USG COULD LEVERAGE $100 MILLION AUSSIE FORESTRY INITIATIVE

UNCLAS SECTION 01 OF 02 JAKARTA 002780 SIPDIS SENSITIVE SIPDIS DEPT FOR EAP/MTS AND EB/IFD/ODF USFS FOR CMACKIE USTR FOR MLINSCOTT, DBROOKS USAID FOR CBARBER, MMELNICK TREASURY FOR TFCA - BERG DEPARTMENT FOR OES/IET and OES/ETC NSC FOR CEQ CONNAUGHTON, VAN DYKE E.O. 12598: N/A TAGS: SENV EAID KGHG ECON PGOV ID SUBJECT: USG COULD LEVERAGE $100 MILLION AUSSIE FORESTRY INITIATIVE IN INDONESIA ¶1. (SBU) Summary and Action Request: In the run up to COP 13, Australia has announced an AUS$100 Kalimantan Forests and Climate Partnership. Post could increase the long-term impact of our current projects in forestry and wildlife conservation by leveraging this new initiative. Any additional funds that Post could program, perhaps even before COP 13, would also enhance our position at Bali and show Indonesia and the world that the USG is taking significant measures to assist the world's third largest GHG emitter. The Australians see potential opportunities for collaboration and express a willingness to harmonize their activities with us. An Australian delegation will visit Indonesia in late October to solicit input and discuss potential collaboration. Post requests suggested guidance and information on identifying additional funding available to leverage this Australian initiative. The Kalimantan Forests and Climate Partnership (KFCP) -------------- -------------- ¶2. (U) Embassy and USAID Mission met with our Australian counterparts in Jakarta on September 25 to discuss their Kalimantan Forests and Climate Partnership (KFCP). Under the Partnership, signed in Sydney on September 9 by Foreign Minister Alexander Downer and his Indonesian counterpart, Dr. Hassan Wirajuda, Australia will contribute up to AUS$30 million (US$22 million) to preserve and rehabilitate forest peat land in Central Kalimantan. The Partnership aims to prevent the deforestation of roughly 70,000 hectares of Kalimantan's peat land forests, to re-flood 200,000 hectares of dried peat land, and to plant up to 100 million trees on rehabilitated peat land. Government, NGO, and press reaction in Indonesia to the KFCP has been very positive. ¶3. (SBU) According to our Australian counterparts, the Partnership aims to raise another AUS$70 million in funding (for AUS$100 million total) over the next four years from other donors -- including countries, NGOs and the private sector. For example, BHP Billiton is a founding partner of the KFCP, and it will focus on protecting forested peat lands with high conservation value. However, they also indicate that the AUS$100 and AUS$30 million figures are "soft" targets; these could be lower or higher depending on interest from outside parties. USAID noted that it is also keen on leveraging the private sector for its environmental programs. ¶4. (SBU) This AUS$30 million is in addition to the AUS$10 million committed in July 2007 to help reduce greenhouse gas (GHG) emissions by reducing fires in forests and peat lands and improving forest and carbon monitoring in Indonesia. As part of this commitment, Australia carried out a pre-feasibility mission in August to identify possible areas for activities to improve fire and peat land management. The KFCP initiative reflects the outcomes of the pre-feasibility study. However, AUSAID has not begun spending the AUS$10 million; it is still in the process of preparing a Subsidiary Agreement (the implementing agreement) with the GOI. ¶5. (U) This project is part of Australia's AUS$200 million Global Initiative on Forests and Climate (GIFC),launched in March 2007, to reduce greenhouse gas emissions from global deforestation through sustainable forest management. Kalimantan contains a large proportion of Indonesia's peat lands, which store at least six times as much carbon per hectare than other forests. The Australian government estimates that the project could reduce GHG emissions by 700 million tons over 30 years. Potential for Collaboration and Harmonization -------------- ¶6. (U) This large Australian initiative could significantly complement our current projects in forestry and wildlife conservation, which are relatively small and piecemeal. USG work in forestry and conservation includes USAID's $8 million Orangutan Conservation Services Program (spread over three years),the Heart of Borneo Initiative, and ongoing U.S. Forest Service-Indonesian Ministry of Forestry cooperation. In addition, we are funding activities under a $1 million Illegal Logging MOU with Indonesia (To place this in context, the March-May 2005 GOI operation to crack down on illegal logging in Papua had a budget of approximately $1.3 JAKARTA 00002780 002 OF 002 million). We are also in the process of negotiating a $19.6 million debt redirection under the Tropical Forest Conservation Act; the GOI will decide how to direct this financing. ¶7. (SBU) The Australians indicate that they see potential opportunities for collaboration as part of the KFCP, and express a willingness to cooperate and harmonize their activities with the USG's work. A high-level Australian delegation led by Robin Taylor, Counselor of Regional Development and Infrastructure for AusAID, is coming on October 22 to visit Kalimantan and have discussions in Jakarta to begin identifying and setting up management mechanisms and partnerships for the KFCP. The delegation will want to meet with Post around October 29 to solicit input and discuss potential future collaboration. Comment -------------- ¶8. (SBU) Comment: Indonesia's forests are under severe threat and possess great environmental and economic value; the GOI is giving them political priority in the run up to COP 13. Post would like to strengthen the USG environmental program in Indonesia. This could complement and leverage the large commitment that Australia is making to address deforestation and climate change. If there were additional funds that Post could program, perhaps even before COP 13, this would garner for us an even stronger position at the table in Bali and show Indonesia and the world that the USG (together with strong allies like Australia) is taking significant measures to assist the world's third largest GHG emitter. End Comment. HUME