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