PROPOSED NORTHERN TRANS-KALIMANTAN HIGHWAY UNDERMINES USG

UNCLAS JAKARTA 000307

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR G, OES, AND EAP
USFS FOR CMACKIE
USTR FOR MLINSCOTT, DBROOKS
USAID FOR ANE, EGAT FOR CBARBER, MMELNICK
NSC FOR CEQ CONNAUGHTON, VAN DYKE
TREASURY FOR KBERG

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: SENV EAID KGHG ECON PREL ID
SUBJECT: PROPOSED NORTHERN TRANS-KALIMANTAN HIGHWAY UNDERMINES USG
PROGRAMS


1. (SBU) Summary: Post has strong reservations about a proposed
Northern Trans-Kalimantan Highway (NTKH),which is the focus of an
AsDB technical assistance grant for a pre-feasibility study. The
economic rationale for the road is weak, and we support the USG
decision to express several reservations about the highway and
related study at the next AsDB board meeting in Washington, D.C. on
February 14. This study could lead to a project to construct new, or
rehabilitate existing, road networks. This would exacerbate the
problems of illegal logging and habitat loss, and undermine ongoing
USG programs to protect forest biodiversity in Indonesia. End
Summary.


2. (SBU) Background: The AsDB proposal includes a component that
would bisect the Kayan Mentarang National Park and the Betung
Kerihun National Park in Kalimantan, two of the largest and most
important protected areas on Borneo. Cutting through these intact
forests would cause damage to biodiversity by increasing illegal
logging and exacerbating degradation of the largest block of intact
forest within the "Heart of Borneo" region. Fragmentation and
degradation of this wildlife sanctuary area would threaten a range
of highly endangered species including the orangutan.


3. (SBU) The initial economic rationale provided for developing the
NTKH is improving economic opportunities for rural populations.
Extraction of timber is the only potentially viable economic
activity in this steep mountainous area. Once road contractors
extract timber, any significant long-term economic activity to
support road maintenance is unlikely. At this time, there is no
clear long-term benefit for the rural populations in northern
Kalimantan, while there is concern that the logging industry could
be the short-term beneficiary.


4. (SBU) Post is concerned that if construction of the NTKH
eventually takes place, it would contradict and undermine the
objectives of a number of ongoing U.S. Government programs to
protect forest biodiversity in Indonesia. These include the Heart
of Borneo Initiative, Orangutan Conservation Services Program, the
U.S.-Indonesia MOU to Combat Illegal Logging and Associated Trade,
new activities to combat climate change, as well as forest
conservation programs implemented by other donors.


5. (SBU) USAID Mission staff have been in contact with the AsDB to
seek background information about this initiative. Consultations
with a range of contacts indicate that the pressure for the NTKH
proposal came from Government of Indonesia (GOI) sources, including
the military. AsDB staff are concerned about possible consequences
of such a project and noted that the GOI is constructing three
sections of the NTKH. The pre-feasibility study aims to ensure the
proper completion of the environmental assessment, including
determining alternate routings and possible recommendations not to
build any sections at all in sensitive areas.


6. (SBU) An AsDB complementary technical assistance project will
support environmental management in the Heart of Borneo area. AsDB
is reaching out to the public, and conducted a workshop this week
about its safeguard policies on the environment, involuntary
resettlement, and indigenous peoples. A contingent of NGOs, however,
held a protest at the workshop expressing general opposition to
loans to the central government and skepticism about safeguards
being effective, particularly with respect to roads in forest areas.



7. (SBU) The Post looks forward to a readout of the AsDB Board
meeting and plans to continue to monitor developments on the ground.
The Mission point of contact for this activity is Suzanne Billharz
at USAID.

HEFFERN