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