CAN'T SEE THE FOREST FOR THE TREES - INDONESIA'S ILLEGAL

UNCLAS SECTION 01 OF 02 JAKARTA 000778

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR OES/ENRC, EAP/MTS, EAP/RSP
USTR FOR MLINSCOTT, DBROOKS
USAID FOR ANE, EGAT [CBARBER, MMELNICK]
BANGKOK FOR RDM/A
NSC FOR CEQ CONNAUGHTON, VAN DYKE
USFS FOR CMACKIE
TREASURY FOR KBERG

E.O. 12958: N/A
TAGS: SENV EAID KGHG ECON PGOV ID
SUBJECT: CAN'T SEE THE FOREST FOR THE TREES - INDONESIA'S ILLEGAL
LOGGING CHALLENGE


1. (SBU) Summary: Recent actions by Indonesian authorities
highlight the successes of Indonesia's campaign against illegal
logging but also underscore the significant remaining challenges.
The Government of Indonesia (GOI) has shown political will and
improved interagency cooperation but has to do much more to improve
forest governance, with international assistance. The continued
clearing of forests, including protected areas, has clear
implications for the Heart of Borneo (HOB) Initiative and the
eventual success or failure of Reducing Emissions from Deforestation
and Degradation (REDD) programs in Indonesia. End Summary.

Enforcement Crackdown Reveals Scale of Problem
-------------- -

2. (U) A recent crackdown in the port city of Ketapang in West
Kalimantan Province highlights the scale and challenge of illegal
logging. In a joint operation with national forestry officials that
began in mid-March, Indonesian National Police (INP) seized 19
vessels carrying 12,000 illegally harvested logs worth over $23
million. The INP arrested at least 26 suspects and transferred 23
of them to Jakarta for questioning. The joint investigative team
estimated from average observed daily volumes that the value of
annual exports of illegal timber from the Ketapang region may have
reached as much as 32 trillion rupiah (approximately $3.5 billion)
-- equivalent to 26 times West Kalimantan's 2008 budget. Last year
between late October and early November, police seized 4000 logs
worth over 1 billion rupiah (over $100,000) in Ketapang.


3. (U) In addition, a joint police, military and forestry team
seized 32,000 logs on February 7, as 57 motorboats and as many as
800 persons were transporting the logs down the Kapuas River in West
Kalimantan. This followed seizures on the same river of 2,500 round
logs and 2,500 planks from mid-late January. Meanwhile, during
January, police and forestry officials seized 5,274 mixed logs in
Hulu Sungai Utara regency, South Kalimantan, and another 2,000
meranti logs in Kabupaten Sintang, West Kalimantan. Government
authorities are frequently reporting similar -- if smaller-scale --
seizures and arrests in other parts of Indonesia.

Interagency Cooperation Shows Recent Improvement
-------------- ---

4. (SBU) This crackdown in West Kalimantan, and Ketapang in
particular, point to improved cooperation between the INP and
Ministry of Forestry (Dephut) -- between whom relations have been
uncooperative if not hostile since mid-2007. Both INP chief,
General Sutanto, and Minister of Forestry M.S. Kaban, made a point
of visiting Ketapang together in early April to assess the
situation. This apparent renewed effort at cooperation comes on the
heels of a limited cabinet meeting on February 22 at Dephut to
discuss illegal logging. After the meeting, President Yudhoyono
remarked that he was not satisfied with the results of the
anti-illegal logging campaign that he initiated in 2005. He called
for an intensification of efforts and improved interagency
cooperation and coordination.

Corruption: A Clear Challenge
--------------

5. (SBU) The recent crackdown underscored the continuing
pervasiveness of official corruption and the need to improve
governance at all levels. Of the 26 suspects detained, the INP said
seven were local and provincial police officers, and another six
were local forestry officials. These included the head of the
Ketapang forestry office, and the Ketapang police chief. One
suspect told the INP he bribed various members of the local police,
local military command, forestry officials, and marine security
officials for each ship leaving Ketapang laden with timber. One
media report said the police investigation indicated these bribes
were as high as $13,000 per ship. (Note: The frosty relations
between the INP and Dephut since last year stemmed in part from
police allegations of widespread corruption among forestry officials
in Riau Province on Sumatra. End Note).


6. (SBU) A local forestry official in Pontianak, West Kalimantan,
told the press that illegal logging surged again in Ketapang after a
previous INP team left after conducting operations there in August

2007. Given the apparent widespread complicity of local police, the
INP's General Supervision Inspectorate summoned the provincial

JAKARTA 00000778 002.2 OF 002


police chief, Brigadier-General Zainal Abidin Ishaq, to Jakarta for
questioning on April 9. Zainal is not a suspect, but on April 15
General Sutanto issued orders relieving him of his command and
reassigning him to INP headquarters in Jakarta.

Widespread Logging And Encroachment Continue
--------------

7. (SBU) While these actions show that illegal logging is still
widespread in West Kalimantan, NGOs and the Indonesian press report
rampant and continued clearing of forests elsewhere, including in
protected areas. (Note: A U.S. Forest Service team, traveling
together with Dephut counterparts, observed signs of this during a
February visit to West Kalimantan. End Note). For example, in
Taman Nasional Kerinci Seblat (TNKS),the largest national park in
Sumatra and straddling four provinces, park officials say there is
evidence of illegal logging up to 4 kilometers within the park
boundaries. Furthermore, they point to plans to build as many as 33
roads that would bisect the park in the four provinces. In Aceh,
despite a logging moratorium, local residents continue to clear
forest to plant oil palm, either for themselves or on behalf of
local companies.


8. (U) In November 2007, the press reported continued forest
clearing in Taman Nasional Kutai (TNK),East Kalimantan and in
December the Ministry of Forestry sent 30 forestry police to
investigate. Meanwhile, the local Kutai Timur regency government
has proposed carving out 24,000 hectares of TNK for encroachers that
have settled there in at least seven villages. In West Kalimantan,
the park chief of Taman Nasional Kayan Mentarang (TNKM) said the
park was vulnerable to clearing although it forms a central portion
of the HOB, noting that some 21,000 people in 50 villages live
within this 1.4 million hectare park (the second largest in
Kalimantan). In Taman Nasional Tesso Nilo (TNTN),Riau, the park
chief said in October 2007 that forest clearing had affected more
than 8,000 of the 38,000-hectare park.

Implications for HOB and REDD
--------------

9. (SBU) The rampant and continued clearing of forests, including
protected areas, has clear implications for the Heart of Borneo
(HOB) Initiative, and for the eventual success or failure of
Reducing Emissions from Deforestation and Degradation (REDD)
programs in Indonesia. The HOB Initiative covers large portions of
West, Central, and East Kalimantan Provinces. Unless the GOI
sustains enforcement efforts and forest governance improves, donors
and environmental activists will question the credibility of
national HOB action plans for conservation and sustainable
development.


10. (SBU) In his February 22 remarks (para 4),President Yudhoyono
clearly connected illegal logging to the GOI's promotion of REDD
during the run-up to and after the Bali climate change conference.
The GOI hopes for a windfall of carbon credits generated from REDD
projects under a post-Kyoto framework (whether from voluntary or
mandatory markets). These hopes could founder if buyers and
sellers, or governments and donors financing pilots, are not
convinced of the integrity of REDD projects -- i.e. that the rate of
deforestation will in fact decline, generating real marketable
credits. Although Indonesia has the "comparative" advantage
(possessing the world's second largest tropical forest area, and the
fastest rate of deforestation),other countries could get ahead of
Indonesia and reap the carbon market gains if its current efforts
falter.

HUME