UNCLAS SECTION 01 OF 02 SURABAYA 000085

SENSITIVE
SIPDIS

DEPT FOR EAP, EAP/MTS, EB/ESC/IEC
DEPT FOR DS/IP/EAP
USDOC FOR 4430
DOE FOR CUTLER/PI-32 AND NAKANO/PI-42

E.O. 12958: N/A
TAGS: ECON ENIV EPET ENRG SENV PGOV ID
SUBJECT: EAST JAVA MUDFLOW UPDATE: SOME REFUGEES RESETTLED WHILE
SUBSIDENCE COULD CREATE MORE

REF: SURABAYA 29 (LAPINDO PR EFFORTS)

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This message is sensitive but unclassified. Please protect
accordingly.


1. (SBU) Summary: With the mudflow disaster now entering its
third year, legal and political controversy in Jakarta
surrounding the causes of the mudflow has not abated, despite an
increasingly sophisticated PR campaign by the holding company
thought responsible for the disaster. On the ground in East
Java, hundreds of families have been resettled, however
compensation and eventual resettlement of thousands of other
refugees hinges on various compensation schemes. At the
epicenter itself, the struggle to hold back the mud continues.
Increasing ground subsidence is becoming a more obvious threat
to area buildings and infrastructure as villages outside the
original disaster area show increasing geyser activity. A U.S.
company is reportedly planning to tap the mudflow as a source of
geothermal power. End Summary.

Law, Government, still bogged down
-------------- -


2. (SBU) Indonesian Police Chief General Sutanto has
complained to media about the progress of the investigation into
the mudflow. Sutanto said that the case continues to be passed
to the Prosecutor's office only to be returned to the Police for
more investigation. The Police have already declared at least
11 people culpable in this case and believe that the mudflow was
caused by a drilling failure. However, prosecutors claim they
are still looking for strong evidence that can prove that the
mudflow was caused by Lapindo's drilling. As yet there is
little help coming from Jakarta. Minister of the Environment
Rachmat Witoelar appeared before the National Commission on
Human Rights on July 14, but offered little hope of sanctions or
assistance coming from his ministry. As for enforcement in this
case, the role of the Environment Ministry is merely to assist
East Java Police in

their investigation, according to Witoelar.
Stepping up its efforts to highlight the mudflow, the Commission
announced plans to call Coordinating Minister for Welfare and
former owner of Lapindo Aburizal Bakrie for questioning on
stalled compensation for victims on July 16. Bakrie created a
press event of his own at Sidoarjo by visiting the relocated
victims at a housing complex near the disaster.

Lapindo Buys a Newspaper
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3. (SBU) Favorable stories in the Surabaya Post surrounding
the resettlement of mudflow victims followed that paper's
purchase by the former owners of the Lapindo company, the Bakrie
Group. While many local papers have been carrying positive
stories about the payment of compensation, this purchase by
Bakrie seems part of a wider, long-term media strategy aimed at
shaping public perception about the mudflow (reftel). The
masthead of the paper lists two officers of PT Minarak Lapindo
Jaya. The Chairman of the paper's board, Andi Darussalam, is
responsible for the payment of compensation to mudflow victims
and is frequently quoted in the press regarding the process.

Subsidence
--------------


4. (SBU) During a July 17 visit to the mudflow epicenter,
Congen Surabaya confirmed that increased subsidence is an
emerging threat to villages still untouched by the mudflow.
Sidoarjo Mud Management Agency (BPLS) Site Safety Coordinator
Mr. Doddy Irmawan told us that dike walls around the mud
epicenter have yet to reach the maximum allowable height of 16
meters above the ground's surface, although if calculated based
on what has been added thus far the dike should stand some 40
meters high. We learned that new earth added to the top of the
dikes simply adds height to a quickly subsiding dike system now
dropping an average of 10-15 centimeters a day in some areas.
This creates a need for a constant parade of soil-filled dump
trucks to keep the dike from sinking below the level of the mud
lagoon it contains. The mud disposal effort has run into
trouble too, as the first spillway built to pump mud into the
Porong River has been totally blocked by mud. Now backhoes
(which float on the hot mud using custom built pontoons) clear
channels for the mud so that it will flow to a new set of

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spillway pipes down river. BPLS workers were uncertain how long
this channel will operate, or if a new one will have to be made.

More Geysers Emerge
--------------


5. (SBU) A cluster of three very powerful geysers have emerged
about one kilometer west of the mudflow in Pamotan village.
Geysers of all sizes are common within a kilometer of the
epicenter due to subsidence and increasing pressures on water
deep beneath the surface. These large methane- and
hydrogen-sulfide-bearing gas and water geysers are the furthest
from the mudflow epicenter yet. One 15-meter geyser has erupted
behind a functioning ice plant. Iramawan of BPLS told us that
ammonia contained in the plant's refrigeration system could be
released if sudden subsidence were to occur beneath it. While
mud can be blocked and channeled on the surface, subsidence is a
much more difficult and unpredictable problem for local
residents and BPLS.

Refugee Resettlement and Compensation
-------------- --------------


6. (SBU) While the area affected by the disaster slowly widens,
some refugees have finally received long-promised new homes.
While good news for recipients, Andi Darussalam, the Vice
President of PT Minarak Lapindo Jaya, the holding company
compensating the victims, asserted that cash and resettlement
schemes are only for specific refugees. Those without proof they
belong to the group are ineligible. Refugees in temporary
quarters in Porong Market are finally ready to leave the
makeshift camp after reaching agQment with Minarak Lapindo
Jaya on July 8. Refugee representatives reportedly agreed to
leave the market after receiving a cash down payment and rent
subsidy. However hundreds of people from Siring, Jatirejo, and
Renokenogo Villages are skeptical of compensation plans and
insist on full cash compensation and refuse to accept a down
payment and a promise of later resettlement. The national
government has reentered active discussion of refugee issues
after a long silence. President Yudhoyono appears poised to
sign revised Presidential Regulation 14/2008, which adds Besuki,
Pejarakan, and Kedungcangkring villages to the list of those
officially impacted by the mudflow.

Infrastructure Still TBD
--------------


7. (SBU) It is still unclear when East Java's main north-south
road and railway -- both threatened by the mudflow -- will be
relocated. Portions of the north-south toll road have already
been destroyed by mud. Sidoarjo Regent, Win Hendrarso, told
local reporters on June 26 that talks between landowners and the
government have stalled. There has been no agreement between
the government and the landowners as to which land would be used
and how much would be paid. The head of BPLS Major General
(Ret.) Sunarso told local media that the land acquisition issue
might be solved by 2009 or 2010.

Is There Power in Mud?
--------------


8. (SBU) Local media described plans for U.S. energy company
Vlocity Holdings to use the mudflow as a source of geothermal
power. Dr. Taswin Tarib, the CEO of Vlocity, presented a
feasibility study of the power plant to Vice President's Jusuf
Kalla's special assistants on July 8. Taswin said that he has
negotiated with the owner of geothermal projects about this
project which requires an investment of USD 5.2 billion and will
have a capacity of nearly 2,000 Megawatts. Taswin told reporters
that electricity will be produced by four vertical tunnels.
Similar tunneling technology has reportedly been applied in
Arizona and Germany. Vlocity will import a Sirex Vertical
Construction Machine from the U.S. Funding for this project will
be from Sirex PHS (U.S.), Turbo Jack (Germany), and foreign
banks. Details regarding the precise method of constructing the
facility on site were not provided to the media.
MCCLELLAND