FLAWED TIMBER CONCESSIONS PASS LEGISLATURE

UNCLAS SECTION 01 OF 02 MONROVIA 000786 SENSITIVE SIPDIS E.O.12958: N/A TAGS: ECON EAGR LI SUBJECT: FLAWED TIMBER CONCESSIONS PASS LEGISLATURE REF: 08 MONROVIA 793 ¶1. (SBU) SUMMARY: The National Legislature ratified four new Forest Management Contracts (FMCs) in a closed-door session September 23, despite civil society objections and a ruling from the Public Procurement and Concession Commission (PPCC) overturning the concessions on technical grounds. Political pressure to begin revenue-generating timber extraction during the upcoming dry season, after having missed last year's, overpowered concerns about the concessionaires' financial and operational viability. Despite USG and donor support for a sustainable and transparent concessions process, conflicting interests coupled with the PPCC's inability to exert its regulatory role compromise GOL efforts to conduct sound forest management. END SUMMARY. ¶2. (SBU) President Sirleaf called a special session of the National Legislature September 23, urging them to ratify four FMCs so that companies could commence operations (and begin generating much-needed revenue for the GOL) during the upcoming dry season. In a highly unusual process, the Senate hastily approved the concessions, before moving them to a closed-door session of the House for ratification. [Note: Typically, bills require weeks to pass the House, and then move to the Senate. Both chambers permit public observation of votes. End Note.] Recipients of the four contracts include: Euro Liberia Logging Company (Area F- Grand Gedeh and River Gee Counties),Geblo Logging (Area I- Grand Gedeh and Sinoe),International Consultants Capital (Area K- Maryland and River Gee),and Atlantic Resources (Area P- Grand Kru, Maryland and River Gee). According to the Fiscal 2009-2010 budget, these FMCs are expected to generate $9.5 million for the GOL. ¶3. (SBU) Two days of disputatious public hearings preceded the vote. Global Witness, Save My Future Foundation, Liberia Democratic Institute, and Sustainable Development Initiative urged the legislature not to ratify the FMCs. They questioned the quality and credibility of the four chosen concessionaires, arguing they lacked access to capital or the operational experience to log their respective areas. They further charged that at least one concessionaire is a front company for Samling, a Malaysian company with a track record of illegal logging. Global Witness wrote the Ambassador a letter urging Post to use its influence to persuade the GOL to address these concerns. There also exists widespread concern that the FDA solicited bids based on inadvertently inflated log volumes, and that concessionaires will demand contract modifications or resort to unsustainable logging in order to recoup up-front costs. Misgivings about FDA leadership, procedural transparency, and the quality of concessionaires date back two years to the early stages of the bidding process (reftel). ¶4. (SBU) The PPCC voiced similar reservations. Four of the five PPCC commissioners determined the FDA and IMCC exceeded their authority by awarding the concession to companies that did not meet the initial bid requirements. The legislature nonetheless justified its ratification, arguing that because the PPCC is a part of the Executive branch, the President's approval of the FMCs supersedes the PPCC ruling. [Note: The PPCC is in fact an independent body that reports directly to the legislature and is not part of the Executive branch. PPCC Chairman Keith Jubah lamented to Econoffs that until the GOL designs new regulations to clarify whether the PPCC has the right to nullify an approved concession on procedural grounds, widespread misconceptions will continue to preclude the PPCC from exerting its regulatory authority. End Note.] ¶5. (SBU) Starting in 2005, the USG worked with the GOL to create the processes and procedures to ensure a transparent and sustainable commercial forestry sector through the Liberian Forestry Initiative (LFI) and the Governance and Economic Management Assistance Program (GEMAP),which sponsored a full-time advisor at FDA. While the GEMAP advisor regularly and publicly warned the GOL about the deficiencies of the potential concessionaires, and Post continues to encourage transparent and sustainable management practices, the decision to move forward ultimately rests with the GOL. -------------- Comment -------------- ¶6. (SBU) Despite potentially adverse consequences, President Sirleaf publicly stated that absent any alternative source of revenue, such as carbon credits or direct budget support from donors in return for a moratorium on logging, the GOL will continue to press forward. Unfortunately, despite widespread discussion on the potential benefits of carbon credits and the REDD (Reduced Emissions from Deforestation and Degradation) concept in African countries, Liberia would not be an ideal candidate due to its inability to monitor and enforce such agreements. Furthermore, such arrangements do not create the jobs and growth desperately needed in Liberia. ¶7. (SBU) Short-term revenue demands seem to have prevailed over strategic and sustainable resource management concerns. The immediate danger of approving weak concessionaires is further delays in timber exports, as it appears unlikely that any of the MONROVIA 00000786 002 OF 002 concessionaires will be able to perform. The assurance of GOL officials that they will monitor the concessions closely suggests that they will void the contracts if in breech. In the long term, however, the consequences of this ratification could be less reversible. Unscrupulous or poorly capitalized companies may log unsustainably - whether in a deliberate bid to maximize short-term extraction and then abandon operations, from a lack of experience, or from a need for immediate revenue. Further, companies without long-term prospects are unlikely to engage communities as partners in development, and in their haste to extract, may build logging roads that open up forests to illegal chain sawyers and settlers who compromise forest growth. THOMAS-GREENFIELD