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
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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