Climate change and rice-growing in Meratus - see page18 No. 76/77 May 2008

This double edition of the newsletter covers the period from December 2007 to May 2008. There was no February edition of DTE.

(DTE) office: 59 Athenlay Rd, London SE15 3EN, England, email: [email protected] tel/fax: +44 16977 46266 website:http://dte.gn.apc.org Suharto’s Legacy

This May marks the tenth anniversary of Suharto's fall from power.The former president, who headed a military regime which ruled Indonesia for 32 years, died in January this year aged 86.

The death of General Suharto is not the end the armed forces played a dominant part.The killing of Papuan leader Theys Eluay in 2001, of an era.The drama of Suharto's last weeks policy of dwi fungsi gave the military a show how the culture of impunity still clearly showed that the New Order remains domestic political role in addition to its persists. a powerful force in the country. Many of the defence function. Democracy was suppressed laws, policies and practices implemented for over three decades in the name of The 'father of development' during his 'New Order' government, continue managing and maintaining internal security by As the self-styled 'Father of development', to influence Indonesia today - despite more limiting political parties, censorship and the Suharto's policies were firmly founded on recent political reforms. imprisonment of opponents. A substantial economic liberalism. Indonesia's initially poor, Suharto was forced to step down proportion of seats in both houses of largely rural economy was transformed into as president on 21st May 1998 amid mass Indonesia's parliament were allocated to the one of south-east Asia's 'tiger economies' by protests, economic chaos and political military and all armed forces personnel and paralysis. Criminal charges over corruption civil servants could only vote for the ruling and human rights abuses were dropped on political party - Golkar. Even today, the army's Inside.... health grounds, although the former territorial command covers the whole Climate change: president continued to play golf, give archipelago with a hierarchical control system Bali and beyond - struggles for interviews and receive visitors. During his last from provincial to village level that parallels climate justice 4 weeks, streams of dignitaries - including the administrative bureaucracy. Debates around REDD, indigenous former heads of state,ASEAN representatives In 1975, Indonesia invaded and rights and control over funding 6 and senior government figures - came to pay annexed East Timor. Over one quarter of the Developments in Indonesia 9 their respects at his bedside, while leading 700,000 population died in the civil war and Climate change/plantations: Indonesian politicians called for sympathy and famine that ensued. Tens of thousands of EU energy policy & agrofuels 12 understanding rather than proceeding with people were killed by military action against Indonesia’s agrofuels programme hit 15 prosecutions. Many obituaries, even in the pro-independence movements in Aceh and Communities force Wilmar to international media, talked of Suharto as a West Papua. Widespread human rights address bad practice 17 great statesman who brought stability and abuses, including disappearances and Indigenous peoples: prosperity to Indonesia. Such reports ignored murders, took place in these disputed Climate change and Meratus Rituals 18 the social and environmental damage caused territories and elsewhere in Indonesia. Army Forests: by his Orde Baru regime. Special Forces are believed to have been Is the ministry serious about the 19 responsible for a wave of 'mysterious killings' legality standard? Joined at the hip of petty criminals by death squads in the early Agriculture: Suharto seized power in 1965 unleashing an 1980s. Throughout the archipelago, conflicts Poverty and the price of rice 21 anti-communist purge in which at least between communities and companies over Agrarian Reform: 500,000 people were killed. Between 50,000 land and resources were suppressed - Another year spent waiting 23 and 100,000 people were imprisoned without sometimes brutally. West Papua/ extractives: trial for up to 14 years and many thousands Indonesia's legal system - in effect, Companies lining up to profit 24 more were stigmatised by accusations of links part of Suharto's power base - was ineffective Mining: with the banned Indonesian Communist due to corruption and patronage.The murder MSM mine: community opposition Party. of rights activist Munir in 2004 and repeated continues as investor backs out 26 The Suharto years were cases of gross human rights violations by the Mining news in brief 27 characterised by authoritarian rule in which armed forces in West Papua, including the DOWN TO EARTH No. 76-77, May 2008 export-led growth based largely on the became a timber tycoon with exclusive rights ruthless exploitation of natural resources and over the export of plywood in the 1970s and Suharto regime called to workers. The state claimed control over the was trade and industry minister in the 1990s. account country's land, forests and minerals and As head of several timber trade monopolies, Jakarta-based human rights activists are handed out huge, long-term concessions to Hasan was Indonesia's de facto forestry trying to set up a People's Tribunal to big business. minister for decades. He also controlled coincide with the tenth anniversary Multinational companies were foundations which were part of the Suharto Suharto's fall.The idea is to address eager to get their hands on Indonesia's family's money making empire, such as the Suharto's record with the overall aim of natural wealth, especially on the preferential Nusamba Group which had shares in the seeking international justice, for example terms offered by Suharto's US-trained Freeport-Rio Tinto Grasberg mine (see DTE through the International Criminal Court economists. Freeport MacMoran got the 38). He was convicted of corruption in 2001 in the Hague, given the weaknesses in exclusive rights to mine a massive gold and after an investigation into forest mapping by Indonesia's political justice system and the copper deposit in West Papua; Exxon-Mobil one of his companies. climate of impunity.The concept is loosely exploited the Arun gas field off Aceh; Rio modelled on the international war crimes Tinto developed gold and coal mines in East The costs to forests and tribunal initiated by peace activist and Kalimantan. These companies have made forest peoples philosopher Bertrand Russell in the 1960s annual profits of billions of dollars, while in response to US military intervention in benefiting from the repressive human rights Between 1965 and 1997, Indonesia lost an Vietnam. situation, the denial of indigenous rights and estimated 40-50 million hectares of its forests Indonesia's Human Rights lax environmental controls. They could hide to logging, conversion to agriculture, mining, Commission (Komnas HAM) has set up behind the government and the local military infrastructure projects and urbanisation. In inquiry teams to investigate human rights in the event of any challenges from local addition to the reduction in biodiversity, this violations under the New Order. Several communities over land rights, violence, sexual forest destruction represents the loss of the retired generals (backed by minister of abuse or pollution. Paramilitary police homes, cultures and livelihoods of tens of defence, Juwono Sudarsono) are refusing protected their sites, a pattern which still millions of people living in and around these to cooperate in these proceedings. persists today in some places. forests. Indigenous communities were Representatives of civil society have Patronage to the president's family deprived of access to their customary lands pressed the president, Supreme Court, and supporters, including the military, was a and resources. parliament and the Constitutional Court key part of Suharto-sponsored crony Furthermore, the New Order's to support Komnas HAM's position, which capitalism. A classic example is that of imposition of a standard system of village is part of its statutory mandate, but no Mohamad 'Bob' Hasan, who provided supplies administration throughout Indonesia state institution has chosen to do this so to (then) Col Suharto's troops in the 1950s, suppressed almost all traditional models of far. local governance. In many cases, this has caused irreparable damage to communities' the Papuans' sense of injustice and fuelled The Central Kalimantan cultural integrity. Where renewal and regeneration is still possible, this process will demands for independence (see also p.24). Mega Rice Project probably take at least a generation. During the 1970s and 80s, oil and Arguably Indonesia's biggest social natural gas exports helped to fuel an In 1995, (then) President Suharto initiated and environmental disaster was the unprecedented period of economic growth a one million hectare project in the peat transmigration programme. Between 1969 with annual increases in GDP of over 6%.The swamp forests of Central Kalimantan. and 1999, around 4.5 million people were USA, along with much of the rest of the This controversial project resettled - mainly from Java, Madura and Bali world, turned a blind eye to Indonesia's planned to move more than 300,000 - to transmigration sites on the 'outer islands' corruption, nepotism and poor human rights families from Java to central Kalimantan to with massive financial support from the record because of the New Order's strong help make Indonesia self-sufficient in rice. World Bank and other international donors. anti-communist stance and its high economic Indigenous Dayak communities were Some sites proved to be suitable for growth rate. The World Bank has described displaced as forests were cleared and agriculture and developed into thriving new the Suharto dictatorship as a 'model pupil'. canals dug to drain the land, but communities, but at the expense of the Other international bodies such as the IMF transmigrant farmers soon found that rice indigenous people whose customary lands and FAO claim that Suharto's policies would not grow there. were taken without consent and at the cost reduced poverty and helped to create relative The combination of dry peat and of forest destruction. Overall, the programme prosperity. But, while Indonesia's wealth from dead timber led to further disaster when failed in terms of poverty alleviation, forests, gold, coal, oil and gas were stripped fires followed the long dry season in 1997. agricultural development and reducing to benefit national and international Weeks of thick smoke affected people's population pressures. Many transmigrants conglomerates, maternal, infant and child health and the burning peat contributed were worse off due to unsuitable soils, lack of mortality rates remained high. Today, with significantly to increased global carbon access to markets and inadequate planning official estimates of poverty at below 17%, emissions. and abandoned their new homes for the tens of millions of people continue to struggle The project was officially cities. to make a living below or just on the official abandoned in 1999, but the whole area The massive influx of Indonesians poverty line. remains devastated and local people have into West Papua, due to state-sponsored been deprived of their livelihoods.The transmigration plus 'spontaneous migration' Where did all the money go? drainage canals have made it easier for (encouraged by the government), has had The New Order's economic successes were illegal loggers to remove any remaining particularly severe impacts on the economic exposed as a house built on sand in the timber from the area.The project, known and social status of the indigenous population. financial crisis that hit south-east Asia in 1997. locally as the PLG, has cost the Indonesian Papuans have been marginalised in their own The IMF brought in a package of severe government at least US$500 million, not land. Suharto's policy of allowing national and economic measures in return for a 'rescue including recent announcements of plans international companies to rape the disputed package' of loans and public pressure soon to rehabilitate the area. territory's natural resources has increased forced Suharto to resign his presidency.

2 DOWN TO EARTH No. 76-77, May 2008

Copyright of Khalil Bendib, www.bendib.com.All rights reserved Other ASEAN countries recovered relatively siphoned money from state enterprises and East Timor,Aceh and West Papua were also a quickly whereas Indonesia has suffered a charities. His wife was called 'Madame Tien drain on the economy. decade of economic depression with massive percent' in joking references to her alleged 'Leakage' of government spending unemployment and increased poverty. The commissions on business deals. His six and international aid estimated at 20% to 30% poor were hardest hit, but some of new children and even his grandchildren became during the Suharto years was recognised by middle classes became poor.Natural resource billionaires through their involvement in a the World Bank and other international exploitation was stepped up to help pay off wide range of business sectors and financial institutions who turned a blind eye the huge debts that mounted up during the commodities including pulp and paper, to it.There was a furore when this figure was Suharto years. cement, plywood, cloves, toll roads, power leaked from an internal Bank document in Suharto's elite had created financial plants, cars and banks. 1998. Nevertheless, corruption remains empires by investing the profits from raw Suharto sued Time Magazine for endemic. Indonesia continues to be rated as materials into manufacturing industries, real reporting he had stashed away US$15 billion among the worst places in the world to do estate and banking. By the early 1990s the in foreign bank accounts - and won the case business. A Transparency International survey new banks were little more than private in Indonesia's Supreme Court. Nevertheless, of international business people and country funding vehicles for their tycoon owners. in 2007, Suharto topped the list of world analysts in 2007 ranked Indonesia as 143rd of These and many other businesses borrowed leaders who had stolen from state funds.The 179 countries. abroad in US dollars. The government also list, compiled by anti-corruption NGO took on international loans to cover budget Transparency International and quoted by the The dangers of nostalgia deficits and to fund various public works United Nations and the World Bank, There are already some signs that Indonesia's projects.When the crash came, Indonesia was estimates that he had embezzled between 240 million population is growing left with external debts of nearly US$140 bn, US$15 billion and $35 billion. Banks in the disillusioned with the steps towards roughly half of which was private. As part of UK, Switzerland and Singapore are suspected democracy that have been taken over the last the 'rescue measures', the post-Suharto to be holding the stolen money. ten years. There is more press freedom and government took responsibility for some Doubtless, patronage to the political parties proliferate, but long-awaited banking debts, including those of forest- Suharto family and supporters (including his reforms, including on land, have yet to be related companies. children's luxurious lifestyles and dubious delivered. Corruption is still rife and there is Although Suharto purported to live business deals) accounts for some of the a yawning gap between Indonesia's rich and simply, he controlled a business empire worth missing billions. Nevertheless, some of the 100 million or so people who live in billions of dollars.Through a complex system Indonesia's wealth was squandered on its poverty or at imminent risk of doing so. of foundations, he and his family received bloated bureaucracy and the New Order's However, any attempt to stir up kickbacks for government contracts and political vehicle, Golkar. Military operations in 'Suharto nostalgia' and promote the return to 3 DOWN TO EARTH No. 76-77, May 2008 climate change Bali and beyond - struggles for climate justice December 2007 saw the resort of Nusa Dua on Bali crowded with thousands of government officials, academics, consultants, business representatives and activists attending the UN intergovernmental climate summit and hundreds of parallel events. The official summit agreed a 'roadmap' as a key step towards a post-Kyoto process to tackle climate change. But its failure to set targets for reducing greenhouse gas emissions and its trust in market mechanisms to address global warming has caused dismay among many activists. As in many developing countries, poor and It is all the more disappointing, The Bali Action Plan goes on to list marginalised communities in Indonesia are therefore, that government negotiators measures for discussion, mitigation of climate expected to suffer disproportionately from attending last December's climate summit change, adaptation to its impacts, technology the effects of climate change. The predicted (officially known as the UN Framework development and transfer, and financing and impacts include more intense rainfall and Convention on Climate Change 13th investment. Under mitigation, the Plan gives flooding, threats to food security, sea-level Conference of Parties, UNFCCC COP13) the green light for 'avoided deforestation' or rises encroaching on coastal communities and were unable to agree targets for the drastic reduced emissions from deforestation and higher levels of diseases such as malaria and reductions in greenhouse gas emissions forest degradation (REDD) schemes to be dengue fever.1 As an archipelago, Indonesia is urgently required to moderate climate included in the new agreement. vulnerable to sea-level rises, storms and coral change. The EU, China and most developing One Bali Roadmap decision that reef bleaching resulting from global warming countries pressed for rich countries to cut was welcomed concerned the Adaptation which threaten coastal communities and their emissions by 25-40%, but this was blocked by Fund, a fund previously set up under the livelihoods. Some farming communities have the US. In the end, the main text stated only Kyoto Protocol for practical climate change already reported an impact on their farming that 'deep cuts' in global emissions were initiatives in developing countries, but not yet activities, with weather patterns becoming needed.3 operational.At Bali, a fairer representation for less reliable for seasonal planting and The Bali Action Plan, one of the developing countries to manage the Fund was harvesting (see also page 18). series of agreed documents known as the Bali negotiated. However, the decision to invite A recent report on Indonesia by Roadmap, commits signatory countries to the GEF, which is co-managed by the World the United Nations Development Programme reach a new agreement by 2009 (COP15 in Bank, to be the interim Secretariat, was less (UNDP) calls for more attention to be paid Copenhagen). This will come into force in welcome.5 The agreement should open the to adaptation to climate change's impacts for 2012, when the 'first commitment period' door for funding for vulnerable communities poor people. The Other Half of Climate Change covered by the Kyoto Protocol ends.4 The - for example, those in flood-prone coastal warns that climate change is "intensifying the UN climate change convention specifies that areas - to adapt to climate change impacts. risks and vulnerabilities facing poor peoples, it must contain a long-term global goal for placing further stress on already over- emission reductions, which takes into account Unofficial outcomes stretched coping mechanisms" and "holding different countries' responsibilities, As well as the official negotiations, Bali was back the efforts or poor people to build a capabilities and social and economic the scene of a global gathering of activists - better life for themselves and their families."2 conditions. fertile ground for creating international (continued next page)

(continued from page 3) plantations along Kalimantan's northern For information on Indonesia's transmigration border, threaten to repeat the PLG disaster programme and the Central Kalimantan a more authoritarian regime, needs to be (see box, page 2) while making fortunes for mega-rice project see DTE Special Report, strongly resisted. It is important to learn from local tycoons. Measures to mitigate climate July 2001, http://dte.gn.apc.org/ctrans.htm. history and to expose and remember the change seem to be regarded more as a new crimes of Suharto and his cronies against lucrative opportunity than as a means to (Sources: Washingtonpost.com 10/Sept/07; Jakarta Indonesia's people and their environment, protect forests and forest peoples' livelihoods. Post 19/Sept/07, 8/Jan/08, 16/Jan/08, 27/Jan/08, rather than to forgive and forget.There should Indonesia's environmental 28/Jan/08, 6/May/08; The Guardian 28/Jan/08; New be no impunity for relatives and associates protection legislation needs to be fully YorkTimes 28/Jan/08; http://soeharto- who benefited financially from corrupt implemented by national and international online.blogspot.com/2008/01/suharto-ex- dealings.Those responsible for the killings and companies who should be held to account by dictator-of-indonesia-dies.html; human rights violations should be called to an independent, properly trained judiciary. http://news.bbc.co.uk/1/hi/world/asia- account. pacific/1222147.stm; There must be more transparency about the Indonesia's politicians are still http://rainforests.mongabay.com/20indonesia.ht business interests of politicians and the following a Suharto-style model of export-led m; military. Above all, Indonesia needs to build a growth based on plundering Indonesia's http://www.transparency.org/policy_research/sur new paradigm of development based on rapidly dwindling natural wealth. The veys_indices/cpi/2007; recognition of human rights and sustainable, expansion of large-scale concessions, including http://siteresources.worldbank.org/INTEAPHAL equitable livelihoods. oil palm and pulpwood, risks ecological FYEARLYUPDATE/Resources/550192- disaster, increased social tension and 1194982737018/ID-EAP-Update-Nov2007.pdf; economic boom and bust. Megaprojects, such http://www.unicef.org/infobycountry/indonesia_s as plans to develop 1.5 million hectares of tatistics.html#0)Š 4 DOWN TO EARTH No. 76-77, May 2008 solidarity, cross-cultural understanding and forging new alliances. One rallying point was the exclusion of indigenous peoples representatives from official proceedings. Others were concerns about the dangerous promotion of agrofuels as 'green alternatives' to fossil fuels; about funding for addressing climate change and its impacts (particularly by the World Bank); and about the potential damaging social impacts of avoided deforestation schemes (for more on some of these concerns, see next article). A coalition of over thirty Indonesian CSOs organised a series of events inside and outside the UN negotiations for national and international participants under the title of the Civil Society Forum. This included WALHI, Sawitwatch, AMAN, Greenpeace SE Asia, Telapak, ICEL, JATAM, WWF, Raca Institute, FWI and Solidaritas Perempuan. Activities centred around a main stage and workshops where communities Image from DTE’s display at Forest Day, Bali, December 2007. (DTE) presented their testimonies. Groups combined to issue position statements, message that agrofuel from Indonesian palm foundation for continuing market-based mount displays, hold discussions and organise oil is definitely not 'green' because it has mechanisms - an important signal to demonstrations to inform and impress their severe impacts on local livelihoods as well as businesses that the carbon market would concerns upon official summit delegates and causing deforestation. Elang even managed to continue after 2012. "Businesses have been other civil society groups. leaflet Indonesia's forestry minister and his asking for clarity on this" he said, "and now As a result, a new network - entourage. they have it." The AWG also agreed to include Climate Justice Now! - was set up. Activists The dual-language publicity forest-related activities in the period known from across the globe agreed to exchange materials prepared for the event included as the Kyoto Protocol's second commitment information and cooperate with each other posters, banners, a photo display and period (2012-2016)8 (see also next article). 7 and others with the aim of intensifying actions handouts, plus a four-page 'Bali Briefing'. Nicholas Stern, whose 2006 report to prevent and respond to climate change, DTE also attended other side made many world leaders take the climate with justice at the heart of this response. In a events related to forests, people, agrofuels change issue more seriously, now believes press release issued at Bali, the network listed and climate change; participated in an that greenhouse gas emissions are growing carbon offsetting, carbon trading for forests, initiative by Riau-based NGOs to protect much faster than previously thought.9 This agrofuels, trade liberalisation and privatisation swamp forests being replaced by pulpwood increases pressure for more investment by as false solutions to climate change. Affected plantations; and took part in various governments and business in new communities, indigenous peoples, women and workshops, including one on the role of technologies and for more severe cuts in peasant farmers called for genuine International Finance Institutions, aid and carbon emissions. Sir Stern, formerly the solutions,including: grants in climate change-related schemes. World Bank's Chief Economist, argues in his Š Reduced energy consumption; most recent paper - Key Elements of on Global Deal on Climate Change - that Š Huge financial transfers from North to Bangkok talks agree on market-based solutions should be at the South, based on historical responsibility timetable, carbon markets heart of large-scale, urgent international and ecological debt, for adaptation and and forest-related activities action.10 He also says that drafting the text mitigation costs, paid for by redirecting What has been happening since Bali to move for the post-Kyoto treaty "will begin as early military budgets, innovative taxes and debt the climate change agenda forward? The first as summer 2008". cancellation; major post-Bali meeting was held in Bangkok, Š Leaving fossil fuels in the ground and 31 March - 4th April 2008. A new working investing in appropriate energy-efficiency group under the UNFCCC, called the Ad Hoc Notes: and safe, clean and community-led Working Group on Long-term Cooperative 1. See DTE 74:1, http://dte.gn.apc.org/74acl.htm renewable energy; 2. UNDP, The Other Half of Climate Change. Why Action under the Convention, has been given Indonesia Must Adapt to Protect its Poorest People, Š Rights-based resource conservation that the job of drafting the new agreement. It is enforces indigenous land rights and 2007, linked from http://www.undp.or.id/ due to meet a further three times this year, 3. Bali Action Plan, http://unfccc.int/ ;The Guardian promotes peoples' sovereignty over ending with COP14 in Poland. An existing 17/Dec/07 energy, forests, land and water; group, the Ad Hoc Working Group on 4. See DTE 74:3, and DTE 69:10, Š Sustainable family farming and peoples' Further Commitments for Annex I Parties http://dte.gn.apc.org/69oi1.htm food sovereignty. 6 under the Kyoto Protocol (AWG),also met in 5. See for example initial assessment of Bali Down to Earth together with the Riau NGO, Bangkok to continue negotiations on post- summit by Tearfund at http://www.tearfund.org/ 6. ‘What's Missing From the Climate Talks? Justice!’ Elang, and local indigenous organisation,AMA 2012 commitments by developed countries. Riau, mounted a display at the major Forest Press Release from Climate Justice Now! The meeting reached agreement on Coalition 17/Dec/07. Day side event organised by the Centre for a timetable for negotiations to be concluded 7.See http://dte.gn.apc.org/BB07.pdf International Forestry Research (CIFOR).The in Copenhagen in 2009 and, according to 8.‘Bangkok Climate Change talks conclude’, aim was to promote voices of villagers UNFCCC executive secretary Yvo de Beer, http://unfccc.int/meetings/items/4347.php affected by oil palm expansion. The joint agreed to break the task into manageable 9. Independent 17/Apr/08 display, created with practical support from chunks. He said the AWG's discussion laid the 10. LSE press release, 30/Apr/08Š Forest Watch Indonesia, carried the strong 5 DOWN TO EARTH No. 76-77, May 2008 Debates around REDD, indigenous rights and control over funding

There are many strands to the ongoing international climate change debate. Here, we focus on three issues that have been particularly prominent in the exchanges between civil society and governments and between North and South: avoided deforestation or Reduced Emissions from Deforestation and Degradation (REDD); indigenous rights; and control over international climate change funding.

The context for discussions on these three aspects of the negotiations is the increasing urgency of creating global political will to address climate change and to agree an international course of action at Copenhagen in 2009. The US has been seen as the major block to negotiations, by refusing to commit to greenhouse gas (GHG) emissions reduction targets, before major GHG emitters of the developing world such as China and India make their own commitments. The international sense of frustration evident at Bali, has been lightened by the hope that whoever replaces George Bush in the White House later this year will adopt a less recalcitrant position. All are agreed that the task of agreeing an effective post-Kyoto agreement is a huge one.

REDD schemes - avoiding deforestation…and responsibility? The decision to include avoided deforestation in the discussions leading up to COP15 requires close monitoring by civil society organisations. Using carbon financing to Friends of the Earth protest against REDD at Bali (DTE) protect forests is broadly supported by governments, including countries with large will serve the interests of those countries and highlighted the potential social impacts for areas of forest like Indonesia, but opposed by companies, rather than the people who live in the 1.6 billion people who depend on forests many civil society organisations which take and rely on the forests for their livelihoods. for their home and living. Carbon financing human rights as their starting point. Following the Bali summit, a means that "wealthy companies and countries Deforestation - mostly from tropical spokesperson for a UK carbon trading are able to buy the right to continue to countries - accounts for a whopping 18-20% investment bank, Climate Change Capital, pollute", said the statement, "whilst poor of annual carbon emissions. Many UNFCCC predicted that setting binding emissions communities often find themselves locked signatories see reducing deforestation as a targets would create 'a very substantial into unfavourable, long-term commercial 3 relatively easy and cheap way of getting global market opportunity.' He said we would then contracts". emissions down while allowing the North to see “the power of private money working for Yet another concern with REDD is 2 continue with 'business as usual'. a moral purpose”. But how far can the that focusing on avoided deforestation may While drastic reductions in private sector be trusted? Past experience distract attention away from the equally or deforestation rates are desperately needed in shows that mixing profits and morality is not even more urgent priorities of making deep countries like Indonesia, there is concern that so easy in practice, especially where people's cuts in developed countries' per capita energy land, resources and livelihoods are at stake. consumption levels (the US is top of the table REDD1 schemes could prioritise conservation over poverty reduction, Companies are generally more interested in here), and cuts in overall emissions levels by strengthen state control over forests and short-term profits than long-term climate populous countries such as China and India further marginalise forest dependent change. where recent economic growth combined communities, including indigenous peoples. Such schemes could worsen with sheer size have led to skyrocketing levels There is further concern that poverty and violate rights to land and of greenhouse gas emissions. The Bali civil where REDD schemes are financed by resources where local communities and society statement warned that carbon trading institutions controlled by developed indigenous peoples' rights have weak or non- was being used as a “smoke-screen to ward countries (such as the World Bank), or the existent status under national laws, as in off legislation and delay the urgent action private sector (through carbon markets) they Indonesia. A Bali statement signed by civil needed to cut emissions and develop society organisations from North and South alternative low-carbon solutions."4

6 DOWN TO EARTH No. 76-77, May 2008

Moreover, there is nothing to say indigenous peoples’ participation (as than the World Bank, in charge of climate that carbon trading will actually do the job of provided under the CBD); change funding. reducing emissions. The Kyoto Protocol's Š recognition and action from UNFCCC A recent update on this by Third Clean Development Mechanism (CDM) has parties to curb the adverse impacts of World Network,8 explains how the Bank not worked, according to a recent climate change on indigenous peoples; and initially proposed three funds - a Clean investigation by the US-based Institute for to refrain from adaptation and mitigation Technology Fund (CTF, target size US$5-10 Policy Studies.5 schemes and projects which devastate billion); a Forest Investment Fund (US$300- indigenous lands and cause more human 500 million, aimed at REDD programmes) and Indigenous Rights rights violations, such as carbon trading, an Adaptation Pilot Fund (US$300-500 Indigenous peoples have emerged as one of agrofuels and avoided deforestation million), along with an umbrella Strategic the strongest critics of the process and the schemes.7 Climate Fund (SCF) which would act as a content of the official climate change Several recent reports have helped vehicle to receive and disburse donor funding negotiations - especially on proposals on bring the position of indigenous peoples and towards specific funds and programmes. avoided deforestation, which will affect many climate change to the fore.These discuss the Currently, says TWN, the emphasis forest-dependent indigenous communities. impact of climate change on indigenous is on getting the CTF and SCF set up They are demanding greater representation in peoples, the potential risks (and possible immediately, and the Forest Investment Fund the UNFCCC process and recognition of benefits) of mitigation and adaptation efforts in late 2008 or early 2009. The Adaptation their rights, which should be at the heart of and include urgent recommendations for Pilot Fund, renamed the 'Climate Resilience climate change mitigation and adaptation safeguarding indigenous rights and Pilot Programme' will be established as a efforts. participation in decision-making on climate programme under the SCF. These climate At the Bali summit, indigenous change. investment funds, which are expected to attract large contributions from developed delegates protested against their exclusion The resources include: countries, will channel financing via the from a meeting between UNFCCC Executive Š a submission prepared for a key meeting various multilateral development banks, Secretary Yvo de Boer and civil society. on climate change held in New York by Protesters wore gags with 'UNFCCC' written including the World Bank Group itself. the Permanent Forum on Indigenous Another World Bank creation, the on them at a demonstration outside the Issues in April 2008 - see official negotiations on December 7th. Forest Carbon Partnership Facility (FCPF), http://www.un.org/esa/socdev/unpfii/en/cli which will link to the proposed Forest Indigenous representatives mate_change.html highlighted the lack of scope for participation Investment Fund was launched at the Bali Š A conference on Indigenous Peoples and summit (see box, page 8). in the negotiations (in contrast to the Climate Change organised by the Convention on Biodiversity, CBD, for These actions have caused a huge Norway-based International Work Group amount of concern among civil society example) and the almost total lack of for Indigenous Affairs in February this language on indigenous peoples in UNFCCC groups who question the Bank's capacity to year - see manage billions of dollars of climate change documents. "There is no seat or name plate http://www.iwgia.org/sw27034.asp for indigenous peoples in the plenary, nor for funding effectively. TWN is concerned that Š Papers from an International Expert the Bank is setting itself up to be 'a key, if not the United Nations Permanent Forum on Group Meeting on Indigenous Peoples Indigenous Issues, the highest level body in the key, player in the governance of climate and Climate Change, 2 -4 April 2008, change.' The concerns include the following: the United Nations that addresses indigenous Darwin,Australia - see peoples rights," said Hubertus Samangun, an http://www.un.org/esa/socdev/unpfii/en/E Š The initiatives are aimed at carving out a Indonesian spokesperson for the indigenous GM_CS08.html new, lucrative niche for the Bank to delegation at the Bali summit.6 reverse its declining influence and sustain In a statement, which More resources are listed on the Permanent its raison d'être; representatives were not permitted to Forum's web-page on climate change: Š The funds were designed without present at COP13's opening session, the http://www.un.org/esa/socdev/unpfii/en/clima guidance from the UNFCCC, and risk International Forum of Indigenous Peoples te_change.html dwarfing and undermining the UNFCCC's and Climate Change (IFIPCC) asserted that own existing funding mechanisms; indigenous peoples had suffered the worst Control of funding Š They risk creating parallel funding and impacts of climate change without having The emerging tussle for control over funding climate change governance structures contributed to its creation. It said that they for climate change action has a different line- outside the multilateral process; "must not be placed in the position of up from the arguments surrounding carbon Š They place parties in a donor-donee suffering from mitigation strategies so that financing for forests. Strong World Bank relationship, contrary to international over-consumption of industrialised countries involvement in managing funding is being climate change principles and obligations, can continue." supported by developed countries (including where financial resources should be The statement called for the US and the UK), while developing country provided as part of developed countries' cooperation in a manner that recognises governments (under the Group of 77) and obligations, and should not be considered social justice, environmental integrity, China want to see the funds managed by the as donor funds; indigenous and other human rights and that UN, under the climate change convention, or Š The three funds are designed to provide "creates a climate where greed does not a new independent body. Civil society groups loans as well as grants, meaning that dominate the needs of humanity" have been strongly critical of World Bank developing countries will have to pay for proposals on various 'climate investment dealing with a problem caused by IFIPCC also demanded: funds' so far, and the rushed, untransparent developed countries. Yet the UNFCCC way in which the proposals have been drafted. and Kyoto Protocol state that as historical Š the creation of an Expert Group on So, while the UNFCCC has been polluters and due to their higher Climate Change and indigenous peoples criticised for its slow, non-inclusive decision- technological and economic capabilities, with full participation and representation making processes, many groups - especially developed countries should shoulder the of indigenous peoples; those tracking international financial main burden for resolving the crisis Š the creation of a voluntary fund to support institutions - would prefer to see it, rather (continued on page 9)

7 DOWN TO EARTH No. 76-77, May 2008

World Bank's Forest Carbon Partnership Facility under fire

The controversy surrounding this new World indigenous peoples be fully involved in activities. The Forum said such activities Bank body, launched at Bali in December last designing, implementing and evaluating would result in more violations of indigenous year, is where all three strands of the climate initiatives related to REDD."11 peoples' rights and lead to the takeover of change debate discussed above - REDD, Corpuz argued that the success of their forests by states and carbon traders.13 indigenous rights and funding - cross over.The avoided deforestation efforts hinges primarily The Forum is asking the Human Rights FCPF has drawn out arguments over the on whether indigenous peoples support Council and the Special Rapporteur on the principles of REDD and carbon financing mechanisms like the FCPF.To get indigenous Human Rights and Fundamental Freedoms of outlined above, some of the same criticisms support, she said, the FCPF and other actors Indigenous Peoples to monitor the potential directed at Bank involvement in designing and would, among other things, need to: for human rights violations associated with managing climate change funds, and has drawn REDD activities. Š state that they recognise and respect particular attention from indigenous peoples The UK-based Forest Peoples indigenous rights as contained in the UN whose lives may well be negatively affected by Programme has published a survey of Declaration on the Rights of Indigenous projects implemented under its auspices (see indigenous views on the FCPF and a briefing Peoples; also DTE 74:1). on the Facility, which highlight its main Š According to the World Bank, the obtain FPIC before any REDD initiative is shortcomings as well as outlining its FCPF is designed to 'set the stage for a large- pursued in indigenous territories; development and structure. Both documents scale system of incentives for reducing Š enhance their capacity to address the point to the abject failure of the World Bank emissions from deforestation and forest drivers of deforestation as identified by to consult indigenous peoples on the Facility 12 degradation, providing a fresh sources of the UNFF; - instead opting for a rushed retroactive financing for the sustainable use of forest Š ensure that, if the FCPF is accepted by consultation this year,prompted by criticisms. resources and biodiversity conservation, for them, indigenous people are represented These documents can be downloaded from the more than 1.2 billion people who depend in the governance structure of the facility FPP's website at: to varying degrees on forests for their at the same level as governments, donors http://www.forestpeoples.org/documents/for livelihoods'.10 and the private sector; est_issues/bases/forest_issues.shtml The facility consists of two Š ensure that consultations are undertaken with directly affected indigenous peoples schemes - the Readiness Mechanism, to help NGOs around 20 developing countries prepare to and that documents are translated into NGOs attending the Bali summit called for participate in REDD incentive programmes, major languages understood by them and the FCPF not to be launched, due to serious and the Carbon Finance Mechanism, which disseminated in advance of consultations. shortcomings with the Facility, including its will pilot carbon payments for around five of flawed governance structure, lack of the successful Readiness Mechanism In a separate statement on REDD issued at transparency, the lack of attention to the participants. Each mechanism has its own Bali, the international indigenous forum Bank's poverty mandate and over-reliance on trust fund, with the Bank acting as trustee for (IFIPCC) took a clear position against REDD market-based mechanisms to pay for both. REDD.14 The climate change campaigner for Indigenous concern WALHI (Friends of the Earth Indonesia) has The main priority of the Facility is climate since called the FCPF launch 'a little bit change mitigation, which implies that poverty absurd'. "People would think that the Bank reduction and human rights protection, had a very good proposal both for people including indigenous rights, are secondary. and, of course, business. In fact, nobody FCPF REDD programmes, says the FCPF noticed that the Bank, through its lending and brochure, should be designed to “avoid any development policies, has been promoting harm to local people and the environment” deforestation in tropical countries like and improve livelihoods “where feasible”.The Indonesia," wrote Torry Kuswardono, in an Bank says that REDD activities can improve article for Bretton Woods Project, entitled livelihoods for local communities by securing 'Whoever loses, the Bank always wins'. He customary property or user rights to their calls the FCPF the Bank's 'new initiative for forest land and forest products. However, it forest carbon brokerage'.15 makes no mention of upholding indigenous A recent report by the Rainforest rights or of securing indigenous peoples’ free, Foundation UK concludes that "The FCPF prior and informed consent (FPIC) as basic could prove to be an extremely expensive requirements. and ineffective diversion from the urgent Indigenous peoples' concerns over task of stopping tropical deforestation in the the FCPF were voiced at the Bali launch, by short term through known mechanisms". UNPFII Chair, Victoria Tauli-Corpuz. She Moreover, its enquiries have revealed the pointed to the negative historical experiences Bank has not conducted any analysis of the with similar initiatives, the vulnerable position likely impacts of 'avoided deforestation' of indigenous peoples despite the adoption of credits on existing carbon markets. Carbon the UN Indigenous Peoples' Declaration, and Sunk is available at http://www.rainforest- the poor record of REDD target states like foundationuk.org/. See also updates from the Brazil, Democratic Republic of Congo and Forest managed by indigenous community in Bretton Woods Project, eg Indonesia in preserving forests. "It is, Sungai Utik,West Kalimantan (DTE) http://www.brettonwoodsproject.org/art- therefore, a moral and legal imperative that 561066.

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(continued from page 7) (UNFCC articles 3 and 4); According to TWN, the Bank has responded How are climate Š New conditionalities which may be to some of these criticisms by stressing imposed by the World Bank and consistency with the Bali Action Plan (see implementing MDBs, alongside their own page 4) and by making some revisions to the change developments traditional conditions (which have a poor funds’ governance structure to incorporate track record of success), will disadvantage some developing country participation. being played out in developing countries and contradict the Nevertheless, the changes do not resolve the UNFCCC principles regarding funding; “fundamental contradictions and inherent Indonesia? Š The Bank has a poor track record on problems” associated with the design and Indonesia's government, as host to COP13, social and environmental impacts, and is proposed implementation of the funds. For has been keen to portray itself as a continuing to prioritise funding for fossil example, the Bank's Adaptation Fund committed guardian of the carbon stocks in fuel production over renewable energy competes directly with the Adaptation Fund the country’s peatlands and forests, while projects, despite the recommendations of agreed in Bali which has a majority of conveying the message that it should be the Bank-commissioned Extractive developing country members (see also page. compensated for funds spent on doing so. Industries Review.9 It lacks the credibility, 4). Just before the Bali summit, in the expertise and the constitutional TWN is calling for efforts to November 2007, President Susilo Bambang mandate to be so central to the delivery develop a genuinely multilateral fund for Yudhoyono told journalists: "In future, we of climate change mitigation and climate change financing under the UNFCCC have to be very determined in carrying out adaptation programmes; which would give developing countries due reforestation and preventing deforestation. Š The Bank's proposal to act as trustee, representation within the governance We want to plant trees on a large scale - and secretariat and overall coordinator for the structure, ensure that funds are used in each tree will absorb CO , the gas that the funds is a conflict of interest, since the accordance with internationally agreed 2 world fears. By doing this, we will be spending Bank itself is a potential beneficiary of principles and meet the objectives of the a lot of money on seedlings and looking after financing from the three climate multilateral climate change regime. investment funds. the forests for developed countries, so there should be compensation for this. We expect Carry on converting that in the new framework, such efforts will be taken into account... It would make no Indonesia's commitment to safeguarding the be monitored by CSOs, universities and the sense if there was nothing in return."16 world's forests has apparently worn rather Indonesia Institute of Sciences (LIPI), he On another occasion, the President thin in the months since the Bali Summit as said.24 (popularly known as 'SBY') said that new measures are introduced that Meanwhile, illegal logging continues preserving the nation’s rich rainforests was encourage, rather than prevent, unabated. There have been many new cases potentially more economically rewarding than deforestation. in Riau,Aceh, South Sulawesi and Kalimantan cutting them down. "By saving, regeneration Government Regulation No this year. These operations are well- and sustainably managing forests we are also 2/2008, which follows up on a 2004 organised and involve government officials, doing our part in reducing global greenhouse regulation (No 1) on mining in protected the police and military, as seen in the gas emissions, while contributing to forests, is a case in point. The regulation, Ketapang case. In the past two months, sustainable economic development of which sets prices for use of forest areas by Indonesian police action to break up an Indonesia”, he said.17 industries other than forestry, caused illegal timber trading network in this West Amidst much publicity, SBY widespread concern among Indonesian Kalimantan district has exposed the extent launched a massive tree-planting initiative in CSOs as it gives the green light for further of illegal logging's stranglehold over the the run-up to the international climate forest conversion, for a range of different forests. 'Operation Hutan Lestari' has led to negotiations. Nearly 80 million saplings were purposes, including mining. The low fees the the arrest of at least 14 police officers (from to be planted on 'deforested land' and around government is charging have also caused district and provincial police stations) plus 26 people's homes throughout the country in concern as they in no way reflect the value of others, ranging from government officials at just one week. If the scheme succeeds, the social and environmental services provided Ketapang’s forestry service to businessmen trees will cover an area of 900,000ha.18 by the forests (see also page 27). Although and middlemen. Twelve thousand cubic At the Bali summit, SBY announced denied by the government, many CSOs see metres of logs worth around Rp208 billion a national mitigation and adaptation plan, the regulation as a tool to justify and legalise (US$22.6 million), ready to be shipped in 19 covering forestry, energy, agriculture, water more forest conversion, which will speed up, vessels to Kuching in Malaysia, have been resources, infrastructure and health. instead of reduce, the deforestation rate. confiscated. During the investigations, the Measures proposed by the forestry This rate is already the world's West Kalimantan police chief was department include mandatory tree planting highest at around 2 million hectares (or four transferred to national headquarters. He is for carbon storage, a requirement for a times the size of Singapore) per year during considered negligent in supervising his staff, government permit to fell a tree with a 2000-2005.23 but is unlikely to face charges himself. diameter above 10cm and replacement Another contradictory measure is Meanwhile, the fugitive owner of the ships, planting of two trees for each one tree felled. the forestry ministry's decision to reissue a has been caught. Yet another high-ranking The ministry's mitigation targets are: logging licence covering part of the national official, he is Adi Murdani, the current deputy combating illegal logging, rehabilitation of park on the island of Siberut,West Sumatra, district head of Kayong Utara, another West forest land and conservation areas, to company PT Salaki Summa Sejahtera (see Kalimantan district.25 restructuring the forestry industry, DTE 50:8 for background). Four thousand empowering local communities living near hectares of the 49,000ha concession lies forests and improving institutions monitoring within the protected area. Forestry minister forests. Forest rehabilitation targets include MS Kaban said he could guarantee that the 11 million hectares by 2009, a further 4.8 conversion would not disturb the function of million ha by 2012, 16 million ha by 2025 and the reserve. The company’s operations will all remaining areas by 2050.The ministry also

9 DOWN TO EARTH No. 76-77, May 2008 has targets for reducing deforestation and for It said the pilot projects would take policies that contradict its Bali commitments reducing forest fires by 50% by 2009.19 place between 2008 and 2012, and would be (see box, page 9). Massive expansion of oil Indonesia is also keen to participate on national, provincial, district and local palm plantations, partly in response to in internationally funded REDD activities and scales, with the aim of gaining experience of demand for agrofuels from developed is listed as one of 20 countries which has implementing REDD activities before the countries, is leading to more climate- requested involvement in the FCPF.20 Given post-Kyoto agreement is implemented. damaging forest and peatland destruction.The the World Bank's involvement in funding REDD activities are expected to be included contradictions in promoting palm oil as a preparatory studies by a forestry ministry led as part of the UNFCCC-sanctioned actions 'biofuel' have been well exposed, but it is still group, the Indonesia Forest Climate Alliance, to mitigate climate change. The department taking time for the message to get through to it looks very likely that Indonesia will be a said that the studies showed that REDD decision-makers both at production and participant country. activities could be applied in pulpwood consumption ends (see also page 12). In December the forestry plantation areas, as well as production forests, Meanwhile, the basic need for recognition and department announced that the country was conservation areas and peatlands. respect of indigenous rights to land and ready to implement pilot activities to trial What do these announcements resources continues to be a far lower priority various aspects of REDD. An official press mean for people on the ground? Probably not than the powerful business interests involved release.21 said that studies by the Indonesia much positive until the real problems are in the timber, pulp and oil palm industries. Forest Climate Alliance, funded by the World tackled. The country's timber, pulp and oil Bank and British, Australian and German palm entrepreneurs continue to eat into the Aceh's avoided bilateral funds, had prepared studies on the remaining forests, reducing the resource base methodology, payment mechanisms and for local communities as they do so. At the deforestation scheme markets.22 same time, the government continues with Indonesia's first forest carbon trading scheme will be developed in Aceh.Announced early in AMAN calls for rights-based approach in mitigation and February, the scheme is intended to protect 750,000ha of forest in northern Aceh against adaptation measures logging and clearance for oil palm plantations. Around 130,000 people live in and around the Indonesia's indigenous peoples' alliance The submission also called for initiatives to Ulu Masen ecosystem. The project is a (AMAN) has called for climate change provide opportunities for indigenous peoples collaboration between Aceh's provincial initiatives to adopt the UN Declaration on to develop mitigation and adaptation government, the conservation organisation the Rights of Indigenous Peoples and to pay alternatives themselves, based on their own Fauna & Flora International and an Australian special attention to recognition of indigenous knowledge and practices. company, Carbon Conservation. It has land and resources rights. In a statement secured funding worth US$9 million from US prepared for this year's meeting of the Recommendations to the Indonesian bank, Merrill Lynch. United Nations Permanent Forum on government included: The scheme has been certified by Indigenous Issues, AMAN also called for Š changing the 1999 forestry law (No the Climate, Community and Biodiversity climate change-related initiatives to obtain 41/1999) to clearly reflect the rights of Alliance (CCBA) - the first project to be free, prior and informed consent from indigenous peoples over customary certified by the US-based body which indigenous peoples if using their territories forests; includes conservation NGOs and and to provide 'enabling environments for Š changing the 2004 plantation law (No corporations such as Intel and Weyerhauser. meaningful indigenous participation' in all 18/2004) so that indigenous rights to It will sell carbon credits to the voluntary parts of such projects (see also indigenous land, territories and natural resources are carbon market and could benefit from a new concerns, page 8). recognised; post-2012 carbon market likely to be agreed Š implementing Law 27/2007 on Coastal at the UNFCCC Conference in Copenhagen On REDD,AMAN says: and Small Islands Management, which next year. The Government of Indonesia as one of the key recognises indigenous rights to manage Carbon Conservation is headed by initiators of the REDD scheme expects to these areas and recognises indigenous Dorjee Sun, a millionaire internet capture some funds for its forest protection knowledge as an important aspect for businessman who has been instrumental in programmes. The Ministry of Forestry has 33 these areas' protection. convincing the governors of Aceh and Papua developed a plan for a pilot project that of the bright future for forest carbon prioritizes five land use types, i.e. oil palm Indigenous voices from markets. Last year, Aceh's governor Irwandi plantations, pulp and paper plantations, announced a much-welcomed logging production forests, protected areas, and peat Central Kalimantan moratorium for Aceh's hard-pressed forests. It also puts special emphases on Indigenous Dayak Ngaju people whose forests.26 Among Sun's customers in the maintaining the extent of state forest (most of livelihoods depend on peatland areas in carbon market is the UK-based mining which are indigenous lands) and curbing forest Central Kalimantan have rejected carbon multinational Rio Tinto (see also page 24), degradation (which includes swidden farming). trading as a means of preserving forests in which - according to media reports - Sun These emphases will certainly harm indigenous their area as a form of colonialism. A press wants to interest in Aceh and Papua peoples in the country. Nonetheless there are release announcing a gathering of around 200 schemes.27 some opportunities that can be explored once people in Kuala Kapuas from 6-8 December The Ulu Masen project plans to indigenous people can negotiate directly with said the meeting aimed to come up with a reduce logging by 85% and to generate outsiders…. strategic plan for the management of carbon credits worth $16.5 million per year. …As in the case of CDM [the Clean peatland in Central Kalimantan, based on It expects to generate $432 million over the Development Mechanism of the Kyoto local practices and knowledge. It also next 30 years. Local villages that can Protocol], it is a must for indigenous peoples to intended to form a new organisation to fight demonstrate that forests have not been engage in the development and negotiations on for the rights of sustainable community logged are projected to get $26 million over mitigation and adaptation to climate change. If management of peatlands.34 the first five years.The site will be monitored not, they will likely find hindrance in accessing by forest wardens and by satellite imaging.28 their forests once REDD is in effect.

10 DOWN TO EARTH No. 76-77, May 2008

FFI claims that a wide range of Resources stakeholders will be consulted in the project UNDP, The Other Half of Climate Change.Why Indonesia Must Adapt to Protect its Poorest design and implementation, including People, 2007 http://www.undp.or.id/ traditional community leaders (mukim). A project design note29 states that all benefits Bali Action Plan: are shared equitably among all stakeholders, http://unfccc.int/documentation/documents/advanced_search/items/3594.php?rec=j&priref=6 including forest dependent communities and 00004671#beg those with customary (adat) rights to forest Intergovernmental Panel on report on mitigating climate change (Working Group III, 4th land. Assessment Report): http://www.mnp.nl/ipcc/pages_media/AR4-chapters.html Meanwhile in Papua... IIED climate change briefing papers: www.iied.org In May, Papua’s governor Barnabas Suebu Indonesian government's climate change site (Indonesian language): signed an MoU with PT Emerald Planet and http://climatechange.menlh.go.id/ its Australian partner New Forests Asset The World Bank's main carbon finance site is at http://carbonfinance.org/ Management to assess the potential for forest The Forest Carbon Partnership Facility (FCPF) documents can be found at carbon trading in Papua. NFAM said it would http://carbonfinance.org/Router.cfm?Page=FCPF invest US$10 million to conduct research in Mimika, Mamberamo and Merauke, with carbon reserves of these three districts to be Notes: redd/en/news/?id=1196164172 announced by the end of the year. Suebu said 1. See DTE 74:1 or DTE's Bali Briefing 19. Jakarta Post 22/Dec/07 that of Papua’s 31.5 million hectares of http://dte.gn.apc.org/BB07.pdf for further 20. Piloting a System of Positive Incentives for Reducing Emissions from Deforestation and forests, 50% is for conservation, 20% for background on avoided deforestation. 2. US Pours Cold Water on Bali Optimism, The Degradation (REDD). The Proposed Forest Carbon production and 30% for conversion, including Guardian 17/Dec/07. Partnership Facility, Powerpoint Presentation: plantations and agriculture. However, 3. Bali Declaration: Protecting the world's forests Benoît Bosquet, The World Bank. Women's destructive logging and timber smuggling needs more than just money, 10/Dec/07 Council on Energy and the Environment remain rampant.30 4. Bali Declaration: Protecting the world's forests Washington, DC, September 27, 2007 Forestry minister Kaban described needs more than just money, 10/Dec/07 21. Department of Forestry press release Papua's decision to go for carbon trading 5. World Bank Climate Profiteer by Jane Redman, No.S.525/II/PIK-1/2007, December 2007. outside the national framework as a move to Sustainable Energy and Economy Network, IPS, 22. A 2007 official Indonesian document on REDD can be viewed at "sell our forests at a discount." He warned of http://www.ips-dc.org/reports/#292 6. IFIPCC Press statement, 7/Dec/08, www.cifor.cgiar.org/NR/rdonlyres/4E81DB28- 'vultures' who lure governors into making http://www.globaljusticeecology.org/connection 410F-4885-ACB6- 31 such agreements. It is hardly surprising that s.php?ID=81 6CA802603A32/0/indonesia.pdf Aceh and Papua are the first provinces to 7. Statement from the Indigenous Peoples Forum 23.http://www.fwi.or.id/?buka=artikel&NewsID=87. engage with REDD schemes. Both provinces in Alter Eco newsletter, December 2008. Other data shows an even higher have a long history of resource exploitation 8. Celine Tan, Third World Network: 'World Bank's deforestation rate. which benefited Jakarta rather than local Climate Funds Will Undermine Global Climate 24.http://www.bktrn.org/gora.php?menu=isiberita& people. Now, under Special Autonomy, the Action' 10/Apr/08. See www.twnside.org.sg &id=75 25. For further information see: elected governors want to generate their 9. See DTE's 2004 factsheet on the EIR at http://dte.gn.apc.org/AF35.htm and http://www.suarakarya- own funds for development. http://web.worldbank.org/WBSITE/EXTERNAL online.com/news.html?id=196596 /TOPICS/EXTOGMC/0,,contentMDK:2060511 http://www.pontianakpost.com/berita/index.asp?Be Eight REDD schemes 2~menuPK:592071~pagePK:148956~piPK:2166 rita=Utama&id=156591 18~theSitePK:336930,00.html http://www.earthtimes.org/articles/show/197669,in announced 10. Forest Carbon Partnership Facility Booklet, donesian-police-officers-grilled-in-illegal- Indonesia's first official REDD scheme will be downloadable from logging-case.html in a peatland area of Central Kalimantan, http://carbonfinance.org/Router.cfm?Page=Doc 26. See DTE 74:7, http://dte.gn.apc.org/74cwa.htm according to head of research and Lib&CatalogID=37316 for further background, plus our 2004 booklet development at the forestry ministry,Wahjudi 11. Statement on the Announcement of the World for Eye on Aceh, Logging a Conflict Zone at Wardojo. Funded by A$30 million in grants Bank Forest Carbon Partnership Facility, by http://www.aceh- eye.org/data_files/english_format/ngo/ngo_eoa/ from Australia, the project is expected to Victoria Tauli-Corpuz, Chair UN Permanent Forum on Indigenous Issues, 11/Dec/07. ngo_eoa_2004_10_00.asp start in June. People will be prohibited from 12. The United Nations Forum on Forests. See 27. Additional sources for this section: cutting the forest, and canals will be built to http://www.un.org/esa/forests/index.html Pointcarbon.com 7/Feb/08; and Wall Street Journal prevent forest fires and to revitalise the 13. Statement by IFIPCC on REDD agenda item at 11/Mar/08 peatlands, according to a report in the Jakarta the UNFCCC climate negotiations, Nov 2007 28. Bloomberg 7/Feb/08 Post. Kaban says Indonesia has received 14.NGO Statement on the World Bank's 29. Reducing Carbon Emissions from Deforestation in pledges of US$100 million from developed Proposed Forest Carbon Partnership Facility the Ulu Masen Ecosystem, Aceh, Indonesia, countries for its REDD activities, and will go (FCPF) 30 November. Signatories include December 29, 2007 www.climatestandards.org/projects/files/Ulu_M ahead with pilot projects in eight forests this Down to Earth. 15. Torry Kuswardono, Whoever loses, the Bank asen_CCBA_Project_Design_Nov1.pdf year.32 always wins, Profits from Indonesia's forests 30. Jakarta Post 14/May/08 It remains to be seen how the next, Bretton Woods Project, 1/Feb/08 at 31. Reuters, 6/Dec/07 viaWatch!Indonesia Australia-funded project in Central http://www.brettonwoodsproject.org/art- 32. Jakarta Post 16/Apr/08 Kalimantan will address concerns over 560001 33. Climate Change: Impacts on Indigenous Peoples indigenous rights and livelihoods expressed 16.http://www.detiknews.com/index.php/detik.read and on their Territories and Lands in Indonesia, by Dayak communities living in peatland areas /tahun/2007/bulan/11/tgl/28/time/201642/idnew 7th Session of Permanent Forum on there (see box, page 10). s/859026/idkanal/10 Indigenous Issues, 21 April - 2 May 2008. 17.http://www.smh.com.au/news/World/Indonesia- 34. ‘Langkah Dari Kampung Untuk Dunia’, Press treasures-rainforest-says- Release distributed via the NGO-Forestry- SBY/2007/12/10/1197135374339.html Sector-Partnership email list 5/Dec/07.Š 18. Antara, 27/Nov/07, http://www.antara.co.id/

11 DOWN TO EARTH No. 76-77, May 2008 climate change / plantations EU energy policy drives agrofuel production

The UK government and the European Union are pressing ahead with policies to increase agrofuel* use for energy - despite evidence of serious harm to the climate and communities - due to concerns about climate change, rising prices of fossil fuels and energy security.1

Only a year ago, financial analysts reckoned government pushed the policy through that, at US$ 400 per tonne (US$54 per parliament. barrel), palm oil would soon be competitive The RTFO is intended to help the with conventional oil.2 But palm oil has UK meet its targets under climate change closely tracked crude oil. Now, as oil prices agreements and also promote 'energy rise to over US$120 per barrel, crude palm security' by replacing a proportion of fossil oil has hit US$1,150 per tonne (US$155 per fuels with renewables. It is not a measure to barrel) due largely to the high demand for reduce energy consumption overall. So it is agrofuels.3 rather worrying that the UK sees itself as an international leader in developing carbon and Fuelling the policy debate sustainability reporting for agrofuels as part While the recent focus has been on transport of the RTFO.5 There is no new sustainability - responsible for about one fifth of Europe's standard. Suppliers will rely instead on a list of greenhouse gas emissions - it is important to principles plus existing certification schemes, remember that agrofuels are also burnt for such as the RSPO, to safeguard against power generation in Europe. In addition, fats negative impacts (see box next page). It is and vegetable oils are used in the worth noting that only two of these manufacture of food products, soaps, paints, principles address social issues and only one cosmetics and pharmaceuticals. land rights. No agrofuel will be banned. Heads of government from Companies just have an obligation to report European Union member states agreed to a to the government on the 'sustainability' of Protest in Edinburgh,April 2008. (biofuelwatch.org) package of energy measures in March 2007. their agrofuel imports. The European Energy Action Plan included a Britain currently produces about commitment to source 20% of the EU's 55,000 tonnes a year of bioethanol (added to energy from renewables by 2020 (covering Agrofuels for UK transport petrol), mostly from sugarbeet, and 75,000 electricity, heat and transport) and a 20-30% Officially, Britain shares the EU's position that tonnes of biodiesel (added to diesel) from reduction in greenhouse gas emissions greenhouse gas emissions must be sharply animal fat and rape seed, soy and palm oil.This depending on wider international efforts. It reduced if there is any chance of limiting is far below the two million tonnes a year of also proposed a mandatory 10% biofuel world temperature rises to 2°C and avoiding agrofuels needed to meet the RTFO 5% target by 2020, subject to agrofuels being runaway climate disaster.The UK looks likely target.6 The Environmental Audit select 'sourced sustainably' and to second to meet or even surpass its modest committee warned UK parliamentarians that generation biofuels becoming available. An greenhouse gas emission target commitments growing wheat and sugar beet in Britain to earlier Biofuel Directive, introduced in 2003, made under the Kyoto Protocol (22% make fuel would cause food price rises and would be revised. reductions rather than 12.5% by 2012), but make it harder to meet targets on water The political stakes are high but the this is not all good news.This achievement is quality and to protect wildlife.7 Faced with debate has not been easy for the public to due to substantial purchases of carbon such high costs, biofuel imports from the understand. At least two pieces of draft credits from abroad, rather than carbon global south - including palm oil from legislation about closely related issues are emission reductions. In fact, Britain is well Indonesia - appear to be the easy option. now being promoted by different parts of the behind its own carbon reduction targets set Environmentalists challenge this European Commission (the executive arm of in a 2003 government White Paper.4 So view. "Tackling climate emissions from the the EU). Moreover, the policies are not firmly reducing the fossil carbon of transport fuels is transport sector needs to start with strict based on sound evidence. an important priority. mandatory fuel efficiency measures. Biofuels Throughout these policy debates, From April 15th this year, no-one could theoretically play a small role, if (and it's campaigners in Europe have supported who drives a car or uses public transport in a big if) there are strict sustainability criteria Southern groups' concerns about food Britain can avoid agrofuels.All fuel supplied in in place. But draining, clearing and burning of security, biodiversity, soil, water and human the UK must contain a minimum of 2.5% of vast tracts of rainforest and peatlands to rights. These include concerns about large- agrofuel - rising to 5% by 2010. The make way for crops for biofuels is madness," scale palm oil expansion plus plans to revive Renewable Transport Fuel Obligation (RTFO) Andy Tait of Greenpeace UK pointed out in a the sugar industry and scaling up jatropha is the British government's way of letter to the press.8 cultivation in Indonesia (see page 15). They implementing the EU's revised Biofuel have also emphasised the need for Northern Directive. Organisations including European targets societies to reduce their energy consumption Biofuelwatch and the Campaign Against Ironically, while the UK was pushing instead of importing agrofuels from the South Climate Change lobbied hard for many legislation on agrofuels and transport through to feed their energy-hungry lifestyles. months against the target, but the parliament in line with EU policy, some

12 DOWN TO EARTH No. 76-77, May 2008

of the Commission and will be dealt with by RTFO Environmental and social principles energy ministers in the European Parliament. 1. Biomass production will not destroy or damage large above or below ground carbon It includes a revision of Directive 2003/30/EC stocks. on the promotion of the use of biofuels and 2. Biomass production will not lead to the destruction of or damage to high biodiversity areas. other renewable fuels for transport, 3. Biomass production does not lead to soil degradation. commonly called the 'Biofuels Directive'. 4. Biomass production does not lead to the contamination or depletion of water sources. There is also a draft Fuel Quality Directive, 5. Biomass production does not lead to air pollution. introduced last year, to be dealt with by 6. Biomass production does adversely affect workers' rights and working relationships. environment ministers and experts. It says fuel 7. Biomass production does not adversely affect existing land rights and community relations. suppliers should reduce the carbon footprint of transport fuels by 10% by 2020, but it does The UK government considers that the following schemes satisfy these principles: not affect total fuel use. Without suitable safeguards, Standard Environmental Social agrofuels could do more harm than good to Standard OK? Standard OK? people and the planet. An agreed, reliable system of sustainability criteria is essential, but Linking Environment and Farming Marque Yes No this has been a contentious issue. Industry has, on the whole, been resistant. Questions have Roundtable on Sustainable Palm Oil Yes Yes been raised too about whether these criteria breach WTO guidelines. The Commission Sustainable Agriculture Network/ Rainforest Alliance Yes Yes wanted the criteria to be part of the revised Biofuel Directive, but environment officials did Basel Criteria Yes Yes not want the decisions to be left to energy officials.The current compromise is that both Forest Stewardship Council Yes No directives should contain different Social Accountability 8000 No Yes sustainability criteria with a common core. Whatever the solution, mandatory minimum Source: http://www.lowcvp.org.uk/assets/reports/Summary%20of%20RTFO%20C&S%20reporting sustainability standards are unlikely to be in %20requirements.pdf place until 2011, making it difficult for consumers to choose between 'good' and members of the European Commission were forget its other benefits which are as 'bad' agrofuels. having serious doubts. important as the environmental ones, namely: Moreover, neither the UK's RTFO The target that agrofuels must have reducing our dependency on imported oil; nor the current draft of the EU Biofuels a 10% share of the transport market by 2020 providing a development opportunity for poor Directive includes greenhouse gas reduction was agreed in principle by EU leaders over a countries and paving the way for second- targets. So the policy does not necessarily year ago and appears in draft legislation on generation biofuels".16 encourage the use of types of agrofuels with renewable energy launched by the European This confusion arises from the fact the best greenhouse gas savings. As a result, Commission in January this year.12 The 10% that there is not just one but two new the Directive will do more for economic figure was controversial, not least because the proposals on the table. The package on development and energy security than 2005 target was not met. Renewable Energy launched on January 23rd combating climate change.The prestigious UK To meet the targets, the EU this year comes from the energy department scientific body, the Royal Society, has warned biodiesel industry says it would have to raise output by 15 per cent each year and rely mostly on EU-grown rapeseed and sunflower UK agrofuel plants oils. Only 20% of the raw materials would come from imports. EU Agriculture Commissioner Mariann Fischer Boel suggested food manufacturers could meet their demand for vegetable oils by switching from rapeseed oil to soy or sunflower.13 EU Development Commissioner Louis Michel publicly expressed concern that "the use of arable land to produce the resources necessary for biofuels could be detrimental to agricultural production".14 And Environment Commissioner Stavros Dimas admitted earlier that he had largely underestimated the potentially damaging environmental and social consequences of agrofuel production. Dimas said the EU would introduce a certification scheme and promised a clampdown on biodiesel from palm oil.15 On the other hand, Energy Commissioner Andris Piebalgs staunchly defended the EU policy saying that "The key contribution of biofuels to the sustainability of the transport sector should not make us Source:www.biofuelwatch.org 13 DOWN TO EARTH No. 76-77, May 2008 that - without support for research and Sawitwatch that palm oil for agrofuels development - there is a risk of becoming Divide and rule increases social conflict and undermines land 'locked in' to using inefficient agrofuels.17 The UK set up an Office of Climate reform in Indonesia and its calls for a International criticism Change in September 2006 to develop reduction in palm oil consumption in official climate change policies and Europe.30 Copies of DTE's letters to MPs and The past months have seen a stream of strategies both domestically and MEPs are available on request. evidence from independent scientists internationally. It also hosts the Stern challenging biofuel policies. A leaked internal *Note: Many campaigners refer to the use of Review team.9 European Commission report gave a damning products from large-scale monocultures, such as However, responsibility for policy verdict on the EU's mandatory 10% agrofuels biodiesel from palm oil and bioethanol from sugar, implementation is divided between six for transport target. It revealed that the policy as 'agrofuels' to reflect this is part of agribusiness, government departments. For example, the could cost as much as 65 billion euros and use not a natural process.The European Commission Department for Transport is promoting huge amounts of land outside of Europe while uses the term biofuels. agrofuels through the RTFO. Meanwhile, failing to deliver any significant greenhouse gas the Department for Environment, Food & Notes: savings.18 1. This article draws on an unpublished briefing Rural Affairs (DEFRA) which is charged A study commissioned by the Swiss document kindly provided by Helena Paul of with promoting all aspects of sustainability government concluded that agrofuels made Exonexus. www.econexus.info/ takes a more cautious approach to biofuels from palm oil, corn and soy may be more 2 . http://news.mongabay.com/2007/0515- produced from rainforest areas.10 The palm_oil.html damaging to the climate than fossil fuels. The Department for Business, Enterprise and 3. Jakarta Post 28/Apr/08 report, cited in the journal Science, calculated Regulatory Reform (BERR) promotes 4. Hansard, 4/Dec/07 the relative merits of 26 biofuels based on support for low carbon technologies and http://www.publications.parliament.uk/pa/cm200 reduction of greenhouse gas emissions, international carbon markets.11 708/cmselect/cmenvaud/uc155-i/uc15502.htm damage to human health and ecosystems and 5. Royal Society press release, 14/Jan/08, There is also a Climate Change natural resource depletion.19 http://royalsociety.org/displaypagedoc.asp?id=28 Projects Office, jointly funded by BERR and Prof Robert Watson, the UK's Chief 632 DEFRA, which helps UK businesses to Scientific Adviser to DEFRA, also stated that 6. Observer 20/Jan/08 pursue opportunities arising from the 7. Telegraph 20/Jan/08 current policies on using food for energy are Kyoto Protocol. 8. http://commentisfree.guardian.co.uk/andy_ flawed. "In many parts of the world the tait/2008/01/palming_us_off.html reduction of greenhouse gases is not as great headquarters in Rome, Italy in June.25 He has 9. http://www.occ.gov.uk/ as people claim, and it also comes… often already expressed concern that there are only 10.Office of Climate Change, with loss of biodiversity, soil degradation and http://www.occ.gov.uk/about/index.htm seven years left to meet the Millennium water pollution.We clearly need to make sure 11. http://www.berr.gov.uk/energy/index.html Development Goal of halving global hunger by that if we use biomass for fuel it must be 12. New Scientist 23/Jan/08 2015.26 sustainable economically, environmentally and 13. Reuters 7/May/07 Civil society organisations from 14. Interview 11/Jan/08 on http://www.ipsnews.net socially," he argued in a radio interview.20 around the world will use the 9th Conference /news.asp?idnews=40762 Dr Hartmut Michel, who won a of the Parties of the UN Convention on 15. BBC Radio 4 Today programme interview, Nobel Prize for his work on the chemistry of Biological Diversity (CDB) to be held in Bonn 14/Jan/08 photosynthesis, explained "When you in May to debate the agrofuel issue. "The 16.http://www.euractiv.com/en/energy/commission calculate how much of the sun's energy is -defends-biofuels-face-mounting- subsidies and runaway development of the stored in the plants, it's below one criticism/article-169728 21/Jan/08 agrofuels industry is fuelling speculation in percent…When you convert into biofuel, you 17. Royal Society press release, 14/Jan/08, commodity futures markets and land, so add fertilizer, and then harvest the plants. http://royalsociety.org/displaypagedoc.asp?id=28 driving food prices, hunger and the 632 There's not real energy gained in biofuel," he destruction of ecosystems and communities. 18. Friends of the Earth Europe, Birdlife told a forum in the Philippines.21 The CBD must act to halt the damage and call International Press Release, 18/Jan/08 The latest criticism of the 10% for the control of markets in agricultural 19. Scharlemann & Laurance, Science, 4/Jan/08 target has come from the European commodities for food, feed and agrofuels," a 20. BBC Radio 4 Today programme interview, Environment Agency. The EEA's scientific 14/Jan/08 spokesperson for the CBD Alliance committee last month called for the 10% 21. Philippine Daily Inquirer 14/Jan/08 explained.27 quota to be suspended, saying it is an 22. European Environment Agency website, Although some EU officials are “overambitious experiment whose 10/May/08, www.eea.europa.eu/highlights belatedly starting to question whether large- 23. European Federation of Transport & unintended effects are difficult to predict and scale monocultures of palm oil to supply Environment 14/May/08 http://www.trans- difficult to control”.22 agrofuels for Europe's power supply and the portenvironment.org/News/2008/5/Barroso- transport sector is the answer to climate orders-study-on-biofuelsfood-link/ Food vs Fuel change, their considerations are far too late. 24. http://www.transportenvironment.org/News/ European Commission president, José Manuel 2008/4/Cracks-appearing-in-EUs-10-by-2020- Industry in the North and South has jumped target-for-biofuels/ Barroso, has ordered a study into possible on the agrofuels bandwagon. In the UK, many 25.http://www.fao.org/foodclimate/conference. links between agrofuels and the recent rapid biofuel plants have been announced over the html rises in the prices of food.23 However, he is last two years (see map, page 13). Now they 26. Guardian 5/Apr/08 unlikely to revoke the 10% target for are struggling to survive against subsidised 27. CBD Alliance press statement 13/May/08, transport.24 imports from the USA.28 http://www.cbdalliance.org UN Secretary-General Ban Ki- Meanwhile Indonesian and Malaysian 28. Guardian, 1/Apr/08 moon has pushed climate change to the top of palm oil producers are concerned that moves 29. See for example, Friends of the Earth Europe's the UN's agenda. UN food agencies are also 14/Jan/08 press statement calling for a by Europe to restrict biodiesel imports will moratorium on EU plans to expand agrofuel facing a crisis over rising prices (see page 21). adversely affect their investments (see p.15). use on www.foeeurope.org/agrofuels Ban is likely to repeat his call for a review of DTE has joined with other NGOs in 30.See Sawit Watch's open letter to the European land-use conversion by biofuel producers at the UK and the rest of Europe calling for the Parliament, the European Commission, the the High-Level Conference on World Food RTFO targets to be scrapped and a stop to governments and citizens of the European Security: the Challenges of Climate Change agrofuel expansion, targets and imports at EU Union, 29/Jan/07 on http://www. and Bioenergy, to be held at the FAO level.29 We support declarations by biofuelwatch.org.uk/declarations.phpŠ 14 DOWN TO EARTH No. 76-77, May 2008 Indonesia’s agrofuels programme hit by high oil palm prices

Indonesian agrofuel1 producers are putting operations on hold as high demand drives up prices.

Since the Indonesian government issued its environment (‘pro-job, pro-poor, pro-growth years in total. Building rights (HGB) were agrofuels policy in 2006, 22 companies have and pro-planet’). extendable up to 80 years and use rights (HP) been set up to produce these alternative The environmental credentials of up to 70 years. (See DTE 73:1 fuels. However, by the beginning of 2008, oil palm-derived agrofuels have been widely http://dte.gn.apc.org/73fdi.htm for more seventeen of these projects had been discredited. Rather than a green fuel, as the background). suspended due to a lack of raw materials. industry claims, they are produced from a On July 5 last year, a group of According to the Association of plantation crop that is replacing ancient Indonesian civil society organisations Indonesian Biofuel Producers (APROBI), the rainforests, destroying carbon-rich peatlands including the legal aid group, PBHI, the seventeen suspended agrofuel projects are and displacing local communities (see, for peasants union federation, FSPI, and owned by Musim Mas, Dharma Group, AGB example, DTE 75:10 and 74:13 for more environmental group WALHI, requested a Bio Industry, Anugerah Kurnia Abadi Asian background). judicial review of several points in the law. Agri Inti Nusantara, Bakrie Group, Elnusa Now, since the Indonesia's palm oil They argued that there remained an Indobio Energy, EN3 Green Energy, Medco production is being prioritised for lucrative imbalance between the system of control, Energy, Pelita Agung, Platinum Resin, RNI, export markets (and driving up the price of ownership, benefit and use of land, due to the Sampoerna Group, Sinar Mas Group, Sumi cooking oil at home), the programme is also continuous rapid growth in population. As a Asih, Eterino (Gresik) and Ganesha Energy. failing to fulfil its pro-job promise.Two short result of development, a lot of fertile land had The five plants that are still running are years since the policy was announced, been converted for industrial use, with operated by Wilmar (see page17), Indo thousands of people are again unemployed.5 negative impacts for local communities. Land Biofuel Energy (one plant), Multi Kimia, and was becoming a scarce resource, which was Molindo.2 Agrofuels and the nevertheless a basic need for all people. Initially, the government planned to The Constitutional Court's substitute 5%-10% of domestic fossil fuel use Investment Law - Judicial decision, issued on March 25 this year, was with agrofuels, but high demand for palm oil Review on land use rights that awarding rights over land with advance has caused prices to soar - from Rp3.8 million extension did indeed go against the 1945 (US$422) per tonne at the beginning of 2007 To support the agrofuels programme, a 2006 Constitution. As a result, this point on land to three times that amount today.3 Presidential Decree was issued on a packet of use rights (Article 22) was declared The increasing price of agrofuels, investment measures, which mandated the unconstitutional, and must be cancelled.6 most of which are made from oil palm, has replacement of the investment laws of 1967 The ruling represents a small gain had a knock-on impact on the state-owned and 1968. for the majority of people who rely on oil company, Pertamina, as government- On March 29, 2007 Indonesia's natural resources such as forest and land, for appointed buyer of agrofuels: the production parliament passed a new investment law, their livelihoods. price is now much higher than the selling which civil society groups criticised for failing price.4 to prioritise the interests of the majority of Notes: The agrofuels programme was Indonesians. The concern was that the law 1.The term 'agrofuel' is preferred over the announced by the government as a measure would create conflict by making it easier for frequently used 'biofuel' - see also note on to create employment, reduce poverty, investors to acquire land and to extend in page 14. strengthen the economy and improve the advance their land use rights (HGU) up to 95 2. 'Investasi Biofuel US$300 Juta Tertunda',

Projection for the development of agrofuels up to 2015

Parameter Unit Palm oil Castor oil Sugar cane Cassava Total

Land hectare 4,000,000 3,000,000 1,750,000 1,500,000 10,250,000

Production Tonnes kernel, 80,000,000 15,000,000 140,000,000 30,000,000 265,000,000 cane, tuber

Bio-ethanol or bio-diesel tonnes oil 16,000,000 4,500,000 8,750,000 5,100,000 34,350,000

Processing plantsUnit 444 45,455 292 319 46,510

Direct employment people 2,000,000 1,000,000 3,500,000 750,000 7,250,000

Indirect employment people 3,111 136,364 14,583 12,750 166,808

(Source: http://www.indobiofuel.com/Timnas%20BBM%205.php)

15 DOWN TO EARTH No. 76-77, May 2008

Media Indonesia. 25/Jan/08. Government measures supporting agrofuels 3. 'Setengah Mati Minyak Nabati', Tempo 21- 27/Apr/08. Year Number Type Regulates 4. 'Mewaspadai subsidi bank untuk BBN'. Bisnis 2006 5 Presidential Regulation National Energy Policy Indonesia 1/May/07. 2006 1 Presidential Instruction Provision and Use of Agrofuel (Biofuel) as 5. '17 Perusahaan Biofuel Tutup Ribuan Karyawan Dirumahkan', Media Indonesia 27/Jan/08. an Alternative Fuel 6. Constitutional Court Ruling on Investment 2006 3 Presidential Instruction Investment Climate Policy Package Law, issued on March 25, 2008. 2006 32 Agriculture Minister's Guidance/Directive on Managing http://www.mahkamahkonstitusi.go.id/downl Regulation Funds for Developing Sugar Cane Sourced oad/putusan_sidang_Putusan%2021- from the ‘Strengthening Group Businesses' 22%20PUU%20V%202007%20Baca%2025%2 Capital (PMUK) Fund - State Budget. 0Maret%202008_ASLI2.pdf; 2006 33 Agriculture Minister's Development of Plantations through the http://www.mahkamahkonstitusi.go.id/berita. Regulation Plantation Revitalisation Programme php?newscode=606Š 2006 117 Finance Minister's Regulation Credit for Developing Agro-Energy and Plantation Revitalisation 2006 51 Energy and Mineral Resources Criteria and Guidance for Traders (continued from page 17) Minister's Regulation in Agrofuel (Biofuel) as an Alternative Fuel. 2007 25 Law Investment reported to have damaged communities and 2007 26 Agriculture Minister's Guidance on Licensing Plantations forests in the province. Also, the Ganda Regulation Group, which holds plantations covering much 2007 3 Plantations Directorate- Maximum Unit Costs for Development of the Sejenuh sub-district of Sambas, is General Decree of Plantations Participating in the owned by the brother of Martua Sitorus and Plantations Revitalisation Programme in is reportedly a supplier to Wilmar in other 2007. provinces. 2008 13A83 Oil and Gas Directorate- Standards and Specifications for The three cases in Sambas are not General Decree agrofuel (biofuel) of the biodiesel type as an Wilmar's only controversial concessions. alternative fuel, for the domestic market. These include the 30,000 ha PT Asiatic Compiled from various sources. Persada plantation in Jambi, Sumatra, formerly owned by CDC (see DTE 67:20, http://dte.gn.apc.org/67brf.htm). Cases are Support for moratorium on expansion of plantations also coming to light in West Sumatra, South into forest Sumatra and Central Kalimantan. Meanwhile, civil society groups are Greenpeace launched a campaign in April for calling on buyers to ask producers to respect pressing the CAO to address the issues raised a moratorium on further deforestation by the the rights of indigenous peoples and local about IFC procedure for funding approval palm oil industry in Indonesia. The campaign communities and not to develop plantations through an official, independent audit. The calls on industrial buyers of palm oil in Europe without their free, prior and informed overall aim is to ensure that IFC's policies, to make sure that their suppliers do not consent. procedures and investment practices are convert forests when making new plantations, Meanwhile, Greenpeace reports strengthened to respect fully the rights of but restrict expansion to non-forest areas. that companies are continuing to drain and communities and the promotion of Within a fortnight, Unilever burn peatland for oil palm plantations.A field sustainable land use options. However, the announced that it supported Greenpeace's visit to Riau in February and March revealed CAO, possibly anxious about setting a call for a complete halt to rainforest two new operations without permits in the precedent, appears to be dragging its feet. destruction for palm oil in Indonesia and Indragiri Hulu district. Agriculture minister The RSPO Grievance panel is now pledged to use only palm oil certified as Anton Apriyantono issued a statement during considering the complaints against Wilmar sustainable by 2015. Indonesia was quick to the UN climate change conference in Bali in but, as this newsletter went to print, has not point out that it hopes to have a national December ordering all governors to stop publicly released any information about standard for sustainable palm oil, based on the issuing permits for plantations in peatlands. progress. RSPO's international scheme, agreed by late May. The Indonesian Palm Oil Association, The Greenpeace reports Cooking the Climate, *Policy, Practice, Pride and Prejudice,A Review of GAPKI, also committed to stop using forested Nov 2007 and How Unilever Palm Oil Suppliers legal, environmental and social practices of oil land for new plantations. GAPKI's 250 are Burning up Borneo,April 2008, and palm plantation companies of the Wilmar Group members control over half the country's 6.7 Unilever's response are available at in Sambas District,West Kalimantan, July 2007, million ha of oil palm plantations. www.greenpeace.org a joint publication of Milieudefensie, Lembaga It is important that efforts to Gemawan and Kontak Rakyat Borneo is protect high conservation forest and Other sources: Unilever press release available in English at endangered species like orangutans are not at 2/May/08; http://www.milieudefensie.nl/english/forests the expense of communities' livelihoods. http://www.rspo.org/Unilever_Commits_To_ The IFC's Compliance Advisory Some of the 'degraded' or 'idle' land targeted Certified_Sustainable_Palm_Oil.aspx; Reuters Ombudsman's Preliminary Assessment, Nov for future oil palm plantations is where local 8/May/08 (via Watch!Indonesia); Jakarta Post 2007, is available at http://www.cao- people live and farm. So Greenpeace is also 8/Apr/08, 13/May/08. ombudsman.org/html- english/documents/WilmarassessmentAI13N http://www.forestpeoples.org/documents/ifi_i http://www.businessspectator.com.au/bs.nsf/A ov07.pdf with a 27/Mar/08 update at go/ifc_wilmar_fpp_let_jul07_eng.pdf rticle/UPDATE-3-Wilmar-profit-soars-sees- http://www.cao-ombudsman.org/html- Buyers and Financiers of the Wilmar Group, prices-staying-f-ELPW3?OpenDocument english/Wilmar_compliance.htm Profundo, July 2007 http://www.rspo.org/Complaint_against_Wil Other sources: Formal complaint to the IFC, Making Waves, Greenpeace weblog, mar_International_Ltd.aspxŠ July 2007, 17/Nov/07; Reuters 13/May/2008 16 DOWN TO EARTH No. 76-77, May 2008 Communities force Wilmar to address bad practices

Communities in West Kalimantan, supported by national and international NGOs, have taken the unprecedented step of challenging the environmentally and socially damaging impacts of the world's largest palm oil company, using the World Bank Group's official complaints procedure.Wilmar International and the International Finance Corporation (IFC) have withdrawn their claims of 'sustainable palm oil' production.

The Wilmar Group is a large conglomerate, plans to increase further its role in the investments to the group and helped it to get set up by Malaysian and Indonesian international agrofuel market, to expand its funds through the Global Environmental businessmen Kuok Khoon Hong and Martua plantation areas to 1 million hectares in Facility. In so doing, it did not carry out Sitorus in 1991. It started by refining palm oil Indonesia and to buy up and develop proper due diligence and disregarded IFC and quickly expanded into buying and trading plantations in Africa and Central Asia. Despite Performance Standards while wrongly palm oil on the international market. The substantial land holdings, over 75% of palm oil claiming that Wilmar met RSPO standards. parent company, Wilmar Holdings, listed a traded by Wilmar currently comes from The environment ministry had number of subsidiaries on the Singapore other plantations. issued instructions in April 2007 to PT WSP Stock Exchange which became Wilmar Wilmar sells palm oil to companies and BCP to stop all operations until the EIA International in 2006. Last year, Wilmar in China, India, USA and Europe. Among its had been completed and approved, but these Holdings merged its edible oils, grains and customers are Unilever, one of the world's were ignored. PT ANI continued to operate a related businesses with the Malaysian Kuok food processing, detergent and cosmetics processing mill and to expand its plantation Group and the Asian edible oil businesses of giants and a leading member of the without an EIA for these. American agricultural trading company ADM. Roundtable on Sustainable Palm Oil (RSPO). The Wilmar Group is now the According to Greenpeace, well-known Action against Wilmar largest trader of palm oil, palm oil refiner and products such as Walls ice cream, Dove soaps The NGOs used the report to launch a agrofuel manufacturer in the world (see box). and Flora margarine are likely to contain palm three-pronged approach: to the Compliance, It had an annual turnover of US$5.3bn in oil which has been produced at the expense Advisory and Ombudsman Office (CAO) of 2006 and is expected roughly to double its of the rainforest and local communities' rights the IFC; to the RSPO, through its newly 2007 profits of US$580 million this year. and to have passed through Wilmar's hands. established grievance panel; and to palm oil Wilmar International controls British-based bank Standard Chartered is buyers and financiers of Wilmar. After nearly 500,000 hectares of oil palm Wilmar's most important external protracted correspondence and several plantations in Indonesia plus around 80,000ha shareholder. The Dutch Rabobank has also meetings, the IFC eventually agreed to set up in Malaysia of which it claimed to have planted made and brokered a number of significant a mediation process and to send its some 200,000ha by late 2007. A report by loans to Wilmar in the last five years. ombudsman to Sambas. Friends of the Earth Netherlands As a result, by February 2008, (Milieudefensie) stated that, by mid 2007, less Community grievances Wilmar publicly admitted its shortcomings in than one third of the Wilmar Group's land A report by Milieudefensie and Indonesian the three cases in Sambas. To address the holdings had been cleared and planted. Even partners in July 2007 provided evidence that problems, Wilmar says it has set up a so, Wilmar is reported to have ambitious three Wilmar plantations in Sambas, West committee, regional sustainability Kalimantan, had been involved in land rights departments and audit- and monitoring Wilmar and agrofuels conflicts, encroachment on villagers' lands, procedures to make sure that RSPO Wilmar (via PT Wilmar Bio-Energi) has converting peat swamps to plantations, forest principles and criteria on 'sustainable palm oil' three biodiesel plants in Dumai, Riau.The destruction and illegal burning*. They were will be adhered to. Special measures will be total capacity of 1.05Mt represents the also operating without statutory taken to protect biodiversity and high output of 300,000 hectares of mature oil environmental impact assessments. conservation value forests and no plantation palm plantation. Most of the 2007 agrofuel Practices by PT Wilmar Sambas development will take place without free, production was pre-sold to buyers in Plantation (WSP), Buluh Cawang Plantation prior and informed consent of local Europe and the USA. Diesel represents (BCP) and Agro Nusa Investama (ANI) communities. The CAO has also engaged in about 60% of road transport fuel violated Wilmar's own corporate social mediation between and local communities consumed within Europe. If the whole of responsibility policy, Indonesian law and the over contested boundaries between PT Wilmar Bio-Energi's forecast Principles and Criteria of the RSPO, to which concessions and customary lands. However, production went to meeting agrofuel Wilmar has belonged since 2005. Local Wilmar has not acknowledged its role in demand, it would only meet 0.5% of EU communities affected by Wilmar's plantations illegal logging. demand for diesel (around173Mt in 2005). demanded that the company halt operations Civil society groups will be Greenpeace sent the Rainbow on the ground while proper and thorough monitoring carefully to ensure that Wilmar Warrior to block palm oil shipments from EIAs were conducted and that there should sticks to its word. One problem throughout Dumai and established a 'forest defenders' be a transparent consultation process to gain negotiations is the complexity of Wilmar's camp in Riau in the run up to the Bali the communities' consent for land holdings which include front and shell climate conference to draw attention to acquisition. companies. A related issue is that although the damaging effect on greenhouse gas The IFC has its own operating Wilmar eventually stopped operations at the emissions of establishing oil palm standards and is also a member of the RSPO. three plantations pending inspection, it also plantations on peatlands. In spite of concerns raised by NGOs about bought palm oil from Duta Palma which is Wilmar's operations, the IFC made three (continued on page 16)

17 DOWN TO EARTH No. 76-77, May 2008 indigenous peoples Climate Change and the Adat Rituals of the Meratus Dayak community

This report is based on information from a field visit by DTE staff to Meratus in 2008, and from the South Kalimantan based NGO, LPMA

For indigenous peoples like the Meratus constellation which resembles a pig's jaw season too, at worst the community won't be Dayak of South Kalimantan, farming is not only appears in the east at exactly eight o'clock in able to plant rice and will have to buy it in a means to obtain food, but also forms part of the evening, then it is time to manugal.1 from outside instead. Worse still, the the customary (adat) rituals that have been Nature always used to be on the community won't be able to perform the adat passed down the generations. Climate change side of the communities and enabled them to rituals which form part of their religious is causing changes to planting cycles and make a living, but that no longer seems to be worship. bringing change too, to the cycle of adat ritual. the case. Sometimes, the natural signs are Each year there are at least five adat misleading: it looks as if the dry season has The threat of mining ceremonies directly related to the Meratus arrived, but the rains come instead. In February, Government Regulation (PP) Dayak agricultural system. The cycle starts This happened in March when it No.2/2008 on non-tax revenues on forest use with the batumban kayu ceremony, for clearing rained heavily even though the rice fields were was issued (see also page 27). The move was land; followed by manyalukut, for burning; turning yellow and in some places were ready strongly opposed by environmental activists, manugal, for planting padi; aruh mahanyari,an to harvest. Eventually, the dry season came who accused the government of selling expression of gratitude for the padi harvest, and it was possible to harvest. But after the Indonesia's forests for Rp300 per square and finally, aruh ganal, a large ceremony to rice was spread out to dry prior to milling, it metre - less than the price of a piece of fried offer thanks to God for protecting the rained again. This made it hard for people to banana at Rp500. This regulation directly community for a whole year, from planting to dry their crop as they have no drying threatens the Meratus community. harvest time. equipment and only rely on the sun. The regulation follows on from The Meratus rice-growing cycle Not being able to count on these Government Regulation in Lieu of a Law starts with land clearing in May, planting in seasons anymore has made people uncertain (Perpu) No. 1/2004 issued by the Megawati August to September, and harvesting from the about when is best to plant.They have to plant government, which licensed 13 mining end of March to mid-May. the rice, but the results are often poor, and companies to resume open-pit mining Apart from using the calendar for some of the plants have not produced any operations in protected forest areas covering timing, the Meratus Dayaks also use rice. 927,648 hectares.2 (For the full list of astronomy. When a constellation called If the weather continues to be companies see page 27.) Two of these 'karantika' appears at the same time as a unpredictable and disrupt the coming planting companies have mining concessions in the Meratus area: Australia's PT Pelsart Tambang Kencana (gold)3 and Indonesia's PT Interex Sacra Raya (coal). PP 2/2008 goes against the wishes of the Meratus Dayaks, most of whom want to retain their rights over the forests. These people's resistance made a strong imprint in 1999, when South Kalimantan government wanted to change the status of the forest from protected to production forest. Less than ten years after the rejection of this move, the government of president SBY (Susilo Bambang Yudhoyono) is permitting these two companies to sweep aside the customary rights of the indigenous Meratus Dayaks.The regulation transfers state authority over natural resources, governed by the interests of the majority - in this case the Dayak community - to mining companies.The income the state receives in return for renting out the protected forest is derisory.

Notes: 1. LPMA. 1999. Hasil dokumentasi revitalisasi adat balai Kiyo. Members of the local community bathing in Balai Batukambar, (DTE) Meratus, South Kalimantan. (continued on page 22)

18 DOWN TO EARTH No. 76-77, May 2008 forests Is the Forestry Ministry serious about the new legality standard?

It is well over a year since the draft Indonesian Timber Legality Verification Standard was handed over to Indonesia's Forestry Department for approval. Since then, progress towards implementation has been extremely slow, begging the question whether the Forestry Ministry really wants to tackle Indonesia's runaway forest destruction.

The legality standard - now renamed the One positive element in the design Management Units'(FMU) (the companies, Timber Legality Assurance Standard (TLAS) - is that the institution remains a or community logging organisations etc) in was part of the follow-up to a 2002 multistakeholder body, which accommodates the field. agreement on illegal logging between the UK all the stakeholders in almost all of its Š a Licensing and Standard Development and Indonesia, which was superseded by the component parts. Commission (planned as a EU Action Plan on Forest Law Enforcement The TLAS institution comprises multistakeholder body) will be responsible Governance and Trade (FLEGT) in 2003. several bodies: for issuing the licence that states that a Indonesia is currently negotiating a bilateral Š a Secretariat, to be handled by the forestry Forest Management Unit is legally verified. 'Voluntary Partnership Agreement' (VPA) ministry's Centre of Environmental It will also review the standard periodically with the EU, aimed at preventing illegal timber Standardisation, and which will be to adjust it to any related policy entering the EU. The TLAS will be used to responsible for finance, administration and developments. determine what is and what is not legal coordination of the institution; Š a Dispute Resolution Body, which will deal timber.The hope is that it will be used to sort Š an Accreditation Commission, planned as with grievances from the Independent out the legal confusion created by conflicting a multistakeholder body, which will be Monitoring body or affected communities, regulations governing forests.1 (See DTE 73:9 responsible for accrediting the verifiers. relating to the issued licence and/or non- for more background.) The accredited verifiers will undertake the compliance of the FMU with the TLAS. Responding to the acquittal of an work of verifying the legality of the 'Forest Š an Independent Monitoring Body, which illegal logging entrepreneur, Mardi Minangsari of the Indonesian NGO, Telapak, said: "The current way of managing forestry in Indonesia is clearly not fit for purpose. Criminals profit from legal uncertainty and grey areas, while deforestation continues. We urge the government to adopt the new legality standard as a matter of urgency to sort out the confusion." Despite assurances to the EU of speedy implementation, the Forestry Department has still not officially agreed or adopted the TLAS - another indication that the political will to implement the system is in short supply.

Slow Progress on TLAS Institutions In June last year, a Ministry of Forestry Secretary General Decree (no. 53/II- KUM/2007) created an Ad Hoc Team to carry out the task of setting up the institutions needed to implement the TLAS. This multistakeholder team consists of representatives from government, the private sector, academia, NGOs and Indigenous Peoples Organisations. The process of designing the TLAS institution, the role and mechanism of each of its components, and the interrelation between components is now nearly complete. The illegal timber business in Kampar district, Riau (Yuyun Indradi, DTE)

19 DOWN TO EARTH No. 76-77, May 2008

will monitor the whole system and its key Another bone of contention raised Action needed now players. This body will also ensure the by the ministry review team was the question Another crucial point in the TLAS process transparency and fairness of the system. of who sits in each component part of the concerns the pressing need to implement the TLAS (except the Dispute Resolution Body system in the field. While the reviews and Regional public consultations have also been and Independent Monitoring Body). There discussions continue, so does the destruction held. The first of these, for the Kalimantan was divided opinion on whether the in the forests. Any attempt to prolong the Region, was held in Samarinda, East Accreditation Body and the Licensing and process, delay the implementation of the Kalimantan in April 2008. The next will be Standard Development Commission should TLAS and keep it at draft stage means Java, then Sumatra and Papua. The regional be multistakeholder or not. The Ministry business as usual in the forests. The forestry public consultations are aimed at gathering review team took the view that, since the ministry has very little excuse to maintain the inputs for refining the TLAS. Hopefully, by the timber legality licence is a legal product, then status quo, if this is what is intended, since the end of June the whole system design will be it should be the government that deals with TLAS is not anything new, but only a means of finished and ready to go to a National Public it. On the other hand, it is possible that this clarifying and measuring compliance with 2 Consultation for final inputs and refinement. task can be delegated to an appointed existing laws and regulations. In other words, multistakeholder body, in this case, the the TLAS is only underlining law enforcement. Forestry Ministry raises Licensing and Standard Development So, if the forestry ministry is in favour of law objections Commission. enforcement, as it claims, there is no reason for not implementing it. Or maybe the The forestry ministry is in the process of Industry calls for TLAS fees reviewing the TLAS, and held its latest review forestry ministry simply prefers the status meeting in April this year. One point it raised to replace all others quo? was that it considered the criteria and The private sector (represented in the indicators for community-based forest multistakeholder Ad Hoc Team) is pressing Notes: management too soft, and thought that these the forestry ministry to do away with all 1. EIA: Press Release: 21 November 2007, should be set at a similar level to those existing forestry fees, and to replace them 'Court Fiasco As Fugitive Timber Boss Evades Jail'. drafted for large timber companies (HPH) with just one TLAS verification fee.There are 2. More information in the Indonesian language and timber estate companies (HTI). This already more than 40 types of fees payable by can be found at would clearly put communities at a forestry companies and the industry argues http://www.lei.or.id/indonesia/ disadvantage, as the scale of their forest that an additional legality verification fee 3. The first draft on the setting up of the management operations are far smaller than would only add to the financial burden. This Dispute Resolution Body, gives the body those of the big companies, and they have far could well be a reasonable move, because, authority to withdraw (cancel) and suspend fewer resources.The Ad Hoc Team responded quite apart from reducing costs for licences issued by the Licensing and to this by saying that since the criteria and companies, it would mean cutting the chain of Standard Development Commission.Š indicators of the standard were developed by illegal transactions benefiting corrupt a multistakeholder process, the forestry government officials, and police and military ministry review team should go through a personnel. public consultation if it wishes to revise the standard. Another crucial point which Diagram of the proposed TLAS institution demands close attention is the debate around the Dispute Resolution Body and its role in the TLAS.3 The forestry ministry review team took the view that such a body was not necessary in the TLAS, since the timber legality licence is an official government assurance and therefore it is the government, rather than the proposed Dispute Resolution Body that should have the authority to withdraw it. Grievances should be considered under the legal system, by the state administration court or the police. Following this input, the Ad Hoc Team's most recent meeting, also in April, revised the role of the Dispute Resolution Body so that it no longer has the authority to cancel or suspend legality licences. Instead, the Dispute Resolution Body may only put forward recommendations to the Licensing and Standard Development Commission, on the cancellation or suspension of licences, based on strong evidence of non-compliance in a 're-verification' procedure conducted by the Dispute Resolution Body. The proposed timber legality licences will be valid for 3 years, subject to an annual review, which can consider less urgent grievances then.

20 DOWN TO EARTH No. 76-77, May 2008 agriculture Poverty and the price of rice

Concerns about food security worldwide are growing as rice prices have more than doubled in many countries over the last year and global rice stocks are the lowest for decades. Meanwhile the Indonesian government needs to consider how to increase rice production and to protect the food supplies of the poor.

The United Nations Food and Agriculture plantations for biodiesel. That's a concern traders since early 2004 to prevent price Organization voiced concern when [sic]", Zeigler said. disruptions from smuggling. Bulog provides international rice prices rocketed to a 20- In April, World Bank president, emergency supplies during natural disasters year high in late March with the global Robert Zoellick called for a 'New Deal for and also supplies rice to poor families. benchmark price at over US$500 per tonne. Global Food Policy' to focus not only on As the price of rice rose to By early April, the export price of Thai rice hunger, malnutrition and food supply, but also Rp500/kg, the Indonesian government was over US$1,000 per tonne. Rice is the on the interconnections with energy, yields, increased the amount of subsidised rice to staple food for over half the world's climate change, investment and the poor families from10kg to 15kg per month in population, including the majority of marginalisation of women. early 2008.This only costs Rp1,600/kg, but is Indonesia's 240 million people. low quality and the total available under the Rice supplies in Indonesia scheme (beras rakyat miskin) is less than 2 Why are world rice prices Earlier this year, Indonesia announced that it million tonnes. The average annual rice so high? would not be buying in rice during 2008 due consumption per person is about 130 kg. As there are around 15 million people living Supplies of rice on the world market have to bumper harvests. The head of state below the national poverty line2 in urban tightened due to a combination of factors. logistics agency Bulog, Mustofa Abubakar, areas alone, this amount is barely adequate. These include poor weather in some rice- expected that Indonesia's rice production producing areas; use of agricultural land for would increase by 6 per cent from last year to housing, industry and to meet booming 35 million tonnes in 2008. Director general Climate change and demand for agrofuels; changing food for food crops, Sutarto Alimuso, set slightly technofixes lower estimates at about 33 million tonnes. preferences in China; and price speculation. Agriculture in Indonesia is already strongly This was despite serious floods which Vietnam, traditionally a producer of surplus influenced by periodic variations in rainfall affected some 70,000ha of paddy fields in late rice, has imposed a rice export ban. caused by the El Niño-Southern Oscillation December and early January. Rice Meanwhile, Bangladesh - usually a big rice (ENSO). It is also likely to be seriously consumption in Indonesia was just below 34 importer - had bad harvests and faces food affected by long-term climate change.A study million tonnes in 2007, when Indonesia shortages. by US-based Stanford University used output bought in 1.3 million tonnes - mainly from Governments worry if rice prices from all 20 global climate models provided by Thailand. President Susilo Bambang remain high or continue to increase as this the Intergovernmental Panel on Climate Yudhoyono (SBY) called on officials to carries a risk of serious economic and Change to look at how climate change could prevent illegal rice exports to the political problems. Food is the major item in affect rainfall in Indonesia over the next 50 neighbouring Philippines where rice prices household budgets for families living on the years in the important rice-growing areas of have risen sharply as world supplies tighten. brink of poverty. If the price of staple foods Bali and Java.3 This is the first time since the mid- like rice increases, poor people have few The team found that the probability 1980s that Indonesia can even consider choices: reduce food consumption; eat of delays in monsoon rains of more than 30 exporting Indonesia any surplus rice. cheaper,less nutritious food; or economise by days could more than double by 2050, from 9- Domestic production has not kept pace with not sending children to school. Any of these 18 per cent today to 30-40 per cent. They population growth and changing patterns of actions has knock-on effects for the next also predicted that Indonesia would food consumption. "Shrinking farmland, a lack generation. High food prices also increase experience longer dry seasons with of good quality seeds and fertiliser coupled political instability. Furthermore, rice is an decreased rainfall. "It is incumbent on the with poor irrigation are keeping productivity integral part of Asian culture - particularly in research community to develop rice cultivars down", according to agricultural economist the western part of the Indonesian and associated agricultural practices that will Priyarsono of the Bogor Institute of archipelago. allow farmers to continue to increase rice Agriculture. During the Suharto years, official Robert Zeigler, head of the production to meet projected increases in programmes to boost rice production - such International Rice Research Institution (IRRI) demand," said Zeigler. as transmigration and the Central Kalimantan based in the Philippines stated that the key In the past, IRRI has promoted megaproject - were costly failures which problem was that "There is just not enough research into genetically modified varieties of destroyed large areas of rainforest (see page land". Although rice is not used to produce rice as the answer to food shortages and 2). ethanol, the use of other grains for agrofuel rising prices. But GMOs are not a 'silver Bulog purchases some 10-15% of production can affect the supply of other bullet'. Moreover, there are issues about who Indonesia's rice crop.The rest is sold to local cereals and cause price increases. "We have controls this research and to what ends. traders. The agency is tasked with importing some land in Asia that is being redirected Giant biotech companies could increase rice whenever there is a shortage so toward biofuel1 - certainly a lot of interest in dependence on seed varieties and inputs at domestic prices do not soar out of control. converting some good land into oil palm the expense of the poor. New, higher yielding Indonesia banned rice imports by private

21 DOWN TO EARTH No. 76-77, May 2008

strains of rice could be produced within the next ten years, but the real problems are not ones which technology can fix (see DTE 43:12, 49:3, 50:16).

The politics of rice The Indonesian government faces the difficult task of balancing the need to stabilise rice prices with peasant farmers' interests. Much of Indonesia's irrigated rice is produced by farmers in Java who have land holdings of 0.5 ha or less. Small-scale rice farmers are not benefiting from current price increases. They have little bargaining power.Most lack storage facilities, so they have to sell their grain to local traders immediately after harvest. Many sell their crop long before harvest time (under the ijon system) so they have much- needed cash in hand. If government purchase prices are kept low enough for the poor to be able to afford rice most of the time, farmers cannot make a living and will be forced to give up the little land they have. If prices are high, the government must pay out more in subsidies to the poor or risk food riots. Unless the government (Bulog) maintains adequate rice Traditional rice farmer in Ciptagelar,West Java. (DTE) stocks, the only winners are traders who manipulate market prices by hoarding. Henry Saragih, head of the reform which prioritises the resource and focus-indonesia-planning-to-export-rice/; The Observer, 6/Apr/08;World Bank press Indonesian Farmers' Union, blamed current land rights of the rural poor,including peasant release, 11/Apr/08 high food prices on the government's long farmers and indigenous communities. http://web.worldbank.org/WBSITE/EXTERNAL/ neglect of the agriculture sector. "Most Notes NEWS/0,,contentMDK:21726628~pagePK:6425 farmers today are not producers, they are 7043~piPK:437376~theSitePK:4607,00.html; peasants. They have to buy rice, wheat and 1. See note on the terms ‘biofuel’ and ‘agrofuel’ on page 14. Reuters 11/Apr/08; soybeans themselves. While agricultural 2. Indonesia's National Poverty Line is set at http://www.bps.go.id/papers/statpaper13.pdf products are mainly sold in the cities, when US$1.55/day, whereas the World Bank uses Tempo Interaktif 16/Apr/08, prices increase, these peasants are among the a figure of US$2/day (both figures PPP - http://www.tempointeraktif.com/hg/ekbis/2008/ hardest hit," he said. constant Purchasing Power Parity). See 04/16/brk,20080416-121350,id.html, 7/May/08 Indonesia, along with other Heriawan & Imawan of BPS, Feb 2008, http://www.tempointeraktif.com/hg/ekbis/2008/ countries, needs to pay more attention to presentation at a New York seminar on 05/07/brk,20080507-122657,id.html food security, especially as climate change Measuring Crucial Social Issues National Statistics Agency, poverty figures carries the threat of more frequent droughts http://unstats.un.org/UNSD/statcom/statcom 1996-2006 and floods. It needs policies that promote _08_events/special%20events/New_direction http://www.bps.go.id/releases/files/eng- greater diversity of food production and s_social/Rusman_Heriawan_Paper.pdf kemiskinan-02jul07.pdf?; Kompas 23/Apr/08 & more sustainable agriculture. But most of all it 3. Study published in Proceedings of the 25/Apr/08) needs economic policies which are genuinely National Academy of Sciences, 2 May 2007 Š directed at poverty reduction and at agrarian cited in the article (Continued from page 18)

(Sources: Reuter 16/Mar/08, Indonesia rice self- 2. See DTE 61:6 for background. sufficiency plans stumble; Disasters may force prices 3.The Australian parent company, Pelsart http://oryza.com/news/Asia-Pacific/Indonesia- Resources NL, has been suspended from higher Market/Indonesia-Optimistic-Over-Rice- Australia's stock exchange since 1999.The Output.html, 4/Jan/08, accessed 30/Mar/08; company stated in an April 2008 update With the catastrophes in both Burma and http://news.indahnesia.com/item/200802220/ind that the Timburu gold project development China in May, international rice prices are onesia_claims_self-sufficiency_in_rice.php would depend on finding a joint venture expected to climb even higher. Cyclone 22/Feb/08 accessed 30/Mar/08; Jakarta Post partner, or other funding arrangements. Nargis hit Burma’s rice-growing Irrawaddy 25/Mar/08; Philippine Daily Inquirer, 28/Mar/08 Canada's Placer Dome, opted not to enter Delta region, triggering fears of immediate http://www.bbc.co.uk/radio4/factual/foodprogra a joint venture following exploration as well a long-term food insecurity in mme.shtml, 30/Mar/08; UN Office for the between 2001 and 2003. (Source: Pelsart Burma itself, plus knock on effects for Coordination of Humanitarian Affairs press Resources NL update April 10, 2008 via other Asian countries. release 4/Apr/08 Australian Stock Exchange http://www.irinnews.org/Report.aspx?ReportId website:http://www.asx.com.au/asx/research =77608; (Times Online 6/May/08; BBCNews /CompanyInfoSearchResults.jsp?searchBy=as Antara 4/Apr/08 7/May/08) Š http://www.antara.co.id/en/arc/2008/4/4/news- xCode&allinfo=on&asxCode=PRN).

22 DOWN TO EARTH No. 76-77, May 2008 Agrarian reform in Indonesia: another year spent waiting

A year after we reported on Indonesian 30,000 businesses. The indicative budget This fact has alerted the pro-poor agrarian government plans to launch agrarian reform allocated for all these activities is around 1.4 reform pressure groups to the likelihood that based on the Basic Agrarian Law 1960 (BAL), billion rupiah (roughly US$147 million). From BPN's agreement with the ADB will further the regulation on how the reform will be a brief look at the national plans and at BPN's confirm the inclination towards market-led implemented remains a draft.The non-action plans, it is evident that much of the planned agrarian reform. In which case, land reflects the fate of the BAL itself. This law, work is preparation for some kind of agrarian redistribution as part of agrarian reform will championed mainly by peasants and reform. The preparations include BPN's idea not mean distribution of power but will nationalist groups, has been dormant since its to conduct a comparative study on how merely consist of state-sanctioned capitalist birth. It was undermined by a series of other countries carry out agrarian reform. real-estate transactions. sectoral laws passed by Suharto's New Order (Sources: Bappenas, 2008, Government Work regime, aimed at exploitating land and natural Foreign investment focus Plans in 2008; Republic of Indonesia: Enhancing resources and which welcome foreign While carrying civil society expectations of the Legal and Administrative Framework for investment. socially just and pro-poor agrarian reform, Land Project, Project Number 37304, With no finalised regulation, the Indonesia's land initiatives are also being December 2007 at expectation that Indonesia will see pro-poor pulled in another direction: one that requires http://www.adb.org/documents/TARs/INO/3730 agrarian reform anytime soon now looks that Indonesia's land law should comply with 4-INO-TAR.pdf; BPN Strategic Plans 2007- rather optimistic. international expectations, or,in other words, 2009, SPI website: http://www.spi.or.id/?p=129, However, more signs of activity are the interests of (foreign) investment. KPA website: evident in the government's Work Plan for A new Asian Development Bank http://kpa.or.id/index.php?option=com_content &task=view&id=163&Itemid=53) 2008. Under the heading of work related to (ADB) Technical Assistance initiative entitled 'pushing ahead with pro-poor development', 'Republic of Indonesia: Enhancing the Legal For news on a constitutional court decision the National Planning Agency (Bappenas) has and Administrative Framework for Land to revoke investors’ right to cultivate land set a target for the National Land Agency Project' - offering a grant of US$500,000 - for up to 95 years, see page 15.Š (BPN), among others, to issue one million confirms this. The project will run over 18 land certificates in 2008. Further on in the months, with the tentative start date May workplan, under the heading 'agrarian 2008.The 'technical assistance' is for drafting reform', BPN is assigned to: a new Indonesian land law which complies Š deal with issues related tenure, ownership, with international standards. It states that the use and utilisation of land (known in proposed land law would support the administrative jargon as 'P4T') for a total provisions of the BAL, which would remain of 10,000 parcels of land; the the umbrella law. The ADB’s main concerns redistribution of 300,000 land parcels and underlying the proposed land law are:“(i) the the inventory of P4T in 2,000 villages lack of updated legal framework guaranteeing (desa/kelurahan); equitable and rapid involuntary resettlement Š confirm and, where necessary, formalise, (IR), (ii) absence of comprehensive IR the ownership of land in 380 implementing regulations, and (iii) inadequate districts/municipalities; capacity for IR tasks.” These points were Š investigate and tackle 2,600 land dispute raised by government ministers during the and conflict cases in the above 2005 infrastructure summit in Jakarta as the districts/municipalities. causes of delays in project implementation The national plan also notes that BPN is to and disbursement. improve its public service by setting a target Unfortunately, the history of to issue 2.34 million land certificates in 2008. foreign investments in Indonesia and, in Lastly, BPN is also supposed to particular, those directed at natural resources support small and medium enterprises (SMEs) exploitation and access to land, has had little West Java peasants call for land reform at June with a target of issuing land certificates for relation to the terms 'just' and 'pro-poor'. 2007 protest (Photo:Adriana for DTE)

(continued from page 25) (continued from page 28) Perempuan Papua, Edition 19,Year 4(2008), Walhi report on Freeport-Rio Tinto, at http://www.antara.co.id/en/arc/2007/2/14/ant *For a detailed assessment of the Grasberg http://www.eng.walhi.or.id/kampanye/tamban am-bhp-form-alliance-to-develop-halmahera- mines' tailings disposal system see the 2006 g/frpt-report-may-06/; Mineral Policy nickel-deposits/ 14/Feb/07 report on the Freeport-Rio Tinto mine by Institute,Australia, report on 2008 Rio Tinto 10. See http://whc.unesco.org/en/tentativelist/ WALHI (Friends of the Earth Indonesia at AGM in Brisbane,Australia; 'Suharto and the and, for further background: DTE 70 , http://www.eng.walhi.or.id/kampanye/tamban http://dte.gn.apc.org/70min3.htm DTE 66:14, rape of West Papua', TAPOL Bulletin g/frpt-report-may-06/). http://dte.gn.apc.org/66min.htm). No.188/189, March 2008; Survival, News (Sources: TIAP 6th Report on the Tangguh 11. South China Morning Post 16/Dec/07 Archive, 'Police arrest, torture and kill 12. http://www.dpr.go.id/artikel/terkini/artikel_ LNG Project, available at Papuan tribal people' 14 December 2007; cetak.php?aid=3683Š http://www.bp.com/sectiongenericarticle.do? ANC News Online 7 May 2008, 'Papua categoryId=9004751&contentId=7008791; landslide death toll rises to 19')Š ‘Hidup dalam Sangkar Emas’ Suara

23 DOWN TO EARTH No. 76-77, May 2008 West Papua / extractives Multinational corporations lining up to profit from West Papua's resources

Another year, another set of record profits from West Papua's mineral resources.

The Westminster conference centre just will increase the risk of pollution to the local alongside the UK's Houses of Parliament and area and consequently further threaten the Westminster Abbey seem a long way away fishing capacity of local communities. from the frontier town of Timika or, for that Another area of concern is carbon matter, the prawn fisherfolk of Bintuni Bay in emissions. BP has stated its intention to

West Papua. However, each year this is the minimise its CO2 output across the board in scene of the Annual General Meeting of Rio its worldwide operations. Undermining these Tinto PLC, a 40% joint venture stakeholder in green claims is the fact that its ‘world-class the expanded Grasberg mine in the highlands model for development’ operation at Tangguh of West Papua. It is here that the board of still has no plans to implement a system of directors of Rio Tinto announced record Carbon Capture and Storage (CCS).The TIAP profits from its mining operations around the panel has called for a feasibility study from the world. Benefiting from record commodities Indonesian government. However, BP prices, due mainly to the rapid economic Indonesia staff have told DTE that lack of expansions of countries like China and India, progress on this is due mainly to cost and this company and others like it are revelling in have indicated that it should be the economic conditions unparalleled in recent Indonesian government, not BP,that bears this years. In 2007 the company earned US$7.4 cost. Indeed, since the arrival of Tony Hayward billion profit - another record year. as BP's new Chief Executive Officer (CEO), Similarly, record energy prices have the company appears to be taking backward meant that oil multinational BP, despite The giant Freeport-Rio Tinto open-pit gold and steps in terms of its attitude towards the growing concerns over the safety of its copper mine in West Papua. (KLH) environment. A clear example of this is BP's operations, continues to make huge profits. In controversial purchase of 50% of the highly- the shores of Bintuni bay. Added to this, is the 2007, the company recorded profits of polluting Sunrise tar sands field in Canada. news that the towns and villages around the US$17.29 billion. The Tangguh liquid natural Given BP's vast profit margin, it seems Tangguh project are experiencing a growth in gas (LNG) plant, in Bintuni Bay,West Papua, is scandalous that BP should continue to resist numbers of people being drawn to the due to become operational by the end of this implementing every possible technique to anticipated economic benefits from BP's year, and will soon be contributing to these significantly reduce the already large presence in the area. These developments gains. estimated emissions of CO from Tangguh's are of concern as they point to a similar 2 What lies behind such record pattern to the militarisation and population imminent operations. (See also DTE 73:4, profits? As has been documented previously influx that happened around the Freeport/ http://dte.gn.apc.org/73tan.htm). in DTE newsletters, there are many questions Rio Tinto Grasberg mine in Timika. BP is about human rights and social and BP and sustainable making strenuous attempts to distance itself environmental impacts to be asked. from such comparisons, given that Freeport / development - a realistic Increased militarisation Rio Tinto has been condemned so vigorously proposition? for its relationships to the military and police around BP's Tangguh BP's approach to its Tangguh operation is in the area around its mine (see DTE 57:1 showing signs of moving further away from operation http://dte.gn.apc.org/57Frp.htm). the ‘good intentions’ the company uses to sell At the recent meeting of the Tangguh Such observations by TIAP cast this project to the public, both in the UK and Independent Advisory Panel (TIAP) on 22nd doubt over the effectiveness of BP's in Indonesia. The subject of the fisherfolk of April 2008 in London, some of these 'concentric rings of security', provided by its Tanah Merah village was raised as a result of concerns were raised. At one point, a picture 'Integrated Community Based Security' a recent article in the local publication Suara was brought in by a meeting participant of a (ICBS) system, which was intended to prevent Perempuan Papua (‘Papua Women’s Voice’). Papuan man who had been beaten by the such a process of militarisation. Tanah Merah was the village on the southern Indonesian security services. The political BP,Tangguh and climate side of Bintuni Bay which was moved to make environment within which BP is operating way for the company’s main site. The article continues to threaten the picture of calm, change was critical of the new situation that these peaceful economic and social progress Another significant concern that has been villagers find themselves in and also of the painted by the company. The TIAP panel raised with BP is the question of Tangguh's measures taken by BP to provide alternative spoke of an increase of 100 soldiers from environmental impact. With the Tangguh livelihoods for them and their new situation. Indonesia’s armed forces (TNI) to Bintuni and operation due to begin production of LNG by DTE has since heard that many of the new 30 TNI soldiers to Babo, two local towns on the end of this year, extensive shipping traffic houses in Tanah Merah Baru are now empty

24 DOWN TO EARTH No. 76-77, May 2008 and was told by TIAP and BP Indonesia staff mine, the Rio Tinto board maintained this was members that much of the equipment the best possible solution, in contrast to RT’s Sulawesi nickel deal provided by BP has now been sold (for previous admissions that this disposal method Rio Tinto has agreed with the Indonesian example the outboard motors given to the was 'not ideal'.* Many organisations including government on tax clauses for a proposed fishermen). This situation illustrates well how, World Vision, Oxfam and trade unions have $2 billion nickel project on Sulawesi. It will despite apparent good intentions, BP's efforts called for these practices to be banned. be the first major mining investment in to contribute to local villagers development Indeed, even BHP Billiton, another mining Indonesia in several years.The plans are to and well-being is not producing the desired company not normally associated with good initially produce about 46,000 tonnes of results. Perhaps this is an indication that the practices, claims to be moving towards nickel per year from an open-cut gap between the realities of this big multi- policies that do not use riverine or sub- operation, with the potential to increase national corporation and local Papuan marine disposal systems (see also page 28). to about 100,000 tons a year. Rio Tinto villagers is too big to be bridged in this way, Given the record level of profits says the ‘huge deposit’ is enough to and that Tangguh's presence remains an that Rio Tinto is reporting, how is it possible support from 40-100 years of production. imposition on the local landscape and society. for Rio Tinto to allow such destructive In the end, the net result of BP's efforts may practices to continue? Is it really the case (Source: AP 29/Apr/08; be an influx of money (from sales of outboard that Freeport-Rio Tinto can imagine that http://www.riotinto.com/ourapproach/217_ motors and suchlike) rather than real long- because there are lax environmental controls features_7741.asp. See also DTE 70:4, term, sustainable and manageable or few civil society organisations with loud http://dte.gn.apc.org/70min3.htm) development for Papua. enough voices in West Papua that no-one will notice? With the Norwegian Government's tragic incidents such as these are becoming Tangguh and the future of Pension fund divesting from Freeport due to more and more commonplace in connection independent monitoring of this 'severe environmental damage', perhaps with this mine's operations. the project the pressure for change will finally grow too strong for the company to ignore. The future of exploitation of Senator Mitchell, Chair of TIAP, strenuously defended BP's record when challenged about The human impact of the West Papua's resources these problems, maintaining that in no way Grasberg mine Although the history of these two mega- did this reflect the situation on the ground at projects are different, representing two Tangguh. Whatever the reality, it is of concern However, it is not just in relation to the different eras in the exploitation of West that some members of TIAP look increasingly environment that Freeport-Rio Tinto's record Papua's resources, their futures appear to be like ex-officio members of the BP board of at the Grasberg mine is so destructive. As increasingly interlinked. Both projects are set directors, rather than a truly independent mentioned earlier, the companies' record of to make vast profits for their shareholders in body with real critical oversight to the collusion with the Indonesian security forces the UK, US and Australia and are in the project.The last recommendation in the most is already well documented. Recent violent process of expanding further. At the same recent TIAP report on 'Public Information' incidents in the vicinity of the mine further time, these companies are operating in an illustrates this blurring of boundaries between illustrate the social upheaval that this mine environment that, at best, is ill-suited to their BP and TIAP, making various provokes in the area. Survival International all-consuming technologies and, at worst, is recommendations on how BP can "publicize reported that on December 5th, 2007, two being undertaken at the expense and against the benefits delivered as well as correct women were shot dead and another was the will of local Papuan communities. possible misconceptions about the Project". injured as they protested near the mine. However, with increased awareness of the DTE has recently been a co- More recently, 19 illegal miners were killed effect on the climate and of the inequalities signatory of a letter to BP's management when a landslide hit them as they were and injustices of such projects, the wider arguing that external scrutiny of Tangguh is panning for gold on the tailings from the global community is waking up to impact of essential throughout the duration of the Grasberg mine. Although a Freeport-Rio the activities of companies such as BP and project. However, it remains to be seen as to Tinto spokesman distanced the company Freeport-Rio Tinto in West Papua. whether BP is committed to facilitating a truly from responsibility for the incident, saying independent oversight to its operations in that these miners were operating outside the (Notes continued on page 23) West Papua. companies' concession area, it appears that Environmental destruction in West Papua By contrast, Freeport-Rio Tinto can have no possible claims to the stated high aspirations of BP's project. By providing the extra investment for the Grasberg mine expansion, A model house in Rio Tinto bought into a company and a mine the new village that has an abysmal record of environmental built for families and social damage. This investment has moved from Tanah ensured that Freeport's legacy of expansion Merah village - and destruction will continue for at least now the site of another 30 years. This record was Tangguh’s LNG denounced at Rio Tinto shareholders plant in Bintuni meetings this April in both London and Bay,West Papua. Brisbane. Rather than looking at improvement, the management, as in the case of BP,seems to have taken steps backward. (Photo: K Wilson, When questioned about the effects 2002) of riverine tailings disposal at the Grasberg

25 DOWN TO EARTH No. 76-77, May 2008 mining MSM mine: community opposition continues as investor backs out

The Australia and UK-listed company,Archipelago Resources, is continuing preparations to mine gold in North Sulawesi, despite strong local opposition - both from communities and the provincial governor. Meanwhile, campaigners have welcomed the decision by German bank WestLB to withdraw from the project, and have called upon other investors to follow suit.

Archipelago Resources is pushing ahead with protest or who demand their rights are construction is 75% complete. The claim is construction at the Toka Tindung gold mine demonised as criminals and face linked to support for the project from the site in North Sulawesi even though it has no confrontations with police and hired thugs. energy and mineral resources ministry (which permit to mine there. Local people are Two villagers and one activist were sentenced has approved construction at the site, but not already reporting problems.Work done at the to 18 months' house arrest after a small guard yet the actual mining).Yet other key players - site includes clearing forest; constructing a post belonging to the company, was burned the environment ministry and the provincial road, jetty, settling ponds and dams; diverting a down on Rinondoran Beach. governor - show no sign of changing their river; and building a laboratory, workshop and "We regret that MSM shareholders position. Last year, both the fisheries and the office. continue to support the PT MSM gold mine social affairs ministers voiced their opposition According to concerned local and project in our communities. The project is to the mine. The German NGOs conclude national civil society organisations JATAM, rejected by local communities" said a that "the continuing media statements by ICEL,WALHI,YSN and AMMALTA, the forest spokesperson for AMMALTA (Community Archipelago Resources claiming that gold clearance is believed to be one of the causes Alliance to Reject Mine Waste).1 production will soon commence, can only be of a mudslide last year which affected six The project, sited near the interpreted as a desperate effort to prevent villages and killed fish in the river delta. internationally-renowned Lembeh diving area, international shareholders and creditors from According to Suara Nurani Foundation (YSN), has been opposed by local people from the noticing that the final verdict on Toka Tindung the income of local fisherfolk has dramatically outset, and has a history of confrontation, has already been spoken."6 decreased since construction at the mine site inter-departmental legal wrangling and began. conflicting priorities between national and Continuing the Campaign 2 A joint press release from the provincial level interests. It is now imperative that the North Sulawesi organisations says that Archipelago Resources governor maintains his pro-community stance - a company listed on Australia's stock WestLB pulls out; other in the face of any pressure from the energy exchange and London's Alternative investors' support in doubt and mineral resources ministry in Jakarta.The Investment Market (AIM) - is ignoring international campaign must meanwhile community protests, while failing to complete The local community's campaign to stop the continue to press investors to join WestLB a new environmental impact assessment for mining project gained a major boost last year, and withdraw for a socially and the project, as required by law.Villagers who when one of its European backers pulled out. environmentally damaging project, which The German Bank, WestLB, withdrew its could also damage prospects for income lending to the project in December last year, generation from tourism. after strong pressure from international The civil society network, campaigners, led by German NGOs Urgewald BankTrack, is calling for the mine project's and Watch Indonesia.The remaining investors investors to withdraw their finance, and for 3 are Investec of South Africa, Société Archipelago's direct shareholders (JPMorgan Générale (France), ANZ (Australia) and RMB Chase, Prudential Financial and AXA) to (S Africa).4 divest.7 According to a detailed report in 5 the Asia Times, the indications are that these Notes banks will not be willing to commit more 1. JATAM, ICEL,WALHI,YSN,AMMALTA Press funds to the project, unless it gets approval Release,‘Archipelago starts to operate from the environment minister Rachmat without community consent and Witoelar, and the North Sulawesi governor, environmental approvals’, 4/Apr/08. Sinyo Harry Sarundajang. Both have publicly 2. For more background see DTE 72:4, stated they will not give the go-ahead to the http://dte.gn.apc.org/72msm.htm, and 70:3, project, due to environmental concerns and http://dte.gn.apc.org/70msm.htm local opposition. The Asia Times report 3. This company bought out Rothschild describes how Archipelago's chief executive is Australia, which originally arranged the loan trying to boost confidence and secure facility. additional funds, by telling shareholders that 4. For more details on the financial side see the project's Environmental Management Plan http://www.banktrack.org/?show=dodgy&id= (AMDAL) will be approved as soon as 134 5. John Helmer, 'Another miner going nowhere

26 DOWN TO EARTH No. 76-77, May 2008

in Indonesia', Asia Times 4/Apr/08. but intense pressure from powerful mining 6. Urgewald + Watch Indonesia! Press note, Mining news in companies and a deteriorating investment ‘German Bank Pulls Out of Controversial climate prompted the government, in 2004, to Indonesian Gold Mine Scheme’, 18/Jan/08. brief allow thirteen companies to resume 7. For more information see operations in these forests (see table below).1 http://www.banktrack.org/?show=dodgy&id= New regulation means cheap Conflicting statements have made it 134 and http://www.jatam.org.)Š unclear whether the new regulation only forests for mining applied to those thirteen companies, or A new government regulation on non-tax whether it opens the door to more mining in income from forest areas has caused outrage forests.2 among NGOs by setting low prices for the use of forests by mining companies and other WALHI vs Newmont court non-forestry sector users. The regulation - PP 2/2008 - sets case blow the rate for mining in protection forests from The latest in a series of attempts to hold US Rp 2,250,000 - Rp3 million (around US$240- mining company Newmont to account for 320) per hectare per year. In production pollution and health impacts from its now- forests, the rate is Rp 1.8 million - 2.4 million closed North Sulawesi mine failed in (around US$192 - 255) per year. Other uses, December. In a case filed in March 2007, including oil and gas, geothermal and South Jakarta District Court ruled there was renewable energy, toll roads and electricity no proof that Newmont polluted the generation are set at Rp1.5 million ha/year for environment. In April last year, Newmont was protection forests and Rp1.2 million ha/year also cleared of criminal charges linked to for production forests. pollution in Buyat Bay.3 An appeal over that "Indonesia should be ashamed of case was filed in late May with the Supreme itself", said Siti Maemunah of the mining Court. advocacy network JATAM, which is calling for WALHI said it would appeal the the regulation to be revoked. Writing in the December verdict, while Newmont said it Indonesian daily, Kompas, in February, she said was considering a counter-suit against the move was proof that the president and WALHI, even though a previous attempt to his cabinet "do not understand the crisis that sue the environmental group for US$100,000 is faced by Indonesia's environment." JATAM in damages has been rejected by the court. calculates that the rate per square metre Last year too, the company agreed to settle a (Rp300/m2/year) is lower than that of a piece civil case without admitting wrongdoing, of fried banana from a street vendor. agreeing to pay US$30 million to an Environment group WALHI, which environmental foundation in North Sulawesi.4 also wants the regulation withdrawn, has Back in the US, Newmont was told mounted a fundraising campaign to rent to pay US$15 million to settle a shareholder forest areas and prevent mining companies class action, which accused the company of getting to them. making false and misleading claims about the Indonesia's 1999 forestry law (continued next page) banned open-pit mining in protected forests

The thirteen companies permitted to continue mining in protected forests

No Company Type of mine Concession area Location

1 PT Sorik Mas Mining (SMM) gold and other minerals 201,000ha Tapanuli Selatan, North Sumatra 2 PT Karimun Granite (KG) granite 7.000 ha Karimun Island, Riau 3 PT Natarang Mining (NM) gold and other minerals 959,000ha Lampung, South Sumatra and Bengkulu 4 PT Indominco Mandiri (IM) coal 99,000ha Kutai Kartanegara, East Kalimantan 5 PT Interex Sacra Raya (ISR) coal 65,000ha Pasir, South and East Kalimantan 6 PT Pelsart Tambang Kencana gold 239,000ha Kota Baru, South Kalimantan (PTK) 7 PT International Nickel nickel 218,000ha SE, Central and SouthSulawesi Indonesia (INCO) 8 PT Aneka Tambang (Antam) nickel 14,000ha Kendari, SE Sulawesi 9 PT Aneka Tambang (Antam) nickel 39,000ha Halmahera Tengah,North Maluku 10 PT Nusa Halmahera Mineral gold and other minerals 1,600,000ha North Maluku 11 PT Weda Bay Nickel nickel and cobalt 120,000ha Halmahera, North Maluku 12 PT Gag Nikel nickel 7.000ha Sorong, Papua 13 PT Freeport Indonesia (FI) copper gold and nickel 2,600,000ha Papua

Source: Koran Tempo. 28/Mar/08.‘Siapa yang dapat izin’. http://www.korantempo.com/korantempo/2008/03/28/Ekonomi_dan_Bisnis/krn,20080328,21.id.html

27 DOWN TO EARTH No. 76-77, May 2008 company's other main Indonesian interest, environment ministry submitted the Raja the Batu Hijau gold and copper mine in West Ampat archipelago, which includes Gag Island, Nusa Tenggara province. The company had to the 'tentative list' for World Heritage War on Want claimed that the mine had reached the point Status in 2005.10 exposes British mining of turning into 'one of our real cash registers', when in reality it had suffered a major pit New mine planned for links to human rights abuses failure that had a negative effect on mining Lembata Island operations.5 This November 2007 report from the The Batu Hijau mine, on Sumbawa Indonesian mining magnate Yusuf Merukh is British Charity War On Want, can be island, pipes over a hundred thousand tonnes planning to mine gold and copper on Lembata downloaded from of waste into the sea every day, around 50 Island in East Nusa Tenggara, aiming to start http://wow.webbler.org/?lid=15142 times as much as ended up in Buyat Bay in production in 2011. Merukh who is one of the Sulawesi, where the tailings have been linked country's richest men, said he thinks the mine to serious health impacts. In 2005, Indonesia's will take at least 70% of the island, or possibly mining advocacy network JATAM accused the the whole island. Merukh has also claimed he company of failing to alert the local will build a city on the nearby island of Flores community that there had been a leak from to house people moved from the mine area the tailings pipeline.6 and that this will provide apartments, schools, Newmont has failed to meet a hospitals and an international airport 'to February deadline to sell a stake in Batu compensate them and serve the mine'. Hijau, despite threats by the Indonesian According to NGOs, at least 60,000 people government to revoke the company's from 49 villages face eviction. According to contract if it did not sell 10% to local Merukh, 90% of Lembata's local assembly governments. By January 28 it had only sold voted to go ahead with the mine, but there 2% of its share to Sumbawa district have been widespread protests and strong opposition has been voiced by islanders. government for US$72.6 million.7 Merukh, through his company Pukuafu Indah, is a minority shareholder in Newmont Nusa BHP to go ahead with Tenggara,operators of the Batu Hijau copper Gag nickel project? and gold mine on Sumbawa, in the adjacent The Anglo-Australian company BHP is set to province of West Nusa Tenggara.11 develop two Indonesian mining projects, according to the chairman of Indonesia's Iron ore project in Java Investment Coordinating Board, M. Luthfi.The An iron ore mining project on coast south of two nickel mining projects are in Halmahera Yogyakarta district is causing controversy. It is and Gag Island, West Papua - projects that an area of unique sand dunes which has been had been put on hold due to the protected cultivated by local farmers for years. The status of the islands' forests. In late February, operations of mining concessionaire, PT Jogja Luthfi said the BHP and state-owned mining Notes: Magasa Mining, will put the farmers out of 1. See DTE 61:1, 65:18 and 66:14 for more company PT Aneka Tambang would sign work as well as cause irreversible background. agreements within the next two weeks, and environmental damage. Local protests are 2. Reuters 7/Mar/08; Jakarta Post 6/Mar/08; that Aneka Tambang would hold 50% of the apparently being ignored and an Australian Kompas 21/Feb/08 shares.8 investor, Indo Mining, has agreed to fund the 3. See DTE 73:11, In February last year, Aneka project. Support for the project has come http://dte.gn.apc.org/73mi1.htm Tambang announced that it had signed an from the local government as well as 4. PlanetArk 19/Dec/07 agreement to establish an alliance with BHP Indonesia's parliamentary Commission VII on 5. Rocky Mountain News 12/Dec/07 Billiton to explore the joint development of 6. See DTE 67:3, Environmental, Forest and Natural an extensive nickel deposit on the island of http://dte.gn.apc.org/67min.htm Resources.12 Halmahera in eastern Indonesia.9 7. Minweb 22/Feb/08 In a recent television speech (April BHP said in 2006 that it would not 8. Jakarta Post 29/Feb/08 30th) about the energy and food crisis, use submarine tailings disposal (dumping in 9. Antara News ‘Antam, BHP form alliance to President SBY said that one of the strategies the sea) for any mine on the island, and that it develop Halmahera nickel deposits’ to deal with it was to make the extractive would not proceed with the mine if the area industries more attractive to investors. was gazetted as a World Heritage Site. The (continued on page 23)

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