Foreign Debt Fuels Forest Fires In Indonesia - DTE (fwd)

[Robert Weissman <rob@essential.org>]

Down To Earth/International Campaign for Ecological Justice in Indonesia
[UK]
August 2, 1999
FOREIGN DEBT FUELS FOREST FIRES IN INDONESIA
[includes chronology]
Forest fires are spreading in Sumatra and Kalimantan as the dry season
begins. There are fears of a repeat of the disastrous 1997/8 fires
estimated to have damaged 10 million hectares of land, much of it tropical
rainforest. Despite increased concern from Indonesian environmentalists and
international forestry researchers, there is even less chance of Indonesia
taking effective action to prevent the fires because of political and
economic instability in the country. In addition, international financial
institutions are pressurising Indonesia to increase exports, including
timber, paper pulp and palm oil. These are the very industries which fuel
Indonesia's forest fires.
International donors, led by the World Bank,  pledged a US$ 5.9 billion
loan last week to help the Indonesian government balance its budget this
year. This is in addition to the 1997 US$43 billion IMF bailout. Leading
Indonesian NGOs are opposed to any increase in Indonesia's foreign debt,
which now stands at above US$ 150 bn. Indonesia was hardest hit by the
Asian economic crash which caused the value of its currency to plummet, the
collapse of its banking system and widespread bankruptcies. It has also
been slowest to recover with the result that many of its 210 million
population have sunk into deeper poverty. The IMF and World Bank see
plantation crops and natural resources exports as a means of economic
recovery. It is Indonesia's forest communities that will bear the long-term
costs of these policies.
Companies and farmers in Indonesia that use fire as a cheap way of clearing
land for agriculture and commercial plantations of palm oil, rubber and
timber are not afraid to flout the law in the current political vacuum.
Over 80% of the forest fires in 1997/8 were caused by private companies
belonging to powerful conglomerates with close connections to Suharto and
his family. No government action was taken against 176 companies named by
the Forestry Minister as setting fires. The reformist, but weak, government
of President Habibie is in the process of being replaced. Yet seven weeks
after the first democratic elections in over thirty years, the final
results have not been announced.
Conservative estimates by international experts put the damage of  the
forest fires plus the 'haze' for 1997 alone at over US$4.4 billion. This is
equivalent to about 2.5% of Indonesia's GDP at the time. The principal
damages include US$493 million in timber losses; $470 million in lost
agricultural production; $1.8 billion in ecological services (such as foods
and medicine, water supply, erosion control); and $272 billion for the
contribution to global warming from carbon release. This figure does not
include loss of life, damage to health, malnutrition due to crop
destruction or biodiversity depletion. Once again it is local communities
who bear the brunt of these hidden costs.
Indonesian forestry policy has actively promoted the destruction of the
country's rainforests over the past three decades. Indonesia has the third
largest area of tropical rainforest left in the world, but it is
disappearing fast. Figures from a UK-funded aid programme show
deforestation rates are in the order of 1.5 million hectares per year and
less than 100 million hectares of forest remain. Over 60% of Indonesian
timber is the result of illegal logging. Timber and wood products are
Indonesia's third biggest export earner after oil & gas and textiles.
The approach to dealing with Indonesia's economic collapse has, until now,
focussed on the need to avoid defaulting on its massive debts and stay in
the international financial system. Creditors - both public institutions
like the International Monetary Fund and the World Bank as well as private
banks - are not paying the price for their ill-advised bank-rolling of the
Suharto business empire. Independent economics experts in Indonesia have
expressed concern that the debt service ratio is approaching 60%.
Furthermore, due to corruption and lack of monitoring, these huge loans are
not achieving their aims and merely increasing Indonesia's indebtedness.
Last year a World Bank internal report estimated that one-third of  its
project loans disappeared. Now the Urban Poor Consortium claims that as
much as 70% of Social Safety Net funding intended for the poorest of the
poor has been channelled off by local officials. At least US$1.5 billion
have flowed through the Reforestation Fund in the last decade. Instead of
replanting forest trees, this money was used to subsidise the clearance of
natural forests for plantations, the failed million hectare swamp rice
project and a paper pulp plant in addition to non-forestry purposes such as
the state aircraft company, the national car project and supporting the
currency.
The forest fires are a symptom of the crisis in Indonesian politics,
economics and forestry policy  - policies which are influenced by
international donors through bilateral aid programmes and contributions to
the IMF and World Bank. Quite apart from issues of biodiversity loss and
global climate change, Indonesia's forests are important as they are home
to millions of Indonesia's indigenous peoples. They also protect the
livelihoods of many tens of millions more in farming and urban communities
through preventing soil erosion and regulating water supplies for
agriculture.
There are several important immediate steps that the Indonesian government
could take:
? Enforce existing laws that regulate the use of fire for land clearing.
? Identify and prosecute the companies responsible for illegal burning, by
making prompt use of fire monitoring data provided through regional and
international programmes.
? Stop pushing the new Forestry Act through the interim parliament
In the longer term, the following measures would prevent massive forest
fires in Indonesia in future:
? Changing land and forestry laws to recognise the rights of forest
communities to ownership and access of forest resources.
? Abolishing regulations which encourage companies and people to clear
forests as a means of claiming ownership.
? Reducing targets for conversion of forest lands to plantations.
Action that international agencies, foreign companies and governments in
Europe and North America could take:
? Stop promoting exports of palm oil, timber and wood products and paper
pulp as the key to solving Indonesia's economic crisis.
? Prioritise the demands of forest dwellers and local communities for
socially and environmentally sustainable development in all aid and loan
programmes.
? Press the Indonesian government for full compliance with conditions
covering consultation with civil society groups on forestry policy reforms
and the use of the Reforestation Fund for its intended purpose on existing
loans before negotiations on any future loans are considered.
? Ensure that the IMF and World Bank apply their own policies on land
rights, environmental protection and resettlement in all their lending to
Indonesia, including structural adjustment loans.
? Suspend any further investment in oil palm and paper pulp plantations
which destroy forests and violate indigenous peoples' rights.
LC 31/7/99
 1999 INDONESIAN FOREST FIRES: A CHRONOLOGY
The following summary is drawn from a sample of press items received by
Down to Earth.
See the following web-sites for satellite images of forest fires in
Indonesia, including geographical co-ordinates of the hot spots:
- FFPCP Sumatra Fire Overview at http://www.mdp.co.id/ffpcp/overview.htm
- IIFFM Kalimantan Fire Overview at http://www.iffm.or.id/
These do not show the extent or vegetation cover of the burnt area.
? 17/4/99 (SCMP)        Singapore concerned about smoke haze allegedly from
fires
in C. Sumatra. Pollution index 74 (serious health risk above API 100;
levels reached over 800 in Sarawak in 1997).
? April 99 (cited in JP 31/5/99) Singapore government sends protest to
Indonesian government about smoke. Singapore threatens compensation claims.
? 19/4/99 (ST)      Association of South-east Asian Nations (ASEAN) meeting
in
Brunei to discuss progress in the Regional Haze Action Plan (RHAP) created
after  1997. ASEAN gives Indonesia until July to implement its
'zero-burning' policy. Singapore, Malaysia and Brunei reported as very
concerned about the possibility of massive fires breaking out again in
Indonesia, bringing the haze with it.
? 28/4/99 (ST)      Indonesian Disasters Committee head Prof Haryono calls
for
help from Malaysia and Singapore to provide technical assistance in
fighting Indonesian forest fires.
? 30/4/99 (AFP)         Forest fires on the Indonesian island of Sumatra
entered
the "dangerous category," officials said Friday with more than 40 hot spots
detected in South Sumatra, Riau and Jambi provinces.
? 4/5/99 (WALHI Press statement) The leading Indonesian environmental
organisation warns of widespread fires risk and calls for a stop to
clearing forests for large-scale agriculture and plantation developments
and the removal of  official decisions to promote the palm oil industry.
? 5/5/99 (Rep)  Satellite images show 23 'hot spots'  in Central
Kalimantan.
? 6/5/99 (K)        Kuala Lumpur reported to be affected by smoke.
Singapore
protests to Indonesia.
? 6/5/99 (cited in SP 11/5/99) Pollution Standards Index in Singapore 49.
? 6/5/99 (SP)   Indonesian satellite imaging expert calls for fires risk to
be taken seriously, especially the threat to Berbak National Park in Jambi
province, Sumatra.
? 7/5/99 (JP)   Forestry Minister Muslimin states that companies
responsible
for forest fires would lose their operating permits.
? 11/5/99 (Rep) Indonesian Meteorological Agency reports heavy rains in
Sumatra.
? 31/5/99 (JP)      East Kalimantan's Environmental Impact management
office
warns of dangers of fires starting in July with the onset of the dry
season.
? June 99       Indonesia's first democratic elections for over 30 years
take
centre stage in the media and civil society groups' work.
? 3/6/99 (cited in JP 5/6/99) Singapore's Ministry of Environment expressed
concern about increased numbers of hot spots (82 in Sumatra; 50 in
Kalimantan).
? 5/6/99 (AFP)       President Habibie orders all government agencies and
ministries to work together better to prevent fires.
? Mid-July          Meeting on ASEAN Regional Haze Plan scheduled in Kuala
Lumpur,
Malaysia (no reports of this received).
? 30/6/99 (Antara)      Joint Malaysia/Indonesia fire training in Riau
? 12/7/99 (Antara)      Joint Malaysia/Indonesia fire training programme in
Pontianak, West Kalimantan
? 20/7/99 (Antara)      NOAA satellite imaging recorded 167 hot spots in E
Sumatra.
? 28/7/99 (AFP)     Singapore affected by 'haze' from C. Sumatra. Antung
Dedi
Radiarsa, head of the directorate of forest fires at Indonesia's
Environmental Impact Control Agency (Bapedal) said fires in Sumatra and
Kalimantan were not in the "high risk" category. "Measures are being taken
to prevent their spread." A forest fire that burned over 50 hectares of
land in Kampar district of Riau was put out on July 20.
? 29/7/99 (Singapore TV)    Brunei informally filed complaint over haze
resulting from forest fires ahead of the 20th Southeast Asian Games
celebration it is hosting next month.
? 30/7/99           Satellite monitoring images from GTZ-funded station in
East
Kalimantan and EU-funded station in South Sumatra show dozens of hotspots
mainly in West Kalimantan and Riau provinces.
? 30/7/99 (DPA)     Singapore reports air pollution reaches the serious
health
hazard level of PSI=100 as south-easterly winds bring smoke from forest
fires in West Kalimantan. W. Kalimantan forest official says slash and burn
by local farmers is responsible. Local authorities issue health warning.
Malaysia only reports slight haze.
? 30/7/99 (K cited in DPA 30/7/99) Fires in Riau caused by plantation
companies and local farmers blamed for smoke problem in provincial capital
Pekanbaru.