VZCZCXYZ0002
RR RUEHWEB

DE RUEHMV #1090/01 2561435
ZNR UUUUU ZZH
R 131435Z SEP 07
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 9233
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCLRFA/DEPT OF AGRICULTURE WASHDC
RUCNDT/USMISSION USUN NEW YORK 1489
RUEHZK/ECOWAS COLLECTIVE

UNCLAS MONROVIA 001090 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/W-DBANKS 
INR/AA-BGRAVES 
AF/EPS, EB 
AID FOR AFR/WA-YMALCIOLN 
ACCRA AND DAKAR FOR FCS 
 
E.O.12958: N/A 
TAGS: EAGR PGOV EINV EAID SENV LI
SUBJECT: LIBERIA: FORESTRY / TIMBER SECTOR UPDATE 
 
REF: 2006 MONROVIA 1333 
 
¶1.  (SBU) SUMMARY:  The Liberian Forestry Development Authority 
(FDA) has missed key deadlines in the chain of deliverables 
necessary for the resumption of commercial logging in Liberia.  Much 
of the legal framework for the forestry sector is in place and the 
FDA has made substantial strides toward putting the FDA back in 
order financially and technically over the past year.  But the FDA 
has failed to implement critical steps necessary to restart the 
logging industry in line with the government's target to advertise 
and award timber sale contracts by October 2007.  As a result, the 
first timber contracts may not be issued before January and very few 
are likely to be issued at all before the end of Liberia's fiscal 
year next June 30. The chain of custody contract that is the 
foundation for monitoring the legality of the new system (and is 
partially funded by the United States) is stalled and the FDA has 
done little to address sensible civil society concerns on 
significant issues including illegal chain sawing, land tenure and 
community forestry.  Meanwhile, the GOL is set to expand Liberia's 
network of protected parks and is increasingly embracing the idea - 
at least in theory - of carbon markets as a conservation measure and 
a potential revenue source for the country.  END SUMMARY. 
 
--------------------------------------- 
BACKGROUND ON LIBERIA'S TIMBER INDUSTRY 
--------------------------------------- 
 
¶2. (U) The Liberian commercial timber industry has been both a major 
economic engine of growth and a key source of corruption and 
mismanagement.  At the height of forestry production prior to the 
1990-2003 war, export of timber products contributed nearly 25% of 
national foreign exchange and the sector employed more than 8,000 
seasonal workers.  During the war (but before United Nations 
sanctions in 2003), armed militias controlled many concession areas 
and timber exporters amassed over US$64 million in tax arrears on 
more than US$100 million in exports per annum between 1997 and 2003. 
 The GOL handed out 26 million acres of forestry concessions for 
only 10 million acres of actual forest.  A concession review 
committee established in 2005 determined that not one of 70 
contracts reviewed could demonstrate legal compliance. 
 
¶3. (U) The lifting of UN sanctions in 2006 has made the resumption 
of commercial logging a key priority of the GOL.  The industry could 
potentially provide up to US$20-25 million in annual government 
revenue and 10,000 jobs with 2.5 million hectares under contract. 
The Liberian Forest Initiative (LFI), a collaboration between the 
United States, World Bank, European Commission, non-governmental 
organizations and the GOL, began in 2004 to address the reform 
requirements of UN Security Council sanctions on timber, 
specifically working to improve timber revenue management 
transparency and accountability and sustainable forest management 
programs based on commercial conservation and community forestry. 
 
--------------------------------------------- ---------- 
COMMERCIAL FORESTRY - FDA SUCCEEDS ON INITIAL REFORMS... 
--------------------------------------------- ---------- 
 
¶4. (U) Since passage of the National Forestry Reform Law in October 
2006 (reftel) the Forestry Development Authority (FDA) has made 
substantial strides toward putting its operations back in order 
financially and technically in an effort to prepare for the re-start 
of forest management.  The FDA completed a difficult staff 
downsizing exercise to reduce the number of employees on the payroll 
from 519 to 295 at a cost of almost US$640,000 (of which the United 
States contributed US$200,000).  The Governance and Economic 
Management Assistance Program (GEMAP) and LFI are assisting the FDA 
to finalize standard internal operating procedures.  In addition, 
U.S.-funded GEMAP and LFI advisors have worked with the FDA 
financial, procurement and human resources departments to establish 
internal controls and procedures for all financial transactions, 
including but not limited to cleaning up the payroll, petty cash, 
procurement, disbursement, payables and billing transactions.  The 
FDA installed a computerized accounting system linked to the chain 
of custody to ensure accurate tax payments.  In May 2007, for the 
first time in years, the team began publishing financial statements 
each month. 
 
¶5. (U)  With assistance from the LFI, the FDA also drafted a legal 
framework of ten core regulations, a Code of Harvesting Practices, a 
protected area network proposal and a draft of the National Forest 
Management Strategy - all submitted to the FDA Board of Directors in 
June 2007 for approval.  The ten regulations need only to be signed 
into full force and effect and they will form the foundation for the 
legal re-start of commercial logging.  The National Forest 
Management Strategy must be vetted through regional and national 
workshops and is the last document that must move forward before 
logging can start. 
 
---------------------------------- 
... BUT STUMBLES IN IMPLEMENTATION 
---------------------------------- 
 
¶6. (SBU) Despite these notable early achievements in establishing 
the legal and operational framework for forestry, the FDA has 
stumbled in implementation of several critical steps necessary for 
the resumption of commercial logging.  First, the FDA Board must 
sign off on the ten core regulations, which it has failed to do 
since June despite FDA management approval.  Secondly, the FDA must 
complete vetting and approval of the National Forest Management 
Strategy, field evaluation of the likely impact on forest resources 
and affected communities, and the pre-qualification of commercial 
logging companies.  Only then can the FDA establish the prospectus 
describing commercial logging areas that will be up for bidding, 
advertise for tender, and award the first commercial contracts 
through a competitive bidding process.  The FDA suggested earlier 
this year that these steps would be complete by the end of the rainy 
season in October 2007, but as of September, they are still stuck on 
step one, and time-consuming field evaluation didn't begin until 
July. 
 
¶7. (SBU) Besides slippage in the timeline for the resumption of 
commercial logging, the FDA has failed to address a handful of 
critical issues that have the potential to undermine the sector. 
Illegal chain saw processing ("pit-sawing") continues unabated and 
the FDA has not yet agreed on an appropriate policy to ban or 
regulate the practice.  The Liberian Environmental Protection Agency 
(EPA) laws require all companies engaged in extractive industries, 
including logging companies, to carry out rigorous Environment 
Impact Analyses (EIA) and forest management planning, but a lack of 
appropriate capacity within companies and the EPA will slow the 
resumption of logging.  The FDA has not responded to civil society 
concerns that commercial logging should not resume until land tenure 
issues are resolved - a process that is likely to take several years 
- and that the FDA is providing inadequate focus on value-added 
industries.  Because of the FDA's prior track record, civil society 
organizations are understandably uneasy over a return to business as 
usual if contracts are tendered too quickly, without a vetted Forest 
Management Strategy, or with inadequate attention to community 
forestry issues (see paragraphs 9-10). 
 
¶8. (SBU)  All of these issues reinforce the importance of having a 
solid chain of custody mechanism in place, and the most alarming 
obstacle facing the FDA at present is the danger that contract 
negotiations with Socit Gnrale de Surveillance (SGS), a Swiss 
export-import monitoring firm, might soon collapse.  The chain of 
custody is the foundation for monitoring the legality and fee 
payments of all logs from future commercial contracts.  The USG is 
providing US$1.64 million start-up support to make sure that the 
chain of custody system will ensure traceability of log movement, 
guarantee that illegal logs do not enter the system and make certain 
that the GOL collects appropriate fees for logs cut and exported. 
SGS won the provisional bid award in June 2007 to manage the chain 
of custody system.  The Inter-Ministerial Concession Committee 
established the negotiation team comprising the FDA, United States 
Government, Ministry of Finance (MOF), Ministry of Justice, Ministry 
of Planning and Economic Affairs and the Ministry of State.  A 
negotiated position has been established for technical 
implementation but the FDA and the MOF are at odds over the cost of 
the contract.  The FDA has put a premium on the integrity and 
comprehensiveness of the technical aspects leading to an estimated 
cost by SGS of approximately 12% of total sector revenue.  But the 
MOF is unwilling to pay more than 4% of sector revenue, without 
providing any technical or financial foundation for the figure.  If 
SGS abandons the negotiations, the delays could cripple plans to 
commence timber exports in the coming dry season. [Note: Forests are 
inaccessible for commercial logging in the May-October rainy season. 
End note.] 
 
------------------ 
COMMUNITY FORESTRY 
------------------ 
 
¶9. (U) The Working Group on Community Forestry, with representatives 
from the FDA, civil society organizations, international 
environmental NGOs and donor institutions, is coordinating efforts 
to draft a comprehensive Community Forestry Law (CFL).  This law 
will define how communities can participate in sustainable forest 
management in order to obtain economic benefits from forestry. 
Donor support from the World Bank and the United States will ensure 
funding to analyze existing laws and best practices in community 
forestry both in Liberia and in other countries as well as holding 
consultations with forest dependent communities to better inform the 
development of the law.  The USDA Forest Service will provide 
assistance in a technical review of the draft law.  Chapter 10 of 
the 2006 Forestry Reform Law called for a community forestry law to 
be completed by October 23, 2007, but a final draft is unlikely 
before 2008. 
 
¶10. (U) USAID is presently soliciting proposals for a land rights 
and community forestry program in Liberia.  This program will target 
Nimba and Sinoe Counties, where other USAID programs are supporting 
improved natural resource management and development activities.  In 
addition to developing pilot community forestry activities to test 
best-practices in the Liberian context, this program also will 
support efforts to better clarify land and property rights for 
community ownership and control of land and natural resources. 
 
------------ 
CONSERVATION 
------------ 
 
¶11. (U) Efforts continue to create new parks within the country's 
protected area network.  A protected area workshop was held in Ganta 
(Nimba County) during the first week of August 2007 with 
representatives from the Liberian government, international 
conservation organizations, the private sector and donor 
institutions.  The objective was to help the FDA establish its 
methodology for the selection of new protected areas in Liberia. 
The workshop also nominated three new protected park areas: Lake 
Piso, Gola Forest and Wonegizi Forest.  The FDA hosted another 
meeting in Ganta in August to discuss the establishment of 
trans-boundary parks between Liberia and Guinea, Sierra Leone and 
Cote d'Ivoire. 
 
--------------------------------------- 
CARBON MARKETS - TARGET OF OPPORTUNITY? 
--------------------------------------- 
 
¶12. (U) Given the large percentage of forested area in Liberia, many 
international conservation organizations have proposed carbon 
sequestration programs as potential revenue sources for Liberia. 
These emerging schemes could provide financial returns for 
incremental reductions in deforestation levels as well as 
reforestation activities.  However, given that carbon markets are 
relatively new and somewhat volatile, efforts to promote them in 
Liberia require extensive pre-feasibility studies and testing on a 
limited basis before any recommendations for widespread 
implementation. 
 
--------------------------------------------- --------- 
LAND TENURE AND PROPERTY RIGHTS REFORM REMAIN ELUSIVE 
--------------------------------------------- --------- 
 
¶13. (U) Like many countries in Africa, Liberia has both statutory 
and customary land tenure regimes. The statutory system was 
fundamental to the development of rubber, timber and mineral 
concessions, while customary institutions and usufruct rights 
provided smallholders with access and security to land.  However, 
unchecked land appropriation and land speculation have led to 
uncertainty and conflict.  Many communities lost large areas of 
customary lands, and land tenure issues are affecting the 
development of forestry, mining and agricultural sectors. 
 
¶14. (U)  Forest resources in Liberia currently are held in trust by 
the Republic for the benefit of the people according to the Forestry 
Reform Law of 2006, which gives the government rights to determine 
best management practices over forest resources, even where the land 
is held by communities or private landholders.  [Note: Plantation 
trees planted on private lands are not within the jurisdiction of 
the law. End note].  Many government records concerning land title 
were destroyed during the civil war, and in other cases, land titles 
were obtained without proper background investigation and correct 
geo-referencing.  In January 2007, the FDA requested that all forest 
land deed holders submit their deeds to the FDA for review and 
validation.  To date, deeds for over 8 million acres of forest deeds 
have been submitted ranging from several hundred acres to nearly 
800,000 acres.  Several of the largest deeds are subject to claims 
by several groups within one tribe, overlap with other deeds and 
when mapped can not be plotted as closed polygoQ. 
 
¶15. (U) The members of the Forestry Reform Monitoring Committee 
(FRMC) were aware of land and property rights issues as the Forestry 
Reform Law of 2006 was being developed and recommended the creation 
of a land commission.  Civil society organizations maintain that the 
1959 Hinterland Law recognizes customary rights (rather than central 
government control) over forest resources adjacent to communities. 
The Governance Reform Commission (GRC) held meetings with 
stakeholder groups on land reform and established working groups 
under a Land Steering Committee in early 2007, but these efforts 
derailed when the legal status of the GRC expired in June.  The GOL 
plans to introduce a bill to create a dedicated Land Reform 
Commission to the legislature in September 2007.  Efforts to 
conclude a Community Forestry Law and to resume tenders for 
commercial logging sites in a manner acceptable to civil society are 
highly dependent on a swift resolution to land tenure issues, but 
progress has been slow. 
 
------- 
COMMENT 
------- 
 
¶16. (SBU) The resumption of commercial forestry is a top priority 
for the GOL, as the sector should generate significant employment 
opportunities and government revenues.  Unfortunately, 
implementation is slower than expected because the FDA is behind 
schedule and the FDA has proven to be poor at communicating with 
civil society and other stakeholders.  At this point, the best the 
FDA can hope for is advertisement of a few initial tracts in 
November with a possible award the first quarter of 2008.  A 
breakdown in the contract negotiation with SGS would likely cause a 
major delay, potentially erasing any logging gains during the dry 
season.  Even in the best of circumstances, commercial timber is 
unlikely to have a significant economic impact this Liberian fiscal 
year and the GOL is likely to fall short of its original timber 
revenue forecasts.  Land disputes are overwhelming an already weak 
judicial branch, with cases usually being brought to court as 
criminal cases, such as criminal mischief and trespass, although the 
real issue is that of property ownership.  Conflicts over land 
ownership have already emerged in Nimba County, and continue to 
exacerbate ethnic tensions between the Gio and Mano tribes on the 
one side and the Mandingo on the other.  The GOL's continued delays 
in establishing a body to focus on land issues is a serious 
hindrance to effective stabilization and reconstruction efforts in 
the country. END COMMENT. 
 
BOOTH