VZCZCXRO4291
PP RUEHCHI RUEHDT RUEHHM
DE RUEHJA #1474/01 2581047
ZNR UUUUU ZZH
P 151047Z SEP 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 0087
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/USDA FAS WASHDC
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHJA/AMCONSUL SURABAYA 1481

UNCLAS SECTION 01 OF 03 JAKARTA 011474 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS USTR FOR KATZ AND BROOKS 
DEPT FOR OES/IET; OES/ETC/TED 
DEPT ALSO FOR EAP/IET 
USDA/FAS FOR US FOREST SERVICE-MACKEY 
 
E.O. 12958: N/A 
TAGS: SENV ECON ETRD PREL PGOV ID
SUBJECT: DRAFT MOU ON ILLEGAL LOGGING - EMBASSY JAKARTA 
COMMENTS 
 
¶1. (SBU). Embassy Jakarta supports the conclusion of a 
properly-structured MOU on illegal logging between the U.S. 
and Indonesia.  Reducing widespread illegal logging is one 
of Indonesia's top development challenges, and the issue 
touches on several core areas of our assistance program, 
including improving governance, supporting effective 
decentralization, and habitat preservation.  However, given 
the very high expectations on the part of the Government of 
Indonesia (GOI), and the reality of scarce foreign 
assistance dollars, we are concerned that USG implementation 
plans for the MOU may fall short of GOI desires and fail to 
make a measurable impact on Indonesia's illegal logging 
problem.  We accordingly recommend USTR develop a clear 
interagency workplan for activities in 2006-07 given current 
funding levels prior to passing the draft MOU text to the 
GOI--if presented in tandem with the draft MOU, this 
document help attenuate inflated GOI expectations.  At the 
same time, we recommend dropping the annex from the text to 
further reduce expectations.  The proposed MOU is the 
highest profile USG intervention on illegal logging in many 
years, and unless we are able to release a credible workplan 
for the MOU when we announce it, we face a very real risk of 
negative press coverage from Indonesia's feisty media and 
environmental NGOs.  If current funding levels do not permit 
a robust workplan at this time, we recommend scaling back 
the MOU to reflect only those areas for which financing is 
available.  End Summary. 
 
Implementation is Key 
--------------------- 
 
¶2. (SBU) Widespread illegal logging causes major ecological 
problems in Indonesia and stands as one of Indonesia's core 
development challenges.  The scale of the problem is 
enormous: illegal logging occurs over broad swaths of 
Indonesia, involves a complex array of political and 
economic forces including the military, police, and local 
governments, and has an equally complex international 
component involving Southeast Asia, China, the U.S. and 
other end destinations for products made from Indonesian 
timber.  At least a half dozen GOI agencies have a role in 
combating illegal logging, but none does it effectively. 
 
¶3. (SBU) A number of international donors have active 
programs on illegal logging in Indonesia, most notably the 
EU, Germany, the UK and Japan.  The GOI has also shown 
renewed commitment to combat illegal logging under President 
Susilo Bambang Yudhoyono (SBY), with Presidential 
Instruction 4/2005 serving as an umbrella directive to all 
GOI agencies involved on the issue.  However, by most 
accounts, there has been very modest progress to date 
reducing the volume of illegally harvested timber, and 
public pressure on the GOI to show results is rising. 
 
¶4. (SBU) In this context, many of our interlocutors in the 
Ministry of Forestry (MOF) and other agencies have seized 
upon USTR's proposed MOU as an important new tool in their 
fight against illegal logging.  This perception has been 
fueled by the lengthy bilateral discussions about the MOU to 
date, and the considerable amount of press attention it has 
received.  The GOI clearly wants a substantive MOU with the 
U.S. that will make a real difference and can be leveraged 
to generate broader international support and resources-- 
goals the Embassy strongly supports. 
 
Existing MOUs Set Poor Precedents 
--------------------------------- 
 
¶5. (SBU) GOI officials do not hesitate to express their 
disappointment with existing GOI illegal logging MOUs or 
joint announcements with the UK China, Japan and Malaysia. 
They characterize the agreements as general and lacking in 
specific concrete commitments and programs.  At a January 18 
conference for the diplomatic community on combating illegal 
logging, Ministry of Forestry (MOF) Director General for 
Forest Protection and Nature Conservation Arman Malolongan 
dismissed these MOUs as ineffective and chided China 
specifically for lacking political will and capacity to 
follow through.  During our June 22 illegal logging MOU 
 
JAKARTA 00011474  002 OF 003 
 
 
digital video conference with Indonesia, MOF Director 
General for Forest Production Hadi Pasaribu restated these 
complaints.  A recent article in the Far Eastern Economic 
Review noted that "unfortunately, little action has 
resulted" from Indonesia's illegal logging MOUs. 
 
¶6. (SBU) We need to keep our MOU from being put in the same 
box.  The Indonesian environmental NGO community is 
monitoring our MOU negotiations closely and has its own high 
expectations.  For instance, a June 2006 Environmental 
Investigation Agency/Telapak report gives some praise to 
draft preliminary U.S. objectives for the MOU, but stresses 
that they need to be "backed by US funds and technical 
support." 
 
Competing Foreign Assistance Priorities 
--------------------------------------- 
 
¶7. (SBU) The USG has not been a major donor in illegal 
logging for the last five years.  In FY 2007 and 2008, 
Jakarta-programmed assistance funds managed by USAID will 
flow to a number of equally (or more) pressing development 
issues, several of which are also Presidential Initiatives 
in their own right.  These include basic education, water 
for the poor, health (infectious diseases--including Avian 
influenza, HIV-- and maternal and child health) democracy, 
and economic growth.  In fact, the overall assistance budget 
(all accounts) does not include funds for activities such as 
those outlined in the MOU text or previous annex. 
 
¶8. (SBU) The only existing mission program related to 
combating illegal logging is the congressionally directed 
program to safeguard currently viable wild orangutan 
populations in Indonesia.  A portion of the program 
addresses law enforcement as it relates to immediate and 
urgent threats to orangutans, including from illegal 
logging, in selected high priority habitats.  The $2 million 
program in FY 2007 (of the total $8 million program over 
three years), will include communities residing in and 
around protected area boundaries as important partners in 
law enforcement and will explore potential opportunities to 
effectively address law enforcement issues at the national 
level given resources available. However, this program 
focuses on specific habitat areas and does not address the 
complex, nationwide issues related to illegal logging. 
 
Importance of Managing Expectations 
----------------------------------- 
 
¶9. (SBU) Given the very modest USG assistance in areas 
related to illegal logging in FYs 2007-08, and high GOI 
expectations, it will clearly be a challenge to identify a 
credible package of low-cost activities that could take 
place after the MOU is signed that would in turn make a 
measurable impact on Indonesia's illegal logging problem. 
Embassy Jakarta, as well as several Washington agencies, 
objected to an annex attached to an earlier draft of the MOU 
because it contained a number of "unfunded mandates."     A 
blank annex is also not a solution for managing 
expectations, because its presence reinforces the impression 
that the USG has ambitious implementation plans up its 
sleeve that to our knowledge, do not exist. 
 
¶10. (SBU) Given current funding levels and the very general 
nature of the obligations in the draft MOU, we see the 
development of a focused and practical workplan of low-cost 
initiatives as a crucial exercise for Washington agencies to 
undertake prior to passing the draft MOU to the GOI.  We 
encourage Washington agencies to give special consideration 
to activities that have assured funding and that would 
benefit the MOF, the lead GOI agency on the MOU. 
Nevertheless, time is of the essence. Unless we are able to 
present an initial draft of a workplan in tandem with the 
draft MOU, and finalize it by the time we conclude the MOU, 
we see a risk that this worthwhile initiative could 
backfire.  Indonesia has a very active and critical 
environmental NGO movement that is deeply involved in the 
fight against illegal logging and has shown itself capable 
of garnering favorable press coverage.  Once the draft MOU 
 
JAKARTA 00011474  003 OF 003 
 
 
is passed to the GOI, the risk of leaks to the NGO community 
will rise, with which the GOI has not consulted. 
 
HEFFERN