VZCZCXRO9725
PP RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #3278/01 3340250
ZNR UUUUU ZZH
P 300250Z NOV 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 7213
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBY/AMEMBASSY CANBERRA 1664
RUEHWL/AMEMBASSY WELLINGTON 2088
RHEHNSC/NSC WASHDC
RHHJJPI/USPACOM HONOLULU HI
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 003278 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
USDA/FAS FOR OGA/CRUTCHFIELD, MCKEIVER 
 
E.O. 12958: N/A 
TAGS: CASC EAGR PGOV PREL SENV SOCI ID
SUBJECT: "Cooking the Climate" or Cooking the Books? Greenpeace's 
Report on Indonesian Palm Oil 
 
 
¶1. (U) Summary: In a recently released report, "How the Palm Oil 
Industry is Cooking the Climate," Greenpeace blames American and 
European companies for the destruction of Indonesia's forests and 
peat swamps. If this destruction continues unabated, Greenpeace 
writes, vast amounts of carbon will be released, detonating a 
devastating "climate bomb." In making its case, Greenpeace ignores 
the real culprits of forest destruction - unethical local firms, 
government corruption resulting in weak oversight and enforcement, 
and a gold rush mentality leading local firms to expand at all 
costs.  Greenpeace's report also ignores key industry-led 
initiatives that undermine the report's credibility. Greenpeace 
concludes by advocating an immediate moratorium on forest clearing 
and that funds be transferred "from rich to poor countries for 
forest protection." End summary. 
 
The Greenpeace Report 
----------------------------- 
¶2. (U) In early November Greenpeace International published a report 
entitled "How the Palm Oil Industry is Cooking the Climate." The 
report blames "the world's largest food, cosmetic and biofuel 
industries" - including U.S. firms such as Cargill, 
Archer-Daniels-Midland, and Procter & Gamble - for "driving the 
wholesale destruction of peatlands and rainforests." Unless forest 
and peat land destruction is stopped, the report concludes, the 
"peatlands will release massive amounts of carbon triggering a 
devastating climate bomb." Greenpeace blames two other culprits as 
well: shortcomings in the Kyoto protocol and the growing demand for 
biofuels. 
 
¶3. (U) Greenpeace's report outlines four actions it describes as 
necessary to diffuse the "climate bomb". They include: 
 
-- A moratorium on forest clearance and peat land degradation; 
-- Prioritizing protection of remaining peat swamp forests and other 
high conservation value forests; 
-- The inclusion of a global funding mechanism to reduce emissions 
from deforestation in the next phase of the Kyoto protocol (post 
2012); and 
-- The transfer of funds from rich countries to poor countries to 
enable them to take immediate action to reduce their emissions from 
deforestation. 
 
Cooking the Books? 
------------------ 
¶4. (SBU) While the Greenpeace report correctly identifies the 
destruction of Indonesia's forests and the resulting carbon 
emissions as a massive international problem, it is wrong about the 
principal causes, misidentifies the culprits, and fails to 
acknowledge the positive impact Western-led self-regulation programs 
are having on the industry.  In particular, the report wrongfully 
blames Western companies for destroying Indonesia's forests and the 
resulting release of carbon (rhetorically transferring 
responsibility for Indonesia's high greenhouse gas emissions back to 
the United States). 
 
¶5.  (SBU) The report also fails to acknowledge the impact of 
corruption, weak government oversight and regulatory systems, and 
the greater impact that domestic pulp, paper and logging industries 
have on the country's forest resources.  Problems with corruption 
are present at all levels - local, provincial, and national.  One 
example of the scale of corruption related to the domestic 
exploitation of land for palm oil cultivation is the March 2007 
conviction of former East Kalimantan governor Suwarna Abdul Fatah in 
a case which has also implicated at least two former Ministers of 
Forestry.  Fatah was convicted on corruption charges for unlawfully 
opening up one million hectares of land in East Kalimantan to local 
companies for palm oil development beginning in 1998. The main 
Indonesian company involved, PT Surya Dumai, sold the timber after 
clearing the land and failed to develop large tracts of the area 
slated for palm oil plantations.  Fatah was sentenced to 18 months 
in prison and 22,000 USD fine by the Corruption Court in Jakarta in 
a case that is currently on appeal. 
 
American Firms in Indonesian Palm 
--------------------------------- 
¶6. (SBU) Only two U.S. firms have a meaningful presence in 
Indonesian palm oil: Cargill and Archer Daniels Midland (ADM).  ADM 
entered the market earlier this year when it formally merged some of 
its Asian operations with Wilmar International Ltd. Wilmar itself is 
the largest global processor and merchandiser of palm oil, one of 
the larger plantation companies in Indonesia and Malaysia (though 
not in the top ten), and the largest palm biodiesel manufacturer in 
 
JAKARTA 00003278  002 OF 002 
 
 
the world. Cargill International, by contrast, remains a relatively 
minor player in the Indonesian palm oil market. In its report, 
Greenpeace singled out both firms for criticism. 
 
Western Firms are not the problem 
-------------------------------------- 
¶7. (SBU) Environmental activists point out that while all palm oil 
plantations claim to implement responsible land management policies, 
in practice, few are willing to commit the funds needed to live up 
to the rhetoric. Despite this, industry insiders and environmental 
NGOs generally agree that a handful of firms are genuinely 
attempting to operate responsibly. These firms include, among 
others, Cargill, London Sumatra, Socfindo, and Wilmar International 
(ADM's partner in palm). Ironically, American firms Wilmar 
International and Cargill are also primary targets of Greenpeace's 
faultfinding. 
 
According to various observers, several things set these firms apart 
from less responsible firms: 
 
-- These companies are among the few believed to be sincerely trying 
to comply with the Roundtable on Sustainable Palm Oil (RSPO) 
industry guidelines. Many other firms try to use RSPO for 
"greenwash". 
-- These companies have received or are seeking ISO 14001 
Environmental Management certification which requires them to adhere 
to all environmental laws and regulations, treat effluents before 
discharging them, protect riverbanks, etc., practices eschewed as 
too costly by many local firms. 
-- These companies are also among the most conservative in expanding 
their operations. In general, it is the firms that are expanding too 
rapidly and in unsuitable areas that cause a disproportionate amount 
of environmental degradation. 
-- These companies are very technically competent and well- financed 
so there is less pressure to cut corners in land preparation or 
engage in burning. 
-- These companies have also developed a culture of ethical and 
professional management and corporate responsibility. 
 
¶8. (SBU) Not all firms have such responsible management. Indonesia's 
second and third largest palm oil firms and their subsidiaries, 
Asian Agri (Raja Garuda Mas or RGM) and Sinar Mas (SMART), are 
relevant examples. The head of Asian Agri, Sukanto Tanoto, has fled 
to Singapore to avoid prosecution on charges of money laundering, 
corruption, and tax fraud. Last year, after the respected head of 
Mt. Leueser national park brought in heavy equipment in order to 
clear several thousand hectares of oil palm planted illegally by RGM 
inside the park, Tanoto reportedly complained to the Ministry of 
Forestry and had him removed.  Several years ago the founder of 
Sinar Mas, Eka Cipta Widjaya, was accused of embezzling hundreds of 
millions of dollars in the Asia Pulp and Paper debacle. More 
recently, environmental NGO WWF felt compelled to break off its 
relationship with Sinar Mas' pulp and paper division because of its 
failure to adhere to environmental norms.  These two companies 
regularly boast of their rapid expansion in recent years. 
 
Industry Self-Regulation 
------------------------ 
¶9. (SBU) A final major flaw in the Greenpeace report is its 
treatment of industry self-regulation efforts such as the Roundtable 
on Sustainable Palm Oil (RSPO). In the report, Greenpeace accuses 
the body of being complicit in environmental destruction without 
describing what the organization does. The roundtable's primary goal 
is the establishment of credible and verifiable global standards for 
the production and distribution of palm oil products - a goal 
Greenpeace purports to share.  In fact, RSPO has developed detailed 
principles and criteria for sustainable production. Once the pilot 
programs are complete, RPSO members will be required to undergo an 
intense certification process to verify their compliance with the 
principles and standards. 
 
¶10. (SBU) Other important industry initiatives include the ISO 14001 
Environmental Management certification and partnerships with 
environmental NGOs. Cargill, for example, has partnered with Fauna 
Flora International (FFI). Under the arrangement, FFI assists 
Cargill in identifying high-conservation-value-forest areas for 
protection and monitors Cargill's compliance with environmental 
standards. If more palm oil plantations followed the lead of 
American and European companies involved in the industry, 
Indonesia's forests and wildlife would face far fewer threats. 
 
HUME