VZCZCXRO0745
PP RUEHGR
DE RUEHPO #0118/01 0801811
ZNR UUUUU ZZH
P 201811Z MAR 08
FM AMEMBASSY PARAMARIBO
TO RUEHC/SECSTATE WASHDC PRIORITY 0069
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 1239
RUEHTC/AMEMBASSY THE HAGUE 1640
RUEHBJ/AMEMBASSY BEIJING 0149
RUEHIN/AIT TAIPEI 0029

UNCLAS SECTION 01 OF 02 PARAMARIBO 000118 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/CAR JROSHOLT; WHA/EPSC J.SALAZAR; 
INR R.CARHART 
EMBASSIES FOR POLOFF, ECONOFF 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EINV ELAB ETRD PGOV NS
 
SUBJECT: OLD CAMPAIGN PROMISES HAUNT GOVERNMENT COALITION 
 
PARAMARIBO 00000118  001.2 OF 002 
 
 
¶1. (SBU) Summary.  A 2004 agreement between the Government of 
Suriname (GOS) and a Chinese company to set up a palm oil plantation 
in the eastern District of Marowijne still has not been implemented 
due to the GOS's inability to overcome local villagers' opposition 
to key aspects of the plan.  The issue is compounded by the 
A-Combination Party, a minor coalition partner representing 
Marowijne, which originally ran on a platform opposing the 
investment scheme, but now supports the project.  This issue 
illustrates the shifting nature of Surinamese political alliances, 
underscores the skepticism of Surinamers regarding the motives of 
their political representatives and the central government, and 
highlights the challenges of doing business in Suriname.  END 
SUMMARY 
 
¶2. (U)   In January 2004, the Government of Suriname (GOS) signed a 
Memorandum of Understanding with the Chinese company China Zhong 
Heng Tai (CZHT) for a 40,000 hectare palm oil plantation in the 
district Marowijne. Under the agreement, the company was required to 
provide the government with a bank guarantee of US$ 16.2 million 
before starting operations.  Now, four years later, the project has 
not progressed, and the bank guarantee will expire in less than 
three months.  If the guarantee expires, CZHT could file a lawsuit 
against the GOS to recover any losses incurred. 
 
¶3. (SBU) The delays in implementing the project are due to the GOS's 
failure to secure the consent of local villages surrounding the 
concession.  While legally the villagers' approval is not required, 
the GOS and CZHT are reluctant to move forward without it.  The 
villagers initially presented an extensive list of concerns to the 
GOS, and the GOS has done its utmost to respond to the villagers' 
concerns. 
 
¶4. (SBU) In February, Paul Rellum, lead negotiator for this project 
from the Ministry of Agriculture, told Embassy EconAsst that four 
government delegations failed to obtain concurrence for the project, 
even though most objections raised by villagers had been addressed. 
In reaction to the villagers' demands, the GOS: 
(a) set aside 12,000 hectares of the concession for hunting. 
(b) reassured villagers that the clear-cutting and palm planting 
would be done in monitored phases, to prevent the concession turning 
into a logging operation. 
(c) promised villagers that only 100 of the 5,000 jobs created would 
go to Chinese migrants. 
(d) guaranteed CZHT's salaries would be market-based, with some 
variation for performance. 
(e) redrew concession boundaries after two Maroon villages objected 
that the concession infringed on their land rights. 
 
¶5. (SBU) The real problem, according to Rellum, is more deeply 
rooted.  The GOS signed the palm oil agreement in 2004 before the 
A-Combination party joined the coalition government.  During the 
2005 election, the A-Combination political party, whose support base 
is in the district of Marowijne, told constituents the plantation 
was unacceptable, and that it would ruin their living areas and 
chances for development.  Parliamentarian Ronnie Brunswijk promised 
villagers if they voted for him, the project would be stopped. 
 
¶6. (SBU) The A-Combination Party is now a part of the coalition 
government and has failed to convince the skeptical villagers of the 
project's benefits.  Caprino Alendy, Vice Chair of the National 
Assembly and an A-Combination leader, was quoted in the press as 
stating the government was at fault for not communicating enough 
with the villagers.  Rellum told EconAsst, however, that on one 
occasion when Alendy himself tried to explain the project's 
benefits, the villagers accused him of being two-faced and walked 
out of the meeting.  The villagers have stated they will not talk to 
any A-Combination member about support for the project.  (Note:  In 
April 2006, the villagers staged a protest against the project and 
called for A-Combination parliamentarians to give up their seats in 
parliament.  End Note.) 
 
¶7. (SBU) When asked about the GOS's next steps, Rellum stated that 
he, along with staff of the Ministry of Regional Development and the 
Ministry of Physical Planning, Land and Forest Management, were 
preparing briefs for their Ministers.  The Ministers will go to the 
District of Marowijne to address again the villagers' objections. 
 
¶8. (U) The press has reported statements by Minister of Agriculture 
Kermechend Raghoebarsingh that there could be serious financial 
repercussions for the GOS if the project fails, and the GOS may have 
to amend the National Assembly's law granting the concession in 
order to relocate it to another district. 
 
 
PARAMARIBO 00000118  002.2 OF 002 
 
 
¶9. (SBU) Ironically, as the concession was already granted in a law 
passed by the National Assembly, local agreement on the project is 
not required.  The GOS and CZHT, however, do not want to move 
forward without local consent.  Whether the CZHT will resort to a 
lawsuit on this issue remains to be seen, as the company has been 
party to the delay due to its reluctance to forge ahead without 
local consent. 
 
¶10. (SBU) Comment.  This case study underscores the complicated web 
of alliances and self-interests that tenuously bind the GOS and its 
coalition partners together, as well as the GOS's reluctance to make 
controversial decisions.  The local community's vocal criticism of 
the A-Combination's politically-motivated flip-flop stance on the 
palm oil project - and skepticism over the party's (and the GOS's) 
motives - demonstrates that even the A-Combination's biggest names 
(and most heavy-handed political leaders) cannot foist a decision on 
constituents concerned with land rights, the environment, economic 
conditions and opportunity, and (more recently) the social and 
economic pressures generated by increased Chinese migration to 
Suriname.  In the larger context, the project's delay risks raising 
a range of potential concerns among future investors regarding the 
sanctity of contracts, the security of the investment climate, and 
the GOS's opaque - and often questionable - procedures for awarding 
investment contracts.  With Suriname's biggest investment 
opportunities lying in natural resources and agriculture, foreign 
investors may prefer to seek greener pastures.  END COMMENT 
 
SCHREIBER HUGHES