VZCZCXRO9761
RR RUEHMA RUEHPA
DE RUEHMV #0786/01 2990828
ZNR UUUUU ZZH
R 260828Z OCT 09
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 1425
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 02 MONROVIA 000786 
 
SENSITIVE 
SIPDIS 
 
E.O.12958: N/A 
TAGS: ECON EAGR LI
SUBJECT: FLAWED TIMBER CONCESSIONS PASS LEGISLATURE 
 
REF: 08 MONROVIA 793 
 
¶1. (SBU) SUMMARY: The National Legislature ratified four new Forest 
Management Contracts (FMCs) in a closed-door session September 23, 
despite civil society objections and a ruling from the Public 
Procurement and Concession Commission (PPCC) overturning the 
concessions on technical grounds.  Political pressure to begin 
revenue-generating timber extraction during the upcoming dry season, 
after having missed last year's, overpowered concerns about the 
concessionaires' financial and operational viability.  Despite USG 
and donor support for a sustainable and transparent concessions 
process, conflicting interests coupled with the PPCC's inability to 
exert its regulatory role compromise GOL efforts to conduct sound 
forest management.  END SUMMARY. 
 
¶2.  (SBU) President Sirleaf called a special session of the National 
Legislature September 23, urging them to ratify four FMCs so that 
companies could commence operations (and begin generating 
much-needed revenue for the GOL) during the upcoming dry season.  In 
a highly unusual process, the Senate hastily approved the 
concessions, before moving them to a closed-door session of the 
House for ratification.  [Note: Typically, bills require weeks to 
pass the House, and then move to the Senate.  Both chambers permit 
public observation of votes.  End Note.]  Recipients of the four 
contracts include: Euro Liberia Logging Company (Area F- Grand Gedeh 
and River Gee Counties), Geblo Logging (Area I- Grand Gedeh and 
Sinoe), International Consultants Capital (Area K- Maryland and 
River Gee), and Atlantic Resources (Area P- Grand Kru, Maryland and 
River Gee).  According to the Fiscal 2009-2010 budget, these FMCs 
are expected to generate $9.5 million for the GOL. 
 
¶3. (SBU) Two days of disputatious public hearings preceded the vote. 
 Global Witness, Save My Future Foundation, Liberia Democratic 
Institute, and Sustainable Development Initiative urged the 
legislature not to ratify the FMCs.  They questioned the quality and 
credibility of the four chosen concessionaires, arguing they lacked 
access to capital or the operational experience to log their 
respective areas.  They further charged that at least one 
concessionaire is a front company for Samling, a Malaysian company 
with a track record of illegal logging.  Global Witness wrote the 
Ambassador a letter urging Post to use its influence to persuade the 
GOL to address these concerns.  There also exists widespread concern 
that the FDA solicited bids based on inadvertently inflated log 
volumes, and that concessionaires will demand contract modifications 
or resort to unsustainable logging in order to recoup up-front 
costs.  Misgivings about FDA leadership, procedural transparency, 
and the quality of concessionaires date back two years to the early 
stages of the bidding process (reftel). 
 
¶4. (SBU) The PPCC voiced similar reservations.  Four of the five 
PPCC commissioners determined the FDA and IMCC exceeded their 
authority by awarding the concession to companies that did not meet 
the initial bid requirements.  The legislature nonetheless justified 
its ratification, arguing that because the PPCC is a part of the 
Executive branch, the President's approval of the FMCs supersedes 
the PPCC ruling.  [Note: The PPCC is in fact an independent body 
that reports directly to the legislature and is not part of the 
Executive branch.  PPCC Chairman Keith Jubah lamented to Econoffs 
that until the GOL designs new regulations to clarify whether the 
PPCC has the right to nullify an approved concession on procedural 
grounds, widespread misconceptions will continue to preclude the 
PPCC from exerting its regulatory authority. End Note.] 
 
¶5. (SBU) Starting in 2005, the USG worked with the GOL to create the 
processes and procedures to ensure a transparent and sustainable 
commercial forestry sector through the Liberian Forestry Initiative 
(LFI) and the Governance and Economic Management Assistance Program 
(GEMAP), which sponsored a full-time advisor at FDA.  While the 
GEMAP advisor regularly and publicly warned the GOL about the 
deficiencies of the potential concessionaires, and Post continues to 
encourage transparent and sustainable management practices, the 
decision to move forward ultimately rests with the GOL. 
 
------- 
Comment 
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¶6. (SBU) Despite potentially adverse consequences, President Sirleaf 
publicly stated that absent any alternative source of revenue, such 
as carbon credits or direct budget support from donors in return for 
a moratorium on logging, the GOL will continue to press forward. 
Unfortunately, despite widespread discussion on the potential 
benefits of carbon credits and the REDD (Reduced Emissions from 
Deforestation and Degradation) concept in African countries, Liberia 
would not be an ideal candidate due to its inability to monitor and 
enforce such agreements. Furthermore, such arrangements do not 
create the jobs and growth desperately needed in Liberia. 
 
¶7.  (SBU) Short-term revenue demands seem to have prevailed over 
strategic and sustainable resource management concerns.  The 
immediate danger of approving weak concessionaires is further delays 
in timber exports, as it appears unlikely that any of the 
 
MONROVIA 00000786  002 OF 002 
 
 
concessionaires will be able to perform.  The assurance of GOL 
officials that they will monitor the concessions closely suggests 
that they will void the contracts if in breech.  In the long term, 
however, the consequences of this ratification could be less 
reversible.  Unscrupulous or poorly capitalized companies may log 
unsustainably - whether in a deliberate bid to maximize short-term 
extraction and then abandon operations, from a lack of experience, 
or from a need for immediate revenue.  Further, companies without 
long-term prospects are unlikely to engage communities as partners 
in development, and in their haste to extract, may build logging 
roads that open up forests to illegal chain sawyers and settlers who 
compromise forest growth. 
 
 
THOMAS-GREENFIELD