VZCZCXRO0760
RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTRO
DE RUEHBR #0156/01 0411903
ZNR UUUUU ZZH
R 101901Z FEB 10
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0463
INFO ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHRG/AMCONSUL RECIFE
RUEHRI/AMCONSUL RIO DE JANEIRO
RUEHSO/AMCONSUL SAO PAULO

UNCLAS SECTION 01 OF 03 BRASILIA 000156 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SENV EAGR KGHG KSCA BR
SUBJECT: BRAZIL: FOREST CODE PROVOKES HEATED DEBATE BETWEEN 
ENVIRONMENTALISTS AND FARMERS 
 
REF: 2009 BRASILIA 123; 2009 BRASILIA 893 
 
(U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR INTERNET 
DISTRIBUTION. 
 
 
 
¶1.  (SBU) SUMMARY.  The Brazilian Forest Code's requirement that a 
rural landowner in the Amazon maintain 80 percent of the native 
forest as a legal reserve has produced a heated dispute between the 
agriculture and environmental communities.  Environmentalists see 
it as a potentially powerful tool to prevent deforestation, and the 
agriculture sector views it as economically ruinous for millions of 
ranchers and farmers.  As a practical matter, that legal reserve 
requirement has never been effectively implemented, and President 
Luiz Inacio Lula da Silva has decided, once again, to postpone 
implementation till June 2011 - after the upcoming national 
elections.  While the debate continues over the Forest Code, the 
Government of Brazil's other policies have contributed to a sharp 
decline in the rate of Amazon deforestation from 21.5 thousand 
square kilometers in 2002 to 7.0 thousand last year.  END SUMMARY 
 
 
 
 
FOREST CODE'S CONTROVERSIAL RESERVE REQUIREMENT 
 
 
 
¶2.  (SBU) The Brazilian Forest Code (Law 4,771 from Sept. 15, 1965) 
began its life as much a tool for sound soil and water resources 
management as to promote forest conservation.  The law required 
maintenance of forests in strategic areas, such as along rivers, 
streams and lakes, on tops of hills and mountains, and on steep 
hillsides, to protect water quality and prevention erosion.  At the 
time of its enactment in 1965, the Brazilian Government supported 
policies to clear the Amazon for agricultural production.  The 
Constitution still includes a provision requiring a landowner to 
make productive use of the land, which is commonly read to mean 
that landowners must clear some forests for agriculture purposes or 
risk losing the land.  The Forest Code initially required rural 
properties in the Amazon Region to maintain 50 percent of the 
native forest on the property.  This area is called the "reserva 
legal" (or legal reserve).  The legal reserve was 20 percent for 
rural areas in the savannah (or "Cerrado") region and also 20 
percent for the rest of the country. 
 
 
 
¶3.  (SBU) In response to massive deforestation in the Amazon, 
then-President Fernando Henrique Cardoso sought to turn the Forest 
Code into a central tool to conserve the Amazon.  In 1996 he issued 
a "Provisory Measure" to amend the Forest Code to raise the legal 
reserve requirement in the Amazon to 80 percent and in the Cerrado 
to 35 percent.  Opposition from the powerful rural bloc in 
Congress, however, ensured that this measure was not brought up for 
a vote.  Instead, the Presidency reissued the measure 67 times to 
keep it in effect, until 2001 when the rules governing Provisory 
Measures were changed.  Today, although the Congress never voted on 
it, the 2001 Provisory Measure is generally viewed as having the 
effect of law. 
 
 
 
¶4.  (SBU) The Government of Brazil (GOB) has not pursued violators 
of the legal reserve requirement in the Amazon, whether using the 
50 percent or the 80 percent standard.  It looked as though this 
was about to change on December 11, 2009.  That was the date when 
legislation on environmental crimes, including possible criminal 
sanctions and stiff fines for violating the Forest Code, was 
scheduled to enter into effect.  Previously, the government lacked 
the authority to severely punish violators of the Forest Code's 
reserve requirement.  (REFTEL A) 
 
 
 
A REPRIEVE UNTIL AFTER THE NATIONAL ELECTIONS 
 
 
 
¶5.  (SBU) On December 10, 2009, President Luiz Inacio Lula da Silva 
signed Presidential Decree number 7029, which postponed the 
 
BRASILIA 00000156  002 OF 003 
 
 
criminal and stiffer penalties for violations of the Forest Code. 
This new Decree creates the Program Mais Ambiente (or "More 
Environment") that provides a three year period for all land owners 
to register their lands with the competent government authority. 
In order to become legal, the landholder will need to register the 
size of the legal reserve with appropriate documentation and in 
case the reserve size is under the 80 percent, the landholder must 
enter an agreement with the government, committing to correct this 
problem.  To calm the environmental sector, President Lula decided 
that there will be fines and criminal penalties for those 
landholders who do not register their holdings under the program 
and those who are not in compliance with the Forest Code's reserve 
requirements starting June 11, 2011, giving errant landholders at 
least an 18 months' reprieve. 
 
 
 
¶6.  (SBU) Agriculture Minister Reinhold Stephanes supported the 
decision by saying that if Presidente Lula hadn't set a new 
deadline over three million agricultural producers would have 
become criminals.  Out of that total, one million farmers and 
ranchers would have likely been in a position to lose their land. 
Environment Minister Carlos Minc sought to make the best of the 
decision.  He stated that "The [Mais Ambiente] Program will help 
those producers who want to protect the environment to make their 
property legal.  The Program gives a hand to those who want to 
protect the environment, which is mandatory."  COMMENT.  It is no 
surprise that the government stepped away from turning millions of 
farmers and ranchers into criminals who could potential lose their 
land; especially in light of the upcoming October 2010 national 
elections.  END COMMENT. 
 
 
 
¶7.  (SBU) The vocal environmental community had foreseen the GOB's 
lack of support for the Forest Code.  Back in October 2009, a group 
made of fifteen important environmental non-governmental 
organizations (NGOs) wrote an open letter criticizing the GOB's 
efforts to make, what they considered one of Brazil's most 
important environmental legislation, less stringent.  These NGOs 
contended that the Forest Code is not as draconian as painted by 
the rural lobby.  The fines and penalties are supposed to be 
implemented in a flexible way.  For example, sanctions for 
violations of the Code are to be imposed after a determination that 
a violation has taken place and the landholder has been officially 
notified.  After notification, a landholder would normally have 180 
days to solve any pending issues with the authorities.  (NOTE: As a 
practical matter, identifying and notifying violators would be a 
slow process due to the size of the Amazon and the limited staff in 
the region, as well as the lack of information about particular 
landholdings.  If the GOB becomes serious about penalizing the 
large number of landholders in violation of the Forest Code, the 
national government can expect stiff opposition and possibly even 
violent push back, like those that occurred in the municipality of 
Tailandia last year after government raids on illegal loggers or in 
Novo Progresso, where even Brazilian researchers viewed as 
"snooping" around were run off.  END NOTE) 
 
 
 
LONG TERM SOLUTION NEEDED 
 
 
 
¶8.  (SBU) President Lula's postponement of the implementation of 
criminal penalties and fines for violation of the legal reserve 
only defers this controversial issue, but does not solve it. 
Currently, there are about thirty proposals in Congress to modify 
the Forest Code, most of which call for changing the legal reserve 
requirement.  The National Agriculture Confederation (CNA) told 
Post that while they support efforts to reduce deforestation, they 
view the current 80 percent requirement as unworkable.  There are a 
number of proposals to return the requirement to 50 percent, which 
would make it possible for large numbers of ranchers and farmers 
who couldn't economically sustain themselves at the 80 percent 
level to comply with the law.  Environmental groups in Brazil are 
divided on this step too.  Greenpeace calls reducing the 
requirement a sell-out, but Friends of the Earth consider it a 
pragmatic and constructive step.  The head of the Special 
Commission in the Chamber of Deputies looking at amending the 
Forest Code, Aldo Rebelo (Communist Party-Sao Paulo), wants to 
bring the proposed amendments to a vote in April, including one 
heavily criticized by environmentalists that would allow each state 
 
BRASILIA 00000156  003 OF 003 
 
 
to establish the applicable legal reserve.  In a recent press 
interview, Rebelo complained that the GOB through the 2001 
Provisory Measure the GOB had "altered the [1965 Forest Code] 
without listening to anyone." 
 
 
 
¶9.  (SBU) While the dispute over the 80 percent legal reserve 
requirement continues, a couple of practical solutions are coming 
into play.  The Forest Code provides (Article 16) that an 
Economic-Ecological Zoning (ZEE) can reduce the legal reserve to 50 
percent.  The small western Amazonian state of Acre has a ZEE in 
place and is taking advantage of this option.  Unfortunately, this 
is not a solution for the whole region because of the lack of ZEEs 
(it is an extremely complex and long study) and, as a political 
matter, the government doesn't want to use this exception to throw 
out the 80 percent requirement on a wholesale basis.  Another 
possible solution is being pursued by The Nature Conservancy (TNC), 
which seeks to work with landowners to satisfy the 80 percent 
requirement by using compensatory land tracts.  The concept is that 
the landholder instead of meeting the 80 percent requirement with 
its land would conserve the required amount of forests on other 
lands in the biome.  This theoretically could work, but needs 
further development and approval by the government. 
 
 
 
MEANWHILE - REGISTERING TITLE 
 
 
 
¶10.  (SBU) While it remains an open question of when, if ever, and 
in what form the Forest Code will be enforced, Brazil is pursuing 
less controversial measures that may have a far greater impact on 
deforestation.  These include establishing large protected areas 
and indigenous reserves, increasing law enforcement efforts against 
illegal land grabs, and cutting off financial credits for areas 
responsible for large amounts of deforestation.  Moreover, the 
national and state governments have sought to clarify the murky 
question of land title in the Amazon.  In a January 2010 
presentation, the World Bank estimated that 85 percent of the land 
occupied by private interests (which is about 30 percent of the 
total) lacks documentation or are based on suspicious or fraudulent 
title documents.  The government last year passed a law (REFTEL B) 
that creates a path for clear title for small parcels of land in 
the Amazon region.  Further, by tying financial credits to a 
municipality's registration of land titles, the national government 
is giving an incentive for resolving the ownership question.  For 
example, the municipality of Paragominas - previously one of the 
more prolific deforesters - should meet the registration 
requirement in a few months and its mayor has called for zero 
deforestation.  Preliminary information suggests that when 
landholders obtain clear title they begin to behave more 
responsibly and reduce the rate of deforestation. 
 
 
 
¶11.  (SBU) COMMENT: The Forest Code's 80 percent legal reserve 
requirement in the Amazon Forest has generated much heated debate 
in Brazil since its proposal in 1996.  Never having been 
implemented, it has served principally as a point of dispute 
between the agriculture and environmental communities, while others 
less controversial policies have been effective at reducing the 
deforestation rate in the Amazon.  Since coming into office, the 
Lula Administration has overseen a decline in the rate of 
deforestation in the Amazon from 21.5 thousand square kilometers in 
2002 to 7.0 thousand last year.  If the deforestation rate 
continues to drop, then the environmentalist community may be 
willing to show more flexibility about a pragmatic compromise on 
the Forest Code when the issue comes up again in 2011.  END 
COMMENT. 
 
 
 
SHANNON 
SHANNON