Local people have voiced concern over theimpacts of Newmont's open pit gold minesince the company started operations atRatatotok, North Sulawesi, in 1996. In the lasttwo years, the villagers' campaigns, supportedby Indonesian civil society organisations, havegained momentum, attracting national andinternational media attention and putting theJakarta government under pressure to takeaction.

Ore extraction at the NewmontMinahasa Raya mine ceased in 2001, but ore-processing, generating around 2000 tonnes ofwaste per day, continued until August 2004.The company used the notorious SubmarineTailings Disposal (STD) system which involvesdumping mine waste into the sea, instead ofthe industry standard land-based tailingscontainment method. The impact of thisdisposal system on Buyat Bay's marine

ecosystem, the local fisheries and villagers'health has been at the heart of theacrimonious dispute between thecommunities and the company.

For nine years the villagers and civilsociety organisations have sought answers tothe ill-health afflicting them and declining fishstocks.They have been met with denials fromNewmont that anything is wrong and havebeen told that that their health problems aredue to other causes.

Newmont continues to deny thatits mine has posed any danger to local people,despite the evidence piling up. The caseagainst Newmont became official last year,when a government-sponsored investigationfound that levels of arsenic and mercury inBuyat Bay fish posed health risks to the localcommunity, especially children. The studyfound extremely high levels of mercury andarsenic in the seabed sediment and in sea-beddwelling organisms (benthos) - indicating thattoxic substances from the mine's tailings wereentering the food chain. Newmont arguesthat separate tests show that the chemicalsare not entering the food chain and that levelsfound in fish are safe. The government-sponsored investigation team recommendedthat local people reduce their fish intake, butmany have been unable to afford to do so. Italso recommended they consider moving,and, according to mining advocacy network,JATAM, around 67 families have done so. (SeeDTE 63:10 orhttp://dte.gn.apc.org/63MIN1.HTM for morebackground).

In December last year, evidenceemerged of massive pollution at the mine.Internal documents seen by the New York

Times revealed how the company failed toreport substantial emissions of mercury overseveral years. Over a four-year period (1997-2001) around 17 tonnes of mercury werereleased into the air and 16 tonnes more intoBuyat Bay, according to an internal audit.Equipment that was supposed to prevent theemissions was only installed after operationswere well underway, and did not workproperly; nevertheless ore-processingcontinued, allegedly to cut costs andmaximise gold retrieval. The New York Timessaid the audit classified the findings as‘significant’ meaning they could pose an‘imminent risk’ to human health and theenvironment or result in violation that couldcause a plant closure or loss of permits.Newmont denied that the emissions had hadany negative impact on the bay or localpeople.

Newmont called to accountAugust 5th saw the opening of the Indonesian government's first ever pollution case against amajor mining company. US-based Newmont - the world's biggest gold producer - faces months

under the public spotlight as its environmental practices and impacts on the health of local villagersare exposed.

No. 67 November 2005

office: 59 Athenlay Rd, London SE15 3EN, England, email: dte@gn.apc.org tel/fax: +44 16977 46266 website:http://dte.gn.apc.org

Inside...Mining:

STD leak at Batu Hijau mineCall for new law to be delayedMass protests challenge Inco

Energy:Energy policy ignores renewables

Forests:New chip mill, South KalimantanLegal or sustainable?Forest fires Forests UpdateKalimantan development call

Development:MDGs: hopes or hallucination?

Book Review: The Risks we RunIn brief...

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See our websitehttp://dte.gn.apc.org/for Indonesian translations ofDTE articles

Protesting against Inco - see p.5

(Photo:WALHI Sulsel)

STOP PRESS:On 15th November the South JakartaDistrict Court dismissed the EnvironmentMinistry's case against Newmont, statingthat the Contract of Work between thegovernment and Newmont meant that thecase should be taken to internationalarbitration.The Environment Ministry hasindicated it will appeal the decision,contending that the case did not relate tocontractual matters but to a breach ofIndonesian Environment Law, which allpeople and companies are subject toregardless of contracts, a point specificallynoted in article 26 of the Contract ofWork itself.

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Getting toughNow, for the first time Indonesia'sgovernment is taking concerted action onpollution charges against a majormultinational. As part of a policeinvestigation, five company executives weredetained for a month in late 2004. Theresulting criminal indictment lists NewmontMinahasa Raya and its president director,Richard Ness, as the accused. Ness has beenbanned from leaving the country and nowfaces charges which could result in up to 10years in jail and a $50,000 fine.The companycould be faced with costs for cleaning up anyenvironmental damage.

The company is accused ofbreaching four articles of Indonesia'senvironment law (No 23/1997), according toNewmont's lawyer Blake Rhodes who saysthat only one article needs to be proven forthe company and Ness to be found guilty. DowJones Newswires reported Rhodes as sayingthat the essence of Newmont's defence isthat the company will be able to prove thatthere wasn't any pollution related to itsmining activities in Sulawesi.

Besides the criminal trial underwayin North Manado, the civil case lodged by theDepartment of Environment is back on track.Hearings have recommenced in a Jakartacourt after Newmont's attempt to have thecase dismissed, and its hopes for a quiet out-of-court settlement to be brokered via theNewmont-sympathetic mining industryheavyweight and economics minister,AburizalBakrie, came to nothing.

Political influencesThere are various answers to the inevitablequestions: 'why now?' and 'why Newmont?'The case proceeded to trial primarily due tothe extraordinary level of public interest andmedia coverage. It was covered for weeks,even months, in newspapers, magazines, radio

and, most damaging for Newmont, on TV. Onepopular comedy/social commentary dramafictionalised the case to produce an episodeof prime-time TV, and pop rockers Slankreferred to the case in televised concerts andmade public appeals for support for thevillagers. Newmont compounded its ownwoes by spending more on TV and printadvertisements than it ever spent oncommunity health and other programmes forthe Buyat Bay villagers, serving only toincrease the profile of the case.

However, there may also bepolitical influences at work. As Indonesia'sfirst directly elected president, SusiloBambang Yudhoyono (SBY) may want toestablish his credentials as a 'pro-people'leader, showing his willingness to stand up topowerful corporate players.The case may alsobe linked to the fact that SBY is believed toowe his environment minister, RachmatWitoelar, a political favour or two.Newmont's status as an American companymay also be relevant: legal action against a UScompany could be considered a crowd-pleasing move aimed at opponents whoaccuse the government of appeasing USdemands for action against muslim extremistsas well as those wishing to challenge the US'dominant economic role.

However, aside from this particularcase, the same president is continuing alonghis predecessors' path of prioritising theneeds of big business over communities. Inthe overall picture, the 'pro-people' messagerings hollow. It is likely to be drowned out bythe impacts of pro-business policies - such asplanning a huge new oil palm investment inKalimantan's border area with Malaysia (seeDTE 66:1) - and legislation - such as Perpres36/2005 on compulsory land purchase, apiece of legislation judged more repressive

Newmont sues activist forUS$750,000 damages

Newmont's actions to defend itsreputation, by targeting individuals whohave spoken out against them, will donothing to repair its gravely damaged publicimage in Indonesia.

Dr Rignolda Djamaluddin, chair ofthe environmental group, the KelolaFoundation in Manado, was ordered to payPT Newmont Minahasa Raya US$250,000 innon-material damages. The August rulingwas made by Manado District Court infavour of Newmont in its defamation suit.Rignolda, who is also a lecturer in marinescience at Sam Ratulangi University inNorth Sulawesi and member of a peerreview team for the Indonesianenvironment ministry investigation intoBuyat Bay pollution, was told to pay Rp 5million (US$500) for each day he failed topay the damages.

Dr Rignolda has been anoutspoken critic of Newmont and itsimpact on Buyat Bay and had reported theresults of a seminar which noted that localpeople displayed symptoms which weresimilar to Minamata disease.

He has also been ordered to runapologies to the company in local andnational electronic media for threeconsecutive days as well as to place aquarter-page advertisement in severalIndonesian dailies for three days, the JakartaPost reported. Rignolda said he wouldappeal.

The company filed defamationsuits against two others, but they settledout of court. One, Jane Pangemanan, adoctor, signed a letter of retraction forcomments she made last year linking themine to heavy metals poisoning. "I felt I hadto sign because of the suit against me," shetold the New York Times in August. "My stafftold me that Newmont has seven layers oflawyers, and how could I fight them?" DrPangemanan said she thought she waswrong to sign, as she felt the company hadnot fulfilled promises on public health whichwere part of the agreement.

A US$550 million lawsuit filed onbehalf of Buyat Bay villagers by a localNGO, Agency for Health Law, also settledwith Newmont. However, environmentNGO,WALHI, is critical of the settlement,and says this was done without the consentof the villagers.

(New York Times 4/Aug/05; Jakarta Post10/Aug/05; JATAM intellectual oppressionalert 25/Jul/05)

Scientist's appeal to helpBuyat Bay people

A clinical medical toxicologist, Dr E.Blaurock-Busch, is appealing for funds tohelp the people of Buyat Bay recover fromtheir health problems. Dr Blaurock-Buschspoke at a seminar on mining, environmentand sustainable development, part-fundedby Newmont, which was held in NorthSulawesi's Sam Ratulangi University in Maythis year.The scientist, who is on theInternational Board of Clinical MedicalToxicology, calculates that a 6 monthtreatment course would cost 760 Eurosper person. Dr Busch-Bauer makes it clearthat the objective is not to accuseanybody, but simply to help the Buyat Baypeople. Contact: ebb@microtrace.de.

(Source: We can help the Buyat Bay people,via email listserve, 24/Sep/05)

Newmont tailings pipe (WALHI)

than the Suharto-era regulation it replaces(see DTE 66:13). Other large miningcompanies such as Freeport, Rio Tinto andInco, whose human rights and environmentalrecords warrant proper investigation by theauthorities, are permitted to continue theiroperations as normal. As is Newmont's BatuHijau copper-gold mine in Sumbawa, whichalso uses STD and has a much greaterproduction than the Ratatotok operation.

This general context, combinedwith heavy international business pressure onSBY not to damage further the investment

climate, reduce the likelihood that theprosecution of Newmont will be successful.The next few months will be a severe test forIndonesia's judiciary and the SBYgovernment. But even if Newmont doesescape formal punishment, the very fact thatthis powerful company has been held toaccount as far as this, is a positive outcome initself. After this experience, Newmont andother mining multinationals may think twiceabout cutting costs and pay more attention tocommunity concerns.

STD leak at Batu Hijau mineNewmont's Minahasa Raya 2.1 million oz goldmine was a relatively small operation,producing 99,300 oz in its final full year ofproduction, 2003. It generated tailings of of2000 tonnes per day, which were disposed ofinto the sea. Newmont's Batu Hijau copperand gold mine, on Sumbawa Island in NusaTenggara Timur province, is a different story.Newmont boasts that the mine is "one of thelowest-cost and largest copper producers inthe world" (Annual Report, 2004). The minehas reserves of 7.2 million oz and 6.3 billionpounds of copper. In 2004 Batu Hijauproduced 719,000 oz of gold plus 718 millionpounds of copper. The mine generates atleast 110,000 tonnes of waste per day, whichis piped into the sea - over 50 times as muchas in Buyat Bay.

In August, Batu Hijau received a"green level" rating from the environmentministry, indicating that the company hadsuccessfully implemented pollution orenvironmental degradation controlprogrammes as required by Indonesian law.

So when news came in of a leak inthe STD waste pipeline on 11 September2005, this undermined yet again Newmont'sclaims that STD is harmless.

According to a report byIndonesian mining advocacy network, JATAM,the leak was at a depth of 75 metres belowsea level in Senunu Bay, causing thousands oftonnes of tailings to pollute waters at ashallower depth. JATAM says there has been adecrease in in local fisherfolk's catch as aresult. The group said neither the companynor the authorities informed local peopleliving around the bay about the incident orthe risks to them. JATAM notes previous leaksin October and November 2000 and inJanuary 2001.

JATAM criticised the government'sdecision to approve Batu Hijau's applicationto extend its STD permit, without anypreliminary scientific evaluation and is callingon Jakarta to revoke Newmont's license todump waste into the sea.

(Source: New York Times 22/Dec/04, 5/Aug/05,27/Mar/05; Jakarta Post 23/Dec/04; Dow JonesNewswires 9/Aug/05; Antara 9/Aug/05;Newmont websitehttp://www.newmont.com/en/social/policy/social/index.asp and other related pagesincluding "Now and Beyond" reports 2003(Minahasa Raya) and 2004 (Batu Hijau). For anin-depth report on Newmont globally, seeDenver Post articles,December 12 & 13 2004at http://www.denverpost.com/)

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Evidence of Newmont's actions in Indonesiaclash with its claims of social responsibility.On Newmont’s website, company policystates:

"Newmont's future is dependent on its ability todevelop, operate and close mines consistentwith our commitment to sustainabledevelopment, protection of human life, health,the environment, and to adding value to thecommunities in which we operate."

It also claims: "wherever appropriate andfeasible, we set operating standards thatexceed the requirements of local law".

The company explains this as follows:

"Newmont recognizes that laws differ greatlyfrom country to country, and that the laws insome countries governing the environment,health and safety and similar issues are lessrigorous than others. Because we believe thatsocial expectations should be a key driver in thesetting of standards, we endeavour wherever wecan to set standards governing our operationsthat are the highest attainable even where theyexceed what local laws require."

The fact that the company stands accusedof breaching Indonesia law as well as usingmining practices effectively banned in manynorthern countries, highlights the yawninggap between policy and practice. Commentsby a senior company manager, exposed inthe New York Times, also point to therealities behind Newmont's claims to applyUS standards.A 2001 companymemorandum by Lawrence Kurlander, thena senior vice president and chiefadministrative officer, said Newmont had"told the world" it upheld US environmentalstandards abroad, when in reality it failed todo this. He said the concern applied tooperations in Peru and Uzbekistan as wellas Indonesia.

This gap between policy and practice in themining operations of Newmont, and manyother companies, has severely underminedthe credibility of 'corporate socialresponsibility' (CSR) - the voluntarycommitment to and attainment of standardswhich are supposed to ensure a sociallyresponsible way of working.The problemlies with the voluntary nature of thecommitments: under the CSR system, if acompany fails to abide by the environmentalor human rights standards it has set itself, itfaces no sanction other than bad press.Clearly, in Newmont's case this is notenough of a deterrent in itself.

The failure of CSR bolsters the campaignfor a legally enforceable set of internationalstandards to hold companies to account.NGOs pushing for legally enforceable'corporate accountability' - as opposed tothe weaker, self-regulated 'corporateresponsibility' - argue that this would bemore effective in bringing an end toenvironmental and human rights offences inthe corporate world. Not surprisingly, themove has been strongly resisted by thecompanies themselves.

* * * * *It remains to be seen whether theIndonesian government attempt to holdNewmont legally accountable for pollutingthe North Sulawesi environment will besuccessful.

For most companies, whose investments arewelcomed with open arms by thegovernments of deeply indebted, cash-strapped countries like Indonesia, legalaction remains a comfortably remotepossibility. Lax enforcement ofenvironmental regulations has been thenorm in Indonesia and is associated with along and often violent history of communityprotests over negative environmental andsocial impacts.

Undermining claims of corporate responsibility

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Indonesian civil society organisations arecalling on parliament to delay deliberationson the Mineral and Coal Mining Bill and tofocus instead on passing a new umbrella lawon natural resource management.

The mining bill, is designed toreplace the 1967 mining law, which waspassed during the early years of formerPresident Suharto's rule and opened the doorto foreign investors in the sector.The currentcontracts of work, signed by companies likeRio Tinto, Freeport, Newmont and Inco, arebased on this 1967 law.

A coalition of five NGOs issued adetailed position paper in August arguing thecase for prioritising a new natural resourceslaw over the mining law.The paper points to30 years of severe environmental impacts ofmining and conflicts between companies andcommunities.The lack of coordination arisingfrom the sectoral approach to naturalresources, say the NGOs, has led tooverlapping authority, unsustainable policies,conflicts of interest, destruction of naturalresources, poverty and injustice.

The paper remindsparliamentarians that a decree issued by thenation's highest legislative body (TAP MPRIX/2001), issued four years ago on AgrarianReform and Natural Resources Management,was aimed at addressing the problems arisingfrom the sectoral approach. The decreeinstructed the president and parliament towithdraw, reform or replace all laws andimplementing regulations which conflictedwith the decree. Following this, a decision wasmade to draft a new law on natural resource

management (RUU PSDA). (For morebackground see DTE 59:16 and 57:15 and52:3).

The NGOs point to several crucialissues addressed in the draft naturalresources law that affect the mining sectorand a future mining law. These includeadopting a decentralised 'bioregional', ratherthan sectoral, approach to natural resourcesmanagement and applying policies whichsupport sustainable development rather thanjust promoting economic growth. Thebioregional approach means taking thelinkages between land, coastal, marine andsmall island ecosystems into account, alongwith local communities and their cultures in agiven area. Whereas the sectoral laws focuson production of commodities, RUU PSDAputs emphasis on the protection of naturalresource assets, so that they can be usedsustainably.

The draft natural resources law alsohas implications for the mining and othernatural resource sectors, because it tries tosettle the fundamental problem of rights overnatural resources. It divides rights into threetypes: ownership, benefit and management.Significantly, ownership rights may derivefrom state or customary (adat) law and thesemay be individual or collective (collectiverights being immutable). This, argue theNGOs, puts communities in a moreimportant position in natural resourcemanagement. The draft law also specificallyrecognises the right of indigenous peoplesover natural resources and provides for theprinciple of free, prior and informed consent(FPIC) - meaning that mining companieswould need to forge agreements withcommunities who may be affected by theiroperations in advance of any mining activity.

RUU PSDA does not provide forthe reorganisation of governmentdepartments or sectoral authorities, butattempts to provide an umbrella for sectoralintegration by building on principles ofsustainable natural resource management,developing standards for policy-making andestablishing a coordination mechanism.

Under the draft law, a newministerial post is set up to coordinatenatural resource management at nationallevel and area management boards are set up,comprising government representatives, plusexperts, community representatives, NGOsand company representatives in a givenbioregion.Amongst other tasks, each board isresponsible for developing sustainable naturalresources management strategy andcoordinating an inventory of resources in theregion. These, plus sub-regional managementboards, come up with recommendations and

strategies for natural resource managementwhich must become the reference point to befollowed by all sectoral agencies in theirpolicy-making.

As of October 2005, the NGO effortsappeared to have had a positive impact.Reports said that environment ministerRachmat Witoelar told MPs in Septemberthat RUU PSDA would be submitted within 3months (end of November/early December).The PSDA bill is now in the NationalLegislation Programme's priority list for 2006and has the backing of some MPs who saidthey would agree to postponing deliberationson the mining bill.

(Source Tunda Pembahasan RUUPertambangan Mineral dan Batubara dan MARIMENDORONG RUU PS', position paper signedby ICEL,WGPSR, HuMa, Pokja PA-PSDA andJATAM,August 2005.)

Call for new mining law to be delayed

Bribery allegations denied

Three Indonesian state-owned miningcompanies have denied a newspaperreport implying that they were asked topay Rp7 billion (USD 700,000) to ensurethe passage of the new mineral and coalmining law.The report, in the Indonesian-language daily, Suara Pembaruan, said thatPT Aneka Tambang, PT Tambang BatubaraBukit Asam and PT Timah had collectedRp3 billion for a parliamentary committeeformed in June to deliberate the draft law,but also that they refused to pay to havethe law passed because it would hampertheir mining activities.The head of theparliamentary commission said allmembers denied requesting funds. (JakartaPost 16/Sep/05)

Stop irresponsible goldmining - Berlin declaration

Civil society organisations from elevencountries have called on governments andmining companies to respect human rightsand to stop ongoing violations,irresponsible mining practices andenvironmental destruction.The 2005Berlin Declaration, dated 18 September,comes fives years after the BerlinDeclaration on cyanide-based gold mining.The organisations, including Indonesia'smining advocacy network, JATAM, calledon governments to establish, respect andenforce the right to free, prior andinformed consent for all communitiespotentially affected by mining, includingtheir right to reject a project. (BerlinDeclaration 2005, 18/Sep/05)

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Mass protests challenge IncoThis article, contributed by YL Franky of the Alliance of Indigenous Peoples of the Archipelago (AMAN), highlights

ongoing protests against Inco, the Canadian-owned nickel mine at Sorowako, South Sulawesi.

Indigenous people affected by Inco's mining inSorowako*, mineworkers, students andNGOs who have formed the Mine Victims'Solidarity Forum (FSMT), mounted a four-dayoccupation of the company's regional office inMakassar, South Sulawesi, from September 15- 19th.

On 12 September, the FSMT hadprotested to the provincial assembly (DPRD)which resulted in DPRD members promisingthem a meeting with Inco on Thursday 15th.However, the assembly was unable to get Incomanagers to come to this meeting. Hundredsof disappointed FSMT members went enmasse to Inco's office and staged theoccupation.Two FSMT members also went onhunger strike: Yuliana, a 70-year old womanwho had been evicted from her land, andYusran, a Makassar University student. On thefifth day, the occupation was ended whenpolice forcibly ejected the protesters fromthe building.

FSMT is demanding that Incorespects people's rights by compensating thevillagers of Petea and the indigenousKaronsi'e Dongi community for landappropriated by the company. The group isdemanding houses for the Karonsi'e Dongiand recognition of their rights over acustomary (adat) area belonging to theKaronsi'e Dongi, which they have reoccupiedand are cultivating. FSMT is also demandingre-employment for workers who sufferedforced redundancies.

Inco says the Petea land case shouldbe settled by the local government and thatthe workers' claims should go through thelegal channels. The company has said it willinvestigate and discuss the Karonsi'e Dongiland claims internally.

Mass action and open protests havebeen frequent since the 1980s. From Januaryto September this year, there were sevendemonstrations concerning workers, localemployment, land compensation anddemands for recognition of indigenous landrights. The most intensive action has beenrelated to the land conflict between theKaronsi'e Dongi community and Inco and thegovernment.Today, around 70 families are stilloccupying and cultivating land and buildinghuts on Inco's golf course, which they claim astheir customary land. (See page 6 forchronology.)

The widespread protests resultfrom a sense of frustration with an unjustlegal process, with law enforcement agents

who are incapable of upholding the law andwith informal mechanisms, including unequaldialogues, which fail to break the deadlock.Local people are faced with repression, terrorand brutality as security forces and paid thugsare brought in. Policies and law enforcementare directed by investors, with the result thatconflict cases are left to pile up and drag onfor years.

The power of capital to intervenein the policy-making process was evidentduring the time of Megawati's government,which permitted mining in protected forestsvia Government Regulation in Lieu of a Law(Perpu) No 1 2004. This eventually becameLaw No 19, 2004. The government provedpowerless against the mining companies, usinguncertainty over business law and the threatof arbitration, as excuses to renege on itscommitment to protecting forests.

Similarly, the Constitutional Courtin its Judicial Review of Law 19/2004, proveditself incapable of amending policies in favourof communities by taking into considerationthe impact on people of mining operations.The Court admitted that, objectively, it wastrue there would be negative impacts frommining operations, but chose to trust in thegovernment's policy of protecting contractswith foreign mining investors. (Hendri Kuokin Opinion Column, Kompas 8/Aug/05. Seealso DTE 66:14,http://dte.gn.apc.org/66min.htm for morebackground on Perpu 1/2004 and Law19/2004.)

The accumulated impact of legaluncertainty, poverty and brutal acts by thesecurity forces has given rise to social unrest

and distrust of the government. This couldbecome a ‘time bomb’ which may explode atany time into social conflict and which willbring suffering and damage to all.

Continuing to break the lawInco is currently building the Karebbe hydro-electric dam to boost nickel production (seebox). This ‘showcase’ project is clearlyproblematic as two important permits havenot yet been secured: the principal landclearing licence from the Luwu Timur districtgovernment and a licence from centralgovernment to release protected forest land.

Local police are still investigatingthe company carrying out the work, PT ThiessContractor Indonesia, who says it doesn'tknow anything about the licences. (Seehttp://www.fajar.co.id/news.php?newsid=9328, 9/Aug/05.)

This has caused anger among localpeople since, clearly, PT Inco has violated legalprocedures. People are concerned that theclearance will result in heavier flooding whichwill ruin their livelihoods.

Previously, the South Sulawesiprovincial governor appealed to local peopleto guard against the threat of fatal flash floodsresulting from uncontrolled deforestation. Heexpressed concern about forest destructionin Sorowako and Luwu Timur. If it were truethat deforestation was so bad in Inco'sconcession, he said, the company would begiven a reprimand and the government wouldurge Inco to restore the forest to its formercondition. (TVRI report, 21/Nov/03).

There are suspicions that Inco hasbroken the law on other occasions too,

* ‘Soroako’ is an alternative spelling. Map of mining installation and roads at Inco’s Sorowako mine.(Source: K.Robinson, Stepchildren of Progress, State University of New York Press, 1986)

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through its involvement in smuggling coalfrom Tanah Grogot in East Kalimantan. OnNovember 10, 2004, the Luwu Utara policearrested a motor vessel, the Osanik Star, witha cargo of around 3,000 tonnes of coal withno official documents, in the district's coastalwaters at Malili. The coal was worth Rp 1.3billion - the unpaid taxes on this representincome now lost to the state.

Interim police investigations foundthat the vessel was bound for the port ofBalantang and its cargo was said to have been

ordered by PT Inco. The local police chiefsuspects that coal smuggling from Kalimantanto Malili to supply the nickel industry andother interests in Sorowako has been goingon for a long time. Herson Mangonta, thecaptain of this vessel, told his investigatorsthat he had entered Malili carryingundocumented coal ten times, and that all ofthe coal was ordered by Inco. (Seehttp://www.fajar.co.id/news.php?newsid=1270, 10/Nov/04.

Inco in IndonesiaCanada-based multinational Inco is theworld's second biggest nickel producer. Itsoperations around the world continue todraw criticism over environmental damageand human rights abuse claims.

Inco owns 61% of PT IncoIndonesia, which operates one of thelargest laterite nickel mines in the world. Itcurrently produces around 160 millionpounds (about 72,500 tonnes) of nickelmatte per year and is expected to continueproduction for around 20 years more.Thenew USD280 million hydro-dam on theLarona River at Karebbe will boostelectricity production to 360 MW, and ispart of the company's expansion plan toreach annual production capacity of 200million pounds of nickel matte by 2009.Theproject was launched in October this yearby president Susilo Bambang Yudhoyono.Inco will also spend more on 'communitydevelopment projects' and build a 80kmroad between Soroako and Bahodopi inCentral Sulawesi where it also holdsconcession rights.

In the three months toSeptember this year, Inco Indonesia's netearnings were US$73.2 million on sales ofnickel worth $219.4 million.

“Inco is known to be one ofCanada's largest single source polluters ofair and soil, threatening the health ofcommunities…" according to CatherineCoumans of Miningwatch Canada, "and Incois now increasingly exporting its badenvironmental track record andcontroversy-ridden community and labourrelations to places like Guatemala,Indonesia and Kanaky-New Caledonia".

Recent protests in Canadainclude a high-profile student action againstthe company's funding relationship with theMemorial University of Newfoundland, andthe awarding of an honorary degree toInco's chief executive officer, Scott HandinOctober.

(Source: www.inco.com, JATAM,Miningwatch Canada & Society forCorporate Environmental and SocialResponsibility (CESR) press release,28/Sep/05, CESR press release 20/Oct/05;Jakarta Post 25/Oct/05)

Inco protest actions

1980:When Inco built the Larona hydrodam, 95 families living by the side of Lake Matano askedInco for compensation - the case was taken up in Ujung Pandang court.The families demandedcompensation amounting to Rp750 million.The case was settled out of court,with Inco agreeingto pay compensation and relocate a mosque to higher ground.

1998: People demanded compensation for land when Inco built the Balambano hydrodam. Incoasked them to pursue their claims with the government which had been temporarily entrustedwith the compensation funds. One local person, Mendi, had still not received anything from thegovernment as late as 2001.

February 1999: Sorowako villagers demonstrated against Inco for making problems overcompensation and for failing to fulfil promises, such as provision of education and healthservices, electricity and clean water.These promises had been made as early as 1969.The casehas still not been settled.

October 2002: The Karonsi'e Dongi community occupied the Inco golf course, an area ofancestral community-owned land, which the company had taken without compensation. Atvarious times the company responded with threatening letters, eviction, burning huts andarrests on the grounds that the people were using land within the company's concession.

28 January 2005: Around 250 Inco employees who had been put on the redundancy list,together with their families, organised a blockade of the road between Wasuponda and Nuha,from 6:00 am. They stopped all company vehicles carrying nickel from Sorowako to Malili,including trucks headed for the port of Balantang. As a result, dozens of company containerscarrying nickel from Sorowako, were detained. Non company traffic was allowed to pass.

The demonstrators demanded that PT Inco directors withdraw the redundancypolicy and protested against Inco's involvement of local police officers in enforcing theredundancies. (Source: http://www.fajar.co.id/news.php?newsid=2504, 28/Jan/05)

31 March 2005: Around 500 members of a Sorowako youth organisation (FKPAS)demonstrated against Inco.At 5:00 am they flooded into the company golf course as part of amarch from Sorowako village to the Inco golf club grounds.The crowd demanded that theInco management make public all forms of recruitment procedures, including for medical staff.They demanded that Inco prioritise locally-born people in all recruitment, including Inco'sbusiness partners who had various small businesses in Luwu Timur. (Source:http://www.fajar.co.id/news.php?newsid=4250 1/Apr/05)

21 July 2005: Hundreds of redundant Inco workers blockaded PT Inco's airport in Sorowako.The protesters urged Inco's directors to meet them and called for Inco staff responsible for theredundancy policy to be fired.They also expressed sympathy and support for the victims of thePetea evictions.

8 August 2005: Dozens of people from the National Front for Workers Struggle (FNPBI)labour union protested at the South Sulawesi provincial assembly office.They demanded thatInco immediately pay severance pay to 303 workers who had been made redundant.The FNPBIbelieves that the hundreds of redundancies are unjust, because these workers have not yetreceived any compensation in the form of severance pay, uang, long service awards, or transportcosts.The costs owed by Inco amount to Rp 2 billion.

12 September 2005: Hundreds of people, including mining victims belonging to the MiningCommunity Solidarity Forum (FSMT) staged a protest at the South Sulawesi provincial assembly(DPRD) building. The protesters wanted local assembly members to mediate in a meetingbetween Inco's president director, the FSMT and victims of mining, in order to settle the casesof 250 redundant workers and the eviction of Karoni'e Dongi from their customary land.TheDPRD said it would hold the meeting on September 15th. DPRD members said the governmentand the DPRD were in a difficult position, facing threats of arbitration by Inco.

(continued on page 9)

Hunger-strikers, Inco office.

(WALHI Sulsel 2005)

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DOWN TO EARTH No. 67, November 2005

Energy policy ignores renewablesIndonesian NGOs are concerned that fuel price rises are increasing poverty, while long term energy plans are failing

to encourage alternatives to fossil fuels.

energy

Indonesian politics have been dominatedthroughout the fasting month of Ramadan bythe government policy to reduce fuelsubsidies.The move breaks a promise made bySBY that fuel price rises in March would bethe last this year. It has sparked weeks of angryprotests and is already causing hardship forordinary people. Prices for fuel, includingcooking kerosene and low-octane petrol, haverisen by an average of 126%. This has beencited as the likely cause of an inflation rate of17% in the year to October - a six-yearrecord high. It is conservatively estimated thatthe number of Indonesians officially classed asliving in poverty will rise a further 16% fromthe current 60 million people.1

Unfortunately, public anger has notbeen matched by government introspectionor a review of long-term energy plans. Despitethe steep hike in fuel prices and chronic trafficcongestion in major cities, the nationalgovernment does not acknowledge the needfor initiatives to improve mass transportation,for example. Instead, minister of public worksDjoko Kirmanto's plan, endorsed by the vice-president, calls for the building of six more tollroads in Jakarta, at a cost of US$2.25 billion.This is a move that will surely exacerbate bothcongestion and dependence on fossil-fuelledprivate vehicles. Meanwhile, cityadministration policies are patchy: forexample, Jakarta's successful ‘busway’ projecthas yet to be expanded past the current singleinner-city north-south route, while therelatively modest monorail project is stillbogged down in legal squabbles. Since theticket price to ride the monorail is likely to beexpensive, and since motorcycles and bicyclesare banned from toll roads, these 'solutions'are no help at all for the majority of the mega-city's workers and residents.

The critical stance taken byIndonesian environmental NGOs, such asJATAM and WALHI, towards the government'spolicy to raise fossil fuel costs has confusedsome foreign observers, since, elsewhere,environmental groups are calling for fossil fuelprices to reflect their environmental costs.However, the Indonesian NGOs' position isthat the government's pricing policy is notbased on environmental concerns, but ratheraims to satisfy business interests and facilitaterepayment of unjust debts. In the nationalenergy debate currently underway inIndonesia, civil society is arguing that thepresident must fulfil his responsibility forensuring supplies of energy that areconvenient, cheap and clean.

LiberalisationThe Oil and Gas Law (No 22/2001) aims forliberalisation of the oil and gas industry. Inparticular, it facilitates the entry ofmultinational oil companies through thedismantling of the monopoly held by state-owned integrated oil producer and retailer,Pertamina. Although the reason cited by thegovernment for its policy to increase fuelprices was the unsupportable cost ofcontinuing subsidies, another reason was tosmooth the entry of private fuel retailers suchas Shell, which has this month opened a retailoutlet in outer Jakarta, and cannot beexpected to compete with subsidised fuel.

World oil prices have leapt fromUS$25 a barrel in early 2005 to a current $65.

In liberalising the oil and gasindustry in Indonesia, the state hasrelinquished control over a key issue of publicconcern, a daring move given the historicalvolatility of the Indonesian public mood whenfaced with scarcity or hikes in the cost ofbasics such as rice and fuel. The governmenthopes that liberalisation will increasedomestic fuel provision through encouraginginvestment in exploration, production,refineries and the retail sector. It isforeseeable, however, that much of thenation's fossil fuel reserves will be exportedbecause impoverished Indonesians and

struggling local industries cannot afford theinternational prices which consumers indeveloped nations and booming industrialcentres such as China can afford to pay. In fact,despite holding over 500 million cubic metersof gas reserves, over 70% of Indonesia'scurrent production is pre-sold to foreignbuyers, a trend set to increase as the Tangguhproject, being developed by BP in West Papua,scrambles to pre-sell the project's productionto US and Asian buyers.

Critique of Energy BlueprintBefore the fuel price drama gripped thenation, Indonesian government planners hadcompleted a draft ‘Blueprint for NationalEnergy Management 2005-2025’, which wasdue to be examined by parliament in thecoming session.A similar instrument was alsoalready in existence, namely the NationalEnergy Policy 2003 - 2020. Unfortunately, bothdocuments were put together withouttransparency and public participation, by thesame ministry which handles mining, oil andgas.

Upon announcement of the 2005-2025 Blueprint,WALHI took the initiative andinvited the government's Agency for theAssessment and Application of Technology(BPPT) to co-host a National Seminar onNew and Renewable Energy in Jakarta on the25th of October 2005, followed by a series ofexpert meetings to work towards analternative position paper arguing for radicalchanges to the Blueprint.

The October seminar found thatthe Blueprint aims to achieve a paltry 2.4% ofenergy supplies from renewable sources by2025.This figure guarantees Indonesia a roller-coaster ride of dependence on the pricevagaries of a liberalised fossil fuel industry,with all the attendant environmental impacts.The figure of 2.4% from renewables comparesunfavourably with common internationaltargets of at least 20%. Hence expertsinvolved in the Jakarta seminar are pushing forthe Blueprint to be redrafted with the aim ofachieving around 20% by 2025.

This figure is certainly achievablegiven Indonesia's generous endowment ofpotential renewable energy sources. Potentialsupplies of geothermal, solar, wind, microhydro and biomass energy are estimated tototal 160 gigawatts watts of electric capacity -more than 7 times the current nationalelectrical generation capacity. For example, atthe moment just 4,200 megawatts ofhydroelectricity is being generated, which is

Rising fuel costs: kerosene stove, Jakarta (DTE)

less than 6% of the estimated 76,000potential megawatts available in Indonesia.2

Indonesia is well-endowed with geothermalpotential: existing planning calls forIndonesian geothermal installed capacity of9500 megawatts by 2025, compared to only800 megawatts currently utilised.

The WALHI/BPPT seminaridentified key obstacles to achieving a 20%renewable energy target, highlighting the needfor government planning, policy andregulatory support for renewables. Theproposals which arose were:

A clear definition and identification ofrenewable energy and energy efficiency askeys to national energy security;A roadmap for developing renewableenergy developed with all stakeholders -including private enterprise - supported byinnovative financing incentives, with a goalof technological and financialindependence;Transparent and consistent electricityprice-setting processes (bearing in mindthe monopoly held by state electricitypurchaser and distributor, PLN);A short-to-medium term policy ofincentives to spur implementation ofalternatives to fossil fuels intransportation, industry and the home;Strengthening government institutionalcapacity and focus on renewables. Theseminar participants recommended theimmediate establishment of a NationalCommittee on Renewable Energy andEnergy Efficiency, to he headed by thePresident; to be followed by theestablishment of a Ministry for RenewableEnergy and Energy Efficiency.3

Finally, besides largely ignoring theenvironmental implications of differentenergy sources, the Blueprint does notacknowledge that different energy sourcesare viable and appropriate in differentlocations. Not all sources are convenientlylocated close to demand, for example 25% ofhydroelectric potential is located in low-demand West Papua. Similarly, coal-firedpower plants are most efficient when locatedon the doorstep of the coal mine. This ismore true in Indonesia than elsewherebecause top quality ‘clean’ coal is sold tooverseas buyers, while the poor quality coalthat remains for domestic consumption ishigh in ash and moisture content.This meanssignificant energy and money are beingwasted transporting low energy density coalfrom Kalimantan to Java.4 In fact a keyproposal to improve the Blueprint is toundertake more detailed and decentralisedplanning at the local and provincial levelinstead of setting across-the-board nationaltargets.

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Geothermal Energy - Whatare the environmental

concerns? Renewable energy sources bring someenvironmental concerns, as is wellrecognised with large-scale hydroelectricdams.These are not supported by mostenvironmental organisations because ofunacceptably severe environmental andsocial impacts. Since experts are excitedabout Indonesia's potential for renewablegeothermal power, it is worth consideringwhat conditions must be met forenvironmentally-friendly realisation of thatpotential.

Depending on the local geology, waterfrom geothermally-heated undergroundreservoirs can contain dangerous levels ofheavy metals and dissolved pollutant gasessuch as methane, hydrogen sulfide andammonia; the hotter water means morepower but also often more dissolvedchemicals.The heat contained in wastewater is also ecologically disruptive ifreleased into surface waters. In order toprevent surface contamination, this watershould be re-injected into its originalreservoir, with the added benefit ofmaintaining reservoir pressure.Thepotential for contamination ofgroundwater above the reservoir shouldbe dealt with through impermeableborehole casings as developed for the oilindustry. Sludge and sinter can accumulatein the power plant, containing precipitatedmetals and sulfur which must be processedand put to use or safely disposed of.

Much of Indonesia's geothermal potentiallies in environmentally or culturallysensitive areas including protected forestsin mountain areas, so the area of landrequired for the power plant, access roadsand power transmission lines must betaken into account and minimised. Powerstation operations must not interfere withwater users living downstream - already aconcern for communities living near aproposed geothermal power plant in Bali.The proposed site is Bedugul forest, full ofrare indigenous plants.Three adjacentlakes linked to Dewi Danu Bratan (aBalinese goddess of agriculture) are ofgreat scientific, economic and religioussignificance.WALHI Bali has voicedconcerns about the project, which it saysis proceeding without a full environmentalimpact assessment or the proper permits.5

The Bedugul experience suggests that,while a geothermal power station iscleaner and certainly more greenhouse-friendly than a coal-fired power station, itshould still be subject to a fullenvironmental and social risk assessmentand the approval of local communities.

Biofuels and palm oil:feeding cars or people?

Biofuels are often proposed as anenvironmentally-friendly alternative tofossil fuels, especially by Northerngovernments keen to meet theircommitments to the Kyoto protocol onclimate change. Now the palm oil industryis jumping onto this bandwagon. Palm oilcan be used as a substitute for diesel torun vehicles and power plants. Powerplants in the Netherlands are burningsubsidised palm oil for electricitygeneration.The US agri-businessconglomerate Cargill announced inOctober it is to build a US$30 millionbiodiesel plant in Germany with thecapacity to produce 200,000 tonnes of fuelper year.

The Malaysian Palm OilProducers Association is promoting thisnew ‘need’ for the expansion of oil palmplantations, including in Indonesia, on itscurrent European lobbying tour.TheMalaysian government has already giventhe green light to the development ofbiofuels. And now Indonesia is planning toestablish the world's largest palm-oilplantation in Kalimantan, covering an areaof 1.8 million hectares, along the borderwith Malaysia – with investments fromMalaysia and China. In September,Indonesia's minister for research andtechnology announced that sevencompanies had been licensed to set upbiodiesel plants. Some have their ownplantations. "This industry is supported by5 million hectares and adequate processingtechnology", said Kusmayanto Kadiman. Hesingled out Riau and Jambi as areas readyto start biodiesel production, as well asthe Kalimantan border. Local governmentsare apparently waiving taxes for companieswhich want to open up palm oilplantations for energy production.

Biofuels are said to be carbonneutral, as burning wood, plant wastes,sugar oil or cellulose only returns to theatmosphere the carbon extracted duringplant growth. However, there are seriousissues about the impacts on land, forestsand rural communities. Based on thehistory of the industry in Indonesia, a rushto expand oil palm plantations will causemore deforestation, damage locallivelihoods, create monocultures andrequire more inputs of agro-chemicals.

See: International NGO sign-on letter toEuropean Union parliament athttp://forests.org/action/alert.asp?id=biofuel Indonesian government biofuel statementhttp://www.bppt.go.id/berita/news2.php?id=754

15-19 September 2005: Occupation of Inco's regional office andhunger strike (see main text). During this action, Inco, represented byEdi Suhardi (regional external relations director), Idham Kurniawan(government relations coordinator) and H. Latief, plus the WestMakassar local police chief met with community representatives. Themeeting ended without result as Inco was unable to meet the people'srequests. PT Inco believed the Petea land case should be settled by alocal government team from Luwu Timur. The company said theKaronsi'e Dongi land claims would be investigated and discussedinternally.As far as the workers' claims were concerned, the companywould fulfil all its legal responsibilities.

28 September 2005: Hundreds of FSMT members blockade the Incomine again. Press reports said police fired warning shorts to dispersethe protesters (AP 29/Sep/05).

Inco in Bungku24 September 2004: Village heads and village councils (BPD) fromBungku Tengah and Bahudopi subdistricts, the subdistrict head andmining officials from Morowali subdistrict, held a meeting at Inco'soffice in Dampala village to hear about Inco's exploration plans for2005 in the Bungku and Bahudopi areas, Central Sulawesi.

The residents of Onepute Jaya and Lele villages weredisappointed with the meeting as there was no discussion of theproblems they face and their demands for compensation which havenot been answered by local government or Inco.

On April 29 2005, Onepute Jaya villagers held a protest atInco's office in Lele village, Bungku Tengah subdistrict, over thecompany's exploration activities in March and April on 500 hectares ofland owned by Onepute Jaya villagers, without their consultation oragreement.

(For more background on Bungku and Onepute Jaya see DTE's 1999report Inco in Indonesia, at http://dte.gn.apc.org.Cinc3.htm.)

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On October 1st, 2005, the president sharplyincreased the official price of cookingkerosene by 185% from Rp700 per litre toRp2000 per litre,with the street price settlingin subsequent weeks at around Rp2300/l.Further increases are planned until kerosenereaches international market prices inJanuary 2008.6 The sudden increase inhousehold cooking costs caused a massivepublic outcry so, less than a week later,coordinating minister for the economyAburizal Bakrie outlined a governmentdecision to spend Rp150 billion of the 2006national budget to buy 10 million stoves forpoor Indonesian households designed toburn coal briquettes priced at Rp1000 perkilogram.7

Ironically, the Indonesian Ministryfor Women's Empowerment has been giventhe task of promoting the household use ofcoal briquettes, a plan which brings significanthealth risks for women who do mosthousehold work in Indonesia. The WorldHealth Organization estimates that use ofsolid fuels indoors results in 1.6 millionpremature deaths each year, largely amongwomen who do most cooking, and thechildren in their care, who are at increasedrisk of death by respiratory infection. Toaddress this public health problem, thePartnership for Clean Indoor Air was

launched at the World Summit on SustainableDevelopment in Johannesburg in 2002. Theinitiative involves the UN and severaldeveloping nation governments such as Chinaand India. Unfortunately, despite hosting theWSSD preparatory conference, Indonesia isnot involved in the Partnership.

Studies conducted in China havedetailed the nature and causes of health risksto women and children of cooking with coal:polycyclic aromatic hydrocarbons formedduring coal combustion are a cause ofoesophageal and lung cancers, and otherhydrocarbon combustion products increaserates of acute respiratory infections andchronic obstructive pulmonary diseases (suchas bronchitis and emphysema).Adding to thisrisk, coal contains varying levels of sulfur,mercury, arsenic, selenium and fluoridecontaminants.The U.S. Geological Survey andthe Institute of Geochemistry, Guizhou haveestimated that at least 3,000 people inGuizhou Province in southwest China aresuffering from chronic arsenic poisoning,apparently from consuming food preparedover fires fuelled with coal.

The coal to be used in thegovernment-sponsored coal briquetteprogram comes from PT Batu Bara BukitAsam and PT Kaltim Prima Coal. Since acontroversial government-forced sale in

2003, Kaltim Prima Coal is owned by PTBumi Resources, of which the Bakrie family(led by Coordinating Minister for theEconomy Aburizal Bakrie) hold 43% shares.The Bakrie family therefore reportedlycontrols 40% of the national coal industry,8 aconflict of interest which does not seem toprevent Minister Bakrie from promoting aswitch from liquid fuels to coal, nor frompublicly speaking out against his cabinetcolleague, Minister of Finance Jusuf Anwar'sdecision to levy a 5% tax on coal exports.

Neither Bukit Asam nor KaltimPrima make information available on the(naturally varying) toxic contaminants in theircoal, other than to say that their coal is lowin sulfur. Officials researching and promotingstoves at the BPPT (Agency for theAssessment and Application of Technology)acknowledge there are health issues inherentin using coal indoors, and recommend thatthe briquette-fuelled stoves be kept outsidefor 15 minutes after lighting, and, whenbrought inside, be used only in a well-ventilated kitchen. In response to healthconcerns, BPPT has also recently begun workon a certification scheme for coalbriquettes,9 although this will only coversulfur and carbon monoxide emissions. BPPTstaff acknowledge this leaves out keypollutants of concern including mercury,arsenic, and polycyclic aromatichydrocarbons.10

The dangers of coal briquettes

(continued from page 6)

Sources:1. Alat Mutilasi Negara: Setahun kebijakan SBY-JK pada sektor Tambang dan

Energi (WALHI media release, 20.Oct/05).2.Yogo Pratomo, Dirjen LPESDM, speaking at the National Seminar on

New and Renewable Energy, Hotel Sofyan Jakarta, 25/Aug/05.3. A useful model is India's Ministry of Non-Conventional Energy

Sources.4. Pak Sidik Budoyo of BPPT (Agency for the Assessment and

Application of Technology) speaking at the National Seminar on Newand Renewable Energy, Hotel Sofyan Jakarta, 25/Aug/05.

5. ‘Bedugul geothermal project raises controversy’, I Wayan AnantaWijaya, Jakarta Post 11/Aug/05.

6. ‘Harga Minyak Tanah Naik 185 Persen’, Kompas, 01/Oct/05.7. ‘Disiapkan 10 Juta Tungku Briket Batu Bara’, Kompas, 07/Oct/05.8. ‘Sesama Menteri Kok Saling Nyalip!’, Wim Asmowiroto, Rakyat

Merdeka, 30/Oct/05.9. ‘’Briket Perlu Standar Untuk Menjaga Kesehatan, Media Indonesia,

20/Oct/05.10. Interview with BPPT experts, 27 October 2005.

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Chip mill will put more pressure on South Kalimantanforests and livelihoods

Construction work has started at a wood chip mill on Laut Island, South Kalimantan. It is part of a planneddevelopment of the pulp and paper industry in the province which threatens to destroy forests and impoverish local

communities.

pulp

The new chip mill, which will have the capacityto produce 700,000 tonnes of wood chips, isbeing built by PT Mangium Anugrah Lestari(PT MAL) on Pulau Laut - a large island off thesoutheast coast of South Kalimantanprovince. PT MAL is a subsidiary of Singapore-based United Fiber Systems (UFS). UFS is theinternational firm heading the development ofthe province's first pulp mill - a project whichhas been vigorously opposed by local andnational NGOs for the past three years.

UFS has been trying to get a600,000 tonne pulp project off the ground onthe mainland of South Kalimantan since itofficially received the go-ahead in 2003. Thepulp plant at Sungai Cuka village, in Satui sub-district, has been delayed due to problemsfinancing the project and legal difficulties.Initially, the Pulau Laut chip mill project wasexpected to generate funding for the Satuipulp plant development and to supply it withits main raw material in future. Now that UFShas taken over production at the Kiani Kertaspulp plant in East Kalimantan, the game planseems to have changed.

South Kalimantan's forests and thecommunities dependent on forest resourcesare expected to suffer the impacts of thesedevelopments. The mills are more than likelyto source wood supplies from natural forests- directly or indirectly - since supplies fromexisting plantations cannot meet this newdemand. Areas of remaining forest will becleared to establish more fastwoodplantations. This will contribute further toIndonesia's forest crisis. Yet, at the nationallevel, Indonesia is supposed to be reducing theover-capacity of its wood-processingindustries.

Supply gapBoth the pulp mill and wood chip mill intendusing timber from state-owned forestrycompany plantations (Inhutani II and III) inaddition to UFS' plantation concession,managed by PT Hutan Rindang Banua (PTHRB)1. According to UFS, the Satui pulp millwill be unique in Indonesia as it will only useplantation timber right from the start.However, calculations in a recent CIFORreport show that UFS cannot obtain sufficientraw material from its own subsidiary.

In theory, an area of 160,000ha of

well-managed plantation could meet the pulpmill's needs of nearly 3 million cubic metres oftimber per year in a sustainable 8-year cycle.HRB officially has a 268,585ha HTIconcession. UFS claims that 86,000ha wasplanted with acacia between 1994 and 1999,but the area and quality of these plantations isin doubt. Fires may have destroyed more thanhalf of the trees planted in some places.Drought and poor plantation managementhave affected yields too. Less than 15,000haconsists of plantation in good condition,according to local NGO WALHI Kalsel.

The HRB concession is spreadbetween five locations. Nearly 40% cannot beplanted with pulpwood. The total area alsoincludes some settlements. There are also

overlapping land use permits, mainly for oilpalm plantations and coal mining by PTArutmin. Nine oil palm plantation permits,mostly belonging to the Minamas Group,overlap with HRB's plantation and, once theacacia has been harvested, the land will betaken over for oil palm and not replanted withpulpwood.

The plantation area has beenfurther reduced because local communitieshave reclaimed land which they had previouslyallowed HRB to use.At Sebamban village, thevillage head has allocated land to thecommunity and allowed his people (Balinesetransmigrants) to cut down acacia trees tobuild their houses.

Extensive areas have been over-logged and, since major forest fires sweptthrough Kalimantan in 1997-8, some areas arenow coarse grassland (alang-alang).Nevertheless, 73,000ha of HRB's concessionis still covered with natural forest. Over halfthis forest is at risk of destruction.The Finnishforestry consultancy, Jaakko Pöyry, advisedUFS in 2004 that 44,000ha of 'waste forest' issuitable for conversion. Furthermore, thereare rumours that UFS does not currently havethe funds to replant and maintain the HRBplantation.There are other plantations in thevicinity of the proposed Satui pulp plant, butthese currently have other buyers - includingpulp plants in Riau - and UFS has, as yet, nocontract with them. In other words, there isno guarantee of sustainable plantations for thepulp plant.

Converting forests to wood chipsThe wood chip plant should start productionin early 2006. It is expected to chip acacia logsharvested from HRB's mature plantationareas on the mainland, Inhutani II plantationson Pulau Laut, and sites managed by small-holders and other companies in the area. UFSwill probably use these chips in the newlyacquired Kiani Kertas pulp plant in thenorthern part of neighbouring EastKalimantan. Any surplus can be sold to otherpulp producers, within Indonesia or forexport, at least until the Satui pulp mill is built.

A spokesman for HRBacknowledged that there are problems, butinsisted that HRB was capable of supplying the

Pulau Laut: local fisheries under threat? (DTE,2005)

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chip mill, with additional supplies fromInhutani II and III. Even so, the chip mill maywell operate at the expense of natural forestsand local NGOs still doubt that it will besupplied from legal sources of timber.There isone productive pulpwood plantationmanaged by Inhutani II on Pulau Laut - fairlynear the proposed wood chip plant site. Butboth Inhutani II and III are currently supplyingtimber to Kiani Kertas. Moreover, Inhutani IIIis not, at present, replanting its plantationconcession after felling.

Unlike the planned SouthKalimantan pulp mill which is designed only tohandle acacia trees, the wood chip plant canprocess any sort of timber - including mixedtropical hardwood from destructive or illegalsources. However, a new Jaakko Pöyry report,commissioned by an Austrian bank backingthe project (see below), now claims that UFSwill not use any natural forest wood in thechip plant. Indeed, UFS apparently aims tohave its plantations FSC-certified.The report,nevertheless, admits that "the creation of alocal market for Acacia mangium chip logscould potentially encourage interestedparties outside the concessions, illegally orotherwise, to establish plantations." It goeson to point out that there are some 40,000ha of natural lowland forest on the northernpart of Pulau Laut that could be converted toplantations. Once the commercially valuablewood has been extracted, the rest can beclear felled and shipped along the coast toKiani Kertas to be turned into pulp.

This plant was part of the timberempire of Bob Hasan, the now-disgracedforestry tycoon, government minister andSuharto crony, jailed for corruption. In recentmonths the plant has been taken over by UFS,meaning that its growing portfolio ofsubsidiaries will be competing with eachother for scarce plantation pulpwoodsupplies.

Pulau Laut villagers get one-sided viewConstruction of the chip mill at the village ofAlle-Alle, Pulau Laut had started by earlyAugust 2005 with land clearance. Thegovernor of South Kalimantan laid the firststone for the US$45 million plant in earlySeptember. The plant will be built andoperated by UFS subsidiary PT MAL.

Compared with the devastatingeffects that a chip mill can have on naturalforests, the 'footprint' of the plant is relativelysmall. Some land is required for the factoryand yards for incoming timber and outgoingwood chips. As the site is on the coast, andmaterials will be shipped in and out, fewaccess roads are needed, but new harbourfacilities will be constructed. The chip mill,lifting equipment and vehicles will generatenoise and dust day and night and it will alsoproduce mountains of sawdust as a wasteproduct. So the lives of the local communitywill change forever.

DTE's research has found that localpeople who may be affected by the mill'soperations have not been sufficientlyinformed about potential negative impacts ofthe mill or the facilities associated with it. PTMAL's information campaign, in 2003, waslimited to local government officials andlandowners affected by the project, not thewider community. The company claims theplant will employ at least 2-3,000 people in anarea where some 7,000 people areunemployed, but this seems unrealistic. PTMAL told local people that waste (sawdust)from the mill was not dangerous and could infact be used to generate electricity. Alle-Alleand Tanjung Seloka villagers who only haveelectricity from 18:00 to 6:00 welcomed this.Company representatives also said therewould be no noise pollution.

The land acquisition process didnot come close to upholding the principle offree, prior and informed consent. Thecompany acquired all the land it needs (84ha)from 173 people. However some villagers aredissatisfied with the compensation theyreceived (Rp5,500 per square metre) which isrelatively low compared with open marketrates of 40,000 - 100,000/m2.

Despite disappointment over thelow compensation levels, the villagers regardthe project as a source of jobs andimprovements to the village's facilities. Theirhopes include road repairs, lessunemployment, development of telephone

A labourer collects rocks for jetty construction, Pulau Laut (DTE 2005)

UFS projects in Indonesia

Relevant UFS companies Activity Location Area/capacity

PT Hutan Rindang Banua Industrial timber Five blocks at Riam Kiwa, Officially 268,000 hectares(PT HRB) (previously known estate management Satui, Kintap,Teluk Kapayan as Menara Hutan Buana) and Pamukan in the

southeast part of the South Kalimantan mainland

PT Marga Buana Bumi Mulia Development and operation Sungai Cuka, Satui,Tanah 600,000 tonne pulp/year (possibly (PT MBBM) of new pulp mill (US$863 Bambu district, South increasing to 1.2 m t)

million) to start in 2007 Kalimantan

PT Marga Anugerah Lestari Development and operation Alle-Alle, south part of Laut 700,000 tonne wood chip/year(PT MAL) of woodchip mill island, South Kalimantan

(US$38 million) to start in early 2006

PT Kiani Kertas Pulp mill (set up in Nov Malinau district, north part 525,000 tonne hardwood kraft (negotiations for purchase 1999 by Bob Hasan; UFS of East Kalimantan pulp/yearin progress) takeover July 2005)

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and mobile phone communications andrevitalisation of the defunct villagecooperative to sell farm produce.

The company has failed to point outany negative impacts linked to theconstruction of a 100m dock to importtimber and export wood chips. The water offPulau Laut is deep and ships with a deadweight of 30,000 metric tonnes will be able touse the harbour, according to the localnewspaper, Banjarmasin Post. Since themajority of local people are of Mandar andBugis origin, whose livelihoods rely on small-scale fishing, it would not be unreasonable toexpect that the company should discuss thelikely effects before beginning construction.

An environmental impactassessment for the dock completed in May2005, which has been viewed by DTE, pointsto six potential areas of concern about thedevelopment's environmental aspects. Thesecover impacts on water quality, the amountand variety of aquatic life in the surroundingarea, community health, air quality, soil quality,erosion and sedimentation levels and coastalabrasion.

International backingThere is major international investmentbacking the pulp and chip mill projects.European companies are planning to supplyequipment and expertise as well as arrangefinancing.

UFS, though based in Singapore, hasbeen owned by Finnish, Swedish andIndonesian investors since 20022, when theytook over the pulp mill and plantationcompanies from Chinese constructioncompany Poh Lian. Originally, the projectswere owned by Probosutedjo, formerpresident Suharto's brother-in-law.

It was during Probosutedjo's timethat PT MHB got into trouble with theauthorities for failing to pay around US$10million in government reforestation fund loans- a sticking point that persists in negotiationsover licences between Indonesia's forestrydepartment and the current owners.

In 2003, environmental campaignerssecured the withdrawal from the pulp projectof Akzo Nobel, a Dutch subsidiary of theSwedish chemical company, Eka.The companyhad signed up to build a plant to producebleaching agents for the plant and itsinvestment represented around 8% of thetotal pulp investment cost.

According to a 2005 report byCIFOR, a major Austrian bank, RaiffeisenZentralbank Oesterreich, has arranged 53% ofthe financing for the chip mill construction(US$21 million). 80% of the finance securedso far for the pulp mill (US$693 million) iscoming from CMEC, China. It also said thatAndritz (Austria) will supply most of themachinery for the chip and pulp mill, with anoverall order worth about US$300 million.

The development of the pulp andpaper industry in South Kalimantan also hasstrong support from the local government.This dates back to a visit by the former SouthKalimantan governor, Sjachriel Darham, toWorld Expo 2000 in Hannover, Germany.

Austrian protestAustrian environmentalists protested againstthe involvement of Austrian bank Raffeisen inthe South Kalimantan project in earlyOctober. For a German language report of thedemonstration and pictures seehttp://www.global2000.at/index3.htm.

A report by Austria's Friends of theEarth (Global 2000) on Austrian involvementin the UFS pulp project is available inGerman at

http://www.global2000.at/download/file2825.pdf.An English version will be available shortly.Contact andreas.baur@global2000.at formore information.

1. PT MBBM's EIA includes a fourth company as atimber supplier: PT Kirana Katulistiwa

2. For more information on the Scandinavianinterests in UFS see DTE 56:3.

(Source: DTE field research notes; variousdocuments by and communications with localNGOs Rindang Buana, WALHI Kalsel andLPMA; Review of wood supply for proposed SouthKalimantan pulp mill, Jaakko Pöyry, Nov 2004;Environmental Issues, Wood Chip Mill, JaakkoPöyry, Oct 2005; Brief on the planned UFS pulpmill project for South Kalimantan, Jurgens et all,CIFOR 2005; Friends of the EarthAustria/Global 2000; Amdal tentang PelabuhanKhusus Wood Chip di desa Alle-Alle, KabKotabaru; Banjarmasin Post 9/Sep/05; ST17/Oct/05; Tidak Ada Chip Mill Tanpa Kayu,DTE, forthcoming; Operational ManagementAgreement with PT Kiani Kertas, 28/Sep/05)

passed a resolution in October criticising theEuropean Commission and Member States fortheir lack of action on illegal logging andcontrols on the import of illegal timber intothe EU. The Parliament called on theCommission to go beyond the voluntaryregime proposed and put forward legislationto criminalise the import of illegal wood and

promote sustainable forest managementworld-wide.

The Parliament also stated thatpartnership agreements with countries whichproduce timber, including Indonesia, shouldenhance forest protection and address socialinjustice and poverty. It called for civil societyand democratically-elected citizens to beinvolved in the negotiations, which should setan action programme with clear deadlines to

review the partner country's forest laws andimprove their social or environmentalprovisions. (Greenpeace press release25/Oct/05)

The original legality principles canbe found at http://www.illegal-logging.info/papers/Z%20Introduction%20and% 2 0 P r i n c i p l e s . h t m ;http://www.dephut.go.id/informasi/ph/bpk/UK-Ind/prinsip.htm.

(continued from page 14)

UFS pulp and chip mill sitesshowing rough locations of UFSpulpwood concessions (unshaded)and other potential sources ofpulpwood (shaded areas).

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Legal or sustainable?As part of the international campaign to crack down on illegal logging, stop forest destruction and eliminate timber

smuggling, the Indonesian government has been pressed to agree a definition of what is and isn't 'legal' inIndonesia's forests. Civil society organisations have lobbied hard to ensure better protection for indigenous

communities, whose rights have been largely ignored in the rush to extract maximum profits from the forests.

forests

Last year DTE reported on a legality standarddrafted as part of the follow-up to a 2002Memorandum of Understanding (MoU) tocombat illegal logging and the illegal timbertrade signed by the Indonesian and UKgovernments - see DTE 62:3. One year on,negotiations still continue.

The context of Indonesia's legalitystandard has changed since the EuropeanCommission adopted an Action Plan onForest Law Enforcement, Governance andTrade (FLEGT) in May 2003. This was aresponse to estimates that around half allimports of tropical timber into the EuropeanUnion are from illegal sources. The FLEGTAction Plan starts from the premise thatmoves against illegal logging require co-operation between timber exporting andimporting countries. Central to this plan arebilateral treaties called Voluntary PartnershipAgreements (VPAs). Under a licencingscheme, customs officers in Europeancountries will be able to confiscate anyunlicenced timber entering the EU from apartner country. European ministers backedthe policy by passing two regulations inOctober 2005.The first VPAs will probably bebetween the EU and Indonesia, Congo andGhana.

The Indonesian government and theEU have shown a fair amount of interest inthis partnership on illegal logging. TheEuropean Commission is funding a FLEGTIndonesia Support Project designed to helpIndonesia draw up a VPA.This is expected tostart in January 2006 but, so far, there is littleevidence of understanding or co-ordinationbetween government departments.Indonesian CSOs are rather further ahead.Since June 2004, a series of workshops hasbeen organised by Indonesian forest NGOTelapak, to exchange information aboutFLEGT developments, discuss relevant issuesand decide on a joint position to present todecision-makers in Jakarta and Bruxelles. ThisForum met again from 22-23 August to reviewtheir activities and prepare for a FLEGTConsultation in Bruxelles in September. Themeeting was also attended by representativesof the forestry and foreign affairsdepartments, the EU delegation andcommunities.

Threat or opportunity?Indonesian CSOs are divided as to whetherthese international initiatives on illegal loggingare a threat or an opportunity for Indonesianforests and the communities who depend onthem. Some are frustrated that so much time,energy and funding is spent addressing the'illegal logging' issue primarily to meet theneeds of international timber traders andconsumers when these resources could havebeen directed at tackling destructive loggingand the conflicts between the government,logging and plantation companies and localcommunities - especially over customaryforests. Others consider that currentapproaches could end up legalising destructiveforestry policies and practices.They also pointto the repressive operations initiated in thename of forest law enforcement, includingOperasi Hutan Lestari II which took place inWest Papua earlier this year (see DTE 65:13).And even if Indonesia signs a VPA, furnituremade from illegally harvested Indonesiantimber could still enter the EU via China orVietnam.

On the other hand, some forestactivists see the international 'illegal logging'debate as an opportunity to push for muchneeded change on contentious issues such asland rights and tenure, corruption and forestlaw reform. For example, Indonesian

representatives at the Bruxelles meeting inSeptember demanded that "All VPAagreements must guarantee that all forestmanagement units obtain free prior informedconsent from communities and also improvethe livelihoods of local and indigenouspeoples".

The definition of legality and theprocess by which it is agreed are crucial, buthighly sensitive issues and Indonesian civilsociety, the government and loggingcompanies are engaged in a protracted,complex series of inter-related negotiations.The final Legality Standard should specify allthe legal requirements relating to the origin,production, transportation, processing andtrade of timber - areas covered by some 900Indonesian laws, regulations and decrees thatcover these areas.Yet legal timber is not thesame as sustainable forest management.

The MoU team of staff from DFIDand the forestry department set up regionaland national consultations in 2003. Thevarious stakeholders identified the major'principles of legality', which were drafted intothe outline of a legality standard. Severalindividuals and organisations have sincecontributed further to the Standard todevelop auditable criteria and indicators fromthe initial principles, and to produce guidancenotes for auditors. Some of the associatedwork was contracted to the US-basedconservation NGO TNC.

By May, it looked as if real progresswas being made.The forestry department hadmore or less agreed to the draft legalitystandard which had been over two years inthe making. The standard had been tested inthe field and TNC and the Indonesia-UK MoUteam had organised workshops in Samarindaand Bogor on the results. The consultations,entitled 'Field Testing of Legality Verification andChain of Custody Systems' were meant toupdate participants on field tests, to get inputsfrom the stakeholders and to move towards a

1.This is the process by which forest areas areclassified, their boundaries surveyed andagreed by interdepartmental teams and thenofficially registered as State Forests (see M.Colchester in WRM Bulletin 98, September2005)

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common understanding of the legalitystandard.At this point some serious problemsbecame apparent. The workshop revealedthat Principle 1 of the standard (thegazettement1 issue) and Principle 3 (free,prior and informed consent/communityrights) were difficult to test in the field fortechnical and administrative reasons. Also, alocal NGO that had monitored the field testclaimed that the whole procedure was flawed(see box). Moreover, it became clear thatthere was still a wide range of views aboutwhat the legality standard was and what itshould be doing.

In fact several legality standardswere being developed separately. In additionto the Indonesia-UK MoU initiative, otherlegality standards were under development bythe TFF (Tropical Forest Foundation) andBRIK (Indonesia's Forest IndustryRevitalisation Agency. (See DTE 60:13.)Obviously this situation had to be addressed:Indonesian timber could not be soldinternationally with three different definitionsof legality. It was therefore decided that thesedifferent standards should be 'harmonised'.

The Indonesian EcolabellingInstitute (LEI) was entrusted with this taskand has adopted the approach of comparingthe principles, criteria and indicators of thevarious schemes on the basis of attainability,credibility, ability to respond to socialproblems and links to sustainability. Severalconsultations and workshops have been held.Solving a problem by discussion until aconsensus is reached is a part of Indonesia'sculture (musyarawah), yet there are realdoubts about using this process to define thelegality standard for Indonesian timberexports. There is talk of a 'reformulation ofprinciples'. The Indonesian government isunder considerable political pressure from astruggling timber industry. They would like acrude tool which is quick and simple to use inthe field.The result could be a dilution ofcriteria which favour indigenous peoples'rights.

Whatever the outcome, the wholeprocess of creating a legality standard hasbrought the Indonesian government andforestry industry to sit at the same table withIndonesian civil society groups in a way whichwas unknown five years ago. The discussionsare intense as activists strive to avoid anarrow definition of legality and to ensurethat a wide range of groups can participate inthe process. They also want to open updebate on land rights. Some gains have beenmade - for example on the closely-relatedand highly contentious issues of gazettement,free, prior and informed consent (FPIC) andforest conversion.

Gazettement is a major headachefor the government and timber companies.Although required by law, only 15% of forestsclassified as state forest land, includingprotection forests and national parks, haveactually been gazetted as such. This means

that there are no formally agreed boundarieswith local communities - hence the largenumber of conflicts and cases of violations ofhuman and customary rights. It also meansmost of Indonesia's timber operations wouldfail to qualify as legal. Companies complainedthat they would be penalised because of thegovernment's poor performance inprocessing and measuring production forestland. Now it has been agreed that companiesin the process of gazettement should also beeligible for monitoring and evaluation forlegality purposes. How local communities areinvolved in the gazettement process will alsobe part of evaluating whether or not acompany meets the standard.

Progress has also been madetowards government acceptance of theprinciple of free, prior and informed consent.In the past, forestry department officials havealways said there was little basis for this inIndonesian law and there was not even anIndonesian expression for this term.However, activists have used the meetings toshow how the right to obtain information, theright to participate in development and tomake proposals, inputs and raise objectionsare included in existing laws. As a result, theprinciple of prior consent (as contained in anew bill on genetic resources) has beenextended and the phrase 'Agreement Basedon Prior Information Without Force' - betterknown by its Indonesian acronymPADIATAPA - is to be part of the legalitydefinition.

Some compromises have beenmade along the way. Everyone is well awarethat the policy of issuing permits to clearover-logged forestry concessions in order togrow pulpwood or other cash crops is notcompatible with sustainable forestmanagement. Yet if the timber from landclearance is not included in the legalitystandard, entrepreneurs will use woodutilisation permits (IPK) as means of obtainingwood easily, cheaply and with littleresponsibility. The government successfullyargued that IPK should be covered by thelegality standard so that they could be subjectto restrictions. But the forum insisted thatIPK holders must have a government-approved work plan and the timber procuredunder the IPK must be traceable back to the

forest block where it was felled.There is still a long way to go.

Voluntary partnership agreements depend onindependent verification - a concept which isnot yet accepted by the Indonesiangovernment.

It is not only in Indonesia thatprogress is slow. The European Parliament

(continued on page 12)

The Sumalindo Field StudyThe field-testing of the legality standard, bythe US-based conservation organisation,The Nature Conservancy (TNC), in theEast Kalimantan timber concession ofSumalindo Lestari Jaya II was carried out inearly 2005, with legal verification carriedout by certifiers SGS/URS.

An independent assessment of the socialaspects of the pilot verification was due tobe carried out by Marcus Colchester,director of the UK-based NGO, ForestPeoples Programme in July 2004. However,the company insisted that the verificationprocess was delayed and, as a result, noindependent monitoring took place.

In July 2005, a member of an EastKalimantan forest activist group, PokjaHutan, visited the UK and raised concernsover the legality standard field-test at thebiannual meeting on illegal logginginitiatives held at the Royal Institute ofInternational Affairs.Yoga Sofyar said thatthe team had spent only five days in thefield and had not consulted fully with localcommunities. (A TNC spokesman deniedthis.) He also took up this issue with theUK's Department for InternationalDevelopment, which is funding the legalitystandard initiative. He pressed DFIDofficials to take active steps to ensure thatcommunity rights are addressed in furthertrials and in the development of thelegality standard. Not to do so violatesDFID's mandate to prioritise povertyreduction, sustainable livelihoods and arights-based approach to development. Inaddition, Sofyar urged DFID to ensure thatconsultations over the legality standardwere inclusive and transparent, citingexamples where critical CSOs had beenexcluded from important meetings.

Pokja Hutan had carried out its ownresearch in the area and found evidence ofsocial conflict and the illegal 'laundering' oftimber from outside sources as if it hadcome from Sumalindo's own concession.Yet, surprisingly, the company's operationshad been assessed and were close toreceiving FSC certification.This sets a badprecedent for the many Indonesian loggingcompanies nervously watching the legalityverification process.

Illegal logging, South Sumatra (DTE)

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Forest fires"There is no such thing as a spontaneous forest fire in Indonesia", forestry minister Kaban pronounced, as smoke

from forest fires in Sumatra once again caused serious air pollution in Malaysia and Singapore from July toSeptember.

The minister stated publicly that the fires aredue to competing claims over 'unproductive'forest areas. There are some 17 million ha offorest land in Indonesia which has been over-logged or zoned for conversion, according toofficials. The situation is made worse, saysKaban, by the new administrative regions thatare particularly keen to promote plantationdevelopment because of the potential forrevenues.

Some evidence for the forestryminister's views comes from studies into thecauses of fires in eight sites in southernSumatra and East and West Kalimantan. Forestresearchers carried out in-depth analyses ofthe use of fire in each location using satelliteimages, hot spot data and interviews withcompanies, villagers and government officials.They discovered a number of differentreasons. Both large plantation companies andsmall farmers used fire for land clearance andto destroy each other's crops in tenuredisputes. Companies cleared land for oil palmplantations and timber estates whereas localfarmers cleared it mostly for annual crops,coffee or rubber. Many fires accidentally gotout of control.

This year the worst month wasAugust.There were 3,258 'hot spots' recordedby NOAA satellites in the province of Riau inAugust, each one representing a fire.However, as early as February, the Riauauthorities considered closing down schoolswhen serious forest fires affected 10,000hectares of peat forest and visibility in theprovincial capital of Pekanbaru was down to300m.

Plantation companies andtimber estates blamedOnce again, forests on the border betweenRiau and North Sumatra were badly affected.Rokan Hilir district had the highest number ofhot spots throughout the month of August.Many of the fires were in logging concessionswhere companies had ceased operationsbecause their licences had ended or there

were more profitable activities elsewhere.These included PT Inti Prona, PT Sylva BinaTimber Coy, PT Cipta Jaya Andalas Timber, PTEssa Indah Timber and PT Rokan Permai Tbr.Here it is highly likely that uncertainty overthe future status of these tracts of forestencouraged various stakeholders to burn offthe vegetation as a means of claiming the landfor plantations.

Satellite images also showed fires inplantations and industrial timber estates(HTI). WWF reported that, of the 5,420hotspots from satellite images between mid-July and mid-August, about half -- 2,692hotspots -- were in company concessions and2,728 on land held by local communities. Thedistribution of the hotspots was 1,114 inindustrial timber plantations (HTI); 656 inlogging concessions (HPH) and 922 in oil palmplantations. WWF also made public the factthat many hotspots were located in theconcessions of companies accused by Riau'sgovernment for setting fires to clear land in2003. The companies were a sister companyof Asia Pulp & Paper (APP), PT Arara Abadi(459 hotspots); Astra Group's PT. EkaduraIndonesia (74);Wilmar Group's PT Jatim JayaPerkasa (55); and Sambu Group's PT Guntung

Hasrat Makmur and PT Agroraya Gemartrans(21).

An NGO investigation in July foundevidence of illegal logging linked to the someof the same companies. CV Tessa Indah, acontractor of PT. Rokan Era Subur, was loggingnatural forest in Sontang village, in Rokan Huludistrict.Timber from this operation is suppliedto APP's Indah Kiat pulp and paper plant. Eyeson the Forest also found that PT Jasa Karya, acontractor of Riau Andalan Pulp & Paper wasextracting timber from forest in Pulau Padangin Kuantan Singingi district. This was going toAPRIL's pulp plant.

Peat swamp forest is especiallyvulnerable to forest fires and draining theseareas for plantations makes them moreflammable. For example, of the 166 hot spotsrecorded in Riau on 16 August, 133 werelocated in peat swamps and only 33 in non-peat swamp areas. Fires in peat swampgenerate huge quantities of acrid smoke andare difficult to extinguish. A vicious circle isthus set up: the fires dry out neighbouringareas of forest and make them moresusceptible to burning the next season.Nearly half Riau's 10 million hectares of landis on peat soil.

Calls for actionThe Indonesian Forum for the Environment(WALHI) announced in September that it wastaking legal action against 10 companies inRiau for allegedly starting forest fires duringthe month of August.The law suit would be onbehalf of local people who had suffered fromthe severe air pollution, including childrenwho lost their right to education when thicksmoke forced schools to suspend classes.WALHI said it was planning to give the namesof companies that had set forests on fire inSumatra and Kalimantan in August to theforestry minister and the chief of theIndonesian police.

There were few reports of theeffects of the forest fires on local communitiesin Riau in the media. However healthauthorities in South Kalimantan, where therewas also a serious fires problem in August andSeptember, have reported a rise in thenumber of respiratory ailments in infants forthose months. The air pollution seems to havebeen worse in Malaysia and northern Sumatraas the wind carried the smoke further afield.In Malaysia, air pollution reached extremelyhazardous levels and forced schools and anairport to close.

Fire-ravaged land in West Kalimantan (DTE)

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Forests Update

New measures to promotefastwood plantationsForestry minister Kaban has issued five newmeasures aimed at reducing illegal logging andreviving the timber industry. These supporthis policy announcement made in July aboutspeeding up the establishment of fastwoodplantations to supply the country's pulp andpaper plants. Foreign companies will now beallowed to invest in timber plantations.Indonesian companies which hold permits fortimber plantations are encouraged to runjoint operations in order to increase theireffectiveness in providing employment,marketing and contributing to the localeconomy. (Department of Forestry Pressrelease 15/Aug/05)

First natural forestconcession in KalimantancertifiedPT Erna Djuliawati's 184,206 hectareconcession in Central Kalimantan has gainedFSC certification. This is the largest area ofIndonesian forest to be certified and is onlythe second natural forest concession. (Thefirst was PT Diamond Raya Timber in Sumatra- a certification which is now beingchallenged.) The certifier was Smartwoodwho carried out the original assessment withthe Indonesian Ecolabeling Foundation, LEI, inJuly 2003. Smartwood claims that, throughthe certification process, PT Erna Djuliawatihas "made great strides in improving itsmanagement methods, seeking widerstakeholder consultation with communities,training staff and village members on socialconflict resolution and clearly identifying theboundaries of community lands." Thecompany has developed a biodiversity planand increased the area of forest to be setaside for conservation.A full summary of the

certification assessment report in Indonesianand English is available at www.rainforest-alliance.org. (Smartwood press release23/Sep/05)

Smartwood-APP agreementFollowing the breakdown of an agreementwith WWF to monitor forest protection in itsconcessions, Asia Pulp & Paper has signed anagreement with the Rainforest Alliance(parent organisation for certificationassessors Smartwood). Smartwood willmonitor the condition of 120,000 hectares ofso-called high conservation value forest infour concession areas managed by Sinar Mas:Siak, Serapung, Pulau Muda and Giam SiakKecil.The five-year programme will carry outaerial and ground surveys plus analysis ofsatellite images to verify that these areas arebeing protected and that timber from them isnot going to feed APP's paper mill in Riau -Indonesia's largest. (APP Press release25/Aug/05)

New law on illegal loggingstalledWith the government's strong focus on 'illegallogging', the Department of Forestry is keento draft new legislation on this issue.However, no progress has been made as theIndonesian parliament is said to favourincluding the content of such a bill as anamendment to the 1999 Forestry Act. (Perscom 25/Oct/05)

Parlimentary questions overIntracawood legalityIndonesian parliamentary commission IV hasdeclared that an extension of PTIntracawood's logging permit is illegal. Thestate-owned forestry company PT Inhutani Ioriginally held the concession rights but nowhas only a 25% stake in the operation,Inhutani I was granted an extension tomanage the 195,100 hectare concession in

1995. It appears that Intracawood appliedseparately for an extension of its HPH licencein August 2004. An official team will be sentto East Kalimantan to investigate theconcession areas which lie in Bulungan andMalinau districts. (Investor Daily Online, viaWalhiNews, 29/Sept/05)

Aceh environmental groupscall for action on forestsEnvironmental groups in Aceh are increasinglyconcerned by recent reports of illegal loggingin Bireuen, Aceh Singkil and Aceh Tenggaradistricts.They describe the situation as a 'freefor all' and accuse the provincial forestryoffice of ineffectually blaming local and centralauthorities instead of taking action to preventforest destruction. They urge the forestryoffice to work with district officials and thepolice to stop all illegal timber operations byarresting people who finance the logging.The10 NGOs, which include Walhi Aceh and thelocal WWF office, also call on Aceh'sgovernor to take a firm stand so that loggingpermits are withdrawn.(Working Group onAceh's forests 5/Oct/05)

Riau police confiscate illegaltimberDuring a raid against illegal logging in theprovince, Riau police confiscated over 1,600cubic metres of illegally-felled logs from theRiver Gaung in Indragiri Hilir district. Theysuspect the logs were to be smuggled toMalaysia.A Malaysian man is accused of illegallogging. (Jakarta Post 31/Oct/05)

Forestry association chairjailed and fined forcorruptionThe chair of Indonesia's Forestry Association(APHI), Adiwarsita Adinegoro, was sentencedto six years in jail for misuse of theassociation's funds.Three other APHI officialsreceived four-year jail sentences. Adiwarsita

WALHI and Friends of the EarthMalaysia called on ASEAN governments totake urgent comprehensive action on what isdiplomatically called 'the haze problem' at ameeting of senior environment officials fromSouth East Asian countries held in Penang,Malaysia in mid-August. However, there wasno sign of any decisive action. Indonesia hasyet to ratify the ASEAN Agreement onTransboundary Haze Pollution signed in 2002.

The Food and AgricultureOrganization (FAO) again called on ASEANnations to enforce bans on open burning toprevent the annual pollution crisis and toprotect forests. An FAO expert claimed thatmost of the fires are intentional and used bycompanies to clear forests for agro-industry.Mike Jurvelius said in a statement: "Using fireto clear forests is prohibited in most of the

South East Asian countries and the ban shouldurgently be enforced."

The underlying problem behindthese forest fires is, of course, land tenure.Central and local governments need to worktogether to develop policies for forests andagriculture which suit local conditions andlocal needs. Otherwise, when the next ElNiño* year comes, Indonesia's forests will befacing disaster on an unprecedented scale.

(Sources: Eyes on the Forest, July,August,September editions; FWI press release17/Aug/05;WWF press release 22/Aug/05;Jakarta Post 22/Aug/05; AFP 31/Aug/05;Bloomberg 15/Sept/05; AFX 21/Sept/05

* El Niño is the climatic effect that increasesthe risk of drought and fires in Indonesia.

Copies of the article 'Fire, People, and Pixels:Linking Social Science and Remote Sensing toUnderstanding Underlying Causes andImpacts of Fires in Indonesia', Dennis, R.A. etal, 2005, Human Ecology, 33 (4): 465-504 areavailable from CIFOR.

Eyes on the Forest is a coalition ofenvironmental NGOs in Sumatra comprisingWWF-Indonesia, Friends of the Earth's RiauOffice and Jikalahari.They monitor the statusof remaining forests in Riau. For more newssee http://www.eyesontheforest.or.id

Information on WALHI's legal action oncompanies accused of burning to clear landcan be found at http://www.eng.walhi.or.id/kampanye/bencana/bakarhutan/050904_riau_lawsuit_sp/

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and the other officials must also pay Rp43.5billion to the state. They were convicted oflending APHI funds to third parties. Themoney collected from APHI members,including five state-owned forestrycompanies, were supposed to finance aerialmapping for forest conservation.(Jakarta Post13/Oct/05)

Buru forest farmers appealfor their landIndigenous communities on the island of Buruin the Moluccas are pressing the authoritiesfor the return of forest land taken from themin 1957.The land in Lilialy, Kajely and Tanalisais planted with eucalyptus trees whichproduce a fragrant oil used in the cosmeticindustry. Maluku Tengah district governmentoriginally took over the plantation nearly 50years ago, with the intention of increasingproduction of the kayu putih oil, despite

strong opposition from the local adat(customary) council. With the creation ofnew administrative areas, the indigenouspeople's plantation is now part of the assetsof Buru district. The three communitiesformed an association in late 2004 and haveheld meetings with and written to the districtadministration and representatives of thelocal assembly. As yet, there has been noacknowledgement of their rights and the localauthorities continue to exploit the eucalyptusplantation to generate revenue for thedistrict. (YPPM 25/Sep/05)

Report challengesdeforestation & flooding link A report by the Food & AgriculturalOrganisation of the United Nationas (FAO)and the Centre for International ForestryResearch (CIFOR) concludes that there is noscientific evidence linking large-scale flooding

to deforestation.Although trees can minimisethe runoff that causes localised flooding,much depends on soil depth and structure.During prolonged heavy rain, the roots ofmost forest trees are too shallow to absorbsufficient water and prevent flooding.

Forests & Floods: Drowning in Fictionor Thriving on Facts claims that the currentview is a myth which benefits governmentswho blame hill farmers for causingdeforestation to give the appearance of takingaction on flooding. Instead they point tocomplex interactions between natural andman-made factors, such as draining wetlands,farming floodplains and straightening rivers.The report suggests that an integratedapproach to land management in watershedsand river basins is likely to be more effectivein preventing widespread flooding thanlogging bans. (CIFOR 14/Oct/05)

Four leading Indonesian NGOs organised aworkshop and seminar in early October onthe policy implications of natural resourceexploitation in Kalimantan.The meeting wasattended by representatives of variouscommunities affected by large-scaleplantation and mining projects plus 21NGOs from Kalimantan and 2 fromSarawak.The following press release is thestatement to the authorities which came outof that event.

Stop stealing the livelihoodsof Kalimantan’s people!

Kalimantan is being stripped of its naturalresources.The government's violation ofindigenous land rights through issuingpermits for large-scale logging, oil palmplantations, fastwood plantations and mininghas seriously disadvantaged indigenouscommunities. Kalimantan's natural resourcesare merely regarded as a source of cash,regardless of their important ecological,social and cultural contributions to thearea's sustainability and to the livelihoods ofKalimantan's people.

This situation is made worse by theinteraction between government corruption,weak law enforcement, misguided regionalautonomy and sectoral policy-making, inaddition to the recent increase in fuelprices.

An example of the environmental and socialproblems associated with the establishmentof oil palm plantations is the use of fire for

land clearance resulting in smoke pollutionwhich causes national and internationalconcern.The smoke problem is due to oilpalm plantations' consistent use of localpeople to burn off the vegetation withintheir concessions. Other problems are landdispossession; the control of large tracts ofland by a small group of people; unfairconditions for smallholders, includingallocation of plots; increasing conflict;monopolistic price control for palm fruits;companies' inability to use unproductiveland; and violation of official land useplanning. Oil palm plantations also cause theloss of local knowledge and traditional skills.There is cultural erosion through gambling,drunkenness, criminality and prostitution -previously unknown in the indigenouscommunity.

This multiplicity of problems leads us toconclude that the government is wrong inits policy to promote dependence on oilpalm plantations and mining as areplacement for reliance on timber from thedwindling forests.

We therefore call on:

1. The Indonesian president to cancel theOil Palm Megaproject along theKalimantan-Sarawak border on thegrounds that it will damage the watercatchment ecosystems for the Kapuasand Mahakam rivers.This border regionis where water collects and formsstreams which flow into the major riversystems of West and East Kalimantan.

2. The Indonesian president to instruct

governors, district administrators andministers to stop issuing new oil palmplantation permits in Kalimantan.

3. The governors and district administratorsof Kalimantan to tackle the social andenvironmental impacts resulting from oilpalm plantations as a matter of urgency.

4. The governors and district administratorsof Kalimantan to repair and restorethose parts of Kalimantan which havebeen ravaged due to policies on logging,mining and plantations which areexploitative and orientated towardseconomic benefit.

5. Local and central government officialsand company employees based inKalimantan to respect fully indigenouspeoples' rights.

We make these demands in order thatKalimantan can experience a process ofsustainable development in which:

1. Indigenous communities have theautonomy to manage their lives and theirresources at village level;

2. There is no violation of indigenouspeoples' land rights;

3. There is no more destruction ofKalimantan's environment;

4. Land taken by the authorities andcompanies is restored to its rightfulowners.

LBBT, HuMA,WALHI, Sawit Watch,10/Oct/05

Kalimantan groups call for sustainable development

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Millennium Development Goals: shared hopes orhallucination?

A couple of months after the September World Summit 2005, the dust has settled at the UN Headquarters inNew York.World leaders have long returned to their capitals, supposedly to do their homework. Meanwhile, activiststhe world over share their discontent over the outcome of the meeting: their hopes for change have been dashed.

development

This was the summit that was going to makepoverty history. Originally billed the 'UNMillennium +5 Summit', the objective of thegathering of world leaders at the UnitedNations was to review progress towardsachieving the Millennium Development Goals.

Mimin Dwi Hartono1 , coordinatorof Wana Mandhira, a Yogyakarta-based NGO,was among hundreds of activists from all overthe world attending informal interactivehearings at the UN on 23rd-24th June 2005.Representatives of civil society organisations,NGOs and the private sector were invited togive inputs to the UN Secretary General'sreport In Larger Freedom:Towards Development,Security, and Human Rights for All, which wouldthen be presented to the General Assembly inSeptember. The hearings covered theMillennium Development Goals (MDGs),financing for development and reform of theUN.

Hartono reported that thediscussion that attracted the highestparticipation was entitled Freedom fromWant, concerning the livelihoods of poorpeople in the Majority World. Apart fromChina and India, which are exceptional amongthe developing countries in managing toreduce poverty, most countries are stillstruggling to achieve improvements in povertylevels. In a dozen African countries povertyhas even got worse.

The lukewarm commitments of thedeveloped countries, particularly the wealthyand powerful G8, towards achieving theMDGs were a matter of concern toparticipants attending the hearings. Not allthese countries have made the effort to fulfil along-standing commitment to contribute 0.7%of GDP to support developing and poorcountries. Rich countries are also seen ashypocritical by championing free trade while,at the same time, resorting to protectionismto defend their own interests - for example,subsidies for farmers in the US, New Zealandand the EU.

In terms of environmentalsustainability, Millennium Development Goalnumber 7, most countries have yet tointegrate sustainable development principlesinto their development policies andprogrammes. Here, short-termism and the

economic orientation of development policystill predominate.

The private sector, however, isoptimistic about its role in promotingsustainable development principles throughresponsible behaviour by companies and byproviding funding and investments to meetMDGs targets. Corporate SocialResponsibility (CSR) has become the privatesector's favourite buzzword in order to earn'good practice' credentials. This kind ofcorporate bragging inevitably became a targetof mockery for NGO and CSOrepresentatives at the hearings, given the widegap between CSR principles and practice.CSOs highlight the fact that CSR has beenvoluntary, with no means of holdingcompanies to account for their operations.Furthermore, they doubt whether companieswould ever be willing to compromise profitsfor the sake of sustainability.

In the case of Indonesia, allowingcompanies to mine in protected forests andbeing too lenient with polluter companies areindications of how the state, together with theprivate sector, is undermining its commitmentto the MDGs.

The informal hearings also heard anall-encompassing message from civil society:the need for "a human rights-based approachto development, peace and security and toelevate human rights within the UnitedNations". Another major message was theinclusion of particular and marginalised groupssuch as women, indigenous peoples, peoplewith disabilities, people subjected to racialdiscrimination, children, youth and the elderly,as a prerequisite for achieving the MDGs.

What happens to the voice ofcivil society?The informal meeting was historic because itwas the first time there had been anopportunity for interaction between MemberStates, representatives of civil society andprivate sector. It was attended by 230representatives of NGOs which holdconsultative status with the Economic andSocial Council, other CSOs and the privatesector, of which more than half were fromdeveloping countries.

However, the high hopes raised bythe participatory hearings had a crash landingat September's World Summit.This resulted inlittle more than a confirmation of the pro-market agenda and a repetition of the oldpromises.The lack of commitments promptedGlobal Call to Action Against Poverty(GCAP), an international CSO alliancecommitted to getting world leaders to fulfiltheir promises, to dub the MDGS the'Minimalist Development Goals'.

INFID, the International NGOForum on Indonesian Development, pointedout several weaknesses in the Summitdocument. The resolution to encourageprivate and foreign investment in publicservices which are vital to meet basic needs ofthe population may not fulfil the aim "toprotect vulnerable and disadvantaged sectionsof society". INFID said there was no clearmonitoring mechanism to ensure serviceswere not merely being subjected to a profit-driven strategy.

The participation of civil society washighly restricted in the Summit, even forgroups with accredited EcoSoc status, despitethe invitation by the Secretariat to contributeprior to the Summit. GCAP noted that inputsmade through the hearings were not takenseriously.

The largest gathering of worldleaders has let down the poor and theMajority World by not accounting for theirfailure to make progress, let alone bring abouta substantial change of direction. It is urgentto make the process for achieving the MDGsmore democratic, which includesdemocratisation of global institutions. Alongthe same lines, the governments should notjust give efforts to achieve the MDGs tokenattention while they get on with business asusual, focusing on economic growth and theliberalisation agenda.Otherwise,we risk facingthe same rhetoric - commitment with laxcompliance - at the next global meeting.

Sources: Summary of the informal interactivehearings of the General Assembly withrepresentatives of non-governmentalorganizations, civil society organizations and theprivate sector, http://www.un-ngls.org/GA-hearings.htm; GCAP, Reflections on the United

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19

DOWN TO EARTH No. 67, November 2005

Book Review

THE RISKS WE RUN:Mining, Communities andPolitical Risk Insuranceby Roger Moody,

International Books 2005, pp322Available frominfo@minesandcommunities.org

Political risk insurance and export creditguarantees are not terms that normally grabpeople's interest - except those working inthe financial sector. The Risks We Run shouldchange this.This book shows how politicalrisk insurance (PRI) helps to make the worldsafe for investors. It takes a critical look atthe role of PRI in securing financial backingfor large mining projects despite their highsocial and environmental costs.

In the first half of the book, miningcampaigner Roger Moody explains themechanics of political risk insurance andhow it has been used as a political tool. Hesees PRI as a conspiracy to protect assetswhich should be surrendered to their trueowners - the local people.The second partof The Risks We Run comprises case studiesof six gold mines backed by political riskinsurance: Grasberg (West Papua); Omai(Guyana); Kumtor (Kyrgyzstan); Lihir (PNG);Yanacocha (Peru) and Bulyanhulu (Tanzania).These accounts are written by thecommunity representatives, lawyers andNGOs who have been fighting for justice. Inaddition to describing the history of themines and their financing, each study is apowerful testimony to the damaging effectsof extractive industries on localcommunities.

Political risk insurance has becomean essential part of business. In theory, itcompensates companies for lost assets whenoperating outside their own countries -providing protection against risks such aspolitical violence, expropriation of assets andfinancial controls. Any mine is a trade-offbetween ecological and social problems andthe promise of economic benefits, so it isnot surprising that huge sums are spent onPRI - nearly US$400 million just for the Lihir

gold mine in PNG. But these amounts aresmall compared with the overall financing ofa mining project and insignificant comparedwith the profits generated. PRI's realimportance is to give mines a stamp ofrespectability and an essential 'kick start' insecuring additional investment, rather thanproviding insurance.

As PRI is usually a condition ofexport credits, Moody outlines the contextof export credit agencies, including theWorld Bank's Multilateral InvestmentGuarantee Agency (MIGA) and America'sOverseas Private Investment Corporation(OPIC) and Ex-Im Bank and the ExportDevelopment Canada (EDC).These nationaland international bodies dispensed nearly asmuch financial backing as came fromdevelopment aid globally in 2000.

The private sector is also heavilyinvolved in mining insurance in general andPRI in particular.The US-based companyMarsh & McLennan describes itself as theworld's number one risk specialist andAmerican International Group (AIG) is amajor player providing insurance cover formines.These private insurance companiesare often even less accountable providers ofPRI than national or multilateral agencies.Moreover, private insurers, brokers andspecialised insurance companies protectthemselves from compensation claims, forexample by reinsuring with companies likeSwiss Re.

Companies can also call in riskconsultants to advise them. London-basedControl Risk Group, which has ex-SASofficers in its senior management, hasinvestigated international NGOs whichactively campaign against mining, such as theWorld Development Movement, andIndonesian groups including the miningadvocacy network, JATAM. It concluded that"NGOs are as much of the (Grasberg)mine's political risk profile as Amungmetribespeople".

The Risks We Run raises criticalquestions about the policies of the WorldBank Group's Multilateral InvestmentGuarantee Agency (MIGA), the InternationalFinance Corporation (IFC) and nationalexport credit guarantee agencies withrespect to environmental and socialassessments and access to information.National and multilateral guarantee

institutions are supposed to respect anddefend the public interest, includingrespecting indigenous rights and addressingenvironmental concerns.World Bankinstitutions have a special responsibility sincemany national authorities and commercialinvestors base their standards on Banksafeguards or project assessments. Yetchapter after chapter shows that MIGA, IFCand other financial agencies lack the capacityand expertise to monitor regularly theimplementation of the projects they havebacked.They have repeatedly concealedimportant information about theenvironmental risks associated withparticular mines from the public.At thesame time, they have not used their powerto apply pressure on investors or operatorsto improve environmental or human rightsstandards at these mines.The World Bankcontinues to refuse to implement thefindings of its own 2002 Extractive IndustriesReview and recent policy reviews have madeits social and environmental guidelines evenweaker and more ambiguous than before.

The weaknesses of PRI areexemplified by Freeport/Rio Tinto'sGrasberg mine in West Papua.This gold andcopper mine - the largest in the world -was the first to receive PRI from the WorldBank via MIGA and also received backingfrom OPIC.This became the focus forinternational campaigning in the 1990s. OPICpulled out in 1995 when it was clear thatenvironmental safeguards had been violatedand Freeport/Rio Tinto rejected MIGA'scover in late 1996 when the agencyannounced a long-overdue environmentalinvestigation. Freeport/Rio Tinto thencontinued to go its own way.The company'sfinancial links with the military remainedconcealed; millions of tonnes of tailings enterthe River Ajkwa every year; workers werekilled in the collapse of the Wonagon wastedam; and human rights violations continuethroughout West Papua.

Moody argues that any influencethe World Bank or OPIC might exert toforestall these consequences could only havecome from their refusing insurance from thestart. In his view, the whole tangled web ofPRI "substitutes ill-defined and only partialmitigation for impacts which should havebeen prevented from the outset".You maynot agree with his analysis, but political riskinsurance and export credit guaranteesprojects are likely to remain importantvehicles in raising finance for miningprojects. For that reason, The Risks We Run isa valuable tool for activists who need toknow about PRI and how to use thisunderstanding for the benefit ofcommunities threatened by mining and otherpotentially damaging developments.

Nations Summit,http://www.whiteband.org/specialIssues/UNP5/unp50/gcapnews.2005-09-30.4602183211/en; INFID's position paperto the draft declaration for the UN MDGsSummit, http://www.infid.be/INFID-Position-Paper-UN-MDG-Summit.pdf; INFID pressrelease: 2005 World Summit OutcomeDocument to weaken developing countries.

For more on The Millennium DevelopmentGoals, see DTE IFIs Factsheet, No 36,October 2004http://dte.gn.apc.org/Af36.htm

1. The first part of this article is adaptedfrom articles by Mimin D Hartono entitledTujuan Pembangunan Millenium danTantangannya.

(continued from page 18)

DOWN TO EARTH is the newsletter of the International Campaign for Ecological Justice in Indonesia. If you want to receive the newsletter on a regular basis, please fill out the form provided.We would welcome information about your work in the field of environment and development in Indonesia.

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Down to Earth is a project of the Asia-Pacific Peoples' Environment Network c/o SAM, 27 Lorong Maktab, 10250 Penang, Malaysia

DOWN TO EARTH No. 67, November 2005

In brief...

Police open fire on farmersin LombokIndonesian human rights NGO Elsam hasprotested against the police shooting offarmers attending a national meeting inLombok. Twenty seven people sufferedgunshot injuries on September 18th whenpolice dispersed a farmers' union generalassembly organised by the Nusa TenggaraBarat union and the Federation of IndonesianFarmers Unions (FSPI). Eight people weredetained at the meeting, which was attendedby farmers' representatives from 26countries.The police initially gave permissionfor the meeting, but then issued a letterdenying permission.

In an urgent action appeal, Elsamdescribed the police tactics as a seriousviolation of the freedom of expression andstates its concern for the victims. Elsam alsosaid the action violated national andinternational laws including the Indonesianconstitution, the 1999 Human Rights Act, theUniversal Declaration of Human Rights, theInternational Covenant on Civil and PoliticalRights and the Indonesian penal code.

For more details contact Elsam atelsam@nusa.or.id, www.elsam.or.id. (ElsamUrgent Action No:05/UE/PH/Elsam/IX/05,26/Sep/05)

Regulations respectindigenous management Three villages in the Meratus mountains areaof South Kalimantan have passed locallegislation (Perdes) on natural resourcemanagement which make more space forindigenous people living in the area. Theregulations are reported to be based on whatlocal people want. Juhu, Hinas Kiri and HinasKanan, in Hulu Sungai Tengah district, SouthKalimantan, passed village regulationsbetween July and August this year. Theregulations, on the use and management ofnatural resources in the Meratus forest,respect the existence of sacred forest,

customary forest and protection forest. Theuse of these forests is only permitted forindividual needs, not for economic gain, and isbased on permission from the customaryleader. Only local people who live in the areamay make use of the forest, and only if theypay due regard to conservation. The HinasKiri regulation permits hunting of birds apartfrom those species which are sacredaccording to customary belief. Those whoviolate the regulation must pay fines. (Extractfrom BALIaN, July/Aug 05, via fkkm listserve)

CDC sells of plantations toCargillCDC/Actis sold all its oil palm plantationinterests in Indonesia and PNG to the USgiant agro-industry transnational Cargill inearly November 2005. CDC Capital Partners(formerly the Commonwealth DevelopmentCorporation) was the UK government’svehicle for investing in the private sector indeveloping economies until 2004. It was thensplit into an investment company whollyowned by the British government (still calledCDC) and a new private equity investor,Actis, which managed the government andprivate funds.

CDC/Actis controlled PT AsiaticPersada in Jambi and PT Harapan SawitLestari in West Kalimantan through itsSingapore-based holding company Pacific Rim(PRPOL). It also had investments in PT AgroIndomas in Central Kalimantan. DespiteCDC’s public declarations about its ethicalbusiness principles, there are outstanding landdisputes, human rights issues andenvironmental problems associated with thethree concessions. DTE, together withIndonesian NGO networks WALHI and SawitWatch, supported the local people in theiradvocacy efforts for several years. Perhapsthese communities can take a shred of hopefrom the fact that CDC could have sold outto a Malaysian company which might pay lessattention to social and environmental issues.Cargill is hardly a model of best practicewhen it comes to community rights but, as amember of the WWF-initiated Round Tableon Sustainable Palm Oil (RSPO), it does havea reputation to keep up.

The new venture is called CTPHoldings Pte Ltd. Cargill formed a jointventure in 2000 with Golden Agri-Resourcesand Temasek (a Singapore-based holdingcompany) to purchase and run oil palmplantations in Indonesia. It already operates a27,000ha oil palm plantation in SouthSumatra, PT Hindoli. The majority of theplantation (17,000 ha) is run as a ‘stakeholder’scheme with 8,500 farmer families.

“Palm oil demand is increasingglobally and this acquisition represents asignificant development for Cargill in theplantation business”, says Paul Conway, headof Cargill’s business in Asia and chairman ofCTP Holdings. “The addition of theseplantations is critical to diversifying our edibleoils portfolio and will allow us to meet ourcustomers’ requirements for supply chainintegrity and a high quality supply of palm oiland associated products.” (Jakarta Post8/Nov/05, www.cdcgroup.com,www.cargill.com and DTE files)

Parliament ratifies UNcovenantsIn September Indonesia’s parliament ratifiedtwo major international human rightsinstruments: the UN Covenant on Civil andPolitical Rights and the Covenant onEconomic, Social and Cultural Rights. Thiscommits Indonesia to eliminating all forms ofrestrictions on freedom of expression,assembly and association, threats to religiousfreedom, forced labour and discrimination inthe workplace. However, in clear reference todemands for independence for West Papua,Indonesia made an important reservation tothe covenants, saying that the right to self-determination did “not apply to any part of aunited state”. Human rights group Elsamcalled the ratification half-hearted because itexcluded two optional protocols on onmechanisms for victims of human rightsviolations to individually claim for rightsrestoration, and on the abolition of capitalpunishment. (Tapol Bulletin 180, Oct/05;Jakarta Post 1/Oct/05)