Forestry and Poverty Project Newsletter – Issue 12, May 2010

Indonesian Communities Strike Back at Greens

Indonesian forestry workers and palm oil farmers have struck back at the international campaigners that have been vilifying their industry over the past month.

The major news story among Green activists of late has been palm oil. Greenpeace, in particular, was declaring victory after its international web campaign against food products from Indonesia, in the form of palm oil, used in popular Nestle products.

What was less widely reported was the action taken by local Indonesian palm oil farmers, who launched protests against Greenpeace, Nestle, and Dutch company Unilever, which had also previously announced it would review its Indonesian palm oil suppliers.

This follows further action against Greenpeace on the Kampar Peninsula in Riau, where according to local news reports in the Jakarta Post, local communities allegedly burnt down a Greenpeace protest camp. The reason? The locals support the forestry industry; Greenpeace wants it banished.

This flies in the face of Greenpeace’s longstanding claim that it has the support of local communities.

Worse still, Greenpeace is encouraging the Indonesia-based arms of multinational companies to halt the purchase of Indonesian commodities, such as paper, pulp and palm oil for their local manufacturing operations.

They are strong-arming the European headquarters of operations – in countries where incomes are high and economic development is not a key issue – in order to dictate the policies of their developing country subsidiaries.

The result of this would be a store such as Starbucks in central Jakarta refusing to purchase locally grown coffee – one of Indonesia’s traditional cash crops.

Greenpeace are not simply content to lobby against exports to developed nations from poor countries, the NGO is now attempting to stifle industry within the poor countries themselves.

The response of ordinary Indonesians to Greenpeace campaigns is long overdue, but completely understandable: in Indonesian daily life, Greenpeace is close to invisible.

Their actions are not designed to target local media or engender local support. They are instead directed towards the international media and international purchasers of Indonesian products.

In short, they are attempting to turn the world against Indonesia’s major exports.


Levels of Deforestation are Declining

The preliminary results of the FAO’s 2010 Forest Resources Assessment point once again to falling levels of deforestation and increases in forest area in Asia. The results were released ahead of the complete report, which is expected in October this year.

The new data on deforestation follows steady declines in the rates of deforestation since 1990.

Asia, posted a net increase in forest area, mostly thanks to massive reforestation efforts in China and Vietnam.


Additionally, the report notes that the percentage of legally protected forest area in Asia is just under 24 per cent – considerably higher than the 8 per cent that is legally protected in Europe.

Other points of note in the report include:

  • A full 12 per cent of the world’s forests are set aside for biodiversity protection;
  • The forest area declines in the 1990s from natural causes has been revised upwards;
  • Forests still cover more than 30 per cent of the world’s land area.

The report is released every five years and considered the definitive source for data on forest area and is used as the source for all assessments of carbon emissions from forest loss.


US Moves Toward ‘Green Protectionism’

The US Department of Commerce (DOC) has once again caved into demands from environmental lobbyists, trade unions and an uncompetitive industry on imports of paper products from China.

The preliminary anti-dumping ruling was handed down in March. It contends that Indonesian and Chinese imports of paper are subsidised, and therefore can be subjected to a type of import tariff.

Feel like you’ve heard this before? You have. In 2007, almost exactly the same action was launched by the same petitioners. In that case, DOC handed down a preliminary finding, only to have it overturned by the US International Trade Commission (ITC) not long after. The ITC found that any subsidies that existed were not harming the US industry.

In both the 2007 and current cases against China, the actions were backed by the United Steelworkers (USW) in the US, the Sierra Club and three companies with major operations in North America and Europe: Sappi Papers, NewPage and Sequana Capital (as Appleton Coated Papers).

The position of the Sierra Club is obvious. It wants to stop forestry in developing countries. USW wants to protect the jobs of its members. The three private sector players are just looking for protection.

Sappi, in particular, has found itself on the wrong side of the financial crisis. In 2008 it finalised a major investment in Europe, purchasing the operations of M-Real, a major paper producer and forester in Europe. Since then, it has been cutting staff and closing operations. It suffered major losses to its forest inventories in South Africa. Its share price has tanked since 2008.

NewPage has been following the model undertaken by most US businesses in the midst of the financial crisis: it has been clearing inventories. But its sustainability is questionable; it ran a loss of more than US$300m in 2009, more than double that of 2008. It is burdened by heavy debts, with interest payments alone costing the company more than US$400m last year.

Sequana, which owns Appleton, is holding the fort in trying business circumstances. Its balance sheet has improved, as has its profits, which took a massive hit in 2008.

All three are burdened by concentrations of operations in the US and Europe.

Compare this with China. The latest IMF World Economic Outlook forecast growth of more than 10 per cent in 2011. Labour costs are low, manufacturing operations for pulp and paper are new and efficient, and forest resources are abundant.

The DOC is also investigating Indonesia under the action.

No wonder all three companies released a joint statement congratulating the DOC. And no wonder they have been lobbying for a similar probe into Chinese subsidies in the EU. Stay tuned.


Why Isn’t the EU Industry Vilifying Indonesian Paper Makers?

The EU is chasing down China on subsidies to its forest sector, but unlike the US, is not doing the same for Indonesia. Why? It doesn’t need to – it has actors in place to lobby for restrictions on forestry in developing countries.

New research out of the UK highlights the immense sums that were being given to Green groups directly from the European Commission, highlighting the large sums given to WWF Europe, Friends of the Earth and Climate Action Network in particular.

Friends of the Earth and WWF Europe both received in excess of US$1 million in recent years from the EU.

Both have a history of lobbying against the forestry sector in developing countries. Friends of the Earth in particular lobbied heavily against the Indonesian forest sector in the UK by attempting to pressure UK-based financial institutions to sever ties with Indonesian companies.

But not highlighted was the funding directed to FERN, a Green campaigning organisation based in Brussels. FERN recently released a European Commission funded report that criticised the EU’s sustainability eco-label.

Criticism of eco-labels is nothing new. The problem with this report was that it was effectively a smear sheet against the Indonesian forestry industry. Moreover, the report’s author is well-known in environmental circles as objecting to all forestry, regardless of whether it is certified, in plantations or natural forests.

Should the EU really be funding activity that may impact on employment in developing countries in the name of a campaign to reduce deforestation?


Australia Considers a Green Trade Barrier

The Australian Government is reportedly considering following both the US and the European Union in a bid to introduce a ban on supposedly ‘illegally’ harvested timber products.

The move follows an election campaign promise by the incumbent Labor Party to introduce a ban on illegal timber imports.

The measure is being introduced despite government-commissioned advice stating unequivocally that: any regulatory measure introduced would have little impact on the level of illegal logging in exporting countries, and; such a policy would impact adversely on Australian consumers.

The Australian Government stated publicly that it was more than happy to ignore this advice in order to fulfil a political commitment.

The rumoured new policy comes at a time when the current Australian Government’s policies have taken a hit. Its proposed emissions trading scheme has failed politically. Bungled implementation has scandalised its roll out of Green home initiatives.

A move against forestry industries in developing countries is an easy target – with no risk of a voter backlash.


Does RAN want Indonesian Workers to Starve?

Rainforest Action Network, a US-based campaign group has been campaigning heavily to have the FSC certification awarded to APRIL, one of Indonesia’s largest pulp and paper companies, revoked.

APRIL’s certification was temporarily suspended last week, prompting victory cries from the group’s headquarters in a well-heeled part of San Francisco.

Anyone familiar with FSC certification would be aware that compliance with the FSC scheme is fraught with difficulty. Suspensions and complaints from campaign groups such as Greenpeace are commonplace.

However, APRIL should be particularly wary.

In 2007, WWF lobbied heavily for another Indonesian pulp and paper producer – APP – to have FSC certification of some of its products suspended. Unable to fault any of APP’s operations under FSC rules, the body took an unprecedented step of changing the certification rules so that APP could no longer use the FSC logo.

The result was that the investment made in FSC certification was made worthless.

APRIL is likely to find itself in a similar situation.

Yet this is not the real tragedy of the campaign. RAN and Greenpeace have attempted to cut the two leading Indonesian pulp and paper producers out of global markets. Together they produce around 80 per cent of Indonesia’s pulp and paper.

The industry formally employs around 600,000 people according to FAO estimates. Other estimates that include informal and indirect employment are as high as 2 million.

It can reasonably be assumed that RAN will do anything to achieve its campaign goals, including run roughshod over the world’s poor.

This has been documented many times in the past. RAN founder Randy Hayes once used the indigenous Penan people in Malaysia as a tool in his fundraising campaigns – but never bothered to hand the Penan any of the funds raised, instead using for its own running costs in its San Francisco offices.

The group has also been criticised for its looseness with facts. The group claimed that orang-utans would be extinct by 2011, which, according to respectable conservation biologists is close to an impossibility, save a large-scale catastrophe hitting Borneo.

When challenged on this point, a RAN spokesperson simply said, ‘We are a campaigning organisation so research is not our main thrust’.

In short, a group like RAN believes that accuracy is not important when it comes to its campaign goals – even when it harms the poor.

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