08/25/00

OVERVIEW & COMMENTARY

In a shockingly shameful proposal, an Australian telecommunications

company is seeking to finance 50% of a fibre-optic cable from Papua

New Guinea (PNG) to Australia through sale of large amounts of PNG

rainforest logs to China.  This would likely require breaching the

PNG government's moratorium on opening new areas for commercial

logging.  Further, Greenpeace rightly points out below that it is

wrong for PNG's people to have their biodiversity and culture sold

out from under them to pay for basic services.  If PNG is to protect

its ancient forests, constituting the third largest tropical

wilderness in the World, Australian and other country's governments

and companies need to honor basic principles of international

environmental conduct.  Both Chinese and Australian interests should

support PNG in its effort to protect its ancient forests, not be

plotting new financial mechanisms to facilitate their liquidation.  It

is morally reprehensible that this proposal was made and preceded in

the first place, and it will be unconscionable if it goes any further. 

China has devastated its own forests to the point that many large

ecosystems are no longer functioning.  Australia is well on the way to

widespread ecosystem failure due to ongoing large-scale agricultural

land clearance and continued commercial development of its modest

ancient forest reserves.  The model of development pursued by both

countries--trading the environment for transitory capital flows--

provides a poor example of how to achieve sustainable, equitable

development.  Papua New Guinea can, should and must do better. 

g.b.

 

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ITEM #1

Title:  K119m deal could see PNG sell of its rainforest

Source:  The Independent (PNG), Copyright 2000

Date:  August 24, 2000  

 

A K119 million proposed deal for a fibre-optic cable to connect

Australia and Papua New Guinea may force the PNG government to sell

off part of the world's third largest rainforest. This was revealed by

Greenpeace Pacific this week in a statement released from its office

in Suva, Fiji.

 

It has called on the Australian telecommunications company Optus to

immediately pull out of the proposal.

 

According to information from Greenpeace as part of the proposed

countertrade deal, the PNG government would pay 50 per cent of the

US$33 million price tag of the submarine cable by selling the

equivalent amount of PNG hardwood timber to the Chinese military.

 

China recently stopped harvesting its own forests, after serious

flooding in the country was blamed on logging, and has been looking

for other timber sources, in particular in PNG.

 

According to a report in the Australian Financial Review, under the

proposal the PNG government would provide hardwood logs to the

People's Republic of China to pay for its capable participation.

 

It is believed that this timber would have to come from areas

currently covered by a logging moratorium, as there would be an

insufficient supply of timber from existing logging concessions.

Greenpeace forests specialist Brian Brunton said the deal would breach

a PNG government imposed 10-month logging moratorium on new timber

concessions.

 

"It would also put the PNG economy at risk by breaching conditions of

a World Bank International Monetary Fund bailout package. In December

last year, the new PNG government imposed a moratorium on all new

forest concessions, extensions and plantations. Almost half of PNG's

accessible forests are already committed to industrial logging.

 

PNG forests cover 40 million hectares, of which 15 million hectares

are deemed loggable. The forests contain 5-7 per cent of the world's

biodiversity in 001 per cent of the world's landmass. "The PNG people

should not be forced to sell their biodiversity and culture to pay for

basic services.

 

"Australian companies and government need to work with the

democratically-elected government of PNG to protect the world's third-

largest untouched rainforest: the Amazon on Australia's doorstep.

 

"Companies such as Optus should be exercising corporate responsibility

and respecting PNG culture, environment and laws rather than coming up

with these deals", Mr Brunton said.

 

Greenpeace has obtained a letter dated June 28, 2000 from Douglas Bell

Consultancy to the General Manager of Telikom PNG outlining the

counter-trade proposal. The letter in part said, "Chinese authorities

have already expressed an interest in the countertrade option.

 

Their commodity interest is hardwood timber, and their participation

would require use of their cableship for installing the submarine

cable, and the collection of timber from PNG in Chinese registered

ships."

 

Attempts to contact Telecom PNG Managing Director Sunil Andradi was

unsuccessful.

 

The office of the Prime Minister Sir Mekere Morauta has assured

Greenpeace that they were not aware of the proposal.

 

According to another Australian newspaper, Advertiser (Adelaide),

Secretary for Environment and Conservation Dr Wari Iamo two weeks ago,

asked for international support if PNG is to protect its ancient

forests.

 

 

ITEM #2

Title:  Logging on: PNG chips in for cable

Source:  Australian Financial Review

Date:  August 22, 2000

By:  Rowan Callick 

 

A new $75 million fibre-optic cable proposed to connect Australia and

Papua New Guinea could be purchased through bartering PNG rainforest

logs.

 

Cable & Wireless Optus, cable layer Alcatel and PNG's monopoly telco,

Telikom, have begun exploratory talks about the new cable.

 

But Telikom, which would need to pay half, is broke.

 

So lateral corporate thinkers have come up with a creative answer:

barter the cable for rainforest.

 

This, however, would create another immense problem: a moratorium on

new timber concessions is a core condition for a global bailout of PNG

into which the World Bank, the International Monetary Fund and the

Australian Government have poured almost $500 million.

 

There is a proposal for PNG Telikom's owner, the Government, to

provide hardwood logs to the People's Republic of China to pay for its

cable participation.

 

When the Yangtze River suffered devastating floods two years ago,

China's Premier, Mr Zhu Rongji, blamed the disaster on logging

upstream by people who, he said, "have no intelligence and no virtue".

 

Mr Zhu banned logging, and said: "We can completely depend on imports

to solve the problem of inadequate timber supply."

 

And PNG, which contains the third-largest surviving primary rainforest

in the world, is being targeted as one of China's supply sources.

 

Mr Ian Bell, a Singapore-based consultant to Alcatel Submarine

Networks, one of the three major international cable layers, wrote to

Telikom that China could provide its cable ship for installing the

cable from Cairns to Port Moresby and collect timber in Chinese-

registered ships.

 

Mr Paul Banimbi, commercial manager of Telikom, said: "We are talking

to people in other parts of the Government" about the proposal.

 

He said: "There are different solutions, but timber is the guarantee

we are looking at. And our minister will support us on this."

 

Alcatel's manager in Australia, Mr Mike Kerr, said the present coaxial

cable, installed about 20 years ago, was "getting a little bit old

now", but its replacement was "a difficult one to finance".

 

He said he had never been involved before in a project involving

counter-trade or barter. "Whether that makes sense to PNG, I really

don't know."

 

Mr Kerr said PNG's situation was replicated elsewhere in the Pacific

region, where it was proving a challenge to "find a way to cost-

effectively connect these places into the fibre-optic network."

 

The present cable has about 25 per cent free capacity, and Telstra,

its owner with Telikom, has taken a different position from Optus and

Alcatel.

 

Telstra is not convinced about the need or demand for a replacement

yet, suggesting that a microwave link from Cape York would be a much

cheaper alternative.

 

Telstra and Optus have been competing for a role in PNG, to which the

former sends all the traffic but from which Optus is the main agent,

having established substantial satellite access.

 

The two, in Optus's case via its owner Cable&Wireless, historically a

major player in the Pacific, may also be competing next year when

Telikom - which is just breaking even at present, despite holding a

telecommunications monopoly for the country of 4.7 million - is

scheduled for privatisation.

 

Mr Alan Petts, director international of Optus, said: "We have a very

strong relationship with PNG Telikom." But he said it was not

appropriate to comment on the record about proposals for a new cable,

about which nothing was yet final.

 

Mr Klaus Rohland, the World Bank's country manager for PNG, said that

the country's structural adjustment program was conditional in part on

a halt to new timber permits until a major review had been completed.

 

He said: "Forestry is a major source of corruption in PNG, and if we

are serious about governance, we would want to get it in order.

 

"We are all aware that the Chinese, because they have stopped logging

to protect their own forests and watersheds, are really moving into

the Pacific."

 

Mr Rohland said that if the PNG Government were to seek to suspend the

moratorium, "my first reaction would be 'no'".

 

Mr Brian Brunton, Greenpeace's PNG-based Pacific forests specialist,

said on Sunday: "To the extent that Optus may have been involved in

this proposal, the message from us is: 'Optus, no'."

 

It would be impossible to sell $35 million logs to China without

breaking the moratorium.

 

He said that China should be aware that the history of the timber

trade with PNG was one of corruption, of transfer pricing and of

cheating poor landowners, to the benefit of mainly Malaysian loggers

and of Japanese and Chinese processors.

 

The record of China's timber interests in PNG - where two leases are

being operated, in East Sepik and Gulf provinces - was not positive,

he said.

 

"And Australian companies, too, need to ensure their investments in

PNG are informed and responsible."

 

The timber trade, he said, had been plagued by "bureaucratic

ineptitude, corruption and backdoor deals, with a destabilising effect

on the economy."

 

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