Press Release / May 8, 2000

The Case for a Moratorium

The ADB funded concession review correctly identified that the forest concession system in Cambodia has been a disaster for the country’s forests, which will lead to their destruction by 2003. The report was less clear on how the problems should be resolved. The workshop held in Phnom Penh on the 20th and 21st April addressed some of these issues but its conclusions appear to be less robust than necessary.

This brief paper will argue that a moratorium on all timber concession activity is essential in the short-term, to ensure a medium and long-term future for forestry in Cambodia. It is emphasised that these recommendations are based on Global Witness’ experience in monitoring and analysis of the forest sector over the past five years. The only issue being considered by Global Witness in this regard, is what options will really work in the Cambodia context. Many of the theories and recommendations resulting from various studies are fine – but only in theory. Observers of Cambodia’s forest sector will acknowledge that commitments by concessionaires are worthless–they are more skilled at voicing regret for their past actions and promising reforms than actually trying to implement sustainable forestry management. They have been doing this since 1996.

· The forest concession system has been extensively criticised since 1995. The World Bank’s 1996 Forest Policy Assessment was highly critical. The World Bank funded Forest Policy Reform Project in 1998 was damning, as have been all independent reports concerning forestry in Cambodia. It was this latter report that first suggested a concession review, explicitly as a means to terminate the worst-performing concessions. This methodology was ignored in the ADB review, and none of the recommendations of either of the above projects have yet been implemented, allowing the logging companies to continue with their bad and illegal practices right up to the present day, resulting in the current parlous state of Cambodia’s forests. It will probably be several years before these recommendations, and the final recommendations resulting from the ADB report will be implemented, thus allowing these activities to continue. Past evidence suggests that the timber companies will continue with their bad and illegal practices, thereby threatening the future of the resource, probably fatally.

· The findings of the April workshop suggest that the concession companies will be required to carry our certain tasks within a given time-frame, probably one year, during which time they can continue operations. The concessionaires past records suggest that they will avoid and/or ignore reforms, thus threatening the resource and rendering reform meaningless. This likelihood must be appreciated. Furthermore, it is highly likely that the DFW and the RGC will enthusiastically latch onto any option other than concession termination, using such reports as an endorsement of current methodology. Also it is likely that yet another stay of execution will lose the momentum of forestry reform – the time for action is now.
· The recommendations of the ADB review treat the concessionaires as ordinary legitimate businesses operating according to conventional international business standards. The reality is that all but two of the concessionaires do not have the technical ability to conduct the business they are involved in –strange for any legitimate business - and virtually all of the companies have consistently broken every rule of forest management and Cambodian law. They owe their existence in Cambodia to the culture of corruption that pervades the sector and as such operate as a kind of Mafia, avoiding mandatory controls. Until this core issue is tackled it is unlikely that there will be improvements on the ground. Only strong action, such as a moratorium and several concession terminations, will create an environment where real change is possible.
· The CTIA pledged, at the April workshop, to reduce their harvest by 75% of their annual allowable cut (AAC). Given that the ADB review identified that the AAC is based on old and inaccurate data this pledge will do little to protect the remaining forest. Furthermore, given that neither the DFW or the concessionaires have yet managed to control legal or illegal harvesting, who will police this reduction? In the case of Samling, which has not operated since early 1999, this ‘reduction’ in fact represents a resumption of activities, not a reduction at all. Finally, can the CTIA’s pledge be trusted? Experience would suggest not.
· A moratorium would have little financial impact upon the RGC. Since 1994 the RGC has generated just $92 million from forest royalties and taxes, $35 million of that in 1994 alone. Current annual revenues are in the region of $10 million: surely it would be better to impose a moratorium to protect the resource, rather than risk the resource for around $10 million per year.
· The only plausible argument put forward against a moratorium is the issue of who will protect concession lands during the moratorium. Currently such protection is the responsibility of the concessionaires, who hire military units. The responsibility should remain that of the concessionaires, under strict monitoring and supervision by the DFW and the Forest Crimes Monitoring Unit.
· The ADB report confirms that no existing concession has more than 10-15 years left in terms of harvesting, many of them less than five, whilst the contracts are valid for around another 20 years. Therefore it is self-evident that Cambodia’s forests cannot sustain the current levels of concession activity. Concession boundaries need to be redrawn to encompass forest areas in which sustainable forest management can be practised, operated by substantially fewer companies. Although the report clearly states these facts, it does not suggest any method to address the problem. A moratorium is essential to protect current forest resources whilst this issue is addressed, or even this option will be lost.
· The concession review acknowledges the failure of the concession system, but fails to identify a future vision for Cambodian forestry. A moratorium would provide time to analyse the best way forward for the forest sector. As even a reformed version of the current system is likely to fail, the RGC should consider alternative uses of the forests. For example, if the sector focused on manufacturing high value furniture for the European market it would not only generate earnings probably higher than the current system can provide, but would also create a skilled workforce and be known for supplying a prestigious product. Currently Cambodia’s forests are being destroyed to supply comparatively low value plywood.
· The legal arguments against concession termination have been blown out of proportion by the ADB report. Had these arguments not been given such high prominence it is unlikely that the majority of concessionaires would have resorted to the law, given their own records of serious contractual breach. The ADB report has probably alerted the concessionaires to the possibility of legal action, thereby weakening the review process.