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A Third Of Papua New Guinea Now Beholden To Foreign Logging Companies

November 22, 2013
Mint Press News
Nearly one third of the country has been leased to foreign logging companies, many on century-long agreements.

WASHINGTON – Within just a few years, Papua New Guinea has become the world’s second-largest supplier of illegally logged tropical timber, fuelled by Chinese factory contracts and consumer demand in the United States, Canada and Europe.

The Southeast Asian country has long been known for the size of its rainforests, estimated to be the third-largest in the world, as well as its remarkable success in maintaining strong land tenure regulations, with the vast majority of traditional landholdings having remained in the hands of local communities. Yet according to new research released this week, nearly a third of Papua New Guinea has now been leased to foreign logging companies, many on century-long agreements.

The Oakland Institute, a California watchdog group that has been involved in monitoring large-scale land deals in Africa for years, calls the situation “one of the swiftest and largest land grabs in recent history.”

“After having looked at hundreds of deals in Africa, this is certainly one of the most egregious situations I’ve ever seen,” Frederic Mousseau, policy director at the Oakland Institute, which has just released a new report and companion documentary on the situation, told Mint.

“First, the fraudulence of these deals is unbelievable. People think they’re agreeing to 2,000 hectares of land being used for development projects, only to find out later that they’ve signed over a logging concession covering two million hectares,” he said. “Second, the level of violence is much higher: many countries use security forces to repress opposition to land-grabbing, but we’ve never actually seen companies hiring police forces for this purpose.”

Mousseau said that while speaking with affected communities he heard “a real cry for help.” Many of these communities have found they have little place to turn, given that, for the most part, the government, local elites and the police are working against them and siding instead with foreign investors.

“There has been a lot of surprise as communities have started finding out how their lands have been taken,” Serah Aupong, with the Pacific Network on Globalisation (PANG), an advocacy group, told Mint.

“Many have said they hadn’t signed any papers, knew nothing of any of the details, only to find out that whole portions of their lands have been given away for up to 99 years. That’s three generations of Papua New Guineans who will be cut off from their lands – that’s devastating.”


Futureless development

 Papua New Guinea is not a particularly large country, but it has maintained globally important forest coverage. According to a World Bank estimate from 2010, around 63 percent of Papua New Guinea is covered with forest.

Not only are those forests thought to be home to some 5 percent of the world’s wildlife (two-thirds of which are endemic to the country), but an overwhelming amount of this forestland – 97 percent, according to official counts – has remained under legal control of local communities.

Yet Mousseau said the government is determined to “break” this legal protection. Under the guise of development projects – officially known as the Special Agriculture and Business Lease (SABL) approach – the government has been able to convince local communities to sign away huge swaths of land to foreign companies intent not on development but on logging.

“What we see now is looting of the resources of the country without any development return for the people, other than the distribution of small bribes to let these companies do what they want to do.

“The main goal of the companies involved is logging, pure and simple, and building access roads through the jungle are basically the only infrastructure they’re bringing. Clearly this isn’t about development – once they’ve taken the logs, they will leave and these logging trails won’t be maintained,” Mousseau said.

According to the government, the SABL approach would involve replanting the logged areas as palm oil plantations, following a model being used in Indonesia and Malaysia (indeed, many of the logging companies involved are Malaysian). Yet Mousseau said that even if that model is eventually followed – and currently there is little evidence of that – when he and other researchers visited a few of the country’s old, established palm plantations, they found little reason to believe that palm oil held out much opportunity for local development.

“The government said that farmers are not ‘productive,’ but in places where these plantations have been in place for 50 years, the people are very frustrated because they gave away their land and have seen almost no development outcome.

“These communities are living with no water, no roads, no access to schools or health care, no electricity – and this is the model that is being upheld by the government. Instead, we see the people being turned into low-paid plantation workers with no future for themselves or subsequent generations,” Mousseau said.

For now, however, some current “infrastructure projects” are clear covers for little more than massive logging operations. One of the most egregious, documented by the new report, involves a company registered in the United States called Independent Timbers and Stevedoring (IT&S). Originally it was contracted to build a highway in the country’s Western Province, in return for the use of any timber harvested along a 40-meter corridor surrounding the road. Yet as this plan continued to evolve during the preparation process, the corridor continued to widen.

Ultimately, the Oakland Institute and others have reported, the planned “road” project evolved to constitute a 34-kilometer-wide corridor, allowing for the logging of more than two million hectares, agreed to under the terms of a 99-year lease. (IT&S, which appears to be little more than a letterhead operation in the tax haven state of Delaware, was unable to be contacted for comment for this story. In the past, however, its Australian CEO has suggested that his company’s actions have been unfairly singled out.)

It is not necessary to take the word solely of activists on the legality of the new “development” deals being struck in Papua New Guinea. In September, following two years of investigation, an official commission of inquiry published a report on the SABL approach, finding that some 90 percent of related land deals had been fraudulent.

“We recommend that the mechanism for acquiring and releasing customary land as SABLs for land based development be reviewed with a view for it to be replaced with a better and risk free option,” the report stated, according to an online summary.

Nonetheless, Prime Minister Peter O’Neill has dismissed the findings, despite having previously supported the commission while in opposition.

“Politicians will be politicians. The official statement has noted simply that the government is still going ahead the policy of putting up land for development,” PANG’s Aupong said. “That’s shocking for us. Nonetheless, the commission has recommended that all land should be returned to the people and that the SABL program should be abolished, because it’s being abused and because foreigners are getting all of this land from the people. For now, we stand with that.”


Chinese black box

Legislators are currently moving to crack down on the trade in illegally harvested and rare tropical woods, though these remain at a nascent stage. In the Papua New Guinea situation, the long process from harvest to consumer is jumpstarted by the government’s practice of certifying all timber it exports as having been lawfully harvested, despite the host of documented evidence to the contrary.

From there the impetus switches to importers of raw timber, with China playing a massive role as intermediary. Indeed, some 97 percent of Papua New Guinea’s illegally harvested timber is currently bound first for China, where it is processed into a range of furniture and wood products.

Over the past decade, Chinese exports of wood products have increased by upward of 30 percent per year. Today, it is the world’s largest exporter of wood products, with more than 12 percent of the global market, valued at almost $12 billion last year. Yet that market is also said to be one of the most opaque of any commercial market with which the United States trades.

“China remains a black box in this regard, with thousands of Chinese factories buying whatever wood they need to buy to make U.S. customers happy,” Alexander von Bismarck, executive director of the Environmental Investigation Agency (EIA), told Mint. “So far, many have had to look for illegal wood to fulfill their contracts.”

Over the past decade, Von Bismark has been at the forefront of uncovering this illicit trade. Last month, the EIA put out a major report accusing Lumber Liquidators, the largest specialty flooring company in the United States, of importing illegally harvested hardwood from far eastern Russia, in contravention of US law. In late September, federal authorities executed search warrants on two of the company’s Virginia offices. Again, the EIA found that Lumber Liquidators was able to trade in this illicit hardwood through a Chinese supplier.

In 2008, U.S. lawmakers amended legislation known as the Lacey Act to prohibit the sale of illegally harvested woods in U.S. markets. In the current context of the Papua New Guinea and Lumber Liquidators situations, some environmentalists have stepped up criticisms of the Lacey Act’s perceived weakness or lack of implementation.

Yet von Bismark suggested that such criticism is misplaced, noting that the Lacey Act has already had a revolutionary impact on global markets. And while China remains the clear soft spot in international regulation of the timber trade, he emphasized that an important trend is currently emerging: regulations in critical markets are only now being put in place, and China too is beginning to follow suit.

“For the fist time, Chinese factories dealing in flooring and other wood products are changing their sourcing, and that’s because of the Lacey Act,” he said. “This hasn’t happened to the extent that they should, but it’s happening – they’re already buying more wood from responsible sources in order to get their products into US ports.”

Further, he points to a domino effect in other countries following the implementation of the Lacey Act. The European Union has now passed its own version, which is only considering doing the same.

“Of course, the Holy Grail would be getting China to pass its own version of this principle, and in fact, they are making moves on this. There’s already reason to be optimistic, as the Chinese are talking about illegal logging for the first time – that’s a sea change in attitude,” von Bismarck said.  “Now, if they want to remain relevant as a major producer of wood products, China will need to codify this new standard that is sweeping the world. If they remain a black box that willingly accepts illegal wood, their markets will simply close. Right now this process is extremely incomplete, but they are changing their tune.”