Appeared in The Island, Colombo http://www.island.lk October 01, 2003
By Hemantha Withanage
Environmental Scientist
The Sri Lankan government is planning to sign an agreement, under the US Tropical Forestry Conservation act, to bind Sri Lanka's forests for external debt, soon. Under this arrangement those forests will in future be managed by a committee comprising representatives from the US government, International NGOs other than local representatives. Would this be a question of sovereignty too?
Like any other developing country, Sri Lanka receives loans and grants from both multilateral and bilateral agencies, such as the World Bank, the Asian Development Bank, the IMF, USAID and the JBIC. Nevertheless, Sri Lanka’s foreign debt continues to increase.
The repayment of such a debt is not easy for a Third World country and all such countries find they must exploit their resources excessively in order to do so. Sri Lanka is no exception. The large scale felling of timber, shrimp culture, the cultivation of cash crops such as gherkins, baby corn and tobacco, the extraction of minerals such as phosphates and mineral sands and the privatisation of water supplies are examples of such exploitation. It is not merely the present generation, but also another three to four generations which may have to carry this burden.
The environment sector also receives large-scale loans and grants. These grants and loans cover tree planting, watershed management, coastal conservation, pollution control, wildlife, medicinal plant conservation, conservation of bio-diversity, traditional knowledge etc. In spite of this aid, however, there is no improvement in the environment sector in general.
Forest cover has been reduced to 19% from 24% in 1990, while the green cover has been reduced to 47% from the 70%. More than 200 elephants die annually. There is no new data available in other sectors. However, necessary laws and funds are available in this sector. Government institutions and the non-government sector promote environmental conservation, but are unable to control this destruction. The reasons are politically supported illegal forest felling, tea cultivation etc.
Neither the government sector nor the non-government sector projects have been able to improve the forest cover; nor indeed have they managed to at least abate the destruction. The felling of Jak, Sapu, Lunumidella trees were deregulated and that destroyed most of the trees on Sri Lankan land. There are over 100 trees species, which include some native species, and medicinal plants in a list to be deregulated under the present ADB funded project for the Forest Department. In short, although there is an official logging ban by the Government they are not able to stop forest felling due to the haphazard decision making of certain sections of the executive.
Recent environmental conservation project grants, such as the Global Environmental Facility (GEF) Enviro-nmental Action 1 project may be regarded as unsuccessful. These projects mainly finance the purchase of vehicles and the planting of trees, but 80-90 percent of the trees planted no longer exist. Hence, these project grants tend to add to the foreign debt of the country.
The Act
However, third world countries have no resources to repay their debt. In this context the US Public Law 105-214, for Debt Reduction for Developing Countries with Tropical Forests the Tropical Forest Conservation Act (TFCA) - might be seen as a valuable mechanism. Under the provisions of this legislation, if a tropical country possesses at least one globally important tropical forest, then that country may sign an agreement with the United States of America to reduce the debts to the latter incurred either as a result of loans under the Foreign Assistance Act of 1961 or because of credits extended under title 1 of the Agriculture Trade Develo-pment and Assistance Act of 1954. This may be achieved by DEBT BUYBACK, by DEBT FOR NATURE SWAP or by LOAN RESTRUCTURING.
I. Debt Buyback
Under this provision, a loan may be repurchased at a price equal to its net present value, with an additional local currency payment made up-front to endow a Forest Conservation fund. This endowment would be up to 40% of the purchase price of the loan.
II. Debt For Nature Swap
According to this provision, a third party may purchase a loan in exchange for a commitment by the debtor country to fund forestry conservation and protection programmes. The exact terms of the agreement will be subject to negotiations between the US Government, the third party and the debtor country. The total payments by the debtor country under this option would be higher than the net present value of the original credits, but lower than their actual face value.
III. Loan Restructuring
Payments of principal would continue to be made, in US Dollars, to the US Government, but interest payments would be made in local currency to a Tropical Forest Fund.
Tropical Forest Funds
The key element in the TFCA is the concept of Tropical Forest Funds. These are intended to be established, under the laws of the debtor country, as endowed trust funds to be managed in perpetuity. They would make grants for the conservation, maintenance and restoration of tropical forests in the debtor country, through the following activities:
a) The establishment, restoration, protection and maintenance of parks, protected areas and reserves;
b) The development and implementation of scientifically sound systems of natural resource management, including land and ecosystem management practices;
c) Training programmes to increase the scientific, technical and managerial capacities of individuals and organisations involved in conservation efforts;
b) The restoration, protection or sustainable use of diverse animal and plant species.
e) Research into and identification of medical uses of tropical forest plant life to treat human diseases, illnesses and health related concerns; and
f) The development and support of the livelihood of individuals living in or near a tropical forest in a manner consistent with protecting that forest.
The grants would be made primarily to non-governmental organisations (NGOs) involved with environment, forestry, conservation and indigenous peoples and other local or regional entities. Grants to the government of the debtor country would only be made in exceptional circumstances.
The Tropical Forest Fund in a given country would be administered by a body, to consist of one or more individuals appointed by the US Govern-ment (ie the US Ambassador or his/her designate), one or more individuals appointed by the government of the beneficiary country and individuals from NGOs and scientific, academic or forestry organisations.
The Pros
The failure of the Sri Lanka Government to prevent the destruction of the forests means that a new mechanism is necessary for forest conservation. It appears that the Sri Lankan Government will be never committed to forest conservation if it does not come as a condition for grants. It is hence argued by proponents of a US-Sri Lanka Tropical Forestry Agreement under the TFCA that, although they may not want a third party intervention in managing the countrys natural resource, there is no other practical way to protect the remaining forests in Sri Lanka. Such an agreement, they say, would ensure that resources would be allocated to the protection of the forests that would not otherwise have been so used.
There would be enhanced forest conservation through the establishment of a Tropical Forest Fund for Sri Lanka. There would be more effective use of existing funds and resources through better management.
Furthermore, such an agreement would alleviate indebtedness; resources that once went to the US as debt repayment would remain in the domestic economy and be channelled to organisations involved in forest conservation and protection. The US Government might subsidise the programme partially, leading to further reductions.
The Cons
The fundamental disadvantage, to Sri Lanka, of a Tropical Forest Agreement with the US, under the TFCA, is the abdication by the Government of Sri Lanka of the responsibility for safeguarding the forest resources of this country. However the meaning might be clothed in verbiage, the primary aim of the TFCA is for the US Government to obtain control over the forest resources of tropical countries. According to the TFCA, one of its main purposes is:
To recognise the values received by United States citizens from protection of tropical forest.
It is unrealistic to expect a foreign country such as the US to behave totally altruistically in managing Sri Lanka's forest resources. It will put its own interests before those of this country.
A corollary is the possibility of exploitation of the resources of Sri Lankan forests by US-based NGOs and companies. One of the reasons for the TFCA is the protection of the plant and gene bank which is only available in tropical forests, while one of the activities envisaged under the Tropical Forest Funds (and mentioned above) is research into the medicinal uses of tropical forest plant life indicating that this issue was not far from the minds of US legislators. The US may, therefore be expected to benefit fully from research into the plant and gene resources of Sri Lankas forests, to the detriment of the local population. US pharmaceutical companies are well known for getting patents for plant based pharmaceuticals, sometimes of substances that have been in use for millennia.
The question of control over the process appears to be already raising its head. The Additional Director General, Department of External resources of the Ministry of Finance and Planning has written to the Ministry of Forest and Environment asking the latter to identify activities for funding under the Tropical Forest Fund that could be established under the mechanism. It appears, therefore, that either (a) the Government has not understood the mechanism or (b) the Government does not wish any collaboration with NGOs although the NGOs are major stockholders of this mechanism. Whichever is the case, it appears that the needs of the Government of Sri Lanka will be in contradiction to the requirements of the TFCA.
There are many threats of bringing international NGOs to protect our resources. Some of them are infamous for biopiracy and some of them keep biodiversity sites with military support. The killing of two Indonesian tribals who tried to enter to COMODO National Park is a popular story to show how they treat the people in biologically valuable areas. Their approach is removing people from the forest and buffer zones which is not a suitable option for Sri Lanka.
There is also the question of how effective the fund would be. The activities mentioned above are not new to Sri Lanka. As noted earlier, there are quite a few foreign funded projects which do not provide serious protection to the forests right now. Does it seem likely that these NGOs which have failed to affect the situation so far will be able to do so in future?
Yet finally, the question of sovereignty remains the principle one. If the Government of Sri Lanka is unable to protect its natural resources, then the state is no longer viable in that it cannot protect the interests of the country. How far would such a state be able to exercise control over what would be basically a foreign agency operating as an administrator of forest resources within Sri Lanka?
The Ecological Debt
It is a well-known fact that US refused to sign the Kyoto protocol, which is the agreement, negotiated under the climate change convention signed in 1992 at the Rio conference, which aimed to reduce the greenhouse effect. The US disagreed with the level of reduction of the C02 for the US and with the mechanism to reduce such C02 levels, which were included in the protocol.
It appears that US will benefit from the TFCA without reducing its C02 levels, by stating that it has protected so much of Tropical forests in the world, which act as sinks to absorb the C02, which the US releases. One US citizen releases C02 equivalent to 19 Sri Lankan, 19 Indians 107 Bangladeshis or 269 Nepalis. The United States currently emits 45,000 pounds (20 tonnes) of C02 annually per person. The reduction of C02 level for US involves serious reduction of the life style and this is a very big political question there. The US and all other developed countries which emit enormous amounts of greenhouse gases are already served by the countries that own tropical rain forest. Absorption of C02, controlling the hydrological cycle, acting as a gene and seed bank are those major functions. The value of these functions is higher than the capital of all the countries that exist in the world or the value of all business in the world.
Therefore all developed countries already owe an enormous debt to these third world countries. This is normally called ecological debt. Environmentalists argue that the developed countries should reduce the foreign debt of these countries considering the value of such ecological debt.
The US TFCA, while accepting this principle, does not forget or reduce that debt with regard to the past services. The Act is intended for the future services of the Tropical Forest. However, the past debt should be reduced unconditionally and the TFCA should be only in respect of future loans.
So far Bangladesh and Thailand have signed the agreement with the USA under the TFCA, while Peru, Belize, Ecuador, Malaysia, Jamaica, Brazil, The Philippines, E1 Salvador, Costa Rica and Dominican Republic and Paraguay have expressed their interests in the programme. The Sri Lanka Government thus has a very big role to play when considering this mechanism to reduce debt. The role of the government in identifying the eligible purchaser, the activities under the programme and how to select the administering committee are some of the issues that it must cover.
We know that forests are public assets. The Government only acts as the guardian. This public guardianship doctrine is very clearly explained in the Eppawela Phosphate case. Therefore the key issue is whether we lose our rights in the tropical forest sector once we enter into such an agreement and whether the government can sign such an agreement without any public consultation.
As a country we have to have policies and laws
a) To protect the alienation of forest resources
b) To stop pirating the genetic material, plant serum, plant species or the traditional knowledge.
It should be the first step of any government before entering into such an agreement. However, instead of the government identifying whether Sri Lanka has policy and legal coverage to enter in to such an agreement they just try to identify the activities. This indicates that the Sri Lankan government wishes to hurry up the process.
Most importantly, the government should be very careful whether it would affect the sovereignty of the country. No one wants another Kandyan Convention in Sri Lanka.
