Forgive Us Our Debts--for Trees : Forests: ‘Debt-for-nature’ swaps could slow the sell-off of tropical America’s timberlands.

One of the few benefits of the Cold War, from the perspective of the Western Hemisphere, was that the extreme anti-capitalist and leftist attitudes of many tropical nations discouraged investment by unscrupulous international investors. Now that many of these same countries have democratized and joined the world economy, they are being eyed greedily by international lumber companies eager to take advantage of lax environmental regulations and enormous swaths of tropical forests.

Natural-resource utilization is part of every country’s development scheme, including our own. But we have learned through our own negative experiences that there are ways of utilizing one’s natural resources that maximize the economic benefit while minimizing the harmful environmental impact. It is the responsibility of the United States to share this knowledge with the developing world.

Consider the case of Nicaragua. Several years ago, a Taiwanese firm held secret negotiations with the government of Nicaragua to obtain an enormous forestry concession in the northeast corner of the country. Local loggers and environmentalists (including those working for the government) were not consulted. Neither were Amerindian leaders, despite the fact that the concession included part of their traditional lands. The resulting uproar by concerned Nicaraguans led to the circulation of the logging contract, which proved to have terms unfavorable to Nicaragua. As a result, the project was canceled.

The Taiwan-Nicaragua deal presaged a swell of Asian companies seeking enormous timber concessions across tropical America. The Asians claim that their operations will be “sustainable and environmentally friendly,” but not a single one of those companies has a track record that indicates anything of the sort. In fact, many of these firms have histories of environmental transgressions or outright disregard for environmental laws, as well as insensitivity to local land rights, particularly with regard to indigenous people.

Then, there is the experience of Guyana in northeastern South America. More than 90% of the country is covered by old-growth forest, but this may not be the case for long. In 1991, the Guyanese government granted a 4-million-acre timber concession to a Korean-Malaysian joint venture with no track record of sustainable harvest in the rain forest. This company is busy turning virgin rain forest into plywood, and the government of Guyana is making only about $2 a tree, an absurdly low figure for prime tropical hardwoods that take centuries to mature. Because of the extremely favorable terms under which the Asian company is able to operate, it is destroying the businesses of local timber operators, who have been harvesting the local forests in a sustainable manner for decades.

A similar situation is unfolding in neighboring Suriname, which has more rain-forest cover than any other country in the world--more than 98%. In order to obtain multimillion-acre concessions, two subsidiaries of an Indonesian logging firm have incorporated themselves under 67 different names, enabling them to avoid the maximum area limit as designated in local legislation. Ironically, through bad planning, they obtained their concession in a region where the timber is of relatively poor quality. Once these companies have established local operations, however, economy of scale will dictate that they seek additional concessions.

No country, including the United States, has the right to dictate to another country what it can or cannot do with its natural resources. But we can suggest alternative schemes for the wise use of these resources. These include sustainable timber harvest, the promotion of eco-tourism, prospecting for new drugs from rain-forest plants and debt relief for countries that may be tempted to sell off resources cheaply to service their debt.

There are some positive signs. The government of one Latin American country, a creditor of Guyana, has indicated to me its willingness to convert a portion of Guyana’s debt in return for a commitment by the Guyanese that they will fund environmental programs that support rain-forest conservation. This bold step could mark the first debt-for-nature swap between two developing countries. Such creative financial mechanisms should be encouraged throughout the Hemisphere.