The politics of selling out your natural resources

Politics, law and the logging industry

The influence of the logging industry on the politics and laws of host countries should not be underestimated, particularly with regard to obtaining licences to log and to forest policy more generally. There is often a mutually beneficial relationship between logging companies and political elites, involving the acquisition of large private wealth for both parties through bribery, corruption and transfer pricing, at the expense of public benefit through lost revenues and royalty payments and at the expense of social, environmental and indigenous communities' rights. At the very least, these relationships equate to a conflict of interest; at worst, they suggest an institutionalisation of cronyism and corruption. In most cases, there is a fundamental imbalance of power between economic interests, the State and civil society over the control, use and exploitation of forests. The long-term consequences of this are logging at unsustainable rates for quick profit; illegal felling and illegal trade; disruption of successful local economies; social instability; environmental degradation; and social, cultural and political oppression.

Awarding of Concessions and Licences to Log
The awarding of concessions and other licences to log as a result of political patronage, rather than open competitive tender, has been the norm rather than the exception in many countries. All too often, the identity of concession holders is surrounded in secrecy, as is the actual location of concessions. Occasionally, this information has been leaked from forestry departments or made available through unofficial channels. Sometimes, the only information available is a list of the local concession holders rather than the identity of the ultimate owners and/or the sub-contractors who usually reap the rewards. In the case of Sarawak, for instance, the publication of a concession map became a political tool in 1987, when the present Chief Minister succeeded his uncle after an election campaign full of accusations of cronyism and corruption on both sides (see below).

Transnational logging companies, including Malaysian-based ones, often operate abroad through numerous private, locally-registered companies or as subcontractors to national concession holders. In this way, not only are each company's financial details difficult to track, but the actual links between operations (both nationally and internationally) are also obscured. On paper, for example, the licence holders may appear to be separate entities. These practices have enabled companies to dominate the forestry sector of a country, for instance Papua New Guinea, or to circumvent maximum concession holding limits, such as those in Cameroon.39 In countries which are now opening up their forests to timber exploitation (Guyana and Suriname, for instance), huge concession areas are sought by Malaysian and other transnationals. They put pressure on governments to issue logging licences over these areas despite the inadequacies of forestry departments to monitor operations effectively or to enforce legislation, despite indigenous and other local peoples' titles or claims to land and despite the lack of enough state forest to cover their requests. In Cambodia, the anarchic issuing of local permits to log has become an easy way to obtain licences to cut trees, avoiding the more lengthy process associated with forest concessions allocated at the national level.40

Guyana
A 1995 World Bank study confirmed that loggers were getting their timber in Guyana very cheaply and revealed that royalties, taxes and forest fees were some of the lowest in the tropics, less than one-tenth of those paid in most African and Asian countries. With Guyana liquidating its forest assets for little national gain, the World Bank report warned that such forest mining entails a boom-and-bust pattern of development that can be highly disruptive to employment levels, trade balances and other factors of macro-economic stability...... Read more