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					TROPICAL FORESTS AND THE POLITICS OF
ENVIRONMENTAL REFORM: THE CASES OF
 BRAZIL AND INDONESIA FROM 1988 TO
                        1992/93




                      Dr. Polit thesis




      Department of Sociology - University of Oslo




                  Submitted by: Sjur Kasa
Center for International Climate and Environmental Research –
                University of Oslo (CICERO)
                                    TABLE OF CONTENTS


CHAPTER ONE: INTRODUCTION .......................................................................................... 7



                                                      2
CHAPTER TWO: METHODOLOGICAL CONSIDERATIONS - DESIGN AND
DATA ............................................................................................................................................ 11
   2.1. Introduction ................................................................................................................ 11
   2.2. The comparative design ............................................................................................. 11
CHAPTER THREE: EXPLAINING VARIATIONS OF ENVIRONMENTAL
REFORM – FOUR APPROACHES AND SEVEN PROPOSITIONS ................................... 43
   3.1. Introduction ................................................................................................................ 43
   3.2. Explanations inspired by the dependency approach .................................................. 45
   3.3. Explanations related to environmental interdependence: Environmental reform as co-
   operation ........................................................................................................................... 54
   3.4. Explanations centred on the domestic bureaucracy ................................................... 75
   3. 5. Explanations focusing on domestic societal actors ................................................... 78
   3.6. Summary .................................................................................................................... 96
CHAPTER FOUR: THE PROBLEM – A CONTRAST IN ENVIRONMENTAL
REFORM ...................................................................................................................................... 97
   4.1 Introduction ................................................................................................................. 97
   4.2. Forest land use and environmental problems – evaluating and comparing reforms .. 97
   4.3. Commercial actors in Brazilian and Indonesian tropical moist forest areas ............ 120
   4.4. Environmental reform: Brazil outpaces Indonesia in the period from 1988 to 1992/93
    ........................................................................................................................................ 161
   4.5. The contrast between reforms in Brazil and Indonesia from the late 1980s to 1992/93
    ........................................................................................................................................ 205
CHAPTER FIVE: EXPLAINING THE CONTRAST .......................................................... 209
   5.1. Variations in dependency - no consistent explanation ............................................. 209
   5.2. Explanations related to environmental interdependence: Environmental reform as co-
   operation. ........................................................................................................................ 237
   5.3. Bureaucracy-oriented explanations: Weak environmental agencies confronting
   strong and powerful military agencies ............................................................................ 265
   5.4. Brazil and Indonesia - weak domestic environmental movements confront well-
   organised and powerful domestic commercial actors ..................................................... 285



                                                                      3
   5.5. Comparative conclusion:                         International          pressure, domestic structures and
   transnational networks.................................................................................................... 333
CHAPTER SIX: SUMMARY AND CONCLUSION ............................................................. 364
References: .................................................................................................................................. 374
APPENDIX 1: Persons interviewed in Brazil and Indonesia - chronological order ............ 408
APPENDIX 2: SOME ACRONYMS USED IN THE TEXT ................................................. 413
APPENDIX 3: INTERVIEW GUIDE AND LIST OF QUESTIONS ................................... 418




                                                                   4
                                                            TABLES
TABLE 1: Two versions of external economic constraints .......................................................... 48
TABLE 2: Two versions of the hypothesis of pressure from transnational companies................ 53
TABLE 3: External economic factors and intermediate domestic economic links that may
       influence the response of governments to external pressure for environmental reform ........ 61
TABLE 4: External economic factors and intermediate domestic political links that may
       influence the response of governments to external pressure for environmental reform ........ 66
TABLE 5: Combinations of variables that influence the ability of transnational actors to
       trigger internal attention ......................................................................................................... 72
TABLE 6: Factors that may influence the emergence of international pressure in favour of
       environmental reform............................................................................................................. 74
TABLE 7: Operationalisations of the concept of «environmental reform» as a basis for
       evaluation and comparison of the cases. .............................................................................. 119
TABLE 8: The distribution of forest on major regions of Indonesia 1950 ................................. 124
(Millions of ha): ........................................................................................................................... 124
TABLE 9: Estimates of log production in Indonesia by various sources (million m3) .............. 130
TABLE 10: Percentage of Brazilian Amazonia under effective land use .................................. 149
TABLE 11: Effective land use distributed on main activities 1975-85 ...................................... 150
TABLE 12: Distribution of forms of effective land use on size of agricultural
       establishments in North Region and Mato Grosso .............................................................. 152
TABLE 13: Development of deforestation in states of Legal Amazonia 1975-1991 -
       percentage of state area ........................................................................................................ 154
TABLE 14: Distribution of deforestation in Legal Amazonia on states 1987-88/89 ................. 156
TABLE 15: Foreign investments in Indonesian forest concessions at the end of the logging
       boom .................................................................................................................................... 227
TABLE 16: PT Tri Usaha Bhakti investments in wood industries 1987 .................................... 276
TABLE 17: Main groups in the Indonesian forest industry 1992 ............................................... 300




                                                                    5
Preface and acknowledgements


This thesis is the outcome of several years’ work with problems related to development and
the environment in developing countries. Though the final product is certainly my own
responsibility, I will use this preface to thank several people who have made a difficult
process of learning and writing easier and more fun.
       Among my friends and colleagues in Norway, I would like to thank Bent Sofus
Tranøy, Arild Underdal, Lasse Ringius, Helge Hveem, Lars Mjøset (my tutor), Kristen
Nordhaug, Arild Schou and Lasse Ringius for valuable comments and support during the
preparation of the project and the writing of the present manuscript.
       Internationally, I would like to thank Andrew Hurrell, Anthony Hall, Eduardo Viola,
Michael Ross, Anne Cullen, Susanne Jakobsen and staff connected to the Center for Asian
Studies in Amsterdam (CASA) for important comments to sections of the manuscript and
fruitful discussions.
       I would also like to thank some of the people who helped me most during my
fieldworks in Brazil (October –November 1992, November-December 1993) and Indonesia
(June-July 1993, March 1995). Professor Luiz Pedone at the University of Brasília provided
invaluable assistance by putting me in touch with the right people in the Brazilian
bureaucracy. Don Sawyer at the ISPN in Brasília was equally helpful and friendly. In
Indonesia, Hadi Alikodra and Euis Ekawati at the Ministry for Population and Environment
put me in touch with a large number of people in the Indonesian bureaucracy and
Indonesian NGOs that would have been inaccessible without their backing. In both
countries, the Norwegian Embassies were extremely helpful in putting me in touch with
particular interviewees. The Ambassadors Torolf Raa (Jakarta), Sigurd Endresen (Brasília),
Herberth Linder (Brasília), as well as Secretary Tove Kari Bruvik (Brasília) should be
mentioned in particular.


Last but not least, I would like to thank my wife, Anny, and my daugther, Gabriella, for
their unfailing love and empathy during a hard process.




                                              6
                   CHAPTER ONE: INTRODUCTION
Tropical moist forests1 attracted strong international attention during the 1980s. This
increase of attention was fuelled by two scientific discoveries.
        First, it was discovered that tropical moist forests fulfil important global
environmental functions that had not been fully recognised before the 1980s. Tropical moist
forests are the densest terrestrial ecosystems, containing the greatest biomass and the
highest number of species of any forest type (World Bank 1991:26). Although tropical
moist forests cover only 7 percent of the earth’s land area, they contain about one half of the
1,9 million named species in the entire world biota, as well as innumerable species as yet
unnamed (World Bank 1991:27). Because of their high per unit density of biomass they
account for about 55 percent of the world’s organic carbon. Thus, clearance of tropical
moist forests contributes significantly to atmospheric emissions of carbon dioxide,
accelerating the build-up of this most important «greenhouse» gas in the atmosphere.2
        Second, it was realised that these forests were vanishing at accelerating speed. A
study by the Food and Agricultural Organisation (FAO) from 1985 (FAO 1985) concluded
that 11,4 million ha of tropical forests were cleared annually. Towards the end of the
decade, estimates indicated that tropical deforestation had increased to an annual rate of 17-




1Westoby (1989:148) defines tropical moist forests as «the closed high forests lying in the tropical belt where
there is either year-round rainfall, or only a short dry season of not more than four months. (..) TMF includes
both wet rainforests and dryland forest formations, monsoon forests, mountain rain and cloud forests, and
mangroves. Nearly all these forests consist of broad-leaved species, coniferous forests accounting for less
than 3 per cent». The World Bank in its forest policy paper from 1991 (World Bank 1991:95) defines TMF
as «Forests situated in areas receiving not less than 100 millimetres of rain in any month for two out of three
years, with a mean annual temperature of 24 C o or higher; mostly low-lying, generally closed. Subdivided
into tropical rain forest and tropical moist deciduous forest». «Closed forests» are usually defined as «forests
in which the stand density is greater than 20 percent of the area and tree crowns approach general contact
with each other», in contrast to «open forests» which cover between 20 and 10 percent of the area (World
Bank 1991:93, Westoby 1989:94). Closed forests are not necessarily virgin forests with their canopy intact.
Both «primary forests», defined by the World Bank as «Relatively intact forest that has been essentially
unmodified by human activity for the past sixty to eighty years», and «secondary forests», defined by the
World Bank as «Forest that is subject to a light cycle of shifting cultivation or to various intensities of
logging but that still contains indigenous trees and shrubs», may fall into the category «closed forests».
2According to IPCC (1995:79, table 2.1) middle estimate, emissions from changes in tropical land-use, of
which the depletion and conversion of tropical moist forests make up the lion’s share, contribute 22,5 of total
anthropogenic emissions of CO2. However, uncertainty is relatively high.



                                                       7
20 million ha, and that forest degradation and depletion caused by heavy logging and other
activities also accelerated strongly (FAO 1988).3
        These discoveries, assisted by several other factors that will be analysed in the
following text, contributed to make the problem of tropical deforestation and degradation
one of the hottest international environmental issues towards the end of the 1980s.
        In this thesis, I will analyse how the two countries with the largest remaining tropical
forests,4 Brazil and Indonesia, responded to the challenge of these discoveries. Both
countries experienced very high absolute rates of deforestation, a fact that was assumed to
contribute heavily to two increasingly recognised and feared global environmental
problems; biodiversity loss and climate change.5
        However, the justification for selecting these two states for comparison is not only
their central importance for the problem of deforestation, but also a number of political
similarities and contrasts. In the period from 1988 to 1992/3, both countries initiated several
policy changes aimed to curb rapid destruction of their tropical moist forests in response to
recent discoveries of their environmental functions.6 The governments of both countries


3FAO (1991) found that annual deforestation in the tropics amounted to 17 million ha in 1990. Different
definitions of the term «deforestation» do exist. I choose the definition of The World Bank (1991:93) in the
following: «The clearing of forests and the conversion of land to nonforest uses». By the terms «forest
depletion» and «degradation» in the following, I particularly focus on the effects of selective logging in
Indonesia. Selective logging only guided by short-term profit motives may lead to 60-70 percent biomass loss
(Pinard and Putz 1996), species loss (Kartawinata et al. 1989) and serious soil erosion problems. It may take
as long as 250 years to restore the forest to its pre-logging condition (Kartawinata et al. 1989).
4 According to World Resources Institute (1990:292-293, table 191.1), which dominated the debate on
deforestation in the late 1980s, Brazil had 357,48 million ha closed forests and Indonesia 113,895 million ha
closed forests. Tropical moist forests make up the lion’s share of these areas.
5 According to Stern et al. (1992:25-26), these problems are global because they are systemic and/or
cumulative in nature. Systemic means that «…change initiated by actions anywhere on earth can directly affect
events anywhere else on earth» (Stern et al. 1992:25). Cumulative means that they may result from «…an
accretion of localized changes in natural systems, such as loss of biodiversity through habitat destruction and
changes in the boundaries of ecosystems resulting from deforestation, desertification or soil drying, and
shifting patterns of human settlement » (Stern et al. 1992:25). Deforestation and forest depletion are changes
that may affect events anywhere on earth. The consequences of biodiversity loss following the eradication of
species and ecosystems, which follows in the wake of deforestation and forest depletion, may affect a broad
range of events. The same is the case with the contributions to the greenhouse effect that follow in the wake of
forest depletion or deforestation. Deforestation and forest depletion are also cumulative to the extent that these
changes are dispersed and highly localised.
6The choice of period, from the late 1980s to 1992 in Brazil and until 1993 in Indonesia, is justified by both
political and pragmatic arguments. The main justification is that it is interesting to analyse two simultaneous
and contrasting national responses to the emergence of international considerations for the effects of
deforestation and forest depletion on the environment. However, while Indonesian politics were relatively



                                                        8
proclaimed that these initiatives were motivated by considerations for global environmental
problems.
        In Brazil, though suffering from many limitations and insufficiencies, policy changes
had a broader range and were implemented with more rigour than in Indonesia. This
contrast in regulatory change is particularly visible regarding regulations on some of the
most important private commercial actors operating in the forest areas of the two countries,
namely groups controlling logging concessions in Indonesia and cattle ranches in Brazil.
These groups were important as they were perceived as key actors behind deforestation and
forest depletion in the two countries.
        In Brazil, reforms were initiated in the 1988-1990 period, and pursued at a faster
pace during the 1990-1992 period. In Indonesia during the period between 1988 and 1993,
reforms understood as constraints on commercial actors7 exploiting forest land developed
more slowly. The various dimensions of this contrast is specified below.
        At the same time, there were important limits to change in Brazil. Some policy
changes were avoided, some emerged only hesitantly, and there were indeed problems
connected to the enforcement of reforms. Thus, in this thesis, I address two main problems.
First: Which factors may explain the contrast in change between Brazil and Indonesia?



stable during the whole period, Brazilian politics were severely destabilised by the impeachment of Collor in
1992. Thus, even though I did field work in Brazil in late 1992 and 1993, most aspects of the political
situation were so strongly influenced by the national «impeachment trauma» that I found it much more
worthwhile to focus on the period that ends with the impeachment of Collor. The reason for choosing the
period until 1993 in Indonesia is simply that it was this year I did most of my fieldwork in this country.
7The term «commercial actor» and «commercial interest» in this study is understood as actors that employ
their own salaried staff, and produce for a market with the aim of making a profit. In Indonesia, the actors
focused upon are mainly the companies that manage the country’s forest concessions set aside for logging.
These are profit seeking groups employing a large staff. As will be demonstrated in chapter four, these groups
gained control over the bulk of Indonesia’s lowland rainforests during the 1980s and 1990s. In Brazil,
distinctions are less clear and historical trends different. Land use and deforestation in the Amazon is
dominated by large ranches which represent investments made by corporations or wealthy families since the
1960s. However, as we will see, during the 1980s, medium sized and small cattle ranches became increasingly
important actors behind deforestation in the region (World Bank 1992, Mattos et al. 1992, Schneider 1995).
However, the main focus is on the large ranches. Large ranches are understood as establishments of more than
500 ha in consistency with IBGE’s criteria in the 1985 agricultural census. The justification for singling out
this group is that there was a perception, both inside Brazil and internationally, that this group was the most
important in terms of environmental destruction. Though this assumption was questioned towards the end of
our period of analysis, I argue that the environmental challenge to the Brazilian government during the late
1980s and early 1990s particularly emphasised the need for regulating this group.




                                                      9
Second: Which factors may explain the many insufficiencies and limitations that
characterised Brazilian policy changes?
       In the next chapter, I will discuss the methodological foundations of this project with
a reference to some of the main empirical and theoretical findings. In chapter three, I
introduce four theoretical approaches to how variations in environmental reform may be
explained. Based on this discussion, I operationalise these theoretical approaches into seven
explanatory propositions. In chapter four, I discuss various dimensions of the concept of
environmental reform and propose a framework for evaluating and comparing reforms.
Moreover, I give a historical presentation of commercial exploitation of tropical forests in
the two countries, and compare and contrast the reforms carried out by the Brazilian and
Indonesian state in the light of the previously presented framework. In chapter five, I
discuss this contrast in the light of the seven explanatory propositions presented in chapter
three. In chapter six, I summarise my findings.




                                             10
            CHAPTER TWO: METHODOLOGICAL
        CONSIDERATIONS - DESIGN AND DATA
2.1. Introduction
In this chapter, I will discuss problems related to the design of the comparison (2.2) as well
as problems related to the use of interviews and other data sources in the examination of the
Brazilian and Indonesian cases (2.3). Throughout the chapter, I use examples that
systematise the findings and experiences from the discussions in chapter three four and five.
In addition to clarifying the methodological foundations for what is done in the, these
examples may also make the reader more perceptive to the main arguments I present in the
empirical analysis.


2.2. The comparative design
Above, I presented a very brief sketch of differing Brazilian and Indonesian environmental
reforms. The structure of the design may seem to resemble the classical design in
comparative method in political science as presented by Lijphart (1971, 1975) and applied
to the methodology of historical sociology by Skocpol (1984:374-386). Lijphart calls this
design «similar systems - different outcome» while Skocpol employs the label «the method
of difference». This logic corresponds to the experimental method suggested by John Stuart
Mill in his methodology for the natural sciences. By selecting cases that are similar on all
points except from one, and finding a difference in outcome, the crucial causal element that
causes this difference may be isolated.
       I argue that this understanding of the comparative method creates many problems,
and is inadequate as a foundation of this project. Inspired by Ragin (1987), I criticise their
approach for being based on two dubious assumptions.
       First, they introduce an unrealistic requirement when they claim that random
variables can be «controlled» according to experimental principles. This claim is rejected by
pointing both to the great causal and conceptual complexity of social relations. The
argument is partly ontological, partly epistemological, and genuinely common sense. Social
relations are complex. Even strong proponents of hardcore statistical methods would admit


                                             11
this. People within more social constructivist traditions would add that the fundamentally
interpretative character of social research increases complexity.
       Second, Skocpol and Lijphart’s approaches are strong when differences are caused
by single causes. However, their method is unreliable if diversity is caused by conjunctures
of causes.
       I also introduce a third argument. This is particularly focused on Lijphart (1971,
1975), who is a more consistent proponent of the experimental approach than Skocpol.
Motivated by a desire to maximise control for random variables, Lijphart’s methodology
tends to attract the researcher’s attention away from some of the most interesting topics of
social science. To a certain extent, he turns the process of social research upside-down by
recommending the selection of cases based on methodological criteria, and not on criteria
related to their relevance to major social problems.
       Fourth, I also respond to the criticism of comparative research mounted by
Goldthorpe (1994); who attacks the comparative method’s inability to satisfy principles of
statistical control and generalisation. I base my defence on two arguments. First, when
doing statistical research, it is practically difficult to combine the examination of a high
number of variables with a high number of cases. Second, the phenomenon that variables
may work differently in different social and cultural contexts is difficult to address through
statistical investigations without a very high number of cases.
       Finally, I claim that the justification of the comparative method as applied in this
project is that the case-oriented strategy employed is able to uncover something more
substantial than correlations as in «probabilistic» social science; namely causal
mechanisms. In turn, unveiling of such mechanisms may provide fertile ground for the
generation of theories understood as causal links between events specified in terms of social
actions and motives.




Societal complexity and the problem of control in comparative research
As pointed out by Ragin (1987) and Tilly (1997), even Mill (1843) noted that the human
world is far too complex to be organised in accordance with experimental principles. Weber



                                             12
emphasises the same point in his famous essay on the «objectivity» of the social sciences
(1979:215). His basis in neo-Kantian epistemology, particularly the works of Heinrich
Rickert (1863-1936), makes him emphasise the inadequacy of causal propositions and even
descriptive terms like capitalism when faced with the complexities of the real world. More
recently, Ragin (1987) has used the argument of the high complexity of social phenomena
and processes.
       The focus of this study is an example of the high complexity of social life. Milner
(1992), List and Rittberger (1992:102) and Moravcsik (1993:7-8) recognise interactions
between transnational, international and domestic levels as a particular complex field for
the social sciences. I argue that it is particularly difficult to control a large amount of
cultural, social and economic «random variables» in such a complex field.
       Furthermore, the term «controlling» is not a very good description of what is done in
the following, even when similarities are identified. The idea of control as a mechanical
methodological exercise independent of conceptualisation and interpretation is somewhat
naive. As pointed out by Ragin (1987:46-48), Heidenheimer et al. (1990:11-12) and
Goldstone (1997), similarities and differences are theoretical constructions. Common sense
differences may turn out to be similarities when interpreted through alternative theoretical
lenses. This adds complexity to the analysis of social settings, as the similarities and
differences presented in scientific publications are outcomes of long processes of theoretical
interpretation.
       This is directly relevant to my discussion of two activities that may seem as
incomparable as apples and pears, namely ranching and logging, in the following. These
activities are not dissimilar when I categorise both as activities that may contribute to global
environmental problems, and as a basis for comparing the responses of the governments in
question to the challenge of these problems. When searching for explanations, I do not
provide an endless checklist of accidental similarities and differences to provide control.
Instead, as is done in most comparisons, I analyse my cases through the lenses of some
selected and frequently employed approaches to the explanation of policy diversity. In this
project, this is dependency theory, interdependence-related theories, bureaucracy-centred
theories, and theories focusing on actors in domestic society. This description of the



                                              13
research process as a search for relevant theoretical traditions rather than random properties
of cases is often reflected in the debate. Criticism of comparative projects is more often
focused on the exclusion of specific theoretical traditions and approaches than the exclusion
of lists of common-sense variables.
       In this way, «experimental conditions» in comparative research are usually created
through processes of interpretation. When embarking on this process, both the classification
and explanation of specific outcomes takes place through the adaptation of categories
developed by new and old classics of social science (Ragin 1994:60).


Causal complexity and the inadequacy of the monocausal bias
However, recognising the complexity of social life and its interpretative character is not the
only insight that may undermine Skocpol and Lijphart’s methodology. My second objection
to their «classical» comparative design is the method’s inability to uncover situations in
which two or more causal factors interact in producing the outcome in question.
       Ragin (1987) notes that while experiment-oriented comparative method has a bias
towards monocausal explanations, social reality is characterised by multiple and interactive
causal elements. Ragin’s argument is not only ontological, but also methodological.
Experimental comparative designs focus on single, strategic variables able to produce an
outcome. However, the method does not offer strategies to unveil cases of complex
causality. Complex causality describes situations in which the effect of one factor on the
outcome in focus is influenced by the presence or absence of one or more other factors.
This is what Ragin (1987:23-26) calls «conjunctural causation» in the context of case-
oriented comparisons. Methodologically, the logic is similar to that of «statistical
interaction» in quantitative research. My comparison of Brazil and Indonesia is a good
example of this logic in practice.
       The first argument of the following comparison may look like a simple argument at
first glance. Given international pressure, reforms became more pervasive in Brazil as the
business sectors involved were less concentrated and had less favourable connections to
decision-makers than in Indonesia. Thus, it is the conjunction of external pressure and
domestic structures that causes the difference in outcome. If I had relied on a traditional,



                                             14
monocausal design, the conjunction between pressure and domestic structures would have
been invisible. It could only be unveiled by introducing a third case, in which external
pressure was absent. I have followed the alternative path, which is the collection and
interpretation of historical evidence. This examination suggests that it is a combination of
these factors; pressure and domestic structures, which contributed to the contrast in
outcome.
       The argument on domestic structures also has a conjunctural character in itself. The
political framework through which economic interests had access to the government
influences the effect of the distribution of costs and benefits. The special characteristics of
the institutions that link forestry related business organisations in Indonesia to decision-
making processes made the process of environmental policy formulation and
implementation highly vulnerable to parochial influences from these interests. As compared
to Brazil, where business interests were more fragmented organisationally, and the
«business lobby» must fight for government favours through an entirely different
institutional framework, the Indonesian situation is decidedly more favourable for business
interests.
       In addition to this, I introduce a more complex relationship between the two
variables that make up the concept of domestic structures. In the Indonesian case, the
political framework did not only increase the influence of forestry interests on decision-
making in the sector. The special characteristics of the political framework also contributed
to promote concentration in the sector itself. The stages of appropriation of control over
forest resources are distinguished by the strategies of survival and income sustainment of
the presidential family and the military. Thus, while the leverage of the lobbyists against
environmental reforms in the Brazilian case is at least partly connected to an independent
process of market based property appropriation, internal organisation and following
coalition with federal politicians, the Indonesian anti-environmental lobby received control
over business opportunities on forest land as a consequence of their position at the highest
levels of the Indonesian power structure. Rather than being created by control over forest




                                              15
resources and important industries in itself, the power8 of Indonesian business interests over
forest policies was only one example of their generally very high level of power.
        This point could have been ignored within the framework of a comparative design
based on experimental principles, since causes in such contexts usually are conceived of as
independent rather than interactive. Though not influencing the main explanatory
framework, this interpretation gives perhaps a somewhat more refined understanding of the
relationship between the factors «concentration of interests» and «political framework», and
justifies a special emphasis on the effects of the political framework.
        The comparison gets even more complex when I examine the intensity of external
pressure. Both Brazil and Indonesia were exposed to pressure understood as external
economic incentives, but I find that pressure in the Brazilian case was of a more acute
character. Thus, when focusing on external economic incentives, the difference in policy
outcome might be explained by the higher pressure in the Brazilian case. However, I argue
that the effects of this difference are outweighed by an internal difference in economic
incentives. As the Indonesian government could increase its tax income much more than the
Brazilian government if reforms were introduced without curbing wood exports or
employment in the wood-industries very much, I conclude that the Indonesian government
had equally strong incentives to adopt reforms.



8The term «power» is perceived in different ways. I use Lukes (1974:34) definition: «…A exercises power
over B when A affects B in a manner contrary to B’s interests». According to Lukes (1974), power may be
analysed by 1)studying the outcome of direct conflicts between actors with clear and manifest interests,
2)studying how various factors prevent decision making on potential issues over which there is an observable
conflict, and 3)studying how various factors prevent actors from recognising their real interests, and thereby
prevent observable conflict. While the first path of analysis is focused on concrete conflicts, the second and
third is focused on indirect mechanisms like manipulation of the rules for political representation and political
agenda setting. The second path is particularly focused on non-decisions defined as (Lukes 1974:18-19): «…a
decision that results in suppression or thwarting of a latent or manifest challenge to the values or the interests
of the decision-maker.» The following analysis deals mostly with the two first dimensions of power, as the
conflicts are largely observable, if thwarted or suppressed. Moreover, I call the ability to suppress or thwart
challenges to the values of decision-makers the communicative aspect of power, indicating that I particularly
focus on the repression of the political agenda. However, when analysing transnational actors and agenda
definition in the end of chapter five, I touch extensively upon the third aspect of power that I call the
ideological aspect. Like Lukes (1974:17) I understand the term «influence» as a type of power rather than a
different concept. In terms of this project, influence is a particularly interesting aspect of power relations
between a ruler or a ruling elite and actors interested in changing the direction of their decisions, and I define
it with Bachrach and Baratz (1963:637) in the following way: «One person has influence over another within a
given scope to the extent that the first, without resorting to either a tacit or an overt threat of severe



                                                       16
        The second main explanatory argument deals with another strategy available for
Indonesian business interests. The Indonesian political system protects its most powerful
elements, which are strongly involved in the timber and plywood industry, to such an extent
that both the domestic debate and links to the external world are constrained by various
kinds of government censorship and threats. Brazil makes up a striking contrast to
Indonesia in this sense. Brazilian groups of commercial actors and their powerful military
allies were not able to curb the domestic debate and the links between domestic and foreign
environmental groups, although they wanted to. The freedom of expression, association and
interaction with the external world enjoyed by environmental groups was more strongly
developed in Brazil than in Indonesia. Especially the freedom to connect themselves to
North American and European environmental groups and to challenge the government’s
version of the issue of environmental reform was decisive for the influence of Brazilian
NGOs within the international context.
        This freedom was exploited through the arrangement of meetings and consultations
about Amazon projects and policies both in the US, Europe and on Brazilian territory,
including within Brazilian Amazonia. In these meetings, both Brazilian grass-root NGOs
and grass-root support NGOs participated alongside with NGOs from industrial countries.
        These dense networks, facilitated by democratic freedoms, increasingly linked the
local and the global levels. At the organisational level, US and European NGOs were able
to look for interesting local counterparts in Brazil and the Amazon in full freedom. NGO
representatives from the North virtually roamed the Amazon region in search of «grass-
root» clients. Brazilian national environmental NGOs were crucial in this context, as they
worked as intermediaries between grass-root NGOs and external counterparts. The
broadness of these contacts implied that many of the claims of local groups to enhance their
control over natural resources could find international support, as they could be re-
interpreted as global environmental claims. Political freedom made a high number of local
groups able to become directly «internationally visible» by presenting their claims in a




deprivations, causes the second to change his course of action». Thus, power has to do with persuasion and
other strategies ultimately aimed to make other persons accept that common values and interests exist.



                                                   17
context of global environmental problems and politicised language, thereby breaking break
of repressive local political systems of control coerced on them by big landowners.
       However, the strong organisational linkages between the local, national and
international level was only the first important aspect of the Brazilian NGO success
facilitated by democratic freedoms. The second aspect of this success, facilitated by
democratic freedoms, was the ability of Brazilian NGOs to challenge the Brazilian
government’s perception of culprits and the extent of environmental damage in tropical
moist forest areas. During the meetings mentioned above, the Brazilian government on its
tropical moist forests were criticised in a language that condemned both its actions and
values , all in front of the global media. Thus, the transnational networks focused on Brazil
exploited their freedom to criticise every aspect of Brazilian policies related to the
management of tropical moist forest land to the extent that the government was ridiculed
and humiliated in the presence of the global media.
       In Indonesia, there was increasing transnational activity on the management of
tropical moist forest land. In some cases, NGOs were able to establish global/local
networks similar to those present in the Brazilian case. In these cases, the government’s
picture of the political dynamic behind deforestation was challenged to a certain extent.
However, I argue that this criticism was limited by the powerful disincentives against
independent action and criticism established by the Indonesian government. The dynamic of
these limitations was the following:
       The Indonesian political system discourages processes of linkage-building between
the local, national and international level by restricting internal and international travel and
the arrangement of meetings at both local and national level. Foreign NGOs could not roam
the Outer Islands of Indonesia in their search for local partners in the same way as they
could roam the Amazon region. Even Indonesian national environmental NGOs run high
risks when they link up with local groups that dare to challenge powerful logging
companies. These organisational constraints are matched by even stronger constraints on
the international dissemination of and public discussion of information on the political
aspects of resource management. Especially the links between the most powerful actors
within the state and the Chinese businessmen in charge of forest operations are of an



                                              18
extremely sensitive nature, and may only be fully addressed in closed forums. Public
criticism of the military and particularly the presidential family by Indonesians in
international forums implies high risks for individuals and organisations. Though the links
between the top actors in the state and the forestry business are relatively well-known to
groups with an interest in tropical moist forest management in Indonesia, they could not be
challenged in a language that criticised both the policies and values of the government in
international forums with a high media exposure, or during international meetings on the
environment inside Indonesia. In both cases, these networks could only be mentioned in
vague and very general terms. In cases when the companies of these players received
unfavourable attention abroad, various kinds of repressive measures were taken against the
Indonesian NGOs responsible for this attention.
       An important outcome of these repressive measures was that the public challenge to
the core political networks in forestry in New Order Indonesia had to take place in a
language shaped by the New Order itself. This political language is characterised by
understatements, deliberate vagueness when sensitive issues are approached, and a general
reluctance to focus on the political aspects of ownership and control in concession
management and the wood industries. Instead, «neutral» technical, biological and economic
aspects of forest management received high and detailed attention. Though provocative and
controversial enough inside Indonesia, the message of the Indonesian environmental
movement became considerably less confrontational and visible in the international context
than the message of the Brazilian environmental movement.
       These two main explanations are both sequential and conjunctural. First, when
looking at the effects of external pressure, I explain policy outcomes as produced by the
interplay between external pressure, domestic economic incentives and domestic political
economic and political structures that influence the access of business interests to the
government. This is a conjunctural argument that could not be derived from a traditional
comparative design focused on the search for a single, strategic difference, as the very
important independent variable: «external pressure» has a relatively high score in both
cases. Only a comparative strategy based on interpretations of causal conjunctures could
unveil this configuration of causal elements.



                                                19
       Second, when I highlight that external pressure was higher in the Brazilian case, and
change the independent variable of the first explanation into a dependent variable, I explore
a second strategy pursued by Indonesian forestry interests to prevent reforms. The main
political players in forestry could exploit their access to the government to lobby in favour
of special constraints on the environmental movement. In the absence of democratic
constraints on the Indonesian government, it could impose several constraints and
disincentives on transnational alliance building. From the point of view of the business
sector, this corporate strategy exploited the combination of high influence in government
circles and a low level of democratic freedoms. From the government and the executive’s
point of view, the lack of democratic freedoms extended the menu of favours that could be
offered to some of its main business and political partners. In several cases, this was a
process of nepotism and self-enrichment from the government and the bureaucracy’s side,
as the president, military bureaucrats and other top politicians are deeply involved in the
forestry sector. The outcome was the curbing of transnational links and a moderation of
external pressure.
       This    also   implies     that   even   though   the   argument   on   variations   of
concentration/political connections in confrontation with external pressure and the
argument on the repression of transnational alliances are analytically distinctive, both
arguments describe variations in state and social structures that influence the effectiveness
of certain business strategies.
       It is important to point out that while the second argument is intimately linked to the
variation of democratic freedoms between the two cases, the first argument is not
necessarily linked to arguments based on the extent of democratic freedom or other
characteristics of democratic regimes. Though particularistic influences on decision-making
and the concentration of wealth in a few, politically privileged hands perhaps occur more
frequently in authoritarian and totalitarian regimes as the outcome of generally low
government accountability and a low level of critical examination of government decisions,
several formally democratic regimes also display the same characteristics. Exchanges of
illegal favours for votes, party support and nepotism are salient features of many
democracies, both in developing and industrial countries. Other circumstances, like the



                                                20
heterogeneous nature of Amazonian commercial actors, internal political cleavages between
Amazonian politicians on environmental issues as well as the dismantling of the previously
very strong coalition between the government and business groups from Brazil’s
Southeastern region with an interest in subsidised investments in the region all contributed
to weaken the ability of the region’s business sector to influence the process of policy-
making and implementation in the region.


Societal relevance as the guiding principle of social research
Our third objection to the ideals promoted by Lijphart and Skocpol is linked to the choice of
units of analysis and the aim and justification of comparative studies. I argue that the
adoption of very strict methodological criterions for research narrows the range of
scientifically defendable comparisons improperly and may block discussions of a broad
range of important social problems.
       Lijphart (1975:167-169) emphasises that the units of the investigation should be
carefully selected to obtain maximum control for random variables. In this context, he is
critical of the «whole-nation bias» in political research. Selecting and comparing a number
of political sub-units inside the framework of one nation-state may be a strategy to enhance
control with random variables. Though Lijphart provides a vivid and interesting discussion
of situations in which comparisons of two or more political sub-units within a single nation-
state could be fruitful, his underlying assumption is that these alternatives are interesting
because they provide better opportunities for control and generalisation.
       Goldthorpe (1997:17) introduces a similar argument, though based in statistical
methodology rather than strict experimental ideals. According to Goldthorpe, certain
phenomena that macrosociologists have sought to study, like revolutions or other kinds of
«regime transitions», are too few, too interdependent and too causally heterogeneous for
«anything much to be said in theoretical terms».
       Lijphart and Goldthorpe’s positions imply that many important social phenomena
are too complex and vague to be discussed in a meaningful way by social scientists. The
target of social science is to discuss and explain only phenomena that may be fitted into




                                             21
methods that guarantee a high level of experimental or statistical control and, ultimately, a
high level of generalisation.
       I claim that the selection of problems on the basis of applicability of certain research
methods threatens to turn the process of social and political research as a social and
political activity upside down, and is linked to the ideal of generalisation. In the social
sciences, there is a long tradition for making the claim that methods must be adapted to the
changing agenda of problems in society. The neo-Kantians, Weber, Merton (1959:xxi) as
well as Aubert (1982) justify the existence of the social sciences by its ability to produce
knowledge relevant to a changing agenda of social problems. Polanyi (1957:111-129) even
ascribes the birth of the social sciences themselves to the «discovery of society» as a
consequence of a new, major historical problem. This problem was the major social
disruptions that emerged in the wake of the industrial revolution and the introduction of the
self-regulating market as the principle of social organisation.
       The lesson to be learnt from these classics, is that the process of social research is
linked to the changing value-interests again connected to a rapidly changing agenda of
social problems. For the application of the comparative method, this implies that the nature
of the problem itself has to have primacy over methodological concerns. In this project, I
compare the responses of two contemporary states to the challenge of global environmental
problems. As pointed out by Lijphart, this leaves the researcher with considerable control
problems, since there are huge and bewildering differences between the contexts and the
properties of these states.
       However, in most approaches to global environmental reform, the actions of states
are seen to be of a crucial character. This is certainly the case in the literature focused on
government actions as a universal remedy for environmental problems. However, the focus
on the state also pervades the expanding literature in which the state is considered an old-
fashioned and obsolete structure unable to deal effectively with global environmental
challenges.9 Paradoxically, also these approaches target states as influential actors by
emphasising their role as important organisational and political barriers to reforms. The
common characteristic of these two perspectives is that they focus on the most basic




                                              22
characteristic of any state; namely its monopoly on coercive power within the boundaries of
a defined territory. The first perspective perceives the power monopoly of the state as a
great asset, given that state leaders may be persuaded to pursue reforms. The second
perspective perceives the power monopoly as a problem as it take more or less for granted
that state leaders and bureaucrats are unwilling or unable to choose and implement a truly
pro-environmental policy. However, both positions focus academic attention on state
actions and structures in national and international environmental politics.
        The relevance of the focus on the state is also empirically supported by our study. In
both Brazil and Indonesia, the state was the focus of the strategies of most actors. Both
external and internal groups consider government regulation to be a main instrument of
reform. Though both states had only modest ability to influence activities in their vast and
remote forest regions, they were still perceived as the most attractive target of political
activity. Even in cases where anti-bureaucratic grass-root oriented approaches prevailed,
government action was perceived as an important instrument for the establishment and
maintenance of local, «sustainable» autonomy.


The aim of the study: Defending the strategy of comparing between ideals of experimental
and statistical control
However, if social and causal complexity in addition to the state-centred bias of our
investigation makes rigorous control and following generalisation difficult, could not these
problems be solved by increasing the number of units and using statistical techniques of
control? After all, a major challenge to historically grounded comparisons with few cases,
like this, is that such comparisons provide a minimal basis for generalisation, and that they
fail to take advantage of the «probabilistic revolution» in social science brought about by
the use of sophisticated statistical techniques of control (Goldthorpe 1994). Using such
control techniques may provide an alternative to experimental control as a path to
generalisation.
        However, before I extend on this discussion, I may give attention to some of the
conclusions of the project that may be of interest also to proponents of high levels of

9Princen et al. (1994), Rich (1994) or Lipschutz (1996) are good examples of this position.



                                                     23
generalisation in social science. This is particularly the case with some of our refutations of
popular hypotheses. The demonstration of the partial irrelevance of hypotheses related to
external financial pressure, debt and the actions of transnational investors have a general
interest as they refute some widely supported assumptions about general connections
between destructive environmental policies and situations of dependency. In addition to
refute these hypotheses in two very important cases in which they (the debt-related
hypothesis in particular) could be expected to be relevant, our refusal is perhaps more
satisfactory as it gives a more exhaustive discussion of the more fine-grained causal
mechanisms that may link a difficult economic situation with environmental reforms than
what could be achieved by applying statistical techniques.
       The logic which is at the core of the falsification of these approaches is the one
which is known as a «strategic test» (Eckstein 1975). If a theory claims some kind of
universal validity, questioning its relevance in only one case may refute it, given that this
case has all the characteristics expected to produce the outcome predicted by the theory.
       Apart from this negative claim, however, the positive contribution of this study, as
compared to statistical studies, is the more detailed and meticulous description of how
causal mechanisms are played out in complex combinations in specific social contexts.
While statistical methods are strong as instruments to identify broad patterns in a high
number of cases, the case-oriented comparative method is strong as a tool to deal with
problems created by situations which are complex in terms of number of and interaction
between causes and in terms of interpretative ambiguities related to specific contexts.
Though providing less fertile ground for broad generalisations, detailed studies of how
variables are interlinked in specific contexts provide more satisfactory accounts of causal
mechanisms than studies of correlations between variables in a high number of cases. In
this sense, they may be more fruitful as they may extend the arsenal of causal mechanisms
linking cause and effect.
       One example of relevance to this study is the link between democracy and
environmental reform. While some statistical studies suggest a negative link between
democratisation and deforestation (Didia 1997), these studies are not very conclusive when
it comes to identifying what aspects of democracy that produce the difference. In this study,



                                              24
I find that the existence of democratic rights like freedom of association and freedom of
speech facilitate the construction of transnational linkages which may trigger broad
international pressure to adopt a reformatory policy. The term «facilitate» is not arbitrary,
but reflects that the causal links unveiled by this study are not necessary links between
cause and effect. Democratic freedoms may make some actions that promote reforms easier
to perform, but they do not predict or determine the performance of such actions, neither do
they predict that the effects of these actions are strong enough to produce policy change.
       Also the effects of my second explanatory variable, concentration of industrial
interests and their linkages to decision-makers, are more satisfactorily described by a more
intensive, case-oriented strategy. By studying the Indonesian case more closely, I see that
there is a strong relationship between the concentration of the sector and the fact that many
of the top players in the sector are connected to persons and groups with extremely high
power in the Indonesian society in general. Thus, rather than being based on an independent
process of capital accumulation, concentration and gradual acquisition of access to and
influence in government circles, the influence of these groups over environmental decision-
making in the forestry sector is based on their long history of strong connections and partial
infiltration with groups with a very high level of control over the bureaucracy and the state.
As mentioned, I claim that this relationship between industrial concentration and influence
in government circles provides these groups with even stronger influence on environmental
decision-making than the more commonly recognised links that consider high influence on
decision-making to be the outcome of independent processes of organisational
concentration.
       The disclaimers mentioned above apply also here. Though I argue that such links
between ruling elites, business groups and bureaucracies put the bureaucracies in a
precarious situation when they try to design and enforce regulations perceived as
unfavourable by the elite, this outcome is not determined by such political arrangements.
Several events may put this logic out of play. The business groups and/or the ruling elites
may simply change their mind and become less hostile to environmental reforms, or
international pressures on the state may become so strong that the government chooses to
accept the costs of confrontation with these elites.



                                              25
       In quantitative surveys of many states, crucial nuances connected to specific contexts
may easily be neglected, as the cases in question are classified on the basis of standardised
indicators which may have different meanings in different contexts. This is connected to
what I mentioned about interpretative complexity above.
       Pro-environmental political statements or decisions that look similar may have very
different meanings in different social contexts. One example from our study is the context
of the distribution of fines and cancellations of exploitation rights for breaking
environmental regulations in the two cases. While both states increased the use of fines
during the period in question, and the Indonesian Ministry of Forestry indicated that they
also stepped up cancellations of concessions, the repressive measures had different
meanings in the two countries.
       In Brazil, the struggle of the environmental authority IBAMA to impose fines on
ranchers and other businesses breaking environmental regulations in the Amazon region
represented a real and substantial increase of government attempts to implement
regulations, even though legal problems may have curbed their effectiveness. However, in
the Indonesian case, a more paradoxical logic operated. Cancellations of concessions were
used deliberately to facilitate the concentration of concessions in the hands of the most
powerful and well-connected concessionaires. At the same time, these repressive measures
served important symbolic purposes as they gave the external world the impression that the
government finally cracked down on the powerful logging and plywood companies.
       These are all examples of how the intensive strategy of comparative research is more
perceptive to complicated causal configurations and differences of the meaning of
seemingly similar actions in different contexts. Though not providing powerful tools of
generalisation, the unveiling of complicated causal relationships in case-oriented research
projects are still of great theoretical and empirical interest. In this context the term
«theoretical» does not point to the isolation of correlations, but rather to increased
knowledge about which mechanisms that may influence the adoption of environmental
reforms with special reference to third world countries. The term «mechanism» is a
frequently mentioned and somewhat ambiguous concept as employed in the current
literature (Hedström and Swedberg 1996). In our context, the understanding of the term



                                             26
mechanism is connected to the principle of methodological individualism. A main
characteristic of this principle is that causal explanations must be understandable in terms
of individual actions (Elster 1989:13).
       It is easy to reconstruct the explanations of the contrasts between the Indonesian and
the Brazilian cases in terms of individual actions. However, in contrast to many approaches
that identify the sources of variations in social actions at the level of the individual, the kind
of mechanisms I have uncovered are more contextual or structural. The relationships
between the state and business interests that prevail in Indonesia favour the interests of anti-
environmental actors at the expense of pro-environmental actors to a greater extent than in
Brazil for reasons that may be categorised along two structural dimensions. These
dimensions are the discrepancies in the access of business interests to decision-makers as
well as the discrepancies in the constraints on the government’s ability to crack down on the
transnational links of the environmental movement.
       However, it is important to point out that the mentioned political structures may be
decomposed into relationships between individuals and groups of individuals. As pointed
out by Boudon (1991:110-120), the concept of structure is only legitimate when it is
interpreted as a heuristic device to simplify descriptions of reality. Though some of the hard
facts of political life are experienced as very strict constraints by individual actors, the
notion of «structure» should be understood as an abbreviation for outcomes of conflicts and
compromises between groups and individuals. The extent of democratic rights is, as pointed
out by Tilly (1992), the outcome of previous clashes between state and society. Through
these clashes, the state has been forced to guarantee the protection of democratic rights.
Thus, the actions of individuals in the past have forced some constraints on state officials
that may be exploited by current opponents to the state’s policies.
       Historically, there are strong differences between state-society relationships in Brazil
and Indonesia along this dimension. The emergence of the New Order regime in Indonesia
implied a far-reaching process of repression of most individuals and groups in society who
had ambitions to challenge state actions. Though the New Order regime may allow some
groups in the Indonesian society to criticise the government, there is a broad consensus that




                                               27
Suharto and the military have been successful in keeping such challenges at a very low
level.
         Brazil stands out as a stark contrast to the Indonesian situation. Though the
transition to democracy in Brazil during the 1980s to a certain extent was planned and
designed by the powerful bureaucratic-authoritarian state (Skidmore 1988), the
intensification of clashes between state and society throughout the process of the «opening»
of the regime also forced the regime to respect a set of democratic freedoms which again
broadened the scope of actions for groups who wanted to challenge the government in the
future. Among the benefits of democracy, the freedoms of association, speech and
unrestricted travel were essential prerequisites for the international campaign against the
government’s policies in the Amazon region.
         When I talk about the other important variable, namely the concentration of business
interests and their access to the government, the arrangements found in Indonesia were of a
particularly individualised or personalised nature. The strong dependency of these
arrangements on specific persons reflects the absence of politically institutionalised forums
for interest representation and negotiations between different groups and the highly
individualised character of the power structure. Again, this reflects the historical absence of
collective action strong enough to impose institutionalised constraints on the state.
         The anti-environmental strategies chosen by Indonesian logging companies reflect
the gradual substitution of the political motives behind practices of concession distribution
and regulation. During the 1970s, concession distribution and regulation took place in a
context in which concession distribution and regulation was part of a strategy aimed to buy
loyalty from competing military factions. As the autonomy of the president from military
groups increased during the 1980s, concession distribution and regulation came to reflect
Suharto’s strategies of self-enrichment and enrichment of his family and associates. The
Chinese businessmen who gained importance as concession holders and industrialists were
composed of new and old business brokers intimately linked to the president and his family.
Though these new concession holders were in a more ambiguous position, since their
satisfaction was less important to the survival of the president, I argue that their privileged
position continued to be strong enough to decelerate and shape reforms decisively. From



                                              28
the point of view of the President, it was difficult to combine reforms with the cultivation
and extension of business ties between the presidential family and the Chinese
entrepreneurs.
       The Brazilian situation is an instructive comparative contrast. Internal barriers to
reform were lower as the Amazonian business elite, regional political interests and the
military were less powerful potential enemies of the president’s position and unimportant as
personal business brokers for the executive. Thus, the costs of neglecting the demands of
these groups were lower than neglecting the corresponding interests in the Indonesian case.
However, must be emphasised that though the anti-environmental groups in the Brazilian
case were less powerful than in the Indonesian case, they were strong enough to mount
many obstacles to reforms. This is a main factor behind the fact that the contrast in outcome
between the two states is relatively moderate.
       However, are the causal links mentioned above really mechanisms? As already
mentioned, Elster (1989) demands that mechanisms should make explanations of social
phenomena understandable in terms of individual behaviour. Our explanations satisfy this
criterion. Another criterion mentioned by Elster is that mechanisms are not predictions. Our
reservations against deterministic interpretations of our findings satisfy this criterion.
       When illustrating the term «mechanism», both Elster (1989) and Hedström et al.
(1996:296-298) tend to mention situations in which macro-phenomena are explained by
micro-phenomena like preferences, desires or paradoxical characteristics of human
rationality. The explanations presented in this thesis have a different character. This story
consists of actors who pursue their interests in rational ways in the sense that they use the
measures they dispose of as best they can to reach their goals. However, the differences in
outcomes are created by differences in political structures that favour various individuals
and groups rather than any particular paradoxes or contradictions inherent in human
rationality. It is the differences in the context of rationality rather than the complex
properties of rational action itself which have explanatory power. It is correct that the
context of rational choice are the «condensed» actions of other groups and individuals;
outcomes of perpetual struggles for power and domination. Even when these struggles end




                                               29
in the creation of institutions, these institutions cannot be separated from the actions and
struggles that create and sustain them.
       However, the issues and actions I study are not of a transformative character at the
level of institutions. Though political mobilisation on issues related to the environment has
played a certain role in the process of democratisation and contesting of political routines in
both countries, in general, environmental groups have been trying to exploit the existing
political openings for protest and the promotion of political alternatives. Only to a moderate
extent, their strategies and achievements have been connected to a wish or ability to
transform the relationship between state and society directly.
       Having provided some elements of a methodological foundation for this study, I now
turn to a discussion of the methods employed to collect information about the cases.


2.2. Strategies of data collection: Interviews, documents, secondary sources.
The complexity of the field examined in this thesis has made the use of a multiplicity of
sources necessary. When examining the relevance of the four main theoretical approaches,
the character of each approach guided the strategies for data collection. As pointed out in
the next chapter, the four approaches may also be divided into economic and political
approaches. The discussion of the economic approaches is basically an exercise to clear the
way for political explanations. If the policy contrast in question is adequately explained
only by pointing to the operations of strictly economic incentives, the political analysis may
be superfluous.


Economic approaches: Statistical data, reports, interviews.
Both the debt-related brand of dependency theory as well as the economic arguments under
the interdependence approach demand examinations of economic data at macro- and micro-
level. The main sources under these are economic statistics and written analyses of
economic trends, both at the national level, at the level of the central government and at the
level of particular economic branches. While macro-economic data have been easy to find
in reports from the World Bank and other multilateral institutions as well as in information
from government agencies, data related to specific government sectors and economic



                                              30
branches have been more difficult to obtain. At the level of government sectors and
agencies, technical problems have also made it difficult to estimate the development of
funding. In Brazil, very high rates of inflation make information on the funding of
individual agencies difficult to analyse. Thus, it became necessary to complement analyses
of the funding situation for environmental agencies and programmes with interviews with
leading persons in the most important federal environmental agencies.
       Documentation on the Brazilian ranching sector was derived through a combination
of collection of documents, reports and interviews with specialists. Discussions and reports
derived from a visit to SUDAM in 1992 were particularly helpful. Also the 1992 World
Bank (World Bank 1992) report on environmental problems in the Amazon and the 1994
World Bank Report on Brazilian agriculture were helpful (World Bank 1994a). Discussions
with Emanuel Adilson Serrão and other researchers at EMBRAPA/CPATU in Belém
during the same trip were also of great value. Eustaquio Reis at IPEA in Rio de Janeiro
provided useful comments on the links between aspects of agricultural expansion and
various incentives. E-mail discussions with Victor Abou Nehmi Filho, researcher at the
important private agricultural consulting company FNP Consultoria & Comércio in São
Paulo, provided useful information about the business sector’s perceptions of the evolution
of the climate for investments in Amazonian ranching. Filho was also able to give precise
information about the destiny of specific investors and groups of investors in the region.
       Reliable and exact information on economic aspects of the Indonesian timber
industry is very difficult to obtain, as pointed out by Fenton (1996). The most reliable
source or information on the wood industries in Indonesia, the plywood producer’s
association APKINDO, does not publish statistical information related to the plywood
sector. Though one interview with a high-ranking official at APKINDO provided some
general information, access to further information was explicitly denied. Thus, I was left
with the difficult choice between government and producer industry estimates which
methodology is unknown and estimates of varying quality from international agencies,
NGOs and a small number of Indonesian and international researchers. One of the
interviewees connected to the Indonesian Ministry of Forestry was also willing to comment
on the conclusions of various reports. The same was the case with an anonymous consultant



                                             31
in one of the biggest plywood companies in Indonesia. Among written sources, I have relied
extensively on Fenton (1996) as well as World Bank reports, particularly their 1993 draft
discussion paper on Indonesian forestry (World Bank 1993a). The joint study of the
Indonesian Ministry of Forestry and FAO on forestry in Indonesia from 1990 (MOF 1990)
has also been useful; particularly the various background papers. The same is the case with
various reports from the Indonesian consulting company PT Capricorn (Capricorn 1989,
1992).
         At the methodological level, the problems of obtaining reliable data on economic
aspects of forestry in Indonesia are of considerable interest. When the presumably best
sources of information are inaccessible for outsiders, the problem of low reliability may
also represent the discovery of an important political strategy. Low reliability of economic
data on Indonesian forestry is an important symptom of the superior power and influence of
the forestry business organisations in Indonesia. This connection between power and
information restrictions was mentioned explicitly by several interviewees, some of them
connected to the Ministry of Forestry.10 One of the most fundamental monitoring tasks of
the Ministry of Forestry should be to force the wood industry to provide as accurate as
possible information about the economic aspects of logging and wood processing. The huge
discrepancies between Ministry of Forestry and other estimates on all aspects of logging
and wood processing indicate that the wood industry companies and their organisations are
able to avoid strict monitoring of important aspects of their activity. This finding is
consistent with other findings related to the power and influence of these actors.
         Interviewing in these cases usually had a subordinate function to the reading of
reports and statistical information. Researchers were asked to extend on sections their own
publications of relevance to this project, or they were asked to comment on other written
sources.
         In some cases, when interviewees were interviewed both because of their knowledge
of the economic dynamics of sections of government activity or specific business sectors
and because of their closeness to political processes, the first section of the interview
usually dealt with economic or technical aspects. This sequence of topics was chosen to




                                             32
establish a relaxed and open atmosphere before more sensitive questions related to power
and influence over forest policies were asked. This strategy had several advantages. First,
many policy experts were quite happy and flattered to demonstrate their own expertise to an
interested stranger, a mechanism noted by Dexter (1970:37-39). Second, in this situation, I
had the chance to demonstrate my own familiarity with forestry issues in Brazil and
Indonesia.     When conducting expert interviews, demonstration of familiarity with the
expert’s field of research might be compared to the demonstration of empathy in depth
interviews on emotionally sensitive subjects. Besides increasing the value of the interview
in terms of collecting relevant economic and technical information, familiarity with
technical and economic issues often facilitated more openness from the interviewee when
sensitive political issues were addressed.


Political approaches: Secondary literature, reports, newspapers, interviews
For the approaches that deal with political aspects of reforms, strategies and political
framework for groups within and outside the countries in question, the relationship between
interviews and written documentation as sources of documentation is opposite to what it is
under the economic approaches. When examining the priorities and perceptions of domestic
societal, governmental and transnational actors, interviews with various groups of decision-
makers are essential tools for the testing of various hypotheses. Allison (1971:183)
emphasises the essential function of the interview, in particular for the «bureaucratic
politics» tradition. However, he also claims that the interview is part of a more general
strategy to collect information (Allison 1971:83): «The use of public documents,
newspapers, interviews of participants, and discussions with close observers of participants
to piece together the bits of information available is an art».
        It is advantageous to combine the various sources mentioned by Allison in sequence.
There are strong arguments in favour of conducting interviews at a relatively late stage of
the research process. Preliminary studies of the literature related to the interplay between
politics and the environment in both countries were extremely important as preparations to
the interviews. The literature study was a guide to the selection of important organisations

10Interviews with personnel connected to the Ministry of Forestry in June and July 1993.



                                                     33
and interesting interviewees, and it was useful as a background for the selection of topics
and questions for the interview. Kvale (1996:88-92) calls this process «thematising», while
McCracken (1988:29-32) calls it «review of analytic categories». This is the stage when the
purpose of the investigation is clarified. As stated by Kvale (1996:88): «The why and what
of the investigation should be clarified before the question of how - method - is posed».
McCracken (1988:29-31) points to the crucial importance of the literature study as a
fundament for later research.
       The literature study is important in the shaping of expectations and concepts, and it
plays an essential role when the researcher prepares for the interview. Furthermore, as
pointed out by Kvale (1996:237) the development of sound theoretical presuppositions and
derivations from theory to the research questions, represents the first step of validation.
Skocpol (1984:382-383), who writes within a tradition in which secondary sources often
form the basic sources of evidence, also suggests that the collection and analysis of
secondary data should precede the stage of collection and analysis of primary data.
       The selection of organisations and individuals within organisations are important
aspects of the targeting of the research project when the study of secondary literature is
finished and the study of written primary sources like newspapers and government
documents begins. In an ideal world, the interview stage should be preceded by the study of
written primary information. Such a sequence enhances the ability of the researcher to ask
the right questions during the interview and informs the process of selecting specific
organisations and interviewees within organisations.
       However, confronted with the realities of the research process, the recommended
sequence is more of a guiding principle than an absolute norm. Often, researchers discover
that they have ignored important documents, organisations and interviewees during their
conversations with interviewees. This also illuminates a secondary function of interviews
with experts and policy-makers. Many interviewees may help researchers to check out
whether they have ignored important sources in the pre-interview process. However, the use
of interviewees for this purpose should be minimised by doing as extensive pre-interview
studies of the issues in focus as possible. Excessive reliance on expert interviewees for
guidance in the selection of sources will make the interviewer less able to ask the right



                                             34
questions, increase the ability of the interviewee to fool the interviewer, reduce the
credibility of the interviewee and most probably prolong the research process.
        When recruiting interviewees, most students of political processes opt for
individuals in high-ranking positions. The reason for this is perfectly clear. Usually, leaders
know more about the activities of an organisation, its inner life, and its political
environment than anyone else does. In many cases, they have made the decisions in focus
themselves, or been present when they were made. However, an argument which runs
contrary to this, is that leaders often have much to defend in terms of their own political
legacy and even more to lose in terms of future career opportunities by releasing
controversial information which challenges the government’s official version of its policies.
The openness of agency leaders and politicians tends to decrease in polities in which
powerful groups in state or society have a high ability to influence their career prospects
and personal security. In addition, the value of interviews with people in high-ranking
positions in bureaucracies with intranspartent and parochial recruitment routines may be
very low. The two last problems tend to be mutually reinforcing and particularly important
in developing countries, as they are linked to the strategies of survival of many third world
leaders (Migdal 1988:256). Both the selection of loyal clients to important positions and the
employment of what Migdal (1988) calls «dirty tricks» like discontinuation of careers or
outright violence against agency leaders or politicians who dare to challenge powerful
groups are common strategies among state leaders in developing countries.
        There was a strong contrast between the political contexts of interviews in Brazil
and Indonesia. While former and current leaders of state agencies were easy to get in touch
with in Brazil, they were almost inaccessible in the Indonesian case. Furthermore,
interviews with top-ranking personnel, particularly in the Ministry of Forestry, turned out to
be very disappointing.11 In some cases, interviews were cancelled and re-cancelled on the

11 The main list of interviewees inside the Ministry of Forestry in Indonesia was provided by Ir. Hadi
Alikodra from the Ministry of the Environment on the basis of my own wish to meet officials from the
Directorates General of Protection and Nature Conservation, Forest Utilisation and Reforestation and Land
Rehabilitation. This wish was expressed in an application to the Ministry of the Environment in which the
broad goals of the project were described. The credibility of the persons on the list was checked with well-
informed people I knew and trusted in the media, in government agencies and among NGOs. Though, as
mentioned, only a few of these interviewees provided valuable information, the reliability of the statements of
the interviewees who decided to speak openly was increased by these cross-checking procedures.



                                                     35
spot. In several other cases, the response to my questions was extremely defensive and
reflected only official positions.12 In Brazil, former and current agency leaders were easy to
get in touch with and happy to expose and discuss their own views on a broad range of
political issues related to the environment.
        It should be mentioned that many of the interviews with agency leaders in Brazil
were conducted after they had left office. The focus in the Brazilian case is on the Sarney
(1985-1990) and the Collor (1990-1992) administrations, and all interviews were conducted
after the impeachment of Collor. This may have given agency leaders more freedom to
reflect on their own experiences, as most of them were in new jobs and had no formal
loyalties to their superiors. On the other hand, even former leaders who continued to work
for their agencies were often exceptionally open-minded. Particularly Sidney Possuelo, the
president of FUNAI, the federal agency responsible for Brazil’s indigenous groups,
answered my questionnaire in great detail and without any reservations on anonymity, even
though he was still working as an official in FUNAI in July/August 1994.
        Though at least one high-ranking Indonesian official was willing to comment on
substantial policy matters, the strategy of selecting high-ranking officials as interviewees on
political issues turned out to be disappointing in the Indonesian case. The reason for this
seems perfectly clear in the light of the conclusions of this project. The issue of
environmental reform in Indonesia involves more powerful groups than in Brazil. In
addition, the Indonesian political system does very little to protect persons who expose their
critical attitude to the political arrangements behind unsustainable forest management
practices. Exposing criticism as a government official could mean the end of the
interviewee’s career.
        Thus, in Indonesia, I had to find an alternative to the strategy of selecting people in
high positions. I ended up with recruiting additional interviewees from a group of lower
government officials who may be called «by-standers». This group consists of well-


12During the interview with the Director General of Conservation (PHPA) in the Indonesian Ministry of
Forestry, I had to deliver written questions to a secretary. Then I had a meeting with his secretary and two
other staff members, who referred the Director General’s written responses to my questions. However, I was
explicitly denied to read or keep a photocopy of the Director General’s statements. The negative attitude was
further emphasised by the aggressiveness demonstrated by the staff members; an attitude that is particularly
surprising given the usually very polite and cultivated appearance of most Javanese.



                                                     36
informed officials often charged with research and implementation tasks and frustrated by
the often total absence of government backing for their tasks. Some of these people, many
of them highly qualified, were also frustrated by their own lack of promotion within the
Ministry of Forestry and related agencies. They were able to provide substantial information
about the various aspects of policy-making related to forestry in Indonesia. All of them
wanted to stay anonymous.
        However, it must be admitted that the nature of the problems of access to reliable
interviewees clearly made interviewing in Indonesia less successful than in Brazil. To a
certain extent, these problems pervade the whole literature on forestry problems in
Indonesia.13 Authors like Petrich (1993), Dauvergne (1994) and MacAndrews (1994) rely
on citations from interviews done by other researchers. The somewhat shaky evidence may
also in some cases lead researchers to rely on studies of the distribution of interests as
indicators of power and influence. As pointed out by Ham and Hill (1993:75-78), studies of
the distribution of interests is only a first step in the study of power and influence. The final
target should always be to identify concrete cases of action by certain groups.14
        Due to the closed and informal nature of links between business and politics in
Indonesia and the high risks connected to openness, clear-cut and well-documented cases in
which forestry business interests exert power and influence over policy formulation and
implementation are rare. As the reader will notice, the following manuscript could have
contained more such cases. However, I still argue that my findings have relatively high
reliability. The combination of information provided by interviewees, studies of newspaper
and magazine articles as well as secondary literature strongly supports the view that various
coalitions of Chinese entrepreneurs, powerful sections of the military and the President’s
family are able to control the extent of reforms and to impede critical examination of
forestry from NGOs and media.



13 Also Ross (1996), perhaps the recent work on Indonesian forestry with the broadest empirical basis, notes
this problem.
14According to Ham and Hill (1993:75), some researchers rely on the study of interest distribution as a
criterion for identifying elites that suppress political challenges. If status quo, in my case absence of reforms,
benefits a certain group, then the situation may be explained by pointing to the interests of this group. Ham
and Hill (1993:75-78) review the criticism of this position. The critics point to the necessity of identifying



                                                       37
        The presentation of the Brazilian case may also be subject to criticism because of the
low number of clear-cut and well-documented examples of business pressure for
environmental policy change. However, I still claim that the willingness of agency leaders
and politicians to speak out about the political dynamics of environmental policy
implementation, the internal consistency between the reports of various leaders and the
external consistency between the descriptions of the interviewees of the problems of
implementation in Brazil and various reports in the media produce a tolerable level of
reliability in the Brazilian case. The conclusion that at least some reforms that confronted
the interests of ranching and other commercial interests in the region were carried out, is
strongly supported by these sources. Furthermore, there is a high level of consistency
between various sources that conclude that the main opponent to reforms was a somewhat
heterogeneous coalition between the military, business organisations and local politicians.
        The sensitive nature of information and discussions in both cases necessitated some
special precautions during interviews. Many sources (Dexter 1970, McCracken 1988, Kvale
1996) recommend the use of a tape recorder to improve the researcher’s ability to
reconstruct the interview and to make reinterpretation easier. However, as the majority of
the interviews dealt with information of a politically sensitive nature both in Brazil and
Indonesia, there were strong arguments in favour of abandoning the tape recorder. When
discussing sensitive issues, a tape recorder is likely to make the interviewee more reluctant
to relax and speak openly. The use of a tape recorder would have made the few good
interviews conducted in Indonesia impossible, as the interviewees had good reasons to fear
some kind of retaliation if the tapes ended up in the wrong hands. There is also an ethical
dimension here. If the consequences of lost anonymity for interviewees may be so serious
as in the Indonesian case, the interviewer should abandon the use of the tape recorder to
protect the personal safety of the interviewee. Lost tapes usually represent higher risks to
interviewees than lost research notes.
        However, also in Brazil, where none of the interviewees could fear the same degree
of retaliation as in Indonesia, speaking openly about political and administrative issues


positive action from certain interest groups or discriminatory access structures to decision-making that may
be proven to benefit specific interest groups at the expense of others.



                                                    38
would have been more uncomfortable in the presence of a tape recorder. Although few
formal sanctions can be applied against free-speaking interviewees in Brazil, bureaucrats
and politicians usually weigh career considerations against the willingness to speak openly
about their experiences. The use of a tape recorder could therefore decrease openness by
increasing the likeliness that statements could be reproduced in a detailed way in unsuitable
forums.
       The questions in the sections of the interviews that dealt with political issues were
formulated as broad and open questions. Asking what Merton (1952:47) calls «unstructured
questions» permitted the interviewees to structure their own perception of important
political issues, events, and the processes behind them. In this section, familiarity with the
political milieu that surrounded the interviewee was of crucial importance to exploit «clues»
that emerged during the conversation. Such «clues» could be allusions to particular political
incidents which existence or importance was unknown to me, contacts with particular
groups or persons, or unexpected interpretations of well-known political events. This also
implied that the interview guide presented in Appendix Three had to be a rough list of
topics covered by the interview, rather than a structured list of detailed questions asked in
the same sequence under every interview. Quite often, the interviewee provided extensive
analyses covering several topics. In these cases, the sequence of the interview was changed
in the interview situation, and totally new issues were addressed. In some of the most
interesting interviews with outspoken and well-informed bureaucrats and politicians, like
Jarbas Passarinho in Brazil or some of the anonymous interviewees in Indonesia, the list of
topics and their sequence were abandoned due to the high ability of the interviewees to
present their own comprehensive and complex political analyses.
       To what extent did language problems influence the quality of interviews? Both in
Indonesia and in Brazil, most of the interviews were conducted in English. Most officials
and NGO representatives in Indonesia spoke English. This made translation superfluous. In
Brazil, several interviewees preferred to speak Portuguese. This implied that I had to bring
a translator. In both cases, interviews became more difficult for the interviewees. To a
certain extent, interviewing in a foreign language or with the assistance of an interpreter
places an additional burden on the interviewee. As communication became more difficult



                                             39
and time-consuming, both the interviewer and the interviewee became more easily tired. In
addition, the language barrier perhaps also decreased the confidence of the interviewee in
me and made it more difficult to feel relaxed in the interview situation. Language barriers
and the filtering of statements through an interpreter may decrease the reliability of the
interview, as misunderstandings become more likely. To deal with this problem, I put
particular emphasis on attempts to summarise the interviewees response to each question
and to round off the interview with a preliminary summary of its main conclusions, a
strategy which is generally recommended to avoid misunderstandings (Kvale 1996:110).
       As mentioned, both in the Brazilian and Indonesian cases, the interviews were part
of a broader strategy to collect information. However, these sources were not only additive,
but also interactive. The study of newspapers turned out to function particularly well.
Informants were often more willing to speak when confronted with newspaper report. For
example, when I asked a former government member in Brazil about a story on a conflict
with deputies from the state of Santa Catarina over his involvement in IBAMA’s
employment strategies from the newspaper Jornal do Brasil, he provided details about
pressure from federal politicians from this state. In this way, the collection of stories from
newspapers was particularly useful as a background for the interviews.
       In other cases, newspaper sources were important sources that could increase the
reliability of conclusions from the interviews. In Brazil, several news stories were used to
crosscheck the reliability of information from the interviews. The Congress Library in
Brasília permitted me access to an impressive archive that contains articles from various
national newspapers sorted under various topics. Among these topics were the names of
specific congressmen and senators. When former agency leaders and politicians reported on
pressure from or co-operation with specific politicians, newspaper articles could provide a
check of the reliability of their stories. For example, after several high-level officials at
IBAMA had pointed out a senator from the state of Amazonas as an important source of
pressure against the organisation’s law enforcement campaign, newspaper articles that
provided reports on accusations against this senator from other persons or organisations
about environmental crimes increased the reliability of the interview findings.




                                             40
       Can newspaper stories be of any use in an authoritarian country like Indonesia?
Certainly, censorship constraints on Indonesian newspapers reduce their value as sources of
information in the research process. As emphasised in the following analysis, journalists
face a complicated and sometimes unpredictable system of negative sanctions. The outcome
is a relatively high degree of «self-censorship» among journalists, particularly when matters
relevant to the presidential family and the military are touched upon (Schwarz 1994:239-
240). As these groups are main players in forestry, one should expect that newspaper
articles would be of marginal value for this project.
       However, I also noted that newspaper articles had been of some value both for
authors focused on Indonesian forestry (Hurst 1990, Potter 1991, Rush 1991, Petrich 1993,
Schwarz 1994, MacAndrews 1994, Dauvergne 1994, Ross 1996) as well as authors dealing
with links between politics and business in general (Robison 1986, MacIntyre 1991). The
Indonesian-language Indonesian newspaper Kompas is broadly acknowledged as the best
newspaper in Indonesia. However, my moderate skills in Bahasa Indonesia prevented any
systematic reading of this newspaper. I was obliged to choose between various English
language newspapers. Several researchers recommended me the English language
newspaper Jakarta Post, as it is supposed to be somewhat more independent of the
government than other Indonesian English language newspapers.
       As I browsed through all issues of the English language newspaper Jakarta Post
published during the 1989-1993 period, I discovered that several newspaper articles
contained highly interesting information related to forest management in Indonesia.
       First, newspapers provided valuable documentation on the Indonesian government’s
official policies on environment and development, forestry and the NGO sector. Several of
the warnings given to the NGO sector in connection with their discussion of sensitive issues
bolster interview data and secondary sources which conclude that the limits to NGO
activism in Indonesia are relatively strict.
       Second, newspaper articles provided important implicit information on the routines
of policy-making in the forestry sector. A major finding from this point of view was that the
APKINDO chairman and timber and rattan business tycoon Bob Hasan had a multiplicity of
roles when speaking to the press. The fact that he is given the task of orienting the People’s



                                               41
Consultative Assembly about various forest policy initiatives supports the assumptions
derived from the literature and the interviews about his high influence on forestry policies.
Also other newspaper articles, in which members of APKINDO criticise Hasan while
declining to reveal their identity, support assumptions about Hasan’s dominating position
within the forestry industry.
       Third, when reading articles with pro-governmental or politically neutral headlines, I
discovered that critical stories related to forestry were frequently hidden at the end of the
article. This relatively subtle way of reporting on sensitive matters seems to make it
possible to expose several critical stories and views on main players in forestry in
Indonesia.
       In this discussion, I have described some of the problems and limitations of the
sources of information and data for this study. Below, I continue with a discussion of
explanatory factors that may contribute to understand variations in environmental reform.
Though the discussion is carried out at a general level, it aims to present clear and
operational propositions about explanatory factors and mechanisms relevant to explain the
variation of environmental reform identified in chapter four.




                                             42
 CHAPTER THREE: EXPLAINING VARIATIONS OF
             ENVIRONMENTAL REFORM – FOUR
      APPROACHES AND SEVEN PROPOSITIONS

3.1. Introduction
Although a comprehensive academic discussion of factors that influence environmental
policy outcomes related to tropical forests is yet to be fully established, there has been a
vital international debate on these topics. Among other actors, this debate has involved
forest scientists, social scientists, governments and national and international NGOs. In the
debate, several approaches to the explanation of variations in the pace and range of
environmental reforms and their implementation in developing countries have been
presented.
       Pointing to discriminatory aspects of the international economic system has been a
quite popular approach. Factors in focus have particularly been external pressures to
generate foreign exchange as well as the power and actions of transnational corporations
(Altvater 1987, George 1988, Nectoux and Kuroda 1990, Wood 1990, Kulessa 1992,
Dauvergne 1997). This perspective attracts much sympathy from radical NGOs as well as
third world governments (Agarwal and Narain 1991, Hyder 1992).
       However, other factors at the international level that may work in the opposite
direction have also attracted attention. International «green» pressure on states that
contribute to transnational and global environmental problems has been pointed out as a
powerful factor with great potentials for speeding up the pace of reforms. One influential
branch of such analyses simply explains policy changes as the outcome of national and
international incentives and disincentives exerted by international organisations and various
countries. If domestic economic incentives for reform are insufficient, and the
environmental problem in question is transboundary, providing a mix of positive and
negative international economic incentives may encourage reforms. Partly in connection to
this perspective, the pro-reformatory effects of the rapidly growing transnational



                                             43
environmental movement have attracted much hope and attention. The new international or
transnational environmental movement may play a pro-reformatory role by collecting and
disseminating environmentally related information as well as raising environmental
problems on the international agenda. By directing attention towards states which are
important sources of important transboundary environmental problems, the international
environmental movement may play the role of a global environmental watchdog (Rich
1989, MacNeill 1991, List and Rittberger 1992, Silva 1994, Rich 1994, Princen et al. 1994,
Lipschutz 1996).
       A third variety of explanations has ascribed both problems and successes of
environmental reforms in forest areas to the domestic polity and domestic political
processes. Various business actors have attracted particular attention, as corporate actors in
agriculture and wood industries often cause massive deforestation and forest depletion.
Hurrell (1992) and Cleary (1991a) point to the involvement of large-scale mining and
ranching interests in coalition with the military bureaucracy as an important barrier to
environmental reform in Brazilian Amazonia during the late 1980s. Hurst (1990), Repetto
(1990:21) and Thapa and Weber (1990:25-26) link the influence of these actors to
particular clientelist and corrupt political practices in developing countries. On the other
hand, Rich (1994), Guimarães (1991), Viola (1992), Fisher (1993) point to the positive
influence of national environmental agencies and national environmental NGOs on the pace
and range of reforms in several countries.
       Though most of the mentioned authors deal much less with theoretical than
empirical discussions, their analyses often draw upon implicit theoretical approaches.
Below, I will try to clarify these approaches and operationalise them as broad propositions
about factors which may explain the contrast in reforms which is the focus in this thesis.
When doing this, I try to combine insights from international politics, general public policy
analyses, analyses of environmental policies as well as analyses of political processes in
developing countries.




                                             44
3.2. Explanations inspired by the dependency approach
Few contributions in the dependency approach pay much attention to analyses of domestic
policies. Dependency theory in its main varieties tends to focus on the effects of historically
given macro-structures and differentials in economic development rather than specific
public policy outcomes. Many of its main proponents emphasise the subordinate role of the
national states and the national polities to the functions of a capitalist world economy
(Randall and Theobald 1989:99-137). There are two main arguments that support this view.
       First, the third world state is constrained by external economic and political
constraints which are so severe that the state remains virtually powerless to alter
development patterns. Second, the state and public policies are controlled by internal
groups allied with or directly affiliated to foreign companies, states or agencies. These
foreign interests are mainly interested in exploiting the developing country, and by doing
this, they distort the development of the country. Governments, bureaucracies and political
institutions all tend to be treated as appendages of the world capitalist system and therefore
somewhat peripheral to the analysis of political and social change (Randall and Theobald
1989:115).
       When public policies are approached, these are usually analysed by pointing to two
principal mechanisms. First, various external economic constraints limit both the range of
possible policy outcomes and the fiscal resources necessary to carry out these policies.
Second, foreign economic and/or political interests and their local allies may act as a «fifth
column» lobbying in favour of policies adversary to the national interest. Below, these
mechanisms are presented and discussed in detail. Following this discussion, I derive two
alternative propositions about empirical mechanisms linking various operationalisations of
situations of dependency to variations of environmental reform.


Dependence through external economic constraints
The classical version of the argument on external economic constraints on developing
countries in the post-war era is the argument on the deteriorating terms of trade presented
by both Raul Prebisch in 1950 (Prebisch 1950). According to both Prebisch, different
market structures in the production of and trade with primary products and industrial



                                              45
products caused an increasing gap in prices between these two groups of products in the
world economy. This interpretation of the world economy as an asymmetric and
exploitative system is a common basis for later theorists such as Frank (1967), Emmanuel
(1972) and Wallerstein (1974).
        These implicit arguments were revitalised in the early 1980s as explicit arguments
describing economic determinants of environmental policies in the Third World. The
coincidence of the international debt crisis with increased attention to deforestation and
forest degradation was a common background. A popular version of this argument is
presented by George (1988) who correlates debt statistics and deforestation to demonstrate
the negative effects of debt on forests. The basic mechanism, namely that states are forced
to plunder their forests because of their huge financial obligations, is pinpointed by
Guimarães (1991:124):


«The financial resources needed for their development must be paid back, which in turn creates a need to earn
dollars, which means more exports, which means intensified exploration of already overexploited resources.»


The exploitation of products from forest areas like beef, minerals or timber may increase
export income and damage the environment. Thus, there may be a contradiction between
external financial pressure and the need for environmental reforms that is expressed by the
fact an acute need for high export income receives priority over long-term needs for
environmental reforms.
        Altvater (1987) is one of the most sophisticated proponents of this. He analyses the
public policies in the Eastern part of Brazilian Amazonia under the military dictatorship
(1964-85) in the light of external economic constraints and a consequent need for
«valorisation» of the natural resources in Amazonia by integrating the region into the world
market. In contrast to George, Altvater also examines the internal political processes behind
the onset of environmentally destructive policies. However, though internal political factors
play an important role, the alleviation of external economic constraints is an ultimate
precondition for solving the ecological problems of the region. Thus, domestic politics
receive attention, and he admits that domestic political changes are preconditions for
reforms. However, the position of Brazil in the international economic system narrows the



                                                     46
leeway for reforms. The present global economic order becomes the main obstacle to
pervasive environmental reform in the Amazon region (Altvater 1987:313):


«Voraussetzung dafür aber ist - wie schon (....) ausgeführt - eine Verringerung der Schuldendienstzahlungen.
Dazu ist mehr nötig als ein regionaler und nationaler Reformismus, nämlich ein globales Reformprojekt, das
die Konturen einer neuen Weltwirtschaftsordnung zeichnet.»


Altvater (1987:139-149) admits that the military’s perception of regional vulnerability is the
main explanation of the outset of the «conquest of Brazilian Amazonia» in the middle of the
1960s. In his conclusion, he perceives the removal of these interests from power through
democratisation as a precondition for reforms (Altvater 1987:313). However, the quotation
above clearly indicates that the success of such a national reformist project is ultimately
preconditioned by global economic reforms. Thus, domestic politics as well as international
constraints are primary factors behind the onset of destructive resource use, but
international economic constraints are the main obstacles to reforms.15
        For Altvater, the main mechanism blocking reforms is the connection between forest
destruction and exports. The state cannot afford the decrease of exports caused by the
enforcement of environmental standards in production processes. This point is illustrated by
a study of the Carajás iron mine in the Amazon region. In this programme, export and debt
service was one of the main motives of the mining project, which has caused enormous
ecological destruction in the region. However, the environmental impact of this investment
was further increased by the lack of funds for environmental investments (Altvater
1987:310). This is a complementary barrier to environmental reform. The state is squeezed
by two factors related to the debt burden. First, it has to initiate destructive extractive
projects to create foreign exchange for development and debt service on the one hand, and
on the other hand to save money on the environmental aspects of projects to pay off public
debt.
        Dauvergne (1997) argues in a similar way that low export prices on tropical timber
from Southeast Asia due to particular influences from Japan constrain the funds available
for improving forest management.




                                                    47
       Kulessa (1992), partially building on Altvater’s work, extends his argument by also
focusing on the effects of structural adjustment programmes imposed on indebted states by
the IMF and the World Bank. Like Altvater, she claims that the budget cuts imposed by
such programmes may undermine the opportunities for reform by pauperising public
environmental institutions (Kulessa 1992:53).
        To summarise, there are two main arguments on the linkages between a nation’s
position in the international economy and its environmental policies. One argument is that
the need for foreign exchange forces the country to overexploit its own resources at the
expense of the environment. The second argument is that a need for fiscal austerity caused
by a huge debt burden or other international economic factors also influences the area of
environmental policies by restricting funds available for environmental protection
measures.16 Though these mechanisms are analytically distinctive, they may also be seen as
historical stages of dependency. While balance-of-payments problems have forced most
developing countries to maximise exports for a long time, the debt crisis reinforced the
effects of this constraint on public finances through a dramatically increased need for fiscal
austerity. In the table below, these mechanisms are summarised and compared:


TABLE 1: Two versions of external economic constraints


 Explanatory factor                  Intermediate link                  Outcome

 Discriminatory nature of            Balance      of     payments       Constraint to environmental
 international economic system       constraint                         reform, as exports must be
                                                                        maximised

                                     Fiscal constraint caused by        Constraint to environmental
   Same                              necessity of fiscal austerity      reforms,    as  government
                                     programmes connected to            expenditures    must    be
                                     balance     of      payments       minimised
                                     constraint




15Barbosa (1996) supports a similar, but somewhat more ambiguous, position in an analysis of Brazil and
environmental problems during the 1990s, as he recognises a certain «greening» of the international
16The mentioned mechanisms are also summarised in Pearce et al. (1995).



                                                  48
These two versions of this brand of dependency theory, namely export maximisation and
fiscal austerity, may be outlined in the following proposition which validity will be
evaluated through analyses of the empirical material:


Proposition 1: The contrast in environmental reforms of the management of forest land in
Brazil and Indonesia between 1988 and 1992/93 is explained by 1) a difference in the
necessity for export maximisation in the two cases, and 2) a difference in fiscal constraints
on environmental agencies made necessary by an externally imposed need for fiscal
austerity.


Dependency as dependence on transnational corporations
The other main brand of dependency-related approaches to public policy outcomes focuses
on the influence of multinational corporations. This perspective emerged later than the
Prebisch argument. It was mainly linked to the radicalisation of development theory that
emerged in the radical Latin American «dependency school» from the second part of the
1960s. Historically, it was an academic response to two booms of foreign investment in
Latin America during the post-war period. The first one was the foreign investment boom
of the 1950s. Foreign investments were mainly focused on durable consumer goods for the
domestic markets of the richer Latin American countries like Argentina and Brazil. During
the second boom, starting in the late 1960s, multinationals also started to use some
countries of the region as export platforms. Brazil, Mexico and Argentina received the
majority of these investments. Low wages, political stability and a relatively sophisticated
infrastructure were key prerequisites for this wave of investment, which also included East
Asian countries like Taiwan, South Korea and Singapore (Lipietz 1987, Gereffi 1994).
        This trend analysed in the works of a new generation of radical Latin-American
social scientists. They described and analysed the negative effects of transnational
investment in detail.17 Though the main thrust of the analyses of the effects of foreign


17This includes writers like Theotonio dos Santos, Ruy Mario Marini, Osvaldo Sunkel, Fernando Henrique
Cardoso and Celso Furtado. Furtado and Cardoso introduce so many domestic factors influencing the effects
of the international system on domestic development that it is doubtful whether they may be placed inside the
dependency school at all.



                                                     49
investment in the dependency school is focused on effects on the balance of payments
situation and the state’s fiscal capacity (Hoogvelt 1978:74-88), many prominent writers also
analyse the influence of multinationals on politics and public policies. Sunkel (1979:216)
describes this mechanism:


«New studies of 'dependencia' in industry and related sectors have led to a greater recognition of its nature
and effects. (…) foreign factors are seen not as external but as intrinsic to the system, with manifold and
sometimes hidden or subtle political, financial, economic, technical and cultural effects inside the
underdeveloped economy. These contribute significantly to shaping the nature and operation of the economy,
society and polity, a kind of 'fifth column' as it were.»


This statement may be operationalised in terms of factors influencing environmental policy
outcomes. Transnational corporations may have interests in the exploitation of forests in
themselves or the agricultural, mineral or other resources existing in forest areas. This
economic interest may motivate lobbying against environmental reform. In developing
countries, lobbying strategies often involve corruption or threats if profits are undermined
by environmental constraints, as suggested by Bergstø and Endresen (1992:177).
        Several authors have described how transnational investors may influence forest
policies in a negative way. Contreras (1987) describes how transnational investors may
impede policies to establish domestic processing and spur national economic development.
Nectoux and Kuroda (1990) as well as Dauvergne (1997) study the influence of Japanese
operations on the environmental record of logging in Southeast Asian countries since the
1950s. The basic conclusion is that Japanese companies and the Japanese state together
framed a coherent strategy for wood extraction from Southeast Asian forests with little
attention to its environmental costs. This interest structure has impeded environmental
reforms more difficult in this area due to the high power and influence on policy-making
enjoyed by large Japanese companies and their local counterparts (Nectoux and Kuroda
1990:77-94, Dauvergne 1997). Similar mechanisms are suggested by Myers with particular
reference to the problem of deforestation (1980).
        In this perspective, absence of reforms is not only analysed as effects of the active
involvement of companies. It may also work through what is called «anticipated reactions».
This is when national authorities avoid environmental reform because they withdrawal of



                                                     50
important investments (Hill 1997:40). Bergstø and Endresen (1992:177) suggest that the
mechanism of anticipated reactions is an important strategy for transnational corporations
when lobbying against environmental reform. In such cases, the state perceives the national
economy to be so dependent on a particular investor, or the hope of attracting future
investors, that it decides to avoid actions that may motivate a withdrawal of the foreign
company’s operations. Dependence in this case may be reinforced by more general external
economic vulnerabilities created by chronic balance of payments problems. Thus,
vulnerabilities created by the discriminatory nature of the world economy may reinforce
dependence on a positive inflow of foreign investments. The outcome may be absence of
environmental reforms as a consequence of dynamic process of mutually reinforcing forms
of dependence.
       Partially connected to this approach, one finds more recent assumptions about the
existence of a «transnational bourgeoisie» (Cox 1996). As financial markets are liberalised
on a global scale, company shareholders, staff and executives become able to move their
investments unconstrained by national borders. In this situation, an increasing share of
capital is transnational or potentially transnational. Thus, as capital is no longer connected
to a «national bourgeoisie» connected to the national state by loyalty and laws, most
companies in principle become transnational. Then, most companies get access to the same
instrument of pressure on the national government; namely withdrawal in cases of
dissatisfaction with the government’s policy. However, it may be a long way for a company
from being «transnational in principle» to become able to exploit these strategies fully. The
likeliness of using such strategies may decrease if the company’s basic source of revenue is
based on the exploitation of natural resources that are not easily accessible in other parts of
the worlds, linking the company more tightly to a certain territory (Krasner 1995:275). In
addition, strategies of transnationalisation demand a relatively high degree of
professionalism and ability to collect and process information. However, in the empirical
discussion, Cox approach is a reminder of the necessity to evaluate whether nationally
controlled companies also have become able to exert pressure on the national government
by threatening to withdraw their investment.




                                               51
       Another aspect of this discussion is that the domestic allies of foreign investors may
be instrumental in exerting pressure to weaken environmental policies. In dependency
theory, there is a tradition proposing that ruling classes in developing countries become
subordinate political servants of foreign investors, profiting from this connection against the
long-term interests of their own country. Frank (1967) employs this mechanism in his
metropolis-satellite model, Galtung in his centre-periphery model (Hout 1993:78, 98-99)
and Rey (1973) in his studies of colonialism.
       Though the varieties of this approach are difficult to operationalise for many
reasons, empirical examples may provide some clues. Cases where local entrepreneurs and
local authorities act in companionship with foreign capital in a very destructive way are
easy to identify. Several nations in Southeast Asia have seen their forests degraded by
coalitions of local politicians and Japanese trading companies since the 1960s. The usual
pattern here is that a powerful politician or bureaucrat leases out one or more forest
concession to the Japanese partner, who supplies equipment, financing, marketing channels
and sometimes even labour (Nectoux and Kuroda 1990, Dauvergne 1997). Kolk (1996) also
suggests that Japanese companies play similar roles in environmentally destructive mining
in the Amazon region. The Japanese partner, usually interested in high and stable supplies
of cheap raw materials, uses the local partners as middlemen to «negotiate» exemptions
from environmental regulations through corruption on various political levels. An essential
point in this example is that foreign control also may be exerted through joint ventures,
even minority shares, and control over financing and export channels. If necessary, the local
partner may be used as a local «political broker» to overcome the constraints of
environmental regulations.
       The two mentioned versions of the assumption that the variations of environmental
reform implementation may be explained by variations in pressure and influence of
transnational or «transnationalised» corporations are summarised in the following table:




                                                52
TABLE 2: Two versions of the hypothesis of pressure from transnational companies


 Explanatory factor               Intermediate link               Outcome
 Transnational     corporation     Threat     to      withdraw    Constraint to environmental
 interested    in     resisting   investment                      reform      motivated      by
 environmental reform                                             government fear of withdrawal
                                                                  of investment




 Transnational     corporation    Co-operation     with   local   Constraint to environmental
 interested    in     resisting   entrepreneurs and political     reform       motivated  by
 environmental reform             allies functioning as brokers   government fear of hurting
                                  and middlemen                   powerful        allies   of
                                                                  transnationals, or by co-
                                                                  optation of government




With such cases in mind, a second approach based on the dependency tradition may be
constructed. This approach comprises both direct and indirect influences from transnational
corporations, «transnationalised» sections of nationally controlled capital, and the combined
influence of alliances between wealthy transnational corporations and politically powerful
political brokers and middlemen. The power of these actors may be reinforced by
dependence created by international economic constraints.
       The main proposition which is be derived under this brand of dependency theory is
the following:


Proposition 2: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 is explained by a difference in the presence and power of
transnational companies, «transnationalised sections» of nationally controlled companies




                                               53
and the links of transnational corporations with domestic political «brokers» and
«middlemen».




3.3. Explanations related to environmental interdependence: Environmental
reform as co-operation
The effects of deforestation and forest depletion on the global environment may imply that
states without vast forest areas will perceive themselves as vulnerable to policy choices
made in states with large forest areas within their territory. This has been the case since the
mid-1980s, when the importance of tropical forests to global environmental problems
became clear.18 International pressure has implied the use of sanctions and incentives from
various states and international organisations like the World Bank (Kolk 1996). However,
the international political game on tropical forests has also attracted the attention of other
groups like the G-7 and international NGOs. The broad spectrum of actors involved and the
mutual dependence between countries that is the outcome of the increasingly global
character of problems has inspired some contributors to talk about a new global situation of
«ecological interdependence» (MacNeill et al. 1991:4):


«Since World War II, governments have been preoccupied with economic interdependence, the coupling of
local and national economies into a global system. But the world has now moved beyond economic
interdependence to ecological interdependence - and even beyond that to an intermeshing of the two. The
earth’s signals are unmistakable. Global warming is a form of feedback from the earth’s ecological system to
the world’s economic system. So is the ozone hole, acid rain in Europe, soil degradation in Africa and
Australia, deforestation and species loss in the Amazon.»


Several other scholars also use terms like global environmental or ecological
interdependence.19 List and Rittberger (1991:86-89) point to the importance of
interdependence theory for the analysis of international environmental problems. Though
states have not ceased to be institutional centres of supreme collective co-ordination and


18Since the mid-1980s, politicians in the US, Germany, France and the UK expressed worries about the
effects of deforestation on the global climate and the world’s biodiversity. These worries were increased by
the increases of Amazonian deforestation in the same period (see Cleary 1991a:62-66), but also quite strong
regarding Asian deforestation connected to logging as several countries in the EC have threatened commercial
loggers with boycott of timber imports.



                                                    54
control, an increase of transnational relations, absence of military power and declining state
unity in foreign policy-making are important points in interdependence theory readily
transferable from economic interdependence to the field of ecological or environmental
interdependence.20 Conca and Lipschutz (1994:8-10). Princen et al. (1994) as well as
Lipschutz (1996) press the transnational argument further. For these researchers, global
ecological interdependence is a description of how the emergence of transnational and
global ecological problems increasingly involve states in various pressures connected to a
new need for joint solutions. According to Conca and Lipschutz (1994), Princen et al.
(1994:61) and Lipschutz (1996) states must give way to international social movements in
the management of in international environmental affairs. Such transnational movements
are essential as complements and, increasingly, substitutes to state action to identify
solutions on these issues.


Three brands of theories analysing situations of ecological interdependence
Common to these contributors, international and global environmental problems are
perceived as complex problems of a non-military nature crossing national borders and
creating problems for the present system of nation-states. However, analyses inspired by
this approach differ in their causal focus. Here, I will examine three brands of what could
broadly be called interdependence-related theory.
        The first brand mainly analyses domestic outcomes as the result of government
calculations of domestic and international costs and benefits of environmental reform. Here,
the dimensions of international incentives as well as domestic vulnerability to negative
incentives and domestic costs of reform are causal factors.
         The second brand opens the «black box» of the unitary, rational state to analyse how
domestic actors and structures influence the link between international pressures and
domestic outcomes.

19 International organisations have also used this concept, cfr. OECD (1982).
20This picture of the global order resembles the picture of the international order included in Keohane and
Nye’s (1987:31) term «complex interdependence»: «Complex interdependence refers to a situation among a
number of countries in which multiple channels of contacts connect societies (that is, states do not monopolize
these contacts); there is no hierarchy of issues; and military force is not used by governments towards
another.»



                                                      55
       The third brand, which perhaps represents the most radical departure from
traditional state-centred theories in the field of international relations, focuses on
interactions between societies mediated by various non-state groups and channels. The
emergence of this brand is inspired by various trends in the international community during
the post-war period. The emergence of transnational companies, the re-emergence of
transnational financial markets, globalisation of media, ethno-national movements and
networks of non-governmental organisations are all phenomena that in some way challenge
and transform a state-centred international system. In the field of the environment, the
emergence of transnational media and transnational networks between NGOs are the main
transnational channels linking national societies. In the context of this project, I will
especially examine how these factors, links between societies through media and NGOs, in
combination may have contributed to influence the cases in question by influencing the
strength and content of external pressure, defined both as negative and positive economic
incentives.


Approach 1: The degree of co-operation as rational economic choice
The first commonly used brand of interdependence, is the one that perceives domestic
environmental policy outcomes as caused by complex mix of incentives and disincentives
from other states, international organisations and societal groups on the one hand, and
domestic costs and benefits on the other hand. This perspective is widely applied in the
analysis of international environmental politics. It differs from classical realism and neo-
realism in the way that international organisations and foreign societal groups like
companies and associations of consumers are included as important actors, and that military
power is largely inoperative in the environmental area. However, states are still perceived
as unitary and rational actors. Instead of adjusting to military threats and hierarchies, they
adjust to economic costs and benefits like economic players on a market. This implies that
states have stable hierarchies of preferences and adequate information on the costs and
benefits of alternative actions; in this case various reforms or absence of reforms.
       List and Rittberger (1991:100-102) point to situations in which a polluting country’s
domestic ecological damage is low and damage to other states is high as highly problematic



                                              56
in terms of co-operation. Such situations provide few incentives to polluting countries to
change policies in a more responsive direction, unless policy change is linked to other
issues. Biodiversity loss and climate change, the two global problems worsened by
deforestation and forest depletion, are not necessarily such problems. Their global nature
increase the environmental risks experienced by everybody (Beck 1992). However, the
much higher general health and welfare risks experienced by most third world populations
(Beckerman 1992) because of widespread poverty make it less attractive for these countries
to introduce policies to prevent deforestation, at least motivated by global environmental
concerns. In poor societies where immediate health and welfare risks are generally high,
predictions of problems in the distant future may provide weaker incentives to government
action than in rich societies where such risks are generally much lower. In addition, impact
assessments of climate change and biodiversity loss for individual countries or groups of
countries are clouded with uncertainties.
       The argument that perceptions of the acuteness of environmental problems differ
with the level of economic development implies that global environmental demands to the
states of developing countries need to be bolstered by international incentives to be able to
produce reforms.
       There are other arguments pointing in the same direction. If reforms are associated
with economic costs foregone tax and export revenue or rising unemployment, states may
be expected to be reluctant to choose a co-operative position and introduce unilateral
environmental reforms (Sprinz and Vaahtoranta 1994). The linkages between deforestation,
forest depletion and global environmental problems are also relatively uncertain. This is
particularly the case with linkages between deforestation and greenhouse gas emissions
(IPCC 1995:79, table 2.1). In addition, even in situations in which domestic environmental
damage are high and costs moderate, motivation for acting against global environmental
problems may be decreased by the well-known free-rider problem. The most optimal
situation for a state in terms of costs often is often to avoid action and let other states carry
the burden.
       Altogether, these arguments make the structure of this situation of environmental
interdependence quite similar to the non-co-operative situation described by List and



                                               57
Rittberger above.21         In such cases, the existence of international incentives may be
expected to be crucial to motivate governments to act.
        Incentives may be positive and negative. In international environmental politics,
positive incentives are usually connected to favourable financing of specific environmental
projects. If reforms are promised and/or initiated, governments may receive generous
external funding and/or technology transfers to support reforms. Thus, I will investigate
variations in the volume and terms of external concessional funding as a possible
explanation of the contrast in policy change in question.
        However, the main incentives in international environmental politics during the
1980s and 1990s have been negative. The main negative incentives have been linkages
between environmental issues and developing countries’ access to external financing or
trade. Both issues are of special importance to most developing countries. These countries
are particularly dependent on loans and foreign exchange to finance the construction of
infrastructure connected to industrial growth, agricultural modernisation, urbanisation and
social development. Embargoes of products directly linked to environmental degradation
and more generalised embargoes of exports from certain countries have been important
negative incentives. Such embargoes or embargo threats have been applied against
countries where government policies have been perceived as causes of deforestation, or
where international critics have perceived prevention of environmental degradation as
inadequate. Either threats of withdrawal attached as «strings» to external loans or grants
directly connected to environmentally relevant sectors or other sectors of the economy have
been used by both states and international institutions to encourage environmental reforms.
        Measuring and comparing the «strength» and «impact» of foreign pressure through
embargoes or threats of embargoes is difficult. Mere comparisons of the dimensions of
trade and financial sanctions do not provide an exhaustive picture of the impacts of
sanctions on government motives for compliance. National economies and states vary in
their sensitivity and vulnerability to external trade and financing restrictions. Moreover, the
direct and indirect costs of remedial action also differ. Vanbergeijk and Vanmarrewijk


21It is important to note that the resemblance with this situation stems from an assumed difference in
preferences between rich and poor countries. The costs in terms of increased risks are in principle the same,



                                                     58
(1995) note that compliance to sanctions is dependent both on adjustment costs and what
they call the yield of misconduct, which is the economic benefit of non-compliance. When
sanction damage cannot be avoided by adjustment in the long run, and exceeds the yield of
misconduct, compliance should be expected.
        Some tentative assumptions may be made on sensitivity, vulnerability and
adjustments costs. For sanctions focused on external financing, I will focus upon two
indicators. The first is the inflow of financing from external sources. A high share of such
external financing in total savings/investment is assumed to make the economy, and
therefore also the government, sensitive to external embargoes.
        However, such analyses must be corrected by analyses of the economy’s ability to
adapt to external events. Keohane and Nye (1987:13-17) point out that high sensitivity to
external events in the short run may be matched by low vulnerability to external events in
the long run. Thus, states may be able to adjust to pressure and decrease their dependence
on economic sectors that are heavily exposed to external events. Boycotts of loans, external
aid or foreign direct investments hurt more in situations of declining external inflows; and
even more in situations when the domestic economy is unable to meet declining external
savings by mobilising domestic funds.
        The second indicator is the share of external aid, loans and direct investments which
has been held back or threatened held back by donors for environmental reasons. Here, it
would be reasonable to rank cases of positive action by donors and investors as stronger
incentives for reforms than mere threats of action. A distinction could also be made
between withdrawal of support to government and business sectors directly related to the
management and exploitation of forest land, and other sectors of government and business
activity. Extending financial embargoes to other government and business sectors may be
assumed to imply stronger pressure, as such an extension represents a broader challenge to
the economy. However, this distinction becomes less important in cases in which economic
activities on forest land make up a high proportion of domestic production.
        When it comes to trade, I will focus on implemented trade embargoes and threats of
embargoes from other states, associations of states (like the EC) or societies (like more or

but the benefits of economic growth are perceived as higher among developing than developed countries.



                                                    59
less well-defined groups of consumers). Like for trading sanctions, implemented embargoes
are ranked as stronger incentives for reforms than threats, and the inclusion of exports
extending outside forest-related sectors as stronger negative incentives. However, this
distinction is not very important in cases in which forest related products make up a large
share of exports. If a country is strongly dependent on such exports, an embargo related to
only this sector may be a strong incentive for policy change.
          When analysing the effects of sanctions, I also have to analyse the impact of external
incentives in terms of the domestic costs of remedial environmental action. This variable is
essentially a domestic factor that influences the effects of external pressure. Domestic costs
have at least two dimensions. First, environmental reforms may be costly in terms of a
reduction of economic activity. This is what could be called foregone yield of misconduct
in the terminology of Vanbergergeijk and Vanmarrewijk (1995). Second, implementing
reforms may require increases of government expenses.
          If domestic economic costs of remedial action are high, strong positive or negative
incentives may be required to produce reforms. Conversely, if domestic costs are low, even
weak positive or negative incentives could be expected to have a bearing on government
action.
          To summarise, the factors I have discussed under this approach have been how
various economic factors influence the effects of positive and negative external economic
incentives on domestic environmental reforms. In a comparative context, the impacts of
these incentives on states cannot be analysed only in terms of their absolute size. The
impacts of negative external economic incentives depend on the national economy’s
sensitivity and vulnerability to trade and financing embargoes. And the impacts of negative
and positive external incentives depend on both the costs of a possibly necessary reduction
of the dimension of environmentally destructive activities and the direct costs of direct
reform implementation, in addition to the costs of environmental damage. These factors are
summarised in the following table:




                                                60
TABLE 3: External economic factors and intermediate domestic economic links that may
influence the response of governments to external pressure for environmental reform

 Explanatory factor               Intermediate link                 Outcome

 Variations in positive and       Differences in sensitivity and    Variation of environmental
 negative         international   vulnerability    to    negative   reform.
 economic incentives              international incentives


                                  Differences in costs related to
                                  reduction of the dimension of
                                  destructive activities



                                  Differences in government
                                  costs related to reforms




This approach may be summarised in the following proposition:


Proposition 3: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 is explained by a difference in external positive and negative
economic incentives, the vulnerability to negative external incentives and/or by differences
in the indirect and direct domestic economic costs of reform.




Approach 2: The degree of co-operation as a reflection of domestic politics and interests
Above, I looked at economic factors that could influence a state’s reaction to external
incentives for environmental reforms. I now proceed with a discussion of how political
factors that may influence the government’s responses to external incentive changes. As
remarked by Keohane and Nye (1987:15), vulnerability to external incentives applies to
socio-political as well as politico-economic relationships. For example, if powerful
business groups are responsible for environmental damage, these groups may succeed in
blocking reforms even when the «objective» economic costs of reforms are low. List and



                                                61
Rittberger (1992:102) mention the same point. They remark that there may be a gap
between the perception of government authorities and the «objective facts» of the
environmental situation. To understand this difference, the domestic «black box» must be
opened to political analysis.
       In this approach, the interplay between international and domestic politics is
introduced as a tool to explain variations in domestic political outcome. Theoretically, this
approach has been outlined by Gourevitch (1978). In his «second-image reversed» model,
he invites comparative social scientists to analyse how international influences shape
domestic political outcomes. This approach has several other advocates among scholars
dealing with international relations as well as comparative economic policy. Similar
approaches are also used in analysed of economic policies. Both in the Latin American
dependencia school, and in analyses of economic policies in OECD countries, the study of
domestic-international dynamics has a prominent place. In the Latin American dependencia
school, the classical work is Cardoso and Falletto (1979). They describe how variations in
economic and social structure have influenced political coalitions and economic policy-
making in several Latin American countries. Katzenstein (1985) as well as Mjøset (1987)
have analysed how national political arrangements and coalitions influence political
responses to international economic impulses in comparisons of OECD countries.
       In the literature on international relations, links between international and domestic
political relations have come increasingly in focus since the 1970s. Keohane and Nye
(1987:739) admit that the connection between international and domestic political relations
was missing in their original theory on international relations (and much traditional
international relations theory), as their original theory failed to account for changes in self-
interest definition by governments. Young (1989:364) points to the importance of sub-
national actors in the intra-party bargaining that runs parallel to inter-party bargaining in the
process of regime formation, and he points to the frequency of splits between
environmentalists and industrialists as a good example. For Milner (1992), neglect of
domestic political processes is one of the major flaws of the theories of international co-
operation that emerged in the 1980s.




                                               62
        Putnam (1988) is a main inspirator of recent attempts to bridge the gap between
political relations at the domestic and international levels. Through his «two-level
metaphor», which is a conceptual starting point for a more systematic analysis of the
interplay between domestic and international affairs, Putnam opened a broad debate on
interactions between the domestic and international level.
        Though the contributions inspired by Putnam mainly focus on the impact of
domestic-international interactions on the outcomes of international negotiations, some of
these contributions may also be applied to analyses of domestic policy-making. One
important reason for this is that the line that divides an international position from a
domestic policy may be difficult to draw in some cases. If there is a strong international
interest in environmental reforms in a particular state, this state’s domestic policies may be
interpreted as acts of co-operation or non-co-operation.
        When commenting on a series of case studies of international-domestic interactions
inspired by the «Putnam debate», Evans (1993:397-423) presents some hypotheses about
the effects of some variables on the statesman’s autonomy in decision-making and some
hypotheses on the relations between domestic social structures and negotiation outcome.
        The last group of hypotheses provides the most straightforward approach in our
context. Though they deal with the prospects for domestic acceptance of international
agreements, they may also shed light on the question: How do domestic social and political
structures influence the government’s response to international pressure? Evans presents
three hypotheses (Evans 1993:412-416).22
        The first one is termed «concentrated costs versus diffuse benefits». This hypothesis
draws on a classical argument in the analysis of public policies, environmental policies in



22These three hypotheses are presented together with two other. The first deals with the executive’s
opportunities to restructure domestic interests, and in the long run reach an agreement after reshuffling the set
of domestic interests. This may be done by providing rewards for co-operation to domestic groups, or by
undermining their societal position to make them less influential in the long run. This requires the use of
domestic rewards which value at surpasses the costs incurred on commercial interests by reform as perceived
by these interests, or the ability of the executive to effectively undermine the position and leverage of
domestic interests. The first strategy demands that the executive controls huge financial resources and is
willing to use them for environmental purposes, the second demands that he has a very high level of control
over his own society, and is willing to use it for environmental purposes. These strategies seem to be
unrealistic on environmental issues, as both require a strongly pro-environmental executive with control over



                                                      63
particular (Wilson 1980, Heidenheimer et al. 1990:330-337). The global environmental
advantages of tropical moist forest protection are common advantages enjoyed by a large
section of the global population. But increased forest protection may incur costs on a small
number of well-organised business actors. Such a match between costs and benefits may
cause strong political mobilisation among the sectors which welfare is highly endangered
by reforms, but weaker mobilisation among the wider sections of society that may receive
moderate benefits. This argument predicts that the higher the concentration of domestic
economic costs connected to reforms, and the more diffuse the domestic benefits, the higher
the political obstacles to reforms.
        Evans’ second hypothesis is centred on the variations in enfranchisement of various
domestic interests, or the institutional rules that decide the access of various interests to
decision-making. This variable is particularly important among developing countries.
Several political regimes in the developing world are characterised by disproportionate
enfranchisement of privileged business in government decision-making, often at the
expense of other sections of civil society. As I point out and discuss in detail under the
bureaucracy-centred and society-centred approaches below, variations in enfranchisement
of different interests are connected to a huge variety of state-society linkages. Commercial
groups may have powerful government allies, exposing the government or president to
complex internal pressure from both state and society. In some cases, government members
or state leaders may be directly involved in commercial activities. Pro-environmental
groups may be correspondingly disenfranchised by such arrangements. The implications of
this argument are that the higher the level of enfranchisement of anti-environmental groups
and the lower the level of enfranchisement of pro-environmental groups, the higher the
domestic political obstacles to reforms and vice versa.
        Both these hypotheses discuss domestic political structures as intermediate variables
between external pressure and domestic outcome. Both are simplifications of insights and
arguments inspired by the literature on domestic public policy. Both these intermediate




vast financial and political resources. The second hypothesis deals with transnational linkages; a topic I
address below.



                                                   64
links will be discussed as independent explanatory factors when I discuss domestic political
factors under the state and society centred approaches below.
       A third intermediate explanatory factor introduced by Evans (1993:425-426) is the
connection between domestic reforms and issues related to security. Forest issues may be
very important to state security due to their strong territorial aspects. Historically, land
clearing and settlement have often been encouraged by the state to protect the integrity of
the state and its territorial sovereignty against external and internal enemies. According to
Westoby (1989:59-61), forest clearing in France and Ireland was partly motivated by a
desire to deprive bandits and guerrilla groups of places to hide themselves. Forest regions
may also be difficult to protect from infiltration and assault from foreign powers. During
the Vietnam-conflict, the US used chemical defoliants to destroy remote rainforest regions
to reduce the possibility of North Vietnamese infiltration of the South Vietnamese territory
(Westoby 1989:57). The existence of interconnections between environmental reforms and
territorial security may have strong implications for the willingness of a country to co-
operate with other states that argue in favour of reforms. In contrast to economic factors
like costs, state security is usually an indivisible good. This means that conflicts relevant to
security tend to be more difficult to resolve by compromise and bargaining than conflicts
related to economic issues. If the government perceives environmental reforms as
conflicting with territorial security, this may be a very strong motive to ignore external
demands for reforms, even when bolstered by strong incentives. Conversely, if the issue of
reform is perceived in terms of money or other divisible goods, the willingness of the
government to co-operate may be expected to be higher (Evans 1993).
       Inspired by Evans (1993), I have presented three hypotheses on the relationship
between environmental reforms and domestic political structures and perceptions. All these
three hypotheses pinpoint domestic factors that may influence the response of a government
to foreign environmental pressure. These three factors are outlined in the following table:




                                              65
TABLE 4: External economic factors and intermediate domestic political links that may
influence the response of governments to external pressure for environmental reform


 Explanatory factor               Intermediate link                 Outcome
 Variation of pressure through    Differences in concentration      Variation of environmental
 positive and negative external   of domestic costs vs. diffusion   reform
 economic incentives              of    benefits    related    to
                                  environmental reform




                                  Differences               in
                                  enfranchisement between pro-
                                  environmental    and    anti-
                                  environmental groups




                                  Differences in the degree of
                                  conflict between reform and
                                  security concerns




These intermediate links may be expressed in the following proposition:


Proposition 4: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the concentration of
domestic costs vs. the diffusion of domestic benefits, differences in domestic



                                                66
enfranchisement of pro-environmental and anti-environmental groups, and/or differences
in the relevance of the issue of reform to security concerns in confrontation with
international pressure for reform.




Approach 3: The emergence of external pressure as a consequence of transnational co-
operation and transnational links
Another set of factors addressed closely related to the «ecological interdependence»
approach focuses on processes that influence the emergence and content of pro-
environmental pressure on states. Young (1989) and Evans (1993) also open their
theoretical frameworks to what they call «transnational alliances». In Evans (1993:418)
definition of the concept, «transnational alliances» refers to groups that «may be
enfranchised only in one country and excluded from formal participation at the international
table, but the transnational alliances they form have an indirect impact on both sides of the
international game». While Evans includes transnational corporations as well as society
groups like NGOs into this term, the debate on the effects of transnationalisation and
globalisation on environmental reform tends to be separated by this distinction. The branch
dealing with transnational companies tends to focus on the negative effects of company
strategies   on   environmental      decision-making,   while   the   branch   dealing   with
transnationalisation of NGOs and media tends to focus on the positive effects of these
actors on environmental decision-making. As hypotheses which involve transnational
companies were discussed under the dependency-approach, the following discussion is
focused on transnational actors outside the business world.
       Transnational actors outside the business world attract considerable attention in the
literature on the international relations of the environment. In volumes like Hurrell and
Kingsbury (1992), Evans et al. (1993) and Risse-Kappen (1995), the implications of
transnationalisation for international relations theory and domestic public policy analysis
are outlined and discussed in relation to the environment and other issues. This focus in the
theoretical literature is complemented by several empirical studies. In the field of policies
related to forest management, there is a large number of authors (Arnt and Schwartzman



                                              67
1992, Hurrell 1992, Princen and Finger 1994, Rich 1994, Potter 1996, Lipschutz 1996) who
suggest that global links and networks that involve environmental NGOs have been
decisive factors in shaping international attention and pressure against various countries on
the tropical forest issue.
       Transnational links may be independent factors behind the emergence of
international pressure. In this way, their causal role differs from the domestic factors, which
influence the impact of international pressure. The influence of transnational links is
introduced as an independent variable, influencing states, societies and international
organisations to mobilise external incentives.
       Breyman (1993), Princen et al. (1994) and Moravcsik (1995:182) emphasise that
NGOs exert power and influence by defining agendas and facilitating the distribution of
information across national borders. Rather than influencing open conflicts by the use of
force or through bargaining, they exert influence on governments and international
organisations by directing public attention to issues overlooked or actively ignored by the
«political establishment». Thus, NGO exert power more by making potential conflicts
manifest than by influencing outcomes of manifest conflicts by bargaining or the use of
coercion. In other words, they exert communicative power, as I chose to call this aspect of
power in chapter two.
       When discussing the power of transnational links between NGOs, many contributors
link the agenda defining capacity of NGOs working across borders to their ability to
motivate states and international organisations to act. In international environmental
politics, states and international organisations usually act by distributing positive and
negative incentives to other states, groups of states and international organisations. Thus, in
the short run, agenda setting and issue definition are sources of power only to the extent that
they may motivate the distribution of positive and negative pro-environmental incentives by
states and international organisations.23 In the discussion, NGO failures and successes in
persuading international organisations and states to act have been tried explained by
pointing to several factors.




                                              68
       One explanation of varying successes of transnational links between NGOs has been
variations in intensity and duration of communication and co-operation between NGOs in
different countries. Eccleston (1996:74) suggests a typology of «global collaboration
methods among environmental NGOs» based on the intensity of contact and co-ordination.
Four basic styles are presented. They are ranked after intensity of collaboration.
«Networking» is based on publications or computer based information used passively. Open
access to the information flow is exploited. «Networks» imply more active exchange of info
through a co-ordinating secretariat. However, tasks are not very specific, and contacts are
more characterised by mutual boosting of morale than action towards specified targets. The
emphasis is on sharing of information rather than joint campaigns. «Coalitions» are single
event joint campaigns among diverse NGOs. There are attempts to introduce a division of
labour into most appropriate tasks. Coalitions have a relatively short life, depending on the
issue. «Alliances» represent the strongest degree of global contact and co-ordination.
Alliances imply long term allegiance to common ideals among trusted partners. Northern
partners have a firm and long-standing commitment to empower Southern NGOs. Alliances
are characterised by very regular consultation by fax, information technology and personal
meetings.
       In Eccleston’s view, stronger integration implicitly implies more power for NGOs
and more influence on governments. Though Eccleston does not specify the power
resources of NGOs very clearly, he mentions the importance of collecting and
disseminating information and thereby influencing international organisations and states
(Eccleston 1996:77-78). This aspect of NGO activity is pinpointed by Moravcsik
(1995:182) as very important for the emergence of international pressure in the field of
human rights. It is also noted by Risse-Kappen (1995:26-27) that such strategies of outward
linkage building are important alternatives for social groups when confronting powerful
states pre-disposed against their goals.
       If this interpretation of Eccleston (1996) is chosen, it could also be argued that the
ability of NGOs and their networks to transfer information might depend on domestic


23In the long run, NGO mobilisation may induce processes of learning in which states and international
organisations may change perceptions of their own interests. This aspect of NGO influence, which demands



                                                  69
factors. Most events of direct relevance to the forest environment take place at the local
level. Therefore, one could expect that high densities of transnational NGO co-operation
should be matched by high densities of contacts between the national and local levels to
facilitate the flow of information. In international environmental affairs that involve
problems in remote areas, and where environmentally problematic activities are widely
dispersed over large areas, updated information related to the ecological, social and political
dimensions of the problem tend to be scarce. Who are the most destructive exploiters?
What are the environmental effects of their practices? What does the government really do
to regulate their activities? All these questions may be answered with reasonable accuracy
when it comes to problems like sulphur pollution or ozone emissions just by analysing
readily accessible information on industrial structure, fossil fuel or CFC consumption and
various tax regimes. Environmental problems related to tropical forest management are
different. Much of the information on the environmental, social and political dynamic
aspects of this problem is not common knowledge, but often asymmetrically distributed to
only a handful of actors. Things happen in remote corners of the country, with small
representation of media or other distributors of information. A handful of actors, sometimes
including the government, may have a virtual monopoly of knowledge of the truth about its
own activities. The ability of governments and companies to keep their monopoly of
information and draw its own picture of the situation may greatly affect the development of
external pressure. If the poor are successfully blamed for damage in reality inflicted by the
government or its associates, or the government’s efforts are portrayed as more positive
than they really are, this may substantially influence the strength and content of
international demands and pressure.
        Links between NGOs at the local and national level may change this situation of
asymmetrical information. Links to local groups that may provide information on the
ground-level actions and strategies of government agencies and commercial actors are
crucial for the version of reality both foreign and national NGOs channel to the
international public.



studies of longer periods, is not addressed in this project.



                                                        70
          Princen et al. (1994) and Fisher (1993) focus on what could be called the national-
local dimension of NGO networking. Princen et al. (1994) also add two very interesting sets
of tasks addressed by NGO networks. According to them, the efficiency of transnational
NGO co-operation when it comes to influencing public policies in a country is not only
dependent on the density of transnational networks from the local to the global level.
       First, the ability of transnational networks to translate local claims to global issues is
of crucial importance. Problems related to environmental damage at the grassroot level may
mobilise grassroot groups primarily because of their economic interest in the sustainment of
their activities. By linking such local claims to global problems, and global problems to
such localised claims, local groups may be greatly empowered. Their struggle is perceived
as a struggle for global benefits at the local level, and the localised nature of global
problems is addressed in a more effective way (Stern et. al 1992).
       The ability of NGO networks to address and spread information on political as well
as ecological or biophysical aspects of local and national management is a second important
factor. Links that provide the external world with information not only on the nature and
extent of environmental damage, but also on political aspects like the effects of government
policies and the distribution of responsibility for problems, are assumed to be more
effective in increasing and shaping external attention. This is the case because such
information not only presents a problem, but also direct claims on the responsibility for
problems. These claims resemble Wilson’s (1980) conclusion that scandals are important
for the emergence of public pressure or Hannigan’s (1995:40-48) emphasis on the use of
verbal and visual imagery as a precondition for successfully presentation of environmental
claims.
       Thus, by combining insights from Eccleston (1996), Princen et al. (1994) and Fisher
(1993), the ability of transnational NGO linkages to influence pressure from actors external
to the state in question becomes dependent on three factors. First, the intensity or density of
transnational co-operation all the way from the local to the global level (Eccleston 1996).
Second, the ability of transnational linkages to interpret local problems in terms of global
and the opposite (Fisher 1993, Princen et al. 1994). Third, the ability of NGOs to distribute
information on environmental destruction which includes both scientific and political



                                              71
aspects (Princen et al. 1994). The first factor, which addresses the pervasiveness and
intensity rather than the content of NGO linkages, could be combined into one variable as
«density» of transnational linkages. The ability of NGO networks to interpret ecological
information in both local, global and political terms makes up the second important factor
that influences the ability of transnational NGO linkages to influence powerful actors
outside the state in question. While the first factor deals with the organisational strength of
transnational links, the second deals with the character of the message or information these
links provide to the international community.
       By combining these sources of NGO power and influence, which I specify as their
ability to influence the international agenda and trigger the mobilisation of incentives from
foreign states, societies and international organisations to countries, the following
combinations emerge:


TABLE 5: Combinations of variables that influence the ability of transnational actors to
trigger internal attention


                                    Ability to politicise information and
                                    interpret problems in global and local
                                    terms
                                              High           Low
         Density of                 Strong attention   from Weak       attention from
     transnational       High       foreign actors          foreign actors
        co-operation     Low        Weak attention     from Very weak attention from
                                    foreign actors          foreign actors




The combination of dense networks and high ability to politicise information and interpret
problems in global and local terms should be expected to produce strong international
attention to environmental destruction, and facilitate the emergence of external pressure.
The combination of high ability to politicise information and interpret problems in global
and local terms on the one hand, and low density of transnational co-operation on the other
hand, or the combination of high density of co-operation and low ability to politicise



                                              72
information and link global and local problems should be expected to produce a somewhat
weak external attention to environmental destruction. It is not possible to rank the
effectiveness of the two options only on theoretical criteria. The combination expected to
trigger least external attention, is the combination of low ability to politicise
information/link global and local problems, and low density of co-operation.
        The character of the particular issue, the strategies of particular NGOs and NGO
networks as well as the character of the polity of the state in focus may be expected to
influence the density, the degree of politicisation and the interlinking of global and local
levels that characterise concrete NGO links.
        Risse-Kappen (1995) has recently analysed the interconnections between the
domestic polity and transnational influences. His argument is that the stronger the
centralisation of the state and the weaker the society, the fewer entry points for
transnational influences into the domestic political system will be found, and the other way
round (Risse-Kappen 1995:14-32). Risse-Kappen’s framework is mainly focused on
preconditions for the entry of transnational influences like ideas into the political system,
and addresses preconditions for political learning and changes of the perceptions of state
interests among top government officials. I pay less attention to this view in the following,
as I argue that both the Indonesian and the Brazilian states were relatively centralised and
pre-disposed against the demands of the environmental movement.
        However, when confronting strong states not sharing the views of the social actors in
question, Risse-Kappen (1995-26-27) notes that channelling information out of the country
is an important strategic alternative for transnational actors. Risse-Kappen’s argument may
be used as a tool to explain variations in the flow of information in the other direction.
Risse-Kappen (1995:23-24) suggests that the strong-state situation may be typical for
authoritarian regimes in the third world. This argument may be linked to the claim of
Gourevitch (1978:909) that the intensity of transnational interaction is a variable influenced
by the openness of the domestic political regime, as authoritarian regimes are defined by
restrictions on democratic freedoms. 24 In turn, it could be asked whether openness, defined


24According to Rueschemeyer et al. (1992:43-44), democracy is defined by (1) the presence of free and fair
elections, (2) responsibility of the state apparatus to the elected parliament and (3) freedoms of expression and



                                                       73
as presence of democratic freedoms, could influence both the intensity or density of
transnational links and the ability of these links to politicise information, but this is a topic
for the empirical analysis.
        In the discussion of the power and influence of transnational networks and alliances,
I introduced a typology which basically deals with the ability of NGOs to channel
information that challenges the government’s definition of environmental problems to
actors outside the country. I suggest this as a prerequisite for the triggering of external
pressure, given that the environmental problems in question already receive high attention
on the international agenda. The ability of NGOs networks and coalitions to channel
information out of the country is suggested to be dependent on four factors. First two
organisational factors. These are the intensity of co-operation between domestic and
external NGOs and the intensity of links from the local to the national level. Second, two
factors related to the content and the character of the information channelled out. These are
the extent to which local problems are interpreted in the light of global problems and the
opposite, and the extent to which problems are politicised. The assumed causal chain
between transnational links and environmental reforms is illustrated in the following table:


TABLE 6: Factors that may influence the emergence of international pressure in favour of
environmental reform


  Density of transnational links        Strength   of      international      Strength    of   environmental
  and           degree           of     incentives                            reform
  politicisation/interlinkages
  between global/local level of
  information           transferred
  through transnational links


This may be condensed in the following proposition:




association as well as protection of individual rights against state action. A democracy is a political regime
where all three conditions are by and large fulfilled. An authoritarian regime fails to fulfil the two first
conditions, but fulfils the third condition. A totalitarian regime is defined by the failure to fulfil all three
conditions.



                                                      74
Proposition 5: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the densities of transnational
communication and co-operation between environmental NGOs from the local to the global
level, and their ability to link global and local problems and politicise environmental issues
in information channelled to the international community, thereby triggering international
pressure for reform.


To summarise, I have introduced some hypotheses that all have a situation of environmental
or ecological interdependence as their point of departure. First, I introduced positive and
negative external economic incentives as explanatory variables. Then, I looked at how
sensitivity and vulnerability to negative incentives as well as domestic costs of reforms
might influence government responses. I have also analysed in what ways domestic political
structures may influence a state’s response to external pressure. Finally, I introduced some
hypotheses on the factors that may influence the ability of environmental NGOs that co-
operate transnationally to trigger external pressure.
       However, though parts of the discussion has touched upon domestic structures as
variables influencing the willingness of governments to respond to external pressure, a
fuller discussion of domestic structures as independent explanatory factors should be
provided.


3.4. Explanations centred on the domestic bureaucracy
In political science, there was a renewal in attention to the state and its role in a variety of
areas during the 1980s (Evans et al. 1985). For developing countries, there has been a
special focus on properties of the state and their effects on differences in economic
development. A main focus in the debate has been on the state’s ability to foster economic
development linked to the construction of a bureaucracy with a certain degree of
independence or «autonomy» from social groups which interests are detrimental to
economic growth. However, a certain degree of state autonomy also implies that groups
within the state may have an effect on government decision-making more or less
independent of actors outside the state. This link between state autonomy and the analysis



                                              75
of government decision-making as the outcome of inter-state struggles is well established in
analyses of policies in industrial countries. Poggi (1990:133) connects increased state
autonomy to the huge increases in state tasks that follow in the wake of economic
development. Though Poggi’s argument is clearly based on observations of the role of the
state in advanced industrial societies, there is a second strand of literature that emphasises
the role and influence of the state and bureaucratic bodies also in cases of economic
underdevelopment.
        Martinussen (1991:14, 24-29) argues that state-centred approaches are particularly
relevant to the analysis of decision-making in developing countries. His argument is based
on the assumption that the societies of developing countries are much weaker politically
than advanced industrial societies. The contrast between the well-organised states and
frequently disorganised, post-colonial civil societies of these countries provides the state
with a comparatively high ability to determine its own goals.25 This ability to determine its
own goals may be high under both democratic, authoritarian and totalitarian regimes due to
a lack of organised societal interests. It should also be noted that this autonomy from
societal groups may be high even though state autonomy on the international arena may be
severely constrained by international economic and political structures.
        O’Donnell (1973) frames a second argument in favour of increased attention to the
internal politics of the state in developing societies. According to O’Donnell, increased
autonomy of the state may be the outcome of structural characteristics of the process of
industrialisation. Some phases of heavy industrialisation may require the centralisation of
decision-making in a few government agencies without interference from societal groups.
        A third argument in favour of a state-centred approach to public policies in
developing countries is the autonomy that a state may derive from intensive class-conflicts
(Barkey and Parikh 1991:534). Such events preceded the emergence of bureaucratic
authoritarian states in Latin America. Here, social polarisation and conflict rather than lack
of cohesion of societal forces provide the state with the necessary leeway to extend its
capacity of self-determination.



25For a similar argument, see Mouzelis (1986).



                                                 76
        A fourth situation that may facilitate the state’s ability to set its own goals and
increase the relevance of state-centred analyses of domestic policy-making is when the
state’s resource structure is such that it is independent of extraction of revenue from society
(Barkey and Parikh 1991:540). This situation may be typical for states that control large
mineral resources, rentier states in Barkey and Parikh’s terminology, with Saudi Arabia,
Kuwait and the Emirates as extreme cases.26
        Increased state autonomy often goes hand in hand with state expansion. Increasing
numbers of state tasks and agencies may increase bureaucratic heterogeneity. Some
agencies may develop their own political interests and goals, and try to influence the actual
course of public policies in their own right. This may be relevant to such diverse public
activities as legislation, the budget, or critical decisions made by the government. Various
agencies may become bearers of their own particular culture and distinctive, self-regarding
interests.
        Allison (1971:144-184) gives a systematic description of key assumptions of the
governmental or bureaucratic politics paradigm. The basic unit of analysis is governmental
action as political resultant in the sense that (Allison 1971:162): «…what happens is not
chosen as a solution to a problem but rather results from compromise, conflict, and
confusion of officials with diverse interests and unequal influence, political in the sense
that the activity from which decisions and actions emerge is best characterised as
bargaining along regularised channels among individual members of the government».
Main actors in focus are groups of players employed by the government; officials in
positions. Their positions are determined by the parochial interests of individuals and
agencies. Each player has impacts on results determined by his or her power, which is a
blend of bargaining advantages, skill and perceptions of these power resources among other
players.
        But though the bureaucratic-politics approach is focused on the perceptions and
preferences of the staff of state agencies as well as indicators of their power and influence,
the issue of environmental reform does not provide any receipt for selecting bureaucratic
organisations for analysis. Environmental issues and policies are highly complex and often

26For a similar point, see Elsenhans (1984:58-65).



                                                     77
relevant to a multitude of sectors and interests. Environmental policies cannot be analysed
in the same way as in the analysis of economic policies or security policy, where certain
ministries and the central bank are obvious candidates. Environmental issues related to the
management of tropical moist forest land are good examples of this. Such areas may be of
interest to government agencies both because of their relevance to state security and the
national economy. Economic use of these areas may vary widely, from logging to
alternative land use like mining, pasture or cropland.
       It is certainly necessary to include the power and influence of environmental
agencies. However, in addition to these, other agencies with activities relevant to
commercial activities in forest areas like infrastructural planning, military agencies,
regional development agencies and agencies with a responsibility for native populations
also deserve attention to the extent that they demonstrate activity and develop independent
positions on the issue. This ad hoc position on the selection of agencies is motivated by the
fact that the institutional structure that may respond to the demand for environmental
reforms differs between the cases due to differences in institutional traditions and variations
of predominant commercial activities in forest areas.
       The explanatory proposition derived from this is the following:


Proposition 6: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the balance of power and
influence between domestic pro-environmental and anti-environmental agencies.


3. 5. Explanations focusing on domestic societal actors
Environmental issues and issues relevant to natural resource exploitation frequently trigger
strong political responses among non-state actors. Reforms may be difficult due to
particular configurations of costs and benefits on the domestic arena. Environmental
policies often decrease risks or damage for large and unorganised sections of the
population, but increase costs for small but well-organised economic interests (Wilson
1980, Heidenheimer et al. 1990:330-337).




                                              78
       Particular problems may arise if environmental demands challenge existing
configurations of costs and benefits described as client politics by Wilson (1980:369).
Client politics emerge when (Wilson 1980:369): «Some small easily organized group will
benefit and thus has a powerful incentive to organize and lobby; the costs of the benefit are
distributed at a low per capita rate over a large number of people, and hence they have little
incentive to organize in opposition – if, indeed they even hear of the policy». This situation
may encourage the government to satisfy particular economic groups at the expense of the
larger public by (Wilson 1980:369): «…backstairs intrigue, quiet lobbying, and quick
passage with a minimum of discussion». Thus, according to Wilson, an unequal interest
distribution produces inequalities in organisational incentives. In turn, this may induce
particular forms of co-operation between commercial interests and the government.
       Such configurations of interests and following co-operative arrangements between
the business sector and authorities may be strong barriers to reforms if these imply the
removal of privileges previously acquired by small and well-organised groups, even if
benefiting larger groups. Many environmental proposals, which often address gains from
avoidance of potential threats, confront such configurations of interests and co-operative
arrangements. Wilson (1980:370) calls this situation entrepreneurial politics, indicating
that the prospects for regulatory change are dependent on the existence of political
entrepreneurs who are able to transcend the situation by focusing public attention towards
potential benefits and galvanise public opinion against the well-organised minority. Wilson
tends to pay more attention to variations in entrepreneurial skills than the factors that
influence the distribution of power and influence between potential beneficiaries and
potential payers. The distribution of power and influence is of high importance when
analysing policy change in developing countries, as greater variations in political structures
tend to produce greater variations in the durability and strength of partnerships between
state and client economic interests likely to suffer from reform. Greater variation in political
structures also leads to greater variation in the barriers to organisation and protest among
the populations who perceive themselves as potential beneficiaries of reform.
       Historically, asymmetries in the distribution of costs and benefits have characterised
many environmental problems connected to the use of forest land. Powerful and well-



                                              79
organised logging and agricultural interests have often been able to keep on with activities
that have undermined the existence of other groups by causing widespread soil erosion or
watershed destruction. In some cases, this has gone so far that whole societies have
experienced economic decline. A good historical example may be the consequences of the
sugar industry in terms of deforestation. Powerful and well-organised sugar producers were
able to destroy the lush forests of Cyprus, Madeira, Northeast Brazil, Haiti, Barbados and
large parts of Cuba in spite of the serious consequences in terms of land degradation
imposed on most other inhabitants and the local economy (Perlin 1989). In these cases,
colonial political structures provided business interests with easy access to the government,
while blocking large local populations suffering from environmental and economic damage
from political access.
       However, countervailing societal forces also exist. Historically, there are several
cases in which deforestation and forest depletion have provoked massive social protests
from already established users of forest land, or users of land which quality has been
dependent on the maintenance of neighbouring forested areas. The resource-conservationist
movement in the US around the turn of the century is a good example. The rapid
deforestation and natural resources degradation that took place in the US during the 19th
century created increasing unease among government officials as well as farmers. The
conservation movement which responded to this situation by introducing measures for
forest protection and more rational exploitation was spurred by the consequences of
reckless deforestation for farmers, wood-dependent industries and water supply (Mather
1990:44).
       In addition to mobilisation from people directly dependent on the state of forests,
other motives for forest preservation have also gained momentum over the last 150 years. In
both Britain and the US, groups interested in the preservation of forest areas for amenity,
ethical and esthetical purposes emerged before the turn of the century. These groups
particularly mobilised in favour of species protection and landscape conservation for non-
economic purposes (McCormick 1988:2-50).
       The increasing perception among industrial societies that an international or even
global environmental crisis was about to emerge from the 1960s led to strong mobilisation



                                             80
among both these varieties of environmental organisations. While traditional environmental
organisations interested in nature protection increased their membership, the same was the
case with groups of activists and scientists that perceived the new environmental crisis in
terms of global over-exploitation of natural resources. The publication of the first report of
the «Club of Rome», the famous Limits to Growth from 1972, is an important example of
the last trend (McCormick 1988:133).
       The discovery of genuinely global environmental problems, like biodiversity loss
and the greenhouse effect, during the 1980s has led to a certain integration of these two
tendencies. Both organisations working in favour of nature protection and those promoting
a more sustainable use of natural resources, like forests, found a common agenda in these
problems. As tropical deforestation and forest depletion is an issue with relevance to both
problems, this issue attracted much attention from environmental organisations during the
late 1980s. This tendency was certainly very strong in Europe and the US, but several
environmental organisations also in developing countries increased their attention towards
this. The emergence of environmental non-governmental organisations preoccupied with
global environmental problems during the 1980s has attracted a lot of attention (Caldwell
1992, Fisher 1993, Princen et al. 1994). However, it is important that the emergence of such
organised interests opposing well-organised groups with a strong interest in resisting
environmental reforms may imply the transition to a far less predictable political situation
in which reforms become more likely. This is particularly the case if larger groups perceive
their interests as furthered by the pro-environmental party.
       As mentioned above, while Wilson implicitly focuses on variations in
entrepreneurial skills as an explanatory factor behind changes of policy areas dominated by
client politics, I also want to look at some structural characteristics that influence the
strength and durability of client politics when confronting domestic political challenges as
well as structural characteristics that influence the possibility of the emergence of
entrepreneurial politics. Empirically, this is an invitation to focus more closely on social
and political structures that influence the ability of commercial interests and pro-
environmental interests to influence government decision-making.




                                              81
Environmental Non-Governmental Organisations
Among environmental NGOs dealing with issues related to the management of forest land
in developing countries, it seems to be at least two types that are of special interest.27 The
first is what I loosely call Western style middle class organisations focused on conservation
and nature protection. Such organisations have existed for a long time in several developing
countries. Traditional protection issues, like the establishment of national parks have
dominated their agenda. During the 1980s, the agenda and activities of these NGOs have
been redirected towards global environmental problems, particularly biodiversity
protection. As this issue has a strong focus on the establishment of conservation units,
existing activities needed only moderate redirection to be adapted to the emerging global
environmental agenda.
        In the literature on environmental NGOs, such nature conservation organisations
receive less attention than a second type of environmental NGOs that emerged during the
1980s. This second type of NGOs that became involved in pro-environmental campaigns


27There is a broad debate on the definition of the term NGO. Here, I include international, national and local
non-profit organisations with an agenda dominated by environmental considerations in the concept. Thus, the
concept includes both transnational organisations like WWF, national organisations and networks both of the
classical conservationist variety, new national grass-root-support organisations, and local grass-root
organisations. There have been attempts to identify grass-root organisations with «the people» or «civil
society» in general, but such attempts have been highly problematic. «Civil-society» is not necessarily a pro-
environmental term. As pointed out by Bebbington and Riddell (1995:881-882), a chamber of commerce,
confederation of industrialists is as much «civil society» as an NGO with laudable objectives in terms of
human rights or the environment. Also the rhetoric surrounding the congruence of environmental NGOs and
the needs of «the people» or the «grass-root» needs refinement. Terms like the «grass-root» or «the people»
may include local groups with an interest in environmental protection as well as groups with more destructive
interests. Placer-miners contributing to poison forest environments, small farmers clearing forest for
agricultural purposes and local loggers are as much «the people» or the «grass-root» as indigenous populations
interested in forest conservation. Thus, when speaking about the involvement of the «grass-root» or «the
people» in forest protection, the real meaning is usually the involvement of local interest groups with a special
interest in forest conservation. The question of the inclusion of business organisations is a problematic point.
In most of the literature, grass-root organisations with a clear economic interest in tropical moist forest land,
like rubber-tappers or hunter-gatherers, are included, while associations of loggers or ranchers with economic
interests in the same pieces of land, but less environmentally benign economic goals, are excluded. Thus, the
degree of compatibility between economic and environmental claims seems to be more important than the
profit-non-profit distinction in the use of the term «environmental NGO». It is also difficult to use the
distinction between «people» and state/business actors in this context (Nerfin 1987). This is because several
small-scale commercial actors operating in forest areas, like local loggers, placer-miners and farmers who by
all standards belong to «the people», are profit-seeking individuals who build organisations with a strong anti-
environmental agenda. In contrast to this, big business interests have in several cases established pro-
environmental organisations. Thus, a liberal use of the term «environmental NGO» as a non-state organisation
established with special reference to environmental problems seems to be the only conceptual solution.



                                                      82
from the 1980s, usually consists of established, low-impact users of the forest. Given that
some sort of locally based exploitation of resources in forest areas often precedes the onset
of large-scale exploitation, conflicts between commercial exploiters, government officials
and established users of forest areas frequently emerge. Particularly in cases when
traditional regimes for exploitation of forest land are combined with low population
densities, local interests may be in harmony with global or other environmental claims
(Poore and Sayer 1991:57-59).
       Conflicts with commercial interests over control over forest land frequently trigger
organisational responses among populations making a living from such already established
modes of exploitation (Silva 1994, Princen et al. 1994). Over the last decade, many such
grass-root groups in developing countries have joined hands with human rights and
environmental NGOs. As a consequence of this, the line between local grass-root and urban
middle-class activism has been increasingly blurred. Traditional, conservation-oriented
NGOs still expand and thrive, but there has been increasing co-operation between grass-
root organisations and grass-root support organisations (abbreviated as GRSOs by Fisher
1993), which assist grass root groups in organising themselves (Fisher 1993). While the
agendas of larger, national NGOs are focused on global environmental problems like
biodiversity loss and climate change, local groups protesting against deforestation and
forest depletion often increase the visibility of links between government policies, local
conditions and environmental change.
       However, local claims often have an economic origin. They are not primarily
focused on considerations for ecosystems and the implications of ecosystem destruction for
the global environment from the outset. However, local economic claims, which often
imply protection of forests and established regimes of low-impact exploitation, fit well into
the global environmental claims of large, well-organised NGOs. In the context of Wilson’s
theoretical framework, such coalitions represent a mixture of interest group politics, which
emerges when costs and benefits are concentrated on separate groups, and entrepreneurial
politics. From an organisational point of view, local groups may become able to transcend
serious local organisational barriers linked to poverty and repression by local strongmen by
accepting the assistance of well-organised, regional or national NGOs. In addition, the



                                             83
larger NGOs may profit from the political coalitions, and more concrete, often colourful
and visible, content that co-operation with local groups may offer.
         In the context of this project, I do not want to go into the debate on the explanation
of the emergence of NGOs as a general social phenomenon. The three types of NGOs
mentioned above are presented only as a descriptive, crude typology. My research question
is whether the contrast between our cases may be explained by pointing to a difference in
NGO power and influence over the domestic political process.
         From a conventional point of view, the influence of NGOs may be analysed as direct
power and influence on decision-making processes. By commanding political resources like
electoral support, NGOs may function like or even become political parties involved in
bargaining over environmental policy outcomes. NGOs and prominent NGO leaders may
also be incorporated as formal or informal advisors to the government and exert influence
by introducing arguments and ideas into government discussions.
         However, as already mentioned, several scholars claim that the major power
resources of NGOs are connected to their ability to influence the political agenda rather
than their ability to further their interests through political bargaining or participation in
advisory groups with government officials.
         Breyman (1994:124-128) suggests that the most important instrument in terms of
power and influence controlled by NGOs is their ability to challenge existing ideologies and
put new issues on the agenda. Princen et al. (1994), as mentioned, argue similarly when
they suggest that a very important dimension of the activity of environmental NGOs is their
ability to «politicise biophysical problems» and to link global and local issues when dealing
with environmental problems. This implies that a key power resource of NGOs is connected
to their ability to challenge existing political agendas and influence the focus of the public
discussion and broader ideological trends, what I called the communicative aspect of power
above.
         The distinction between the conventional view on power on the one hand, and the
communicative view on power on the other hand, fits well into Wilson’s typology. One of
the characteristics of client politics is that decisions are pushed through as quick
arrangements without public discussions about negative consequences. A main aspect of



                                               84
NGO power is to inform the larger public about the consequences of such arrangements in
terms of potential gains and actual losses. If Wilson’s typology is linked to insights and
concepts in the tradition of power research, it could be said that one of the main
preconditions for the emergence of entrepreneurial environmental politics is the ability of
the environmental movement to introduce non-decisions on the environment into the sphere
of open public discussion.28 This is perhaps a theoretically reflected version of Princen et
al.’s (1994) claim that a main source of NGO power is their ability to «politicise
biophysical problems».
        At the domestic level, this aspect of power, which I choose to call the
communicative aspect, is dependent on the political structures environmental NGOs operate
within, as well as the political sensitivity of the environmental issue itself. More
specifically, if airing of potential conflict and agenda definition is a main instrument of
power, the exercise of this power is dependent on the barriers to the public airing of policy
conflicts. Environmental problems connected to the commercial use of tropical moist forest
land often involve powerful economic interests. This implies that NGOs may be dependent
on protection from such interests to be able to put both the ecological and political
dimensions of environmental problems on the political agenda. Freedom of speech and
association is the right of protection that is essential in this case. Tilly defines rights in the
following way (Tilly 1992:10): «Rights exist when one party can effectively insist that
another deliver goods, services, or protections, and third parties will act to reinforce (or at
least not hinder) their delivery. Such entitlements become citizenship rights when the object
of claims is a state or its agent and the successful claimant qualifies by simple membership
in a broad category of persons subject to the state’s jurisdiction.»
        Thus, Tilly interprets the existence of freedom of speech and association as a crucial
political resource controlled by citizens. This resource is a precondition for the exercise of
the kind of power described above. The existence of the rights of freedom of speech and
association is not the same as democracy. According to Rueschemeyer et al. (1992:43-44),
democracy is defined by free and fair elections of representatives by universal and equal


28 According to Bachrach and Baratz (1970:44), among the classics of power research, a non-decision is
defined as «(-) a decision that results in suppression or thwarting of a latent or manifest challenge to the values



                                                       85
suffrage, responsibility of the state apparatus to the elected parliament, and freedom of
expression and association. The right of free speech and association may exist both in fully
democratic regimes, in authoritarian regimes, which are defined by the absence of free
elections and the absence of state responsibility to the elected parliament, and in liberal
oligarchies, where elections are constrained, but there is state responsibility to the elected
parliament (Rueschemeyer et al. 1992). Thus, this political resource may be controlled also
by the inhabitants of some non-democratic regimes.
        Payne (1995), who argues in favour of a generally positive connection between
democracy and environmental improvements, also supports the view that freedom of speech
and a free flow of information is a fundamental precondition for the formation of
environmental pressure groups and following environmental policy change. Payne identifies
a number of other benign effects of democracy for the environment. A free press and
organised interest groups and other pro-environmental social forces may exploit the higher
responsiveness of democratic regimes. The openness of democracies makes them better
learners than non-democracies as openness advances the flow of information about
problems and possible solutions. Democracies may be expected to be more willing to
participate in global environmental co-operation as democracies will be more sensitive to
rule and norm compliance. Payne’s final argument, which is of less importance to my
project, is that an open market economy, which he considers as an essential feature of any
democracy, creates optimal incentives for environmental reform.
        Clark (1993) introduces a similar argument. According to him, a policy environment
that encourages NGOs must include that the right to associate is respected and protected by
the law.
        The basic factor underlying most of these arguments is the existence of freedom of
speech and association. In Tilly’s perspective, a higher responsiveness by governments
reflects a more powerful population in terms of its right to exert pressure on the
government. A free flow of information on environmental problems is to some extent just
another label on the right of free speech. Higher sensitivity to rule and norm compliance



or interests of the decision maker».



                                             86
may reflect a higher likeliness of and sensitivity to public protest in cases of non-
compliance.
       Potter (1996) disagrees with the claim that NGO power is dependent on democratic
freedoms. In a comparison of environmental NGOs in India and Indonesia, he finds that
several strategies available for NGOs also in strongly authoritarian regimes like Indonesia.
It is possible to reconstruct his argument with reference to Tilly’s framework. NGOs in
Indonesia, though meeting harsh repression and acting with considerable risk, are able to
enlarge the political space for environmental protest. Even when losing cases against
powerful logging companies, the political recognition involved in letting an NGO sue the
company may be highly remarkable in a regime like the Indonesian. Thus, political space
for protest may exist even in cases of strong repression.29 This is a reminder that the
theoretically derived hypothesis about the effects of barriers to NGO activity has to be
demonstrated empirically.
       How should empirical evidence on this aspect of NGO power be collected in the
analysis of the contrast between our two cases? Before examining empirical evidence on the
effects of the «freedom of speech» variable, the two regimes in question should be
examined regarding their general openness. To what extent do they guarantee the freedom
of association and the airing of critical information on government policies? The next
question that should be addressed is whether there are important differences in the political
sensitivity of a public debate on the environmental policies. Insensitive issues may be
discussed openly in any political regime. However, if the top levels of government and/or
big business are actively involved in economic exploitation, freedom of association and
expression becomes more crucial as a precondition for NGO mobilisation.
       Also more obvious structural factors have been suggested to influence NGO success
and failure. One of these is the degree of unity within the environmental movement.
Cleavages between various groups of environmental NGOs may be supposed to weaken the
environmental movement against the government. There are several potential cleavages in
the environmental movements of the third world.




                                             87
        With special reference to Brazil, Goldstein (1992) claims that the diffusion of
considerations for global environmental problems from Europe and the US have motivated
the emergence of a strong middle- and upper class environmental movement in developing
countries. However, this movement has largely failed to recognise the environmental claims
of urban dwellers, suffering from heavy local pollution, problems of water safety and
sanitation. Consequently, the outcome has been a divided environmental movement. One
relatively small middle-class section dealing with global environmental problems, and a
larger, but less well-connected and well-financed grass-root movement addressing local
urban and rural environmental problems connected to under-consumption of safe drinking
water, sanitation services and proper housing.
        Another source of cleavage within the environmental movement may be the
relationship to the government. While some NGOs may choose to work tightly with the
government or local authorities to gain access to benefits and proximity to channels of
influence, but risk co-optation, other NGOs may choose to distance themselves to
government to retain political independence and self-determination. Indro Tjajhogo, leader
of the Indonesian forest-related NGO SKEPHI, experienced such cleavages with local
NGOs when protesting against the establishment of a pulp and paper company at Irian Jaya.
Local NGOs were more preoccupied with gaining access to funds involved in the project.30
The campaign only became a success for SKEPHI after linking up with external NGOs.
Though the choice of strategy along this dimension is a dilemma for all NGOs, the
movement as such may be weakened if it separates along this dimension. As NGOs also
have the ability to dust governments with legitimacy, the government may benefit greatly
from being able to point to groups of more co-operative NGOs when facing the criticism of
those who have remained independent.
        To summarise, I have listed up three indicators on NGO influence on policy-making.
First, the degree of direct inclusion of NGOs in government bodies that advice or make


29Tilly (1992) emphasises that even lost battles against a government may involve a certain increase of
freedom for the opposition. By protesting, opposition groups may tell the government that there are limits to
its power.
30«Interview          with       Indro       Tjajhogo»,       Multinational       Monitor,          internet:
http://essential.org/monitor/hyper/mm1193.html. November 1993.



                                                     88
decisions on the management of tropical forest land. Second, the degree of influence over
the political process by controlling important political resources, particularly votes. Third, I
have focused on the ability of NGOs to influence the national political debate by
introducing new environmental issues on the agenda. I have discussed how these aspects of
power and influence may be influenced by cleavages within the environmental movement,
and possible sources of such cleavages. I have also discussed how the extent of freedom of
speech and association may influence the ability of NGOs to influence the public agenda
and contest the policies and management strategies of business actors and the government.
       However, the success of NGOs to influence policies is not only dependent on these
factors, but also on the power and influence of the hostile business interests they often
confront. With reference to my interpretation of Wilson’s theory it could be said like this: If
client politics are strong and durable, even strong and successful mobilisation of political
entrepreneurs may fail to produce environmental reform,


Business interests operating on forest land
Societal groups trying to resist environmental reform is the other group of actors in focus
under the societal approach. Most of the business groups described in the next chapters try
to resist environmental reforms by influencing the government. This implies that variations
in the power and influence of business groups on decision-making on the management of
forest land is a central factor that can be employed to explain differences in outcome.
       The first argument on the anti-environmental influences of private companies deals
with the degree of control over economic or political events or goods of interest to the
government. If companies or groups of companies that want to curb environmental reforms
control important economic resources like employment, foreign-exchange generation or tax
income, it may be difficult for the government to adopt measures that threaten the
profitability of individual businesses or business sectors that deliver these goods. By doing
this, a government may undermine its own fiscal basis, or even its electoral support. This
argument is the same as the argument on the costs of reform argument under the
dependence and interdependence approaches, but somewhat broader, as it also involves the
potential political costs of policy change. Several scholars have focused on the high value



                                              89
of electoral support and party contributions for companies trying to avoid or shape policy
change (Stigler 1971). However, in third world settings, electoral support and campaign
contributions are not the only political resources exchanged between governments and the
business sector.
       Business concessions, licenses, financial benefits or jobs are often distributed in
exchange for personalised political support necessary for the survival of governments or
individual rulers. Such arrangements may make a ruler so dependent on the political loyalty
of certain business groups that regulation of business activities by the state may become
difficult or even impossible if regulation involves any kind of costs for the party in focus.
This often reflects inability of governments to penetrate society and enforce binding rules
on powerful individuals and groups. Military leaders, regional leaders or leaders of religious
or ethnic groups may be so strong that they are able to threaten the government in cases of
conflict.
       Political systems in which such partnerships are widespread are usually described as
patrimonial or neopatrimonial. The term «patrimonialism» is taken from Max Weber, who
understands patrimonial domination as one of three different but strongly interconnected
forms of traditional domination.31 The other two are patriarchal and feudal domination.
       Patrimonialism is defined by an informal, personal relationship between ruler and
servant sustained both by material rewards and personal loyalty (Medard 1996:79-80). The
distinction between the private and the public sphere is confused as government powers are
treated as private rights. The increasing popularity of the term is inspired by the fact that
several political systems in the third world are characterised by a similar confusion between
the private and public spheres.
       However, to distinguish present political practices that resemble Max Weber’s term
from the historical setting that Weber refers to, the term neopatrimonialism has been
introduced. Medard (1996:84) understands neopatrimonialism as a descriptive term adapted
to hybrid political systems involving both bureaucratic and patrimonial characteristics. This
is also the case for most of the other scholars who employ the term. Neopatrimonialism
usually describes existing political systems in which the distinction between private and




                                             90
public is blurred without strict reference to Weber’s term. Bratton and Van de Walle
(1994:458) describe the essence of neopatrimonialism as «.... the award by public officials
of personal favours, both within the state (notably public sector jobs) and in society (for
instance, licenses, contracts and projects). In return for material rewards, clients mobilise
political support and refer all decisions upward as a mark of deference to patrons». For
Bratton and Van de Walle, neopatrimonialism is essentially a strategy of political survival
by the ruler. The element of personal loyalty between ruler and subject is less pronounced
than the exchange of material benefits, a tangible contrast to Weber’s concept
patrimonialism as a variety of traditional domination. Arrangements between politicians
and private interests in neopatrimonial political regimes might be interpreted as extreme
cases of Wilson’s (1980) client politics.
        Rudolph and Rudolph (1979) remark that neopatrimonial relations exist in most
political systems. Neopatrimonial relations may provide a counterweight to the alienating
effects of bureaucratic rationality. As a response to this, Bratton and Van de Walle (1994)
suggest a distinction between political systems in which neopatrimonial practices occur,
including most political systems, and political systems where neopatrimonial practices are
at the core of politics. According to Bratton and Van de Walle (1994), the last group
includes most African states, Haiti, the Philippines and Indonesia. This understanding of
patrimonialism and neopatrimonialism gains from the fact that it transcends simplistic
dichotomies between blatantly corrupt and stringently bureaucratic rule.
        Other contributors focus on the point that relations between the ruler/government
and society that largely resemble what is presented as neopatrimonial may vary with the
policy areas or state agencies in question. Grindle (1980) suggests in a similar way that
policies that produce collective benefits (like economic growth) are much less likely to
meet opposition than those which produce divisible benefits (like land allocation).32
        Rulers may also combine strategies according to their own political priorities. In her
analysis of the implementation of president Kubitschek’s highly successful «Target Plan» in
Brazil during the 1950s, Geddes (1994) demonstrates how a small but highly professional


31 The following presentation of Weber draws heavily on Medard (1996).
32 Lowi (1964) is a main inspirator in this field.



                                                  91
bureaucratic segment was insulated from clientelist practices to bolster the state’s capacity
to carry out the plan. The rest of the state-apparatus was left open to corruption and
clientelism to appease powerful groups.
       Many observers of Indonesian politics point to similar «combined strategies» in the
country since the establishment of Suharto’s regime in 1965. While a small group of
professionals manage macro-economic policies, other policy areas are characterised by
rampant corruption and clientelism (Liddle 1992:801).
       It is also possible to make a distinction between neopatrimonial polities in which
larger parts of the population is given some share of government spoils, and neopatrimonial
polities in which only privileged minorities have access to such benefits. Lemarchand
(1988) introduces such a typology. He links the strategy of distributing offices and contracts
in exchange for political support to democratic post-colonial polities in which the ruler is
dependent on elections and votes. Lemarchand calls this mode of exchange of benefits
patronage. Patronage implies that the ruler’s demand for democratic legitimisation involves
a substantial number of voters as receivers of benefits. Following the demise of democratic
rule, however, the system of exchange of benefits becomes increasingly characterised by the
exclusionary distribution of benefits to powerful groups like military or ethnic leaders.
Lemarchand (1988) calls this increasingly exclusionary and centralised mode of benefits
distribution prebendal. When prebendalism pervades the political system, it resembles what
Evans (1989) calls a predatory state. In the predatory state, the division between private and
public interests is totally dismantled, and all material benefits within the reach of the state-
apparatus are available for the unchecked appropriation of the ruler and his fellows. Evans
prime example is Mobutu’s cleptocracy in Zaire.
       In the context of this project, the relevance of neopatrimonialism is that such
political systems may provide some privileged economic interests with extraordinary access
to government decision-making and a corresponding incentive to the government to avoid
environmental reform. The negative incentives to the government are created by the nature
of regulation. The formation and enforcement of many regulations of economic activities
established to ensure the existence of public benefits like certain environmental standards
might decrease the private profits from the regulated activity. If the people who control the



                                              92
profits of this activity have received this control as a private, political privilege to ensure
their support to the ruler, the enforcement of regulations of this activity may become very
difficult as it may imply political or even personal risks. It becomes difficult for state
agencies to enforce the law, as there are important political and social relations above the
law. These relations may include larger sections of the population, but in many cases, they
involve only the ruler and some cliques of importance for the ruler’s survival, like military
units. This situation is well described by much of the previously mentioned literature.
       However, from the point of view of the government official charged with the task of
implementing rules, other subtypes of neopatrimonial rule may also present extraordinary
obstacles. In predatory states, rulers and their associates have virtually unchecked access to
the benefits of power, and dominate the business sector. In such situations, enforcement of
regulations does not imply any political risk for the ruler, since the bulk of the population is
powerless, and the ruler’s associates are heavily dependent on his support. However, for
any government agencies formally charged with the enforcement of regulations, it may be
virtually impossible to challenge the ruler and his associates. When power is so strongly
centralised, the ruler may have more freedom to initiate policy change. Political outcomes
become dependent on the ruler’s willingness to choose reform at the expense of self-
enrichment. Regulatory agencies are also in this situation powerless against the ruler and
his associates, but the ruler’s monopoly on power provide him with a stronger autonomy to
choose between personal greed and other considerations.
       In both situations, policy change is hampered by the peripheral role of written laws
and instructions. Neopatrimonial systems are bureaucratic to the extent that written laws
and regulations exist, but patrimonial in the sense that these regulations are easily ignored
and evaded in cases in which personal ties are involved (Medard 1996).
       It should also be noted that neopatrimonial relations often permeate regulatory
agencies. Thus, neopatrimonial relations do not only impair the ability of agencies to
implement written rules, but also their willingness or motivation to implement regulations.
The key mechanisms here are absence of government backing of implementing agencies
and absence of meritocratic and transparent recruitment procedures. From the point of view
of the privileged business interest, a strong ability to control recruitment procedures offers a



                                              93
double advantage. First, jobs can be used as rewards to loyal clients. Second, the
appointment of loyal clients in key positions will increase the ability of any company to
influence the implementation of written laws in its area of economic activity enormously.
Migdal (1988:256) pinpoints these mechanisms: «…many strongmen have captured parts of
states. They have succeeded in having themselves or their family members placed in critical
state posts to ensure allocation of resources according to their own rules, rather than the
rules propounded in the official rhetoric, policy statements, and legislation generated in the
capital city or those put forth by a strong implementator.» This is a complementary strategy
to that of direct lobbying and threats. If the ground level of implementators is captured in
this way, business interests control both decisions at government level and their
implementation.
       Another important aspect of neopatrimonial regimes is that they often demonstrate
authoritarian or totalitarian characteristics. The unbinding character of written laws and
other checks on government authority is reflected in the risks connected to criticism against
the activities of the ruler or his associates. Thus, critical reports on environmental damage
done by these groups will often be kept outside the public debate and remain partially or
fully undisputed. This links up to our previous discussion of the power and influence of
environmental NGOs in the domestic political system. If no third party protecting
environmental NGOs from government repression exists, their ability to influence the
government by criticising its policies and providing alternative views on the ecological and
political dynamic behind environmental destruction may be greatly reduced. The very same
system that gives selected companies privileged access to decision-making may strip NGOs
of one of their most important channels for political influence on the domestic arena.


Summary
The point of departure for this section was Wilson’s essay on the politics of regulation. It
was argued that proposals for environmental reform often face domestic configurations of
interests that may impede policy change. These configurations are particularly difficult to
overcome when already existing configurations of interests in policies in focus for reform
are bolstered by established routines of «client politics». «Client politics» may become



                                             94
strong impediments to reform, particularly when the private interests favoured by such
arrangements control important political assets. By interpreting Wilson with particular
reference to third world contexts, I argue that client politics may be particularly durable
obstacles to reform in these countries. In neopatrimonial regimes, commercial interests may
have firmer control over a wider spectrum of political resources than what is usual in
Western democracies. Extraordinarily high control over regional votes through pervasive
and durable clientelist links between regional political leaders and regional populations or
command of military units independent of the central government may be powerful political
assets that may impede reforms. In extreme situations, described as prebendalism or
predatory states, in which the ruler exerts very high and centralised control over all his
potential enemies, the economic interests of the ruler himself, his family or business
associates may be the most important impediments to reform.
       However, in addition to the strength and durability of client politics, I also focus on
factors that may impede and facilitate the transition from client politics to entrepreneurial
politics. I argue that environmental NGOs are most likely to be political entrepreneurs in
environmental politics. Environmental non-governmental organisations are divided into
traditional, conservation oriented NGOs that increasingly focus on global environmental
problems, new local organisations of established forest users, and grass-root support
organisations supporting their claims. NGOs and coalitions of NGOs may influence policy
outcomes by controlling votes, by being represented in government bodies, or by
influencing the political agenda. Supported by the literature, I propose that their main
source of influence is their ability to criticise the government and put new issues on the
agenda. I also propose that this ability is dependent both on the extent of freedom of speech
and association. Based on the literature focused on NGO strategies in developing countries,
I propose that also factors like the internal unity of the environmental movement as well as
the degree of dependence on government support and co-operation with the government
may influence the ability of NGOs to exert influence on policies.
       Thus, with these theoretical considerations in mind, the last proposition I will
evaluate during the empirical discussion is:




                                               95
Proposition 7: The contrast between environmental reforms in Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the balance of power and
influence between domestic pro-environmental and anti-environmental societal groups.


3.6. Summary
In section 3.2-3.5, four approaches involving seven propositions that may explain the
variation in political outcome in focus in this study were presented. Two of the approaches
focused on the influences of international constraints on and incentives to decision making,
while the other two focus on domestic influences.
       The hypotheses generated under the four approaches are presented as analytical
alternatives, but it is not implied that they are mutually exclusive. This is particularly the
case for the relationship between approach 3.3 and the two following. Explanations focused
on the interactions between international and domestic factors may be combined. External
pressure may provoke configurations of conflict and coalition building heavily influenced
by the special characteristics of linkages between bureaucracies and governments or
particular linkages between societies and governments. NGOs may be strengthened by the
opportunities for transnational linkages opened by international attention to forest
problems. The distinction between approach 3.2 and 3.3 and the two following may be
described as a distinction between approaching environmental politics as open and closed
political systems.
       Tendencies to vagueness are connected to the broadness and complexities of the
open-systems approach. Sophisticated versions of this approach tend to discuss domestic
politics, international politics and transnationalisation at the same time.
       However, before the explanatory relevance of these propositions can be further
evaluated, the contrast in domestic policies that I want to explain has to be discussed and
outlined more precisely.




                                               96
  CHAPTER FOUR: THE PROBLEM – A CONTRAST
                 IN ENVIRONMENTAL REFORM

4.1 Introduction
In chapter one, I gave a broad formulation of the problem of the study. I claimed that there
was a contrast between the efforts made by the Brazilian and Indonesian states to put
constraints on some of the most important private commercial actors perceived as culprits
of deforestation and forest depletion in the period between 1988 and 1992/93. Moreover, I
noted that Brazilian efforts, though substantially stronger than in Indonesia, suffered from
important limitations.
       In this section, I develop this argument. In section 4.2, the problem of evaluating and
comparing regulatory efforts in the management of tropical moist forest land is addressed.
In section 4.3, I give a short historical description of the commercial actors perceived to
make the largest environmental impacts by exploiting tropical moist forest land in the two
countries during the period in question. This is followed by a comparison of the evolution
of environmental reforms in the two countries in section 4.4 and 4.5. In these sections, I
argue that reforms, compared in terms of attempts to enforce directives and change
economic incentives, were more extensive in Brazil than in Indonesia during the historical
period in focus. This analysis provides the background for the fundamental empirical
question raised in this thesis. Why did Brazil make a stronger reformatory effort than
Indonesia?


4.2. Forest land use and environmental problems – evaluating and comparing
reforms
How should environmental reforms of commercial exploitation of forest land be evaluated
and compared? Below, I discuss this and define my approach with particular reference to
state efforts to regulate commercial interests. The discussion is centred on challenges
connected to regulating the main commercial actors perceived as main culprits of
deforestation and forest depletion in the Indonesian and Brazilian cases, namely ranchers


                                             97
and loggers. In this section, I will discuss and outline criteria and indicators for evaluating
and comparing reforms.


Environmental regulation – concepts and instruments
Regulation is usually defined in terms of interventions in private activities to fulfil public
goals. Francis (1993:5) defines regulation as «…state intervention in private spheres of
activity to realize public purposes». I choose this definition of regulation because it is
relatively broad in the sense that it does not specify particular regulatory instruments or
particular spheres of private activity.
       In this discussion, the public purpose to be realised is to decrease the contributions
of private actors exploiting areas of tropical moist forest land to two global environmental
problems, biodiversity loss and climate change.
       Thus, when the concept of environmental reform is used in the following, this
concept refers to trends of increasing state interventions to influence the actions of private
interests controlling rights to exploit tropical moist forest land. Furthermore, state
interventions have to be explicitly justified by considerations for biodiversity loss and/or
climate change.
       Many studies of instruments of state intervention in the environmental sector
conclude that there are two main groups of instruments that usually are employed (Mitnick
1980a, b, Baumol and Oates 1988:191, Heidenheimer et al. 1990:326-330). Regulation of
the actions of private interests may take place by using either by directly guiding the actions
of private interests by legal instruments or changing the economic framework for private
activities to encourage less harmful private practices. Mitnick calls these two varieties of
regulatory means directives and incentives. Regulation through directives is «…control
through direct specification or instruction of the agent’s behaviour» (Mitnick 1980b:380).
Direct specification «…circumscribes choices of actions available to the regulatee»
(Mitnick 1980b:380).33 Baumol and Oates (1988:191) call the same environmental policy
instrument «direct control» and defines it in this way: «…a direct control must involve a
directive to individual decision makers requiring them to set one or more output or input




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quantities at some specified levels or prohibiting them from exceeding (or falling short of)
some specified levels.»
        This approach to regulation is also called the command-and-control approach
(Heidenheimer et al. 1990:326). The state is expected to take steps to gather information
about the actions of private parties, and secure obedience through legal measures like fines,
confiscation of property, cancellation of licenses or imprisonment if rules have been
violated. Among economists, directives or direct controls are defended by pointing to the
fact that they may be applied rapidly in situations of crisis (Baumol and Oates 1988:190).
On the other hand, they are often criticised because of the high costs connected to their
application. Political scientists have remarked that the employment of directives may be
attractive to regulatory agencies, as the employment of legal measures may increase the
public visibility of the agency (Wilson 1980:375-376).
        The other main instrument of environmental regulation is incentives. Regulation
through incentives is «…control through rewards which encourage the agent to behave as
the principal desires» (Mitnick 1980b:380). These rewards, either positive, like tax breaks
or direct subsidies, or negative, like tax increases, are targeted to modify the behaviour of
the company by increasing absolute or relative costs of environmentally harmful activities.
In contrast to directives, «…no individual is told what input or output levels to select (…)
taxes and fees utilize no knife’s-edge criterion. The amount of the decision-maker’s
payment will vary with his pertinent activity levels, with no imputation of illegality to the
activity levels he chooses» (Baumol and Oates 1988: 191). Incentives are usually defended
by pointing to their economic efficiency (Baumol and Oates 1988:171-172).
        Due to the special characteristics of environmental regulation, Baumol and Oates
(1988:190) recommend the use of «policy packages» which include incentives, direct
controls and moral suasion. The inclusion of directives, in spite of their lower economic
efficiency, is justified by the need for instruments to meet temporary crises. Tax
instruments may have higher efficiency, but their application is frequently dependent on
time consuming political bargaining. In addition, there are uncertainties connected to the



33«Regulatee» is the actor or group in focus of state intervention.



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time needed for economic incentives to spur behavioural change and the dosage needed to
bring about acceptable levels of behavioural change (Baumol and Oates 1988:192-193).
       However, the main question in this thesis is focused on a contrast in regulatory effort
rather than regulatory efficiency. Directive and incentive changes are perceived and
discussed as indicators of the strength or magnitude of the regulatory effort, and not
primarily in terms of their efficiency. The main argument is that the Brazilian governments
1988-1992 made a stronger effort to intervene in the activities of commercial interests
whose actions had consequences for forest depletion and deforestation than the Indonesian
government during the period in analysis. Both incentive and directive changes were more
marked in the Brazilian case, though both states expressed increasing consideration for
global environmental problems and increasing willingness to intervene in the activities of
private interests on behalf of the environment during the period in question
       However, before the empirical analysis of trends in Brazil and Indonesia is carried
out, a more detailed discussion of regulatory challenges is carried out to specify the basis of
evaluation and comparison more clearly in terms of indicators and operationalisations.


Directive and incentive change as indicators of environmental reform: Protected areas
There are two primary considerations underlying the wish to regulate the activities of
private interests on tropical moist forest land. First, some areas of forest land may be
particularly attractive in terms of their environmental value and should be protected against
a broad range of human activities, including several kinds of commercial exploitation.
Second, some methods of commercial exploitation are seen as more environmentally benign
than other methods, particularly in non-protected areas. Regulatory efforts are centred on
these two types of instruments. I will first look at the establishment of protected areas. This
is a very popular category of area specific regulatory measures.
       The fact that some forest areas are more attractive in terms of global environmental
value than other is related to the uneven distribution of species, ecosystems and biomass.
Some areas may be so unique in terms of these properties that they are partially or totally
protected from economic exploitation. The regulatory challenge to the government is to
identify and protect such areas.



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        Establishing various kinds of protected areas is a main instrument of environmental
policies related to forest land. The definition of a protected area adopted by the
International Union for Conservation of Nature and Natural Resources (IUCN) is: «An area
of land and/or sea especially dedicated to the protection and maintenance of biological
diversity, and of natural and associated cultural resources, and managed through legal or
other effective means».34 Poore and Sayer (1991:43-47) call protected areas of tropical
forest land: «Nature conservation forests». Though ecosystem protection is the main target
of protected areas, such protection may to a varying extent be combined with purposes like
the protection of cultural features, tourism, education and limited exploitation of natural
resources. Establishing protected areas in tropical moist forests may also be an instrument
to secure the forest’s ability to sequester carbon for the future.
        Ideally, selection of such areas should be based on evaluations of the richness and
diversity of their ecosystems as well as their carbon storage capacity to count as indicators
of reforms motivated by concerns for the global environment. In addition, they should be
carefully inspected and monitored to prevent conflicting uses.
        I choose to focus on the following operationalisations of forest protection as
indications of environmental reform. First, a) the development of the extent of the area of
protected tropical moist forest areas in the period under examination will be examined. This
may be done by consulting information from national and international sources regarding
the increase of protected areas. I will also try to find out whether b) considerations for
climate change and biodiversity loss are presented as motives for establishing protected
areas. Policy statements as found in government plans on forest protection, biodiversity and
climate change plans, as well as public statements by state leaders are relevant sources.
        However, to count as reform in the context of this project, establishment of protected
areas should also in some way represent a restriction on commercial interests. It is
meaningless to include protection of forest areas of little interest to commercial actors as an
indicator of the government’s degree of restrictions on commercial exploiters of forest land.
Mather (1990:189) notes this problem: «...protected areas often tend to be those of lowest


34Taken from the website of the World Conservation Monitoring Centre:
http://www.wcmc.org.uk/protected_areas/data/sample/iucn_cat.htm.



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commercial value. This tendency raises the questions of the purpose of designation if few
threats exist, and also the problems of establishing protected status in the commercially
(and sometimes ecologically) more valuable areas». To count as state intervention in the
private sphere, protection of forests in some way take place at the expense of existing or
planned activities carried out by commercial interests. Thus, I will c) evaluate whether
increases in protected area imply any real restriction on the access of commercial interests
to the forest areas in question.
       However, some criterions should be added. Existing evaluations of potential
economic value of areas decided protected should be consulted to judge whether the
protected areas in question have a value for commercial interests. This value should also be
explicitly recognised and desired by commercial interests. If potential exploiters are
unaware of the economic value of an area, or pay little attention to it because of ample and
expanding business opportunities in non-protected areas, establishing protected areas
cannot be counted as an indication of reform. However, if the establishment of protected
areas takes place in areas that are explicitly desired by commercial interests, there are strong
arguments in favour of categorising protection efforts as positive indications of reform.
       Finally, I consider d) the extent of protection in the field. This implies to what
degree protected areas are guarded against the encroachment of commercial interests. The
existence of «paper parks» without guarding against exploitation by commercial interests is
a well known phenomenon, and should be ranked low as an indication of environmental
reform.
       The high costs connected to limiting the influx of encroaching actors is a major
problem related to the use of protected areas as instruments of regulation. These costs tend
to increase when protected areas contain valuable and easily exploitable natural resources
like precious timber species or minerals. In such cases, guarding and monitoring may be
both expensive and difficult to organise. A new approach to protection that gained
momentum during the 1980s, is to reduce such costs by making alliances with local
populations already involved in low-impact exploitation of ecosystems like small-scale
hunting, fishing, or collection of «minor» forest products like rubber and nuts (Poore and
Sayer 1991:45-46, Hall 1994, Brookfield et al. 1995:81-82). This approach is also



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advantageous as it may involve increased legitimacy of conservation areas and
environmental efforts among sections of the local population. Providing such groups with
some degree of management responsibility in exchange for management and limited
exploitation rights is, in the context of the literature centred on regulation, to regulate by
giving management and exploitation rights as incentives. Although the government is still
responsible for enforcing this exploitation right against other interests, the existence of local
populations with an interest in resisting competing claims increases the costs of
encroachment and may decrease the economic and administrative burdens of monitoring
and inspection greatly (Wade 1987:105).35
        One problem associated with this approach is that the geographical distribution of
such local populations not necessarily matches the geographical distribution of areas of
high biological diversity or high biomass density. It may be somewhat misleading to
categorise the establishment of such user-oriented reserves as strict indicators of reforms
responding to global environmental problems. However, in the real world, such reserves
may be useful instruments to secure a relatively high degree of protection of the global
environmental functions of forests in a context of moderate state capacity and high pressure
for commercial exploitation of forest areas often prevailing in developing countries. Thus,
in this thesis, such efforts will be included as a positive indicator of reform.
        The establishment of protected areas is basically rule through directives. Even
though some of the inspection and monitoring tasks can be distributed in exchange for
management rights, the main focus is to define legal limits of the actions of private interests
in geographical terms. As already mentioned, to count as indications of intervention in the
activities of commercial interests, protected areas must be established in areas with
competing claims from such interests.
        This illuminates a main point to be considered when evaluating and comparing
environmental regulation in tropical moist forests. The establishment of national parks and
protected areas, though important, is no sufficient indicator of reform. As mentioned by
Mather (1990:193), it is possible to combine environmentally harmful exploitation of large


35 Cfr. Wade (1987) for a similar linkage between limited state capacity and the possibility of encouraging
local systems of environmentally sustainable management.



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forest regions with the establishment of a well functioning system of protected areas.
Foresta (1991) demonstrates how this happened in Brazil during the 1970s, when large
tracts of the Amazon forest were opened to commercial exploitation along with expansion
of protected areas. Although some of these protected areas were established in conflict with
important economic interests and thus represent efforts to intervene against commercial
interests, the government sponsored clearing of forests by ranchers and miners grossly
outpaced these reforms in the same period. Mather (1990:193) even suggests that
expanding protected areas without intensifying regulation outside these areas may increase
the pressure for exploitation of non-protected areas. Thus, the development of state
intervention in the activities of commercial interests in the vast tropical moist forest areas
that usually exist outside protected areas are crucial indicators of reform.


Directive and incentive change as indicators of environmental reform: Forest land outside
protected areas
The discovery of the global environmental functions of tropical moist forests in the 1970s
and 1980s emphasises the insufficiency of traditional conservation efforts as instruments
for sustaining the global environmental functions of these forests. Retaining a high level of
biodiversity in tropical moist forests requires a certain level of protection also outside
protected areas, as biodiversity may decline rapidly with forest fragmentation (Collins
1990:188). This makes the protection of limited areas, though often very valuable for
particularly diverse areas with a high concentration of rare species, an insufficient
instrument of biodiversity protection alone. The argument in favour of retaining large areas
of forest relatively intact is even stronger when it comes to the ability of forests to function
as a carbon sink (World Bank 1991:44).
       This means that compromises combining protection and commercial exploitation on
vast forest areas have to be arrived at. If commercial actors are given rights to exploit forest
land, the regulatory challenge to the state is to control the environmental impact of their
activities. In this case, the public purpose to be realised by regulation is to decrease the
contributions of the activities of commercial interests to global warming and biodiversity
loss by decreasing their contribution to deforestation and forest depletion.



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       In the empirical discussion in section 4.3 to 4.5, I argue that there was a general
perception in the late 1980s that the main environmentally harmful commercial activities on
forest land in Brazil and Indonesia were cattle ranching and logging. While big cattle
ranchers were perceived as dominating in terms of environmental damage in the Brazilian
case, logging companies were perceived as dominating in terms of environmental damage
in the Indonesian case.
       In both cases, regulatory instruments might include both area specific instruments
and instruments influencing methods of logging and clearing. These instruments include
both directives, specifying areas as well as methods, and incentives, encouraging less
destructive logging and clearing methods and discouraging extension of activities into
sensitive areas.
       For both logging and clearing for agriculture and ranching, many regulations are
aimed to curb short-term profit maximising patterns of behaviour. The practice of high-
grading, extending harmful and often reckless logging operations and unrestricted road
building over very large areas, is the typical short-term profit maximising pattern in logging
in tropical forests. Unrestricted and rapid clearing of new pasture may also pay off for the
individual owner in the short term in many situations. Burning forest and cultivating the
land for short periods before moving on into neighbouring forests is an attractive option in
frontier settings where land is cheap and easily available (Schneider 1995:15-16).
       The same may be the case for clearing and logging methods. The use of fire may be a
cost-effective method of clearing from the point of view of the individual farmer,
particularly in settings where there is a lack of labour. However, it may produce strong
negative external environmental effects by spreading fire to neighbouring forested land. The
use of fire as an instrument of clearing may be particularly destructive when neighbouring
forests have become prone to fire because of high volumes of wood debris left after heavy
logging. Heavy logging without consideration for forest regrowth may also be an attractive
option when forest areas are perceived to be abundant and logging perceived to be a short-
term business activity.
       Various mixes of regulations are adopted to avoid such situations. It is impossible to
define an exhaustive checklist and ranking of forest regulations according to efficiency in



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the two cases, as there is little precise knowledge about the relationship between specific
measures and environmental effects. This point is reflected in Mather’s (1990:281)
description of forest policies in general: «…the content of forest policy are enormously
variable. Forest laws and institutional arrangements have a bewildering complexity and
diversity.» This is true also for the cases discussed below, even though I only deal with
environmental regulations of commercial activities outside protected areas in this section.
       It is difficult to envisage a «correct» environmental forest policies in terms of
concrete packages of regulations. Many different mixes of regulations could be applied to
reduce the harmful practices described above. Westoby (1989) argues that the absence of
precise knowledge of consequences of forest policy variations is no excuse for avoiding
attempts to regulate. Westoby (1989:151) claims that: «It may not yet always be clear
exactly what should be done; but both experience and common sense have provided sound
notions of what should not be done. In practice this knowledge is rarely applied».
Westoby’s argument implies that the regulatory challenge is to moderate the forces working
in favour of worst case situations rather than to opt for optimal solutions. Understood in this
way, regulation in areas outside protected areas is similar to much other regulation in that it
«…is best understood as a midpoint between prohibition and the complete absence of state
involvement» in the words of Francis (1993:6). If the challenge to state intervention at least
in the short and medium term is to influence private interests to avoid worst case activities
rather than to adopt optimal behaviour, this has important implications particularly for the
application of incentives. This is discussed below.


Indicators of reform: Application of «positive» and removal of «negative» incentives –
some general comments
Mitnick (1980b:381) defines the use of incentives as: «…specifying behaviour desired by
the principal of the agent, information to the principal that the behaviour was performed,
and transfer of the reward from principal to agent». However, Repetto (1988a), Mahar
(1989), Binswanger (1991), the World Bank (1991, 1993a, 1994a) and several other policy
analyses put stronger emphasis on removing incentives encouraging destructive practices
rather than establishing positive premiums on better practices. One advantage connected to



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this approach is that while the disbursement of premiums for good conduct may impose a
heavy burden of monitoring and verification on the shoulders of the state, removal of
general incentives that encourage bad practices does not imply such a burden.
       To a certain extent, these two kinds of incentives apply to different sequences of
regulatory policies. Applying positive premiums on good conduct may be absurd in settings
in which incentives produced by several policies work in the opposite direction. Thus, the
application of «positive incentives» or individual premiums may require the removal of
many «negative incentives» to become effective.
       By its nature, the approach that recommends removal of negative incentives may
bring attention to a very broad range of government policies, as well as factors outside
government control. The incentives to be included in the discussion of incentive changes as
indicators of reform should be separated from the much larger universe of general economic
incentives that may influence the actions of commercial actors. Most economic activities
are dependent on a broad range of economic incentives generated by factors like the
distribution of natural resources, technology and market demand, but only a few incentives
are influenced by government policies. Thus, only incentives that the government is able to
influence can be included in analyses of government action.
       Furthermore, to be included as indicators of reform or absence of reform, the
incentives in focus should be widely assumed to have effects on deforestation and forest
depletion done by commercial interests. In cases of change, their change should also be
justified by global environmental concerns by the government to count as indicators of
reform. The last two preconditions are necessary to reconstruct and analyse environmental
reform as goal-oriented action motivated by considerations for the global environment. This
interpretation of the role of incentives as policy instruments is in accordance with Mitnick
(1980b). He emphasises that both directives and incentives «…presume the existence of a
relation between principal and agent (...) in which either directives or rewards (or both) are
manipulated to control the agent» (Mitnick 1980b:380).
       However, a main difference between environmental regulation through the removal
of negative incentives and other kinds of regulation, is that the universe of relevant
government policies is constantly widening due to rapid processes of learning. This is



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particularly the case with new environmental issues with high complexity in terms of causes
and effects. Governments may find themselves in a situation in which a rapidly expanding
number of policies are analysed in terms of their environmental effects by a multitude of
groups both within and outside the state. This has been a salient feature of the discussion of
policies related to tropical moist forests that emerged during the 1980s. Frequently cited
publications like Repetto (1988a,b), Myers (1989), Binswanger (1989) and Mahar (1989)
outline the environmental consequences of a very wide range of policies in terms of forest
depletion and deforestation. Some of the phenomena in focus, like inflation or exchange
rates, are only partially and indirectly influenced by governments.
       The environmental effects of a wide range of sector policies like agricultural
policies and industrial policies have also been analysed. Negative environmental incentives
produced by such policies have been described and criticised. In terms of regulation, one
outcome of these policy evaluations has been to make governments aware of the
environmental consequences of their own policies. When knowledge about these
consequences becomes well documented and widely recognised, the government is
increasingly charged with responsibility for the consequences of its own actions. But such
knowledge also provides the government with information about a widening spectrum of
regulatory options in terms of incentives that may be removed or weakened.
       There are at least two levels of such regulatory options depending on the properties
of policies in focus. First, there are macro-economic policies focused on employment
levels, inflation rates, money supply and exchange rates. In the debate, high inflation rates
have been targeted as a factor that encourages land speculation and deforestation (Browder
1988:254). Undervalued currencies may encourage logging for export (Repetto 1988a:23).
       The next level is what might be called «sector policies». These policies constitute
the general and specific economic framework for investment and production in specific
economic sectors like agriculture and forestry. Rules for acquiring control over land, tenure
stability, sector specific rules for financing of acquisition of forest land and productive
activities on the land, taxation of land, taxation of production and sector specific policies
influencing the prices of products from forest land are all factors that may influence the
decisions of commercial interests. Some of these incentives may be exclusively focused on



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actors exploiting tropical moist forest land, but other incentives may include many other
groups. Several incentives in the agricultural sector influence actors on a national scale. The
majority of these actors may be located outside moist forest land. Though incentives related
to logging usually have a higher specificity as they mostly deal with land under forest cover
and actors operating on this land, a country’s forest estate may be made up of many kinds of
forest. Thus, removing or weakening economic incentives with negative effects on practices
in tropical moist forests may also influence actors outside these forest areas negatively
without producing environmentally benign outcomes. A similar problem arises if incentive
changes initiated have a high geographic specificity, but lower specificity in terms of
activities. Removing regional tax incentives or subsidies could for example imply not only
reduced deforestation and forest depletion by farmers and loggers, but also reductions of
other desirable activities with little relevance to deforestation and forest depletion.
        This problem may be expressed in geographical and activity terms. If the
geographical distribution of actors whose activities cause forest depletion and deforestation
matches the geographical distribution of the problem (here deforestation and forest
depletion) and changes have selective effects on groups active in environmentally
disturbing activities, «negative incentive» changes are precise instruments. But if «negative
incentive» changes have effects also outside tropical moist forest regions or they have broad
effects on actors not involved in environmentally disturbing activities within tropical moist
forest regions, they are less precise regulatory instruments. In such cases, they may become
more precise if the government decides to link them to more specific environmental
performance criteria. However, monitoring costs also tend to increase with the introduction
of such criteria. If some kind of incentive is disbursed only in the absence of environmental
damage, the government becomes exposed to heavy monitoring and inspection duties. The
administrative requirements of such a policy is more like regulation through positive
incentives. In that case, the government only disburses the incentive after making sure that
the desirable action required is actually carried out.




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Indicators of reform: Enforcement of directives - some general comments
As mentioned above, the application of positive incentives as regulatory instruments
involves at least two steps. First, collection of information on compliance. Second,
distribution of a premium on compliance. These two steps also characterise regulation by
direct control or directives. The only exception is that instead of a premium for compliance,
fines, imprisonment or other legal measures are applied as negative sanctions instead of
positive premiums. The process of monitoring behaviour and distributing negative
sanctions is called enforcement of directives in the following. This implies that increases of
enforcement in many cases require increased monitoring by state agencies. This is even the
case when some of the burden of collecting information is shifted to the private party, as is
the case for environmental impact assessments and pre- and post-logging inventories. In
such cases, the state is charged with the task of controlling whether information presented
by the private party is correct.
       The task of monitoring commercial actors whose activities cover vast expanses is
often monumental; even in the age of satellites and aeroplanes. However, as the point of
departure for enforcement of directives to private companies in tropical moist forests often
is a situation in which virtually no monitoring and sanctioning takes place, the challenge of
doing something is considerably smaller than the challenge of constructing a comprehensive
monitoring and inspection system. While it may be a formidable task to monitor a majority
or even a substantial share of commercial actors in large regions for long periods, making
improvements of monitoring and starting to make even modest inspection efforts would
constitute a substantial increase of state intervention as compared to a situation in which
nothing is done.     In the following, I talk about improved monitoring and increased
distribution of legal sanctions like fines or imprisonment as increased enforcement.
       However, it is not straightforward to use isolated observations of enforcement efforts
as indicators of reform. In many cases, directives meant to speed up economic exploitation
of forest land are much more rigorously enforced than environmental directives that may
decelerate exploitation. In such cases, lacking enforcement may indicate that a government
is able, but not willing to enforce directives. Thus, enforcement efforts focused on




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environmental rules should be compared with enforcement efforts focused on rules meant
to encourage commercial exploitation.
       These are general observations related to observations of enforcement of directives
as indicators of reform. Now I turn to a discussion of some more specific challenges to
environmental regulation in logging and agriculture.


Commercial actors in timber extraction – regulatory challenges and instruments
In the Indonesian case described below, I argue that logging companies operating on forest
concessions leased from the central government were the group of commercial actors
perceived both by sections of the state and the national and international opinion as most
environmentally destructive during the period in question.
       Logging as a commercial activity has for a relatively long historical period been
regulated with the aim of perpetual wood production. Historically, various forms of
selective logging systems have been practised at least since the end of the Middle Ages with
this aim. According to Kellenbenz (1976:101), in 1561 in Perche in France, logging was
carried out in a 100 years cycle to sustain the supply of wood. Modern forest science as it
emerged in Germany in the 18th century started to outline scientifically based principles of
forest management for perpetual wood production or sustained yield (Westoby 1989:79-
80). German sustained yield principles provided the basis of the forest conservation
movement in the US that emerged late in the 19th century (Mather 1990:38-49).
       Though sustained yield management of tropical moist forests is perceived as
practically and technically difficult by many forest scientists, this principle underlies most
existing timber harvesting systems in the tropical sphere (Mather 1990:253-259). Westoby
(1989:157-158) mentions several practices that could be encouraged to reduce
environmental impacts and improve long-term yield without discussing the possibility of
sustained yield in principle. Thus, Westoby’s recommendations deal with actions that can
be undertaken to move towards sustained yield and better environmental practices without
fully addressing the possibility of sustained yield.
       What can be learnt from Westoby, is that considerations for sustained yield to some
extent may be in harmony with considerations for the local and global environment.



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However, sustained yield principles may still conflict with some global environmental
concerns. Sustained yield management may reduce soil erosion, protect watersheds and by
and large maintain the carbon storing properties of the forest, but decrease biological
diversity.36 Thus, most of the selective logging systems existing on paper in developing
countries usually do not entirely meet requirements for systems that are optimal for
environmental protection, and especially not concerns for biodiversity.
        However, a much more serious problem connected to most of these systems is that
they are not enforced or even tried enforced at all. A main reason for the destructive
impacts of selective logging regimes in tropical moist forests is simply that there are so few
attempts to enforce the rules (Kartawinata et al. 1989, Repetto 1990:21, Nectoux and
Kuroda 1990:17-18, Mather 1990:255, Collins 1990:183, World Bank 1991:77). Instead,
varieties of short-term profit maximising strategies like «high-grading» or «creaming» are
practised. High-grading or creaming implies that the logging team picks out only the largest
and most valuable specimens in an area and moves on after felling these. Thus, damaging
logging operations are extended over very large areas, and the production of timber per
hectare compared to the volume of destroyed trees may be very small. High-grading also
implies more road building, more transportation, and increased opportunities for farmers to
extend their activities by following in the footsteps of loggers (Repetto 1988a:20). Such
unrestricted logging may imply heavy loss of species, biomass reduction and local problems
connected to soil erosion and watershed destruction (Repetto 1988a:20, Nectoux and
Kuroda 1990:17-18). Furthermore, high-grading may make relogging within a 5-10 year
period more attractive (Gillis 1988:101). The consequences of relogging so soon are often
disastrous for the forest (Jafarsidik 1992). Barbier (1992:6-7) claims that such profit-



36 A conflict between considerations for carbon sequestration and the preservation of local environmental
functions on the one hand and considerations for biodiversity maintenance on the other hand may also emerge
in such forest management systems. Changes of the species composition of a forest as well as effects on the
fauna from increased human activity will not necessarily reduce its ability to sequester carbon or decrease soil
erosion. Thus, there may be conflicts both between considerations for the preservation of local and global
environmental functions of forests, and between the various global functions of tropical moist forests. Several
international bodies, like the transnational environmental NGO IUCN (Poore and Sayer 1991), FAO and the
commercially oriented International Tropical Timber Organisation have issued detailed recommendations on
how sustained yield forestry could be combined with maximum sustainment of the tropical forest’s local and
global environmental functions.



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maximising, unrestricted commercial logging in Southeast Asia is a major factor behind
reduced carbon storing and biodiversity loss in the region’s forests.
        In the present world, the problem of absence of government intervention, both in
terms of improvements of direct control and changes of economic incentives, is more
visible than the problem of optimal design of the logging system. In most cases,
enforcement of regulations would improve both the local and global environmental
situation, reducing both biodiversity loss and loss of sequestered carbon (Kartawinata et al.
1989). Lack of enforcement of directives and absence of incentive change, particularly the
absence of adequate rent collection and taxation, usually leads to very heavy depletion of
forests following reckless logging operations. Enforcement of existing, suboptimal logging
directives may often provide a good alternative to no enforcement at all, as the inherent
considerations for preservation of standing stock in selective logging systems may make
these systems preferable. Conflicts between local and global environmental concerns in
most sustained yield logging systems are mostly potential in today’s tropical forests.
Finding the best balance between soil protection, watershed protection, biodiversity
conservation and carbon sequestration is a laudable long-term goal for tropical forest
management. However, the most immediate challenge involved in the sustainable use of
today’s tropical forests is to integrate stronger considerations for the preservation of
standing stock into current logging practices. In most cases, such improvements imply
substantial improvements of the present situation, and may provide long-run economic
benefits for the society as a whole.
        For the comparison and evaluation of environmental reforms in the use of forest
land, this argument implies that increasing enforcement of existing logging rules not
originally designed to address global environmental problems should be categorised as
environmental reforms as long as efforts are motivated by global environmental concerns.
Most increases of enforcement of logging regulations motivated by global environmental
considerations should be defined as improvements, even when the design of the system
tried implemented is suboptimal.37 This is in accordance with the observation that


37A good example may be the enforcement of logging cycles. In several tropical moist forest countries, the
periods between the logging of forest areas are about 30 years. Most prescriptions for sustainable forestry



                                                   113
regulation in forest management often deals with avoiding worst case practices and
outcomes rather than reaching optimal solutions. Enforcement of existing rules also has the
advantage that it may take place rapidly without previous political bargaining.
        Many incentives that may be manipulated to encourage better forest management fall
into two main groups. These are taxation and tenure stability. Timber is a natural resource
that produces economic rent. A definition of timber rent is «…a value in excess of the total
costs of bringing trees to market as logs or wood products, including the cost of attracting
the necessary investment» (Repetto 1988a:18). Failures to collect rent from commercial
interests responsible for logging operations is a powerful incentive new investors and an
invitation to over-exploit timber resources (Repetto 1988a:18-21).
        There are usually two challenges connected to imposing taxes. First, to increase their
level, second, to reduce tax evasion. Reducing tax evasion and increasing taxation levels
may be difficult, as it demands a relatively sophisticated state apparatus. Administratively,
increasing taxes is a far more challenging task than to remove existing explicit government
incentives, even though it only implies to remove a natural incentive implied in logging
from an analytical point of view. Though revenue extraction is a key state capability which
is often underdeveloped in many third world countries (Migdal 1988:4n), log shipments
through centralised harbour facilities or large wood industries may be somewhat easier to
monitor than many other economic activities. Particularly when logs are exported by a
small number of companies, processing and exports is often centralised. This structure of
supply may facilitate taxation efforts as compared to situations in which activities are
widely dispersed and products mainly consumed at domestic markets.
        Land tenure stability is often perceived as an important incentive as many of the
investments and educational costs necessary for sustained yield management and further
environmental reforms have long time horizons. While many selective logging systems on
forest concessions prescribe logging cycles of 30-40 years duration (which in themselves
are perceived as much too short to ensure forest regeneration), forest concessions are often



conclude that logging cycles should be 60-70 years to ensure regrowth. But in several cases, loggers re-enter
stands within 5-10 years (Repetto 1988a:24, Whitmore 1992:5). This may deplete the forest resource to such
an extent that conversion for other purposes becomes the final product. In such cases, the enforcement of a 30



                                                    114
given for much shorter periods than this (Repetto 1988a:22-23). Longer duration of
concession contracts is seen as a main instrument for improving forest management by
many experts, as it may provide incentives to the concession holder to secure future yields
(Repetto 1988a:22-23, Mather 1990:104-105). However, also property rights are dependent
on state structures to become effective. Enforcement of permanent or temporary property
rights, here understood as predictable and reliable rules for control over forest areas
guaranteed by the state, is a crucial precondition for the effectiveness of property rights as
an incentive for long-management


Commercial actors in land clearing for agriculture – regulatory challenges
Though environmentalists sometimes deny the possibility of sustainable agriculture on
tropical moist forest land due to the fragility of soils, there have been several cases of
successful agriculture on tropical moist forest land in areas of tropical South America as
well as Southeast Asia.38 However, clearing of tropical moist forest land for agricultural
purposes has also recently produced spectacular failures due to mismatch between fragile
soils and unsuitable cultivation methods. This is the case for the extension of planted
pastures for commercial ranching in Central and South America as well as the clearing of
tropical moist forest land for rice cultivation and plantations in parts of Southeast Asia.
Conversion of forest land for agriculture preserves few of the local or global environmental
functions of tropical moist forest land. If it is also unsustainable in terms of long-term food
production and economic returns, it should be avoided. Another aspect of this is that
intensification of land use on already cleared soils may produce higher material and
economic returns than clearing of new land (Poore and Sayer 1991:56).
        One response to the observations above has been to claim that forest land should be
evaluated for its long term agricultural potential before conflicts between maintenance of


years cycle would represent a clear reform, although it is environmentally suboptimal compared to the 70
years cycle.
38Repetto (1988b:12) estimates that 95 percent of the remaining tropical forests are situated on soils which
are infertile and easily degraded through erosion, laterisation or other processes if the vegetative cover is
removed. Westoby (1989:160) agrees to a certain extent, but emphasises that very little is actually known
about the use of tropical soils for agriculture. For an analysis of conditions in Amazonia, cfr. Serrão and
Toledo (1990).



                                                    115
forests and agricultural land expansion are addressed. Only land that may provide
sustainable returns in terms of material production or economics, should be candidate for
agricultural clearing (Poore and Sayer 1991:55-57, World Bank 1991:43).
       Environmental analyses containing soil, hydrology and climate assessments as well
as analyses of consequences of clearing in terms of biodiversity and greenhouse gas
emissions should ideally take place before land is decided for agricultural conversion along
with economic and technical analyses of the social returns of forest clearing. However, such
analyses are highly demanding in the light of the institutional framework for agricultural
research and planning in most developing countries. Less fine-tuned but more easily
enforceable provisions like prohibitions of forest conversion in regions with certain
characteristics or prohibitions of deforestation of more than a certain share of a property
may be better adapted to the policy-making environments of developing countries, at least
before less blunt instruments can be developed and applied. Like for logging regulations, it
is a clear advantage that such provisions often exist in the legal systems of several
developing countries, allowing rapid enforcement.
       This direct control approach could be combined with incentive changes. As for
logging, taxation and subsidy regimes are important incentives that may be manipulated to
encourage more benign environmental outcomes. Many countries, both developing and
developed, provide farmers and big companies dealing with agricultural production large
subsidies and tax breaks. In many cases, these incentives encourage agricultural clearing to
an extent that is far beyond what is desirable for society as a whole, even in the absence
considerations for environmental damage. There are similarities between land clearing for
agriculture and logging along these lines. While low levels of taxation and rent collection
makes logging in tropical moist forests highly attractive, tax breaks, subsidised credit and
production subsidies often make clearing of tropical moist forest land for agricultural
purposes equally attractive (Repetto 1988a:32-33, Schneider 1995:21). Removal of such
incentives could to some extent combine considerations for better use of economic
resources with considerations for the environment, but would undoubtedly conflict with
agricultural interests.




                                            116
Summary and discussion: Operationalising environmental reform
Above, I have discussed some challenges in environmental regulation of commercial actors
on tropical moist forest land. The main focus has been to discuss how various kinds of
government intervention could be interpreted as indicators of environmental reform. In the
table below, I have synthesised some of the insights from the previous discussion.
Environmental reform is defined as government intervention to influence the actions of
commercial interests who have acquired rights to exploit tropical moist forest land,
motivated by considerations for biodiversity and climate change. Government intervention
can proceed along two complimentary lines; namely by defining protected areas and by
intervening to influence the actions of commercial interests outside protected areas. State
intervention may take place by reducing economic incentives that encourage destructive
practices, establish positive incentives for practices which are desirable, and enforce
directives prohibiting destructive practices. Indicators of reform are changes along these
lines justified by global environmental concerns.
       One important problem related to evaluating reforms, is the problem that regulatory
changes proclaimed to be inspired by environmental considerations might be a disguise for
favours given to particular branches or companies. Stigler (1971) has analysed how
regulations marketed as measures to secure public goods may be the disguised efforts of an
economic branch to gain economic advantages and to deter the establishment of
competitors. This has relevance for both incentive changes and enforcement of directives.
Actors who have such a high degree of influence over the state that they control the shaping
of regulatory policies may be able to influence the costs and profits of real or potential
competitors.
       Thus, strategic problems related to regulation and the advantages connected to
capturing the regulator make it difficult to base evaluations of regulatory changes
exclusively on descriptions of state intervention in media or government reports. This
problem is an aspect of the problems of imperfect information about economic branches
and industries as incentives for fraud described in the economic literature on collusion
(Tirole 1992:153).                     This problem may be addressed by looking at the
reactions of the commercial actors the state intervenes against. Openly expressed



                                            117
dissatisfaction, public protests and political campaigns against regulations from important
business groups or organisations usually indicate that state intervention actually takes place
at the expense of private interests. Tirole (1992:152) mentions avoidance of complaints and
protests as a motive for bureaucrats to engage in collusive relationships with business
interests. Indirectly, his argument supports the use of protests as an operational indicator of
state intervention.
       This argument is slightly different from the argument in favour of using protests by
commercial interests as an operationalisation of regulation through protection of forest
areas. In that case, I employed protests as an indication of the commercial attractiveness of
newly protected areas. In the case of incentive changes and directive enforcement in non-
protected areas, I argue that reforms presented as restrictions on commercial interests on
behalf of the public good may reflect the ambitions of groups of commercial interests to
gain economic advantages at the expense of competitors or the larger public.
       However, it should be remarked that absence of protests is not a sufficient indicator
of regulations that in reality benefit commercial actors. Regulatory efforts may have
positive economic consequences for these actors, for example if they are designed as
positive premiums on good conduct. Regulators may also be so powerful that they are able
to control protests. The group in focus may also accept regulation as an inevitable fact, or
even as an advantage in terms of market access and «green image» in the long run.
       However, absence of protests may be an invitation to ask whether directives have
been enforced at all. Moreover, it may be an invitation to ask whether increased
enforcement of directives and incentive changes are state actions that serve particular
private interests, even if marketed as reforms. In that case, analyses and comparisons of the
economic consequences of reform for different groups of producers may be helpful. If it can
be demonstrated that the environmental consequences of regulatory changes are uncertain
and disputed, that they favour particular groups, and the government is aware of these
consequences, such changes should not be counted as environmental reforms. However,
identifying government motives for designing regulations in this way is an empirical
question. Although the public choice literature (for example Stigler 1971) suggests that
such regulatory forms are explained by processes of «capture» often not described in full



                                             118
detail, processes of «capture» may have different forms and involve several groups of
actors. Several other motives for designing regulations in this way may also exist. As
mentioned by Ham and Hill (1993:75) in their discussion of approaches to power research,
particular distributions of interests do not explain political outcomes if manifest or potential
actions (threats) by these interests or their allies cannot be demonstrated empirically.
        In table seven below, I give a schematic abstract of the previous discussion in terms
of dimensions, indicators and operationalisations related to the concept of environmental
reform:


TABLE 7: Operationalisations of the concept of «environmental reform» as a basis for
evaluation and comparison of the cases.


Environmental              Dimensions               of Theoretical
reform                     reform                         indicators of reform Operationalisations
                           Protected areas:               Protected areas:            Protected areas:

                           Maximise, identify and guard   Development of size of      -Information on evolution of
                           protected areas of high        properly guarded area of    size and guarding of area of
                           environmental value desired    high environmental value    interest for commercial
                           by commercial actors.          desired  by    commercial   actors as found in reports
                                                          actors.                     from      the   government,
                                                                                      international organisations
                                                                                      and     the   environmental
                                                                                      movement.
Defined as: Increasing
state interventions to                                                                -Observation             of
influence the actions of                                                              dissatisfaction or protests
                                                                                      from commercial actors.




                                                     119
private           interests   Forest      land     outside Forest      land       outside Forest      land         outside
controlling and exploiting    protected areas:             protected areas:               protected areas:
tropical moist forest land
justified                by   Enforce rules to limit the -Development of directive           -Information on enforcement
                              impact and extension of enforcement aimed to limit             efforts and incentive changes
considerations          for
                              logging and clearing.          extension of logging and        from      the    government,
biodiversity loss and/or                                     clearing and destructive        newspapers,      international
climate change.                                              logging      and     clearing   organisations      and     the
                              Apply incentives for more methods.                             environmental movement.
                              environmentally        benign
                              logging or clearing practices, -Establishment of positive      -Comparison            with
                              remove      incentives    that incentives       for     less   enforcement of directives
                              encourage environmentally destructive logging and              directed   to     encourage
                              destructive     logging     or clearing practices.             economic exploitation.
                              clearing practices.
                                                             -Removal       of    negative   -Observation             of
                                                             incentives for destructive      dissatisfaction or protests
                                                             logging      and     clearing   from commercial actors.
                                                             practices (increasing rent
                                                             capture and taxation).          -Analyses     of    economic
                                                                                             consequences               for
                                                                                             commercial      actors    and
                                                                                             influence on regulatory
                                                                                             decisions (gains or losses for
                                                                                             various groups, influence of
                                                                                             gaining groups on regulatory
                                                                                             decisions).




This table indicates that to be accepted as environmental reform, regulatory changes as
presented by the government have to be implemented at least with the same vigour as
regulations aimed to encourage economic activity and trigger some kind of dissatisfaction
or protests from business actors. Moreover, changes must not purportedly favour any
particular branch of exploiters if not the favoured group can demonstrate superior
environmental performance.
         Before environmental reforms in the two countries are evaluated and compared
according to these operational criterions, I will present some background information
related to the development of the activities of commercial interests on tropical forest land in
Brazil and Indonesia. In the following, I give a brief historical outlook on the two cases.


4.3. Commercial actors in Brazilian and Indonesian tropical moist forest areas
In this section, I give a short description of the evolution of commercial exploitation of the
tropical moist forest areas of Brazil and Indonesia and its environmental consequences. A
main conclusion is that the most important private interests involved in commercial


                                                         120
activities that contribute to deforestation and forest depletion are logging companies in
Indonesia and ranchers in Brazil. In the following, I give a presentation of the historical
development and general economic context of the operations of these interests. After this, I
examine the environmental impacts of their operations on the tropical moist forests of both
countries. In section 4.4, I give a short presentation and comparison of the regulatory
responses of the two states until with a particular emphasis on the period between the late
1980s and 1992/93 is given. Here, both directive enforcement as well as environmentally
motivated modifications of incentives for loggers and ranchers are compared.


Indonesia - the expansion of commercial logging
Commercial exploitation of Indonesia’s tropical moist forest land on a large scale was
introduced relatively late. A lack of interest from the colonial power, lack of market
opportunities and technological barriers hampered large-scale commercial exploitation of
logs from the vast tropical moist forests of Sumatra, Kalimantan, Sulawesi, and Maluku.
According to Brookfield et al. (1995:62), before World War II and in the early post-war
years most tropical hardwood timber entering world trade came from countries bordering
the Atlantic Ocean. According to Manning (1971:35-36), the forests outside Java were
opened to private investors in the early part of this century, but were not heavily exploited
because of lacking market opportunities and cheaper alternative sources of wood supply.
       In the period following World War II, both markets for logs and technological
options in logging changed. The market was tied to post-war reconstruction and economic
growth in industrialised countries. In 1951, the developed countries imported 4,2 million
m3 of tropical hardwoods from developing countries, while imports had soared to 53,3
million m3 in 1973 (Thapa and Weber 1990:25). This trend was facilitated by the diffusion
of new technologies introduced on larger scale from the early 1960s. These technologies
involved chain saws, motorised skidding and transport facilities and heavy machinery for
log-hauling and road building (Whitmore 1992:5).
       The Philippines, and later on Sabah and Sarawak, were the first major tropical log
exporters in Southeast Asia, dominating the market during the 1950s (Brookfield et al.
1995:62). Indonesia gained prominence in this boom from the 1960s. Japanese companies,



                                            121
which were of major importance in the establishment of log exports from the Philippines
and Eastern Malaysia to the expanding Japanese market, spearheaded this development
(Nectoux and Kuroda 1990:79). The Japanese South Seas Forestry Development
Committee, which represented the interests of large pulp, timber and trading companies,
organised a survey of Kalimantan’s forest resources in 1959 (Nectoux and Kuroda
1990:79). Manning (1971:36) notes that forest operations in this period were undertaken
through production sharing agreements between the Indonesian state-owned forestry
company PT Perhutani and Japanese counterparts. According to Palmer (1978:120), the
first big (altogether 2,4 million ha) concession at Northeast Kalimantan was given to a
Japanese consortium in companionship with Perhutani in 1963. Indonesian private
companies also had joint investments with Mitsubishi and Mitsui in timber exploration
established in 1965 (Palmer 1978:121). According to Manning (1971:36), the production
sharing agreements were unsuccessful in terms of production. Log harvests averaged a
modest 2,5 million m3 before 1965 (Gillis 1988:53).
        After the military coup of 1965 Indonesia joined the timber boom with more
success. The 1967 Foreign Investment Law that favoured foreign investors through tax
holidays and profit repatriation became an important incentive behind this boom.39                     Law
No. 5 of 1967 defined the framework for investment in log extraction in Indonesia. The law
defines unclaimed forest land as the property of the government. It states that the
government is responsible for regulating exploitation of timber resources, including
environmental concerns, in co-operation with the private sector. However, such concerns or
rules were not further defined. Private investors were offered renewable concessions (HPH)
usually of 20 years duration. Foreign enterprises were allowed to establish wholly owned
subsidiaries or to form joint ventures with Indonesian investors. The provisions for
ownership by foreigners were successively tightened during the 1970s. After 1970, only
joint ventures with local partners were allowed. After 1975, only domestic investors were
granted new concessions (Gillis 1988:74).


39The 1967 Foreign Investment Law includes guarantees in case of nationalisation, exceptions from dividend
and corporate tax, exceptions from import duties, freedom of staff selection and free profit repatriation
(Robison 1986:138-139). Gillis (1988:68) claims that only an insignificant amount of taxes was collected from
most domestic or foreign timber companies before 1983.



                                                    122
       These investment opportunities and incentives, along with expanding demand for
logs in industrial countries, led to an upsurge of foreign and domestic investments in
logging in Indonesia. In addition to the mentioned general economic incentives for foreign
investors, control over logging concessions in the lowland forests of Indonesia was also
attractive because of the high economic rent from timber extraction. Tropical timber is a
natural resource, which like oil gives its owners a higher premium than average profit rates
on extraction. This rent was a great carrot for foreign investors.
       According to Manning (1971:39, table 6), until December 1970, 49 foreign investors
had invested USD 384 million in forest concessions in Indonesia, while 35 domestic
investors had brought in USD 53 million. According to Gillis (1987:84), foreign
investments were done by smaller multinational companies based in neighbouring Asian
countries40 as well as larger multinational corporations, like Weyerhauser, Georgia Pacific
and Lever Brothers in addition to Japanese companies.
       In the beginning of the timber boom (until early 1971), provincial governments also
had the right to grant smaller concessions up to 10.000 ha (Manning 1971:37). According to
Potter (1991:182), such operations were undertaken by the use of manual power by local
logging companies. Japanese interests furnished these companies along with larger national
companies with capital for mechanisation to improve supply. After 1971, the Japanese
refused to accept hand-logged timber. In 1973, the change towards mechanisation was
completed for the bulk of the larger logging operations (Potter 1991:182).
       Timber production increased rapidly encouraged by the mentioned economic
incentives. Production grossly exceeded targets set in production plans. According to
Palmer (1978:120), targeted output for 1973/74 was 5,1 million m3, while actual output
was as high as 21,5 million m3. Indonesian exports of sawlog took an increasing share of
the world market from 1969/70. The country’s share expanded from about 11 percent in
1969 to 42,5 percent in 1978 (Brookfield and Byron 1990: 48, 51).


40According to Palmer (1978:121), examples of the smaller companies were the South Korean companies
Korea Sudeco (300.000 ha concession in South Kalimantan with Indonesian counterpart P. T. Indeco),
Kyongnam Enterprise (200.000 ha concession in East Kalimantan) and the Philippine companies Far East
Managers Investors Inc. (100.000 ha in East Kalimantan together with Dharma Rimba Kencana) and The
Philippine International Production Association (200.000 ha concession with P.T. Surya Sakti).



                                               123
        The timber boom was based almost exclusively on the natural forests of Sumatra and
Kalimantan. While the tropical forests of these islands are dominated by homogenous
stands of valuable trees of the Dipterocarpaceae family, the more mixed stands of the
eastern islands are generally less attractive for commercial logging.41 Below, the forest
resources of the different islands as estimated in the 1950-census are indicated. The total
amount of forest in this year was estimated to 148,3 million hectares, distributed in this
way:




TABLE 8: The distribution of forest on major regions of Indonesia 1950

(Millions of ha):




41 IIED (1985:83). This division is based on commercial criteria. Biogeographically, Indonesia may be
divided into three regions. The Asian region, comprising Sumatra and Kalimantan, dominated by
Dipterocarpaceae species, the Australian region, comprising Irian Jaya, Maluku and Nusa Tenggara
dominated by Araucariaceae and Myrtaceae species and a transitional region, comprising Sulawesi and Java,
dominated by Araucariaceae, Myrtaceae and Verbenaceae. Botanically, the richest regions are the primary
lowland rain forests of Irian Jaya and Kalimantan., cfr. ITTO (1991:121).



                                                  124
    50
    45
    40
    35
    30
    25
    20
    15
    10
      5
      0




                                                          TENGG ARA



                                                                      SULAWESI
              JAVA



                        SUMATRA




                                                                                 MALUKU
                                  KALIMANT



                                             IRIAN JAYA

                                                             NUSA

                                                            /BA LI
                                     AN




Source: IIED (1985:82).


Within Western Indonesia, the main focus of the Indonesian timber boom was Kalimantan,
particularly the province of East Kalimantan. This region has particularly dense stands of
valuable species of the Dipterocarpaceae family like Red and White Meranti, Agathis,
Kapur, Keruing and Ramin.42 Kalimantan alone produced about 65 percent of sawlog
export between 1970 and 1980. The province of East Kalimantan produced about 65
percent of Kalimantan exports or about 44 percent of Indonesian exports in the same period
(Brookfield and Byron 1990:48, 51). Other emerging production centres included Sumatra
(particularly Riau), and to some extent the islands of Maluku.43
          The bulk of log production was directed towards exports. During the period between
1973 and 1982, about 70 percent of the 225,4 million m3 of logs and sawnwood produced
in Indonesia was exported (IIED 1985:90, table 4.9). The main destination of logs was



42According to IIED (1985:90, table 4.9), Dipterocarpacaea species took about 70 percent of total log exports
from Indonesia between 1973 and 1982. Of this, more than 50 percent was meranti or species of the Shorea
dipterocarp subgroup.
43According to IIED (1985:93), about 60 percent of logs produced in the 1977-82 period came from
Kalimantan. Sumatra was second, contributing about 26 percent.



                                                          125
Japan. According to Nectoux and Kuroda (1991:36), Indonesia supplied 47 percent of
Japanese log imports in 1974.
        The logging boom led to a rapid increase of logging concessions in Indonesia’s
tropical moist forests. The following numbers should be perceived as crude estimates, as
reliable statistical information about the Indonesian forestry sector is almost impossible to
find (Fenton 1996). According to Hoesada and Walker (1986:39), almost 49 million ha of
the forest area had been distributed to concessionaires in 1981. IIED (1985:12) estimates
total forest concession area to have expanded to about 53,4 million ha in 1984. This had
increased to about 56 million ha in 1992 (APKINDO 1992b:1). Capricorn (1992:5, table
10) gives a somewhat different estimate. According to their estimates, total concession area
in 1990 was 60,1 million ha.
        Since the late 1970s, the government gradually introduced various regulations to
stimulate domestic processing and to increase value added in the wood industry. This
reflected a broad motive in government circles to stimulate forward linkages and value
added by giving special treatment to select industries processing domestic raw materials
(Robison 1986:186, 387). Concession agreements required forest concessionaires to invest
in wood processing in Indonesia. However, this took place only on a very modest scale. In
1977, the export value of plywood was USD 2,3 million or only about 2 percent of total
timber export value (Gillis 1987:68).
        In 1978, the government doubled the log export tax from 10 to 20 percent.44 From
1980, a system of decreasing log export quotas linked to the establishment of plywood
factories (after 1981) was introduced to spur domestic industrial development (Robison
1986:187). In addition, loan guarantees through the Bank of Indonesia and incentives
offered through the Capital Investment Board (BKPM) were offered concessionaires to
assist increases of investment (IIED 1985:37). From 1985, the quota system was substituted
by a ban on log exports. This system of incentives for domestic processing provoked a
massive expansion of investment in processing, even though the wood industry was




44According to Gillis (1987:68), the 10 percent export tax was a subsidy in relative terms, as export taxes
from the competing exporter Sabah was about the double.



                                                   126
depressed by the low log prices that followed in the wake of the global depression of the
early 1980s.45
        Sawn wood and plywood production were the two wood industry branches with the
largest increase in output during the first years following the log export ban. Sawn timber
production changed from being a small industry for the domestic market to a larger,
partially export-oriented, industry. According to the World Bank (1993a:66), output
increased from 7,75 million m3 in 1984 to 11,1 million m3 in 1989. The major share of
output was absorbed by the domestic market, but exports between 1984 and 1989 were also
substantial, taking a share of about 30 percent of production (World Bank 1993a:66). Sawn
timber production expansion included both small and medium sized independent mills as
well as large mills integrated with forest concessions and plywood mills. The total number
of mills was estimated to a little above 4.000 in the late 1980s (Hardie 1989:35). About 10
percent of the mills were linked to forest concessions, and these were clearly the biggest.
They were responsible for about 65 percent of production (World Bank 1993a:67, Hardie
1989:35). Taxes on low quality sawn timber and pulpwood in 1988 as well as general sawn
timber exports were introduced in 1989 as an incentive to move wood- based production
into higher value added production lines. These measures led to a decrease of sawn timber
and pulpwood exports from Indonesia. This also led a drop of domestic prices on sawn
timber (MOF 1991:63). The reform was marketed as a directive to reduce logging as well.
        These reforms made plywood the most favoured branch in the drive towards
increased domestic processing. Statistical information on the expansion, output and log
consumption of the plywood industry is ambiguous. Thus, the numbers presented below
must be understood as crude indicators of trends rather than precise information. The
number of plywood mills increased slowly during the 1970s; from 2 in 1973 to 29 in 1980.
In the same period, production expanded from 19.000 m3 to about 1 million m3 (World
Bank 1993a:60, table 4.2). From 1980 to 1991, the number of mills increased to 118, while
production according to the World Bank (1993a:60, table 4.2) increased to about 9 million



45Large devaluations of the currency in 1983 and 1986 also contributed to a more export-friendly economic
environment.



                                                  127
m3.46 Most of the capacity and about 50 percent of the factories were installed at
Kalimantan (World Bank 1993a:60, APKINDO 1992a). The upsurge of plywood
production made Indonesia the world’s leading producer and exporter of hardwood
plywood (World Bank 1993a:59, Fenton 1996).
        This expansion was accompanied by heavy concentration in forest industries.
Concessionaires without plywood producing facilities were squeezed out or became
dependent on deliveries to concessionaires with already installed production capacity. Also
the dependence on strong financial backing and public financing for establishing large-scale
factories contributed to the concentration of the industry.
        The business journal Indonesia Business Review (7. May 1992:13) concludes that 45
percent of concession area and nearly the whole production capacity in plywood was in the
hands of 25 groups or conglomerates during the early 1990s. However, concentration of
control and profits most probably became higher than this. Most concessionaires without
plywood factories sell timber to or lease their concessions to these groups. This is reflected
in the fact that these groups control nearly all plywood production capacity in Indonesia.
Controlling licenses to plywood production and exports is the key to capturing the
economic rent from logging. Since the export barriers of logs and sawn timber decreases the
domestic price of timber inputs to plywood factories well below world market prices,
control over plywood factories implies control over the bulk of the timber rent (Word Bank
1993a: 85). In this way, plywood production in Indonesia may produce large profits for its
owners despite apparently very low productivity in the industry itself. Calculations
presented both by the World Bank (1993a:85) and Fenton (1996:70-79) conclude that
value-added by plywood processing is very low.
        Moreover, the larger plywood groups benefit from the fact that the plywood
producer’s association APKINDO leaves the pricing of exports to a council consisting of


46The last number, which is relevant to analyses of current policies, is highly controversial. The Jakarta Post
(1. March 1990) refers to the chairman of APKINDO, Bob Hasan, who puts the number of plywood plants to
125. Fenton (1996:44, table 13) cites information on plywood exports from APKINDO. Here, exports are said
to amount to about 9,7 million m3 in 1991 and 1992. If these numbers were correct, total output would
amount to somewhere between 11 and 12,5 million m3, since consumption on the domestic market is
estimated to be somewhere between 1,3 and 2,7 million m3 (Fenton 1996:44).



                                                     128
the 15 largest mill owners (World Bank 1993a:148).47 This leaves the largest companies
with control over export prices and profits in the industry. In addition, as discussed in detail
in chapter five, the biggest plywood groups are integrated in a tight network of mutual
business links, links to the military, and links to the presidential family.
       The plywood industry’s consumption of timber seems to have increased as a
consequence of the under-pricing of logs. Low log prices, which are assumed to encourage
low efficiency in the utilisation of raw materials, have led to enormous waste in logging
operations. Fenton (1996:66-67) estimates that somewhere between 20 and 70 m3 of log
waste is left per hectare logged. Much of this would be attractive to use as industrial input
at higher log prices. Moreover, Fenton (1996:66-67) mentions that 30-45 percent of log
input in fact is left to rot at factory sites, as only a small amount of these residues is utilised
as fuel for plywood dryers. In countries where raw material is less abundant and higher
priced, such waste is used raw material for reconstituted wood products. Fenton’s
observations are supported by estimates presented by the Indonesian Ministry of Forestry in
1991 (MOF 1991:20, 62). Here, it is concluded that logging operations leave enormous
amounts of valuable residues on logging sites. In 1988, such residues were calculated to be
about 23 million m3. Eight million m3 had been suitable as saw/veneer logs of high quality.
The rest could have been used as raw materials for pulp and paper or energy.
       Taxation of log output was also kept very low in this period. This implies that strong
incentives to extend the logging operation into marginal stands persisted. Although
calculation of rent capture and taxation is extremely difficult, most accounts conclude that
rent capture was at a low level throughout this period, although there were modest increases
of some taxes, in particular the reforestation tax (Fenton 1996:80-84, World Bank
1993a:81-88). This tax increased from USD 4 per m3 in 1980 to USD 7 in 1989, USD 10 in
1990, and finally to USD 15 in 1993 (World Bank 1993a:82). However, log prices on the
world market also increased rapidly in this period. Meranti prices increased from USD 195
in 1980 to USD 261 in October 1992 (World Bank 1993a:85, table 5.2).


Indonesia since 1967 - the effects of logging on the forest

47Interview with Ir Hendro Prastowo, APHI/APKINDO, July 1993.


                                               129
Logging on a scale comparable to what had been going on for some years in the Philippines
and Malaysia was introduced in Indonesia under the foreign investment boom after 1967.
From 1967 to 1980, there was a boom in timber exports mostly driven by the Japanese
market. After 1980, sawnwood and especially plywood industries became the main
consumers of wood.
        What were the effects of these two booms on Indonesia’s forests? Logged over
areas, total amount of log extraction from the forest and logging methods are important
indicators on this. However, there are enormous problems connected to available statistical
information on these topics. APKINDO is assumed to have more precise information, but
the organisation was unwilling to provide such information as a basis for my work.48
Fenton (1996:8), who has done one of the most comprehensive attempts to analyse the
forest industry, also complains about unwillingness from APKINDO to provide
information.
        Log output has been analysed by several sources. Sources tend to contrast
considerably, with official sources delivering estimates far below other sources. Below,
estimates presented by official sources and other sources are compared:




TABLE 9: Estimates of log production in Indonesia by various sources (million m3)




48After the initial conversation with the organisation’s deputy president, Ir Hendro Prastowo, all attempts to
contact the organisation were unsuccessful. The staff refused to talk when answering telephone calls, and
Prastowo refused to give new interviews.



                                                    130
                       Byron and                Indonesian   Ministry of
                       Brookfield Capricorn     forest       Environ-    WALHI
           MOF 1997    1992       1989          scientists   ment 1994 1991
                                                1993
1965                   5,7
1966                   5,9
1967                   6,5
1968                   7,2
1969                   8,8
1970                   12,5
1971                   15,6
1972                   18,7
1973                   28,1
1974                   23,6
1975                   18,3
1976                   25,3
1977                   24,5
1978                   28.9
1979                   27,1
1980                   29,9
1981                   25,7
1982/83                24,9
1983/84                27,9
1984/85    15,9        29,5
1985/86    14,5        26,0
1986/87    19,8        30,0
1987/88    27,6        27,7
1988/89    27,8                   41,5
1989/90    22,3
1990/91    26,1
1991       23,8                                 About 44                About 60
1992       26,0                                 About 44                About 60
1993       26,8                                 About 44     About 50   About 60


Sources: MOF (1997), Byron and Brookfield (1992), Capricorn (1989), interviews with
Indonesian forest scientists July 1993, WALHI (1991), TEMPO 5. February 1994.


This table indicates a significant divergence between official (MOF: Ministry of Forestry)
and other sources. The estimates given in interviews with Indonesian forest scientists and
the estimates made by the consultants at Capricorn Indonesia are relatively close. Both
these estimates are based on thorough knowledge of log production, including other sources
of timber like log production from conversion forest and other timber extraction permits.
Both sources also state that there is a considerable underreporting of log production from




                                              131
forest concessionaires to the Ministry of Forestry.49                 The existence of such serious
underreporting is claimed by several sources (Capricorn 1989, MOF 1990 , Rush 1991:37,
World Bank 1994b, Sumitro 1995).50
        However, high log output does not necessarily create major environmental problems.
Potter (1991:202-203) refers to estimates of the productivity of Indonesian forests that
conclude that 50 million m3 or more might be taken out of the forests by optimal
silvicultural treatment. The World Bank (1993a:35) also concludes that the sustainability of
output in Indonesia is strongly dependent on the character of logging operations. Reducing
the amount of waste from logging operations and reducing the impact from logging
operations on forests in various ways may greatly enhance forest yield. Thus, the
detrimental environmental effects of the increased log demand are heavily influenced by
logging methods. These methods will be shortly discussed below.
        Most concessionaires ignore legal provisions encouraging the use of sustained yield
principles. Instead, logging operations are ruled by short-term economic considerations
(Sumitro 1995). In practice, this implies the extension of high-grading in logging
operations. High-grading or «creaming» involves the extraction of only the most valuable
specimens (usually meranti) of a given forest area. According to field studies by Burgess
and Laurent (1989:37) in the late 1980s, high-grading took place in all the 18 concessions
of a major plywood producing company, Kayu Lapis Indonesia. Other sources, like IIED
(1985:129-130) and Gillis (1988:64), support this conclusion. Indonesian forest researchers
confirmed that this practice was a persisting problem in Indonesian forestry in interviews in
1993.51 The main negative effects of high-grading are connected to the fact that logging
teams extend their operations over large areas to find the largest and most valuable
specimen. As the residual stand of trees suffers from severe damage during the logging


49Capricorn (1989:145-146) mentions that numbers from the Ministry of Forestry indicate that output based
on annual work plans on concessions (RKT) delivered to the Ministry in 1988 was about 31,16 million m3.
Log production outside concession forest, like logging for conversion or minor logging permits was 4,2
million m3 in the fiscal year 1988-89. Conservative estimates of log demand for the wood industries, however,
was about 41,5 million m3. This implies that underreporting was at least 6 million m3 or about 15 percent of
production.
50Confirmed by staff connected to the Ministry of Forestry, July 1993.
51Own interviews with Indonesian forest researchers, July 1993.



                                                    132
operation, the extraction of only the biggest specimens of the most valuable species leads to
the destruction of vast areas for the collection of only a small number of exceptionally
valuable trees.
       Damage during logging operations is connected to the use of heavy equipment used
for skidding of logs, road construction and careless tree felling. Especially young trees that
should provide the basis for the next harvest are vulnerable to such damage. According to
Potter (1991:183), various field studies in Indonesian conclude that mechanised logging
operations may damage between 40 and 70 percent of residual stands. Similar figures are
mentioned by the World Bank (1993a:39). As log demand has increased, there is presently
also a strong temptation for concessionaires to re-log stands cut recently, as the stand may
change with the maturation of trees and increasing demand for timber (Gillis 1988:100-
101). According to officials connected to the Ministry of Forestry52 as well as the World
Bank (1993a:39), this happens quite frequently, and is a major reason of forest destruction.
After the second or third cut, the regenerative capacity of the forest both in terms of species
composition and biomass is very low (Jafarsidik 1992).
       A second large problem aggravated by the uncontrolled extension of logging, is the
influx of shifting cultivators who often follow in the wake of loggers. Though there are
important ambiguities in concession agreements and regulations regarding the access of the
public to forest concessions (Burgess and Laurent 1989:42-43), this problem is certainly
magnified by the rapid opening of new land caused by the extensive road-building
connected to the adoption of «high-grading» logging techniques.
       On the basis of accessible information, it is difficult to estimate precisely the size of
logged over area each year. This is partly caused by the lack of reliable post logging
residual stand inventories (World Bank 1994b:53). The World Bank (1993a:23) suggests a
figure of about 700.000 ha/year. The destiny of logged over land is not well known. The
World Bank (1993a:23) goes far in indicating that much logged over land ends up as
deforested land. Dick (1991) gives a high estimate. He indicates that logging operations
cause about 120.000 ha of outright deforestation every year. Ministry of Forestry (MOF
1991) gives a low estimate of about 77.000 ha. The 1990 joint FAO/Ministry of Forestry




                                             133
report suggests that numbers for forest depletion following in the wake of logging which is
so heavy that the forest never returns to its original state neither in terms of species
composition or biomass content, are much higher (MOF 1990:219).
        According to Potter (1991:194), logged over areas and unlogged forest on the
agricultural frontier have been «switched» or traded between the official agricultural
immigration (transmigration) agency and concessionaires in the key forest province of East
Kalimantan, converting potentially restorable production forest to agricultural land of
unknown quality.
        Commercial logging also damages much forest originally set aside for protection and
conservation. The MOF (1990:75) report mentions that there have been frequent intrusions
of concessionaires into neighbouring conservation areas without adequate legal response
from the authorities. A source inside the Indonesian Ministry of Forestry emphasised that
such behaviour remains unpunished, in spite of the existence of adequate legal provisions
directed to stop it.53
        Compared to other activities with effects on Indonesia’s tropical moist forests,
logging is widely held to be the most destructive single activity carried out by commercial
actors (IIED 1985, Dick 1991, World Bank 1994b, Riswan and Hartanti 1995). According
to Dick (1991), development of estate crops on large plantations, the other main activity
implemented by large companies, involved 11,4 thousand ha of deforestation per year, as
compared to the 120 thousand ha caused by forest harvesting. The perception that logging is
the commercially oriented activity which creates most deforestation in Indonesia is
supported by the World Bank (1994b:53). These estimates do not take into account forest
depletion and following biomass reduction and biodiversity loss.
        However, certain ambiguities surround these estimates. One ambiguity pointed out
by Sunderlin and Pradjna (1996) is that the mechanism linking logging to deforestation is
not described. Thus, it is unclear whether invading shifting cultivators, fire or invasions of
Imperata Cylindrica grass on particularly heavily logged sites causes the deforestation that



52Own interviews with officials connected to the Ministry of Forestry, July 1993.
53Interview with high-ranking staff at the Ministry of Forestry.



                                                    134
follows in the wake of logging. It should also be mentioned that some estimates of
deforestation related to establishment of estates are higher than Dick’s (World Bank 1990).
        Though documentation of the share of various commercial activities in deforestation
and forest depletion to some extent is ambiguous, regulatory challenges are not only based
on well-documented, objective accounts of the situation. Popular perceptions of
deforestation and forest depletion and the dynamics behind these events are equally
important (Wilson 1980). During the period stretching from the late 1980s to 1993, there is
little doubt that logging was perceived as the main commercial activity in terms of
environmental destruction of Indonesia’s tropical moist forests. Newspaper and magazine
articles pinpointed logging as a major cause of environmental damage, ranking as the
second most important cause of environmental destruction after government sponsored
migration programmes (IIED 1985, Sedjo 1987, Gillis 1988, World Bank 1990, World
Bank 1993a).54 Thus, despite the ambiguities surrounding the contributions of various
commercial activities to deforestation, it can be argued that the major challenge to the
Indonesian government with reference to environmental regulation of commercial actors
operating on tropical moist forest land was centred on the activities of logging companies.
        To summarise, logging undertaken on privately managed forest concessions was
perceived as the largest source of forest depletion and deforestation connected to the
operations of private commercial actors in Indonesia. The geographical extension of
logging through the adoption of high-grading techniques both contributes to widespread
forest depletion and deforestation, and serves as a spearhead for other agents of
deforestation, like shifting cultivators. As mentioned, the low prices of logs connected to
the log export ban of 1985 and the construction of a large wood-based industry in
Indonesia, seems to have provided strong incentives for increased log demand and careless
logging. However, I have also shown that there was scope for vast improvements in
Indonesian logging. This was the main environmental challenge for Indonesian authorities


54 All the interviewees in Indonesian NGOs and the Ministry of Forestry emphasised logging as the main
source of deforestation and forest depletion driven by commercial actors. Cfr. also the Indonesian Minister of
Forestry, Djamaloedin Soeryhadikoesoemo. In 1993, he stated that: «If we continue producing plywood in
Kalimantan, for example, I’m afraid that the natural rain forests on the island will be damaged soon. We have
to anticipate this possibility», cfr.: «Jungle of laws of environment confusing foreign investor», Jakarta Post,
15. May 1993:1.



                                                     135
during the late 1980s, when it became clear for the larger public that their tropical moist
forests had important global environmental functions. Before I take a closer look at the
Indonesian response, I proceed with a short presentation of the contributions of commercial
actors to deforestation and forest depletion in Brazil.


Brazilian Amazonia55 – the expansion of commercial interests
Like in Indonesia, the opening of the largest expanse of tropical moist forest land in Brazil
for commercial exploitation was done by a military government. While the main tropical
moist forest areas of Indonesia are situated on the Outer Islands, the main tropical moist
forest area of Brazil is the large forests of Brazilian Amazonia. Most of these forests were
virtually untouched56 before the Brazilian military coup of 1964. While there had been a
rubber boom around the turn of the century based on the extensive stands of Brazilian
rubber trees in particular found in Western Amazonia, and some moderately successful
colonisation attempts in Eastern Amazonia,57 the region was in demographic and economic
decline until the early 1960s. The only important development was the establishment of the
capital of Brasília relatively close to the Amazon region in the late 1950s and the
subsequent construction of a highway connecting Brasília and the eastern Amazonian
capital of Belém in the early 1960s.58 There were signals from various governments that the


55 The term «Amazonia» as used in most texts usually has one of two meanings. One is the «North-region» as
defined by the Brazilian census agency IBGE, including the states of Pará, Amazonas, Rondônia, Acre, and
Amapá in addition to the federal territory of Roraima. The definition «Legal Amazonia» that is used by the
Brazilian planning agency for Amazonia, SUDAM, after 1979 also includes Mato Grosso, Tocantins and large
parts of Maranhão.
56Historical studies indicate that Amazonia supported a large population before the genocide following in the
wake of the Portuguese conquest. Estimates of human populations in Amazonia around the year 1500 range
from 1 million to 6 million. The cleared area in the Amazon region was probably close to that prevailing in
1990, cfr. Smith et al. (1995:13) and Bunker (1985). Thus, the «virginity» of Brazilian Amazonia in the pre-
1960 period is most likely a phenomenon created by humans.
57Immigrant settler agriculture was encouraged in the Bragança zone east of Belém between 1875 and 1916
to increase food supplies for the region (Eden 1990:100). Deforestation following in the wake of this
settlement caused the deforestation of about 90.000 km2 as estimated in 1975 (May and Reis 1993:39).
58When it comes to the question of historical deforestation, other «frontiers» than Amazonia should also be
mentioned. Lush tropical forests by and large removed in colonial times or later once covered both the
Northeast and the Southeast. The expansion of coffee cultivation from Rio de Janeiro into São Paulo in the
second half of the last century implied the clearing of tropical forests. The first coffee boom took place in the
Paraíba valley, which soils were exhausted due to extensive deforestation before the 1870s (Dickenson
1982:58). After that, the coffee boom penetrated São Paulo due to its richer soils and abundant international



                                                      136
potential riches of Amazonia were ignored. The most famous example is the «Amazonia
speech» of president Getúlio Vargas in 1940. Here, he invites the Brazilian people to
«march to the West». However, this did not materialise as any increase in commercial or
other activity in the region (Prado 1974:75). Less than 6 percent of the area of the state of
Pará was cultivated (Arnt and Schwartzman 1992:61). The Brazilian agricultural frontier
was moving from western São Paulo into the Southern parts of Mato Grosso, Goiás,
Triângulo Mineiro, and in the South into Paraná during this period (Dickenson 1982).
        Nevertheless, Branford and Glock (1985:37-43)) mention that there was a modest
influx of ranchers into the Amazon region already during the 1950s and early 1960s.
Extremely low land prices and what was perceived as fertile soils in the Araguaia region
attracted the ranchers. This slow influx of ranchers increased abruptly with the military
coup of 1964. The military clique that seized power in Brazil in 1964 had very high
ambitions for the development of Amazonia. The motives for this expansion are discussed
later. Here, it is enough to mention that the new leaders of 1964 perceived Amazonia to be
of central importance for Brazil’s security. The region’s long and virtually unpopulated
border was seen as risky for Brazil as it made the country vulnerable to invasion and foreign
infiltration (Hecht and Cockburn 1989, Miyamoto 1989, Allen 1992). Major efforts were
made to reformulate policies related to the region and establish an institutional framework
for their implementation.
        In 1964, the military president Castello Branco stated that «Amazonian occupation
would proceed as though it was a strategically conducted war» (Hecht 1984). In 1965, he
emphasised the need to promote greater efficiency in regional planning, and to expand the


demand. In 1854, almost 80 percent of São Paulo were covered with forest. This forest cover decreased
rapidly due to the expansion of coffee plantations and medium- and small-scale agriculture. In 1973, only 8
percent of the state were still in forest (Dickenson 1982:164). There are also more recent examples of
deforestation in the South. For instance, in our century, small farmers buying plots from a colonisation
company colonised the state of Paraná. In this process, at least 12.600 km2 of the state was deforested. The
very rich soils then uncovered paved the way for prosperous farmer societies and the modern and prosperous
towns of Londrina and Maringa. In the South, there was also a large-scale onslaught on the region’s pine
forests by the forest industry. In the state of Paraná, the forest industry was a prime actor behind the reduction
of the forest cover from its original extent of 180.000 km2 to 90.000 km2 in 1950. Later on, the twin pressures
of agricultural expansion and forest industry demand have considerably reduced these remaining forests. In the
state of Minas Gerais, the iron industry has consumed enormous tracts of forest due to the absence of high-
quality mineral coal in Brazil. The iron industry’s demand for charcoal required an annual input of 27.000 ha
of forest per year in the early 1960s (Dickenson 1982:164).



                                                      137
role of private enterprise in this process (Hall 1989:6). These intentions were implemented
rapidly.
        The old and inefficient regional development agency for Amazonia (SPVEA) was
reorganised after the pattern of the relatively successful SUDENE (the development agency
for the Northeast) and called SUDAM or Superintendência de Desenvolvimento da
Amazônia. The new institution became operative in 1966, and placed directly under the
Ministry of the Interior (Hecht and Cockburn 1989:106). The programme to be carried out
was introduced by the military government in 1966 under the label «Operation Amazonia».
        Operation Amazonia was a combination of two ideas of how to encourage regional
development. The first idea was that tax incentives, tried earlier in the Northeast (by
SUDENE) and to a much smaller extent, the North (by SPVEA), could attract outside
investment in developmental projects. The second idea was that regional development
might be stimulated by establishing geographic growth poles. Such poles, stimulated by
generous tax incentives, were expected to encourage economic growth and diversification
through linkages to a broader spectrum of economic activities. The main poles of
development under «Operation Amazonia» were the city of Manaus and the Araguaia-
Tocantins area in Eastern Amazonia.
        Ranching was identified as the key sector of the new strategy. This choice has been
criticised as economically unsuitable for the region, but should be considered in its proper
historical context. Cattle ranching was perceived as an important potential growth sector by
international bodies like the World Bank.59 In 1964, FAO and ECLA (Economic
Commission for Latin American) published the study Livestock in Latin America. It
concluded that the Brazilian ranching sector had enormous potentials. A combination of
new Australian pasture technologies with better grass varieties and incorporation of new
areas for pasture could transform Brazil to a beef giant (Hecht 1984:372-374). The analysis
was carried out in a period when international beef prices increased rapidly and Brazilian
ranchers failed to respond (Hecht 1984:372-374).




59 In 1975, the World Bank gave about a third of its project support to ranching projects, concentrating this
support in Latin America (Payer 1982:214).



                                                    138
        While SUDAM was responsible for regional planning and project approval, the
financial section of the programme was to be administered by BASA, a reorganised
regional development bank. BASA became responsible for managing a new regional
development fund for the Amazon, FIDAM. FIDAM was financed both by the government,
stock obligations and private investors who supported specific development projects
approved by SUDAM (Browder 1988:257). Private investors were allowed to deduct up to
50 percent of their income tax liabilities if savings were used for investment in FIDAM
(Reis and Margulis 1991:353).60 Furthermore, business enterprises operating in Amazonia
were eligible for tax holidays up to ten years. These enterprises could also be exempted
from import and value-added taxes. Finally, firms could use 40 percent of their income tax
liabilities for new equity subscription.
        Later, FIDAM was reorganised as a mutual fund named FINAM, but the incentives
remained largely similar.
        A new system of subsidised agricultural credit promoted by the government also
stimulated investments in agriculture and livestock. In 1965, the National Congress gave
the governing board of the Central Bank wide responsibility for developing a system of
subsidised agricultural credit. Government banks, government development agencies and
private banks all participated in the distribution of cheap credit, mainly aimed at the
modernisation of large farms and ranches for export production (Browder 1988:261).
        The new subsidy system created a boom of Amazonian investment. While several
new industries were established in the free trade zone of Manaus created in 1967, cattle
ranching expanded in the Araguaia-Tocantins region in Pará and in Mato Grosso. The
geographical distribution of approved SUDAM cattle projects between 1966 and 1988
demonstrates the concentration of investments in these two areas. The vast majority of the
766 projects for ranching financed by the FINAM programme were located in the states of
Pará (273) and Mato Grosso (283) in this period (Yokomizo 1989:14-15, table 2). There
were no comprehensive plans to coordinate activities stimulated by the incentive



60The investment tax credit subsidies implied that until 50 percent of a company’s tax liabilities could be
invested in specific projects approved by SUDAM. In exchange for these investments, the company received
FIDAM stocks that could be traded for stocks in other SUDAM projects. New stocks could not be sold for



                                                   139
programme through regional development planning. SUDAM suggested a comprehensive
programme for public investment in the region in 1968, but it was never approved (Hall
1989:8). According to Branford and Glock (1985:46-47), inadequate infrastructure was still
a powerful barrier to ranching extension into more remote corners like Rondônia, Roraima
and Amapá.
        During the 1970s, public criticism as well as scepticism in government circles
mounted. The ranching projects did not develop according to government ambitions. A
combination of inadequate agricultural techniques applied by the new ranchers, SUDAM
corruption and diversion of fiscal incentives to other uses led to a lower level of beef
production than expected by the government (Branford and Glock 1985:67-121). Some
considerations for deforestation following in the wake of some of the bigger projects also
played a role.
        Following this criticism, in 1979 SUDAM declared that no incentives would be
distributed to new projects in the «high-forest area» of Amazonia. This was the outcome of
a study made by a parliamentary commission on the devastation of Amazonia in 1978. The
study frequently cited the role of the SUDAM-approved livestock projects in its
proceedings in 1978-79 (Mahar 1989:20, Schmink and Wood 1992:97-98). SUDAM used
satellite images as part of the implementation of projects in 1979-80. However, this practice
was abandoned in subsequent years, and therefore throws doubt on the allegation from
SUDAM that new projects were approved in «transition forest» areas only (Fearnside
1989:291-292). According to Fearnside (1990a:234), three major loopholes allowed
continued clearing of forest with incentives. First, substantial areas were cleared in «old»
projects already approved. Second, «transition forest» also included a mix of dense forests
and «cerrado» or plains covered by bushes. Third, the definition of «dense» or «high-forest»
was made very restrictive; permitting continued use of incentives in forested regions. Thus,
ranching expansion funded by fiscal incentives continued in spite of reductions.
        In the first half of the 1980s, the fiscal incentives programme threatened to collapse
for financial reasons. On the one hand, there was an all time record in approvals of fresh


four years. The tax credits could cover up to 75 percent of project investment costs. To obtain the subsidy,
companies had to commit no less than 25 percent of project money (Browder 1988:257).



                                                   140
cattle projects with a peak in 83/84. Then, 175 new projects were approved (Yokomizo
1989:15, table 2). On the other hand, available resources in the FINAM fund declined with
53 percent between 1975 and 1985 (Yokomizo 1989:18). However, there was a certain
increase of money in the fund in 1986 and 1987. New projects also continued to be
approved. 49 new projects were approved in 1986 and 20 new projects in 1987 (Yokomizo
1989:15, table 2).
       This contradiction between fresh approvals and reduced funding created a very
unstable economic environment for new and old FINAM-financed projects (Yokomizo
1989:18). In the relatively small cattle ranching zone of the Superintendency for the Free
Trade Zone of Manaus (SUFRAMA) near Manaus, clearing of new land for ranching
stopped as a consequence of this breakdown of incentives (Fearnside 1992:178-179). Along
with this, further doubts regarding the profitability of ranching in the Amazon region and
the efficiency of the programme emerged. Several studies (Hecht 1981, 1983, Fearnside
1979) documented the unsuitability of ranching to Amazon soils in the absence of heavy
inputs of fertilisers. Continued unveiling of more frauds and irregularities in the
implementation of projects suggested that the acquisition of incentives frequently were
stronger motives for obtaining project approval than any genuine interest in the projects
themselves (Yokomizo and Gasquez 1986, Yokomizo 1989, Costa 1991). Several projects
were unimplemented or in a state far inferior to what they had reported.
       Nevertheless, fiscal incentives were perceived as an important factor behind
deforestation in the Amazon region. Yokomizo (1989:26-27) cites estimates from the
Brazilian Space Agency, INPE, which conclude that 14.200 km2 was deforested by
FINAM-financed ranches in Mato Grosso and 6.700 km2 in Pará. This represented 21
percent of total deforestation in Mato Grosso and 7,5 percent of (after 1970) deforestation
in Pará until 1988. Later estimates from SUDAM based on field studies are lower.
According to these estimates (SUDAM 1992:14), altogether 23.653 km2 of Amazonian
native vegetation had been converted to pastures under the FINAM programme before
1989. The numbers for Mato Grosso and Pará were 11.050 km2 and 6.561 km2 respectively.
If analysed in terms of INPE’s 1992 estimate of the development of deforestation in the
region, the share of deforestation ascribed to fiscal incentives is 6,5 percent for Pará and



                                            141
13,9 percent for Mato Grosso in 1989 (INPE 1992, SUDAM 1992). There was strong
concentration of deforestation related to FINAM ranching projects in just these two states.
Based on SUDAM’s estimates, it emerges that 75 percent of deforestation for ranching
purposes under the FINAM programme until 1989 took place in Mato Grosso and Pará.
        The World Bank (1992:32) estimates that FINAM incentives covered 17 percent of
Amazonian cattle in 1980 and 25 percent in 1985 on 0,2 and 0,4 percent of the ranches,
respectively. These numbers indicate that ranches supported by FINAM incentives were
very large. Average size of such ranches in Pará in 1989 was 9.500 ha. However, there were
examples of ranches with an area of more than 300.000 ha.
        SUDAM (1992) mentions another effect of fiscal incentives that is absent from the
debate on deforestation and fiscal incentives. This is the indirect contribution of FINAM
financed projects to the construction of infrastructure in the region. According to the report,
altogether 11.710 km of primary and secondary roads and 1.070 bridges had been created
before 1990 in connection to FINAM projects (SUDAM 1992:13). There is, again, a heavy
concentration of such infrastructure in Mato Grosso and Pará.61 Although the report fails to
describe the methods behind these estimates, they may imply that the effects of FINAM
projects on access to forested regions were more pervasive than indicated in estimates of
deforestation on the subsidised ranches alone. Road building is a crucial precondition for
access to new land and clearing in the Amazon region.
        However, the fact that financing for fiscal incentives became unstable during the
1980s and that relatively few projects were financed through this fund and even fewer
properly implemented, indicates that several other factors contributed to the massive
extension of ranching in the post-1966 period.
        One main factor was rural credit, which value increased dramatically in the years
following 1974. Rural credit to Amazonia was mostly channelled into crop production, but
ranchers enjoyed a set of other credit incentives. The National Programme of Livestock
Development (PROPEC) offered twenty year investment credit at a nominal annual interest
rate of 12 percent to Amazonian ranchers, implying huge subsidies (Mahar 1989:21). Credit


61 67 percent of roads and about 64 percent of bridges were located in Mato Grosso. 16,5 percent of roads
and about 24 percent of bridges were located in Pará. Calculated on the basis of SUDAM (1992:13).



                                                  142
at the same rate was also offered to Amazonian ranchers by the POLAMAZONIA
development programme (Mahar 1989:21). POLAMAZONIA was the implementing
instrument of the Second Development Plan for Amazonia (PDA II), which implied a very
strong emphasis on large-scale activities. It represented an extension of the underlying
concepts of «Operation Amazonia». Fifteen «development poles» in Amazonia were
targeted for mining, ranching, agriculture and logging (Filho 1992:359-360). After a short
experiment with small-scale farming along with the construction of the Transamazonia
highway in the early 1970s, this programme implied a return to the idea that large-scale
units were most suitable for the commercial exploitation of Amazonia.62 POLAMAZONIA
gave priority to the assumed economic advantages of Amazonia; cattle, timber and mining.
These demands must also be understood in the context of the Second National
Development plan 1975-1981, in which increased exports was perceived as necessary to
pay for enormous investments in infrastructure and heavy industries. During the first three
years of POLAMAZONIA, 99 percent of credit was disbursed to cattle ranching and mining
and only 1 percent to small-scale agriculture. Like SUDAM incentives, subsidised credit
was particularly attractive because it could be diverted to other activities. World Bank
analysts estimated such diversion to be about 20-30 percent of total rural credit in the late
1970s (Mahar 1989:22).
        Like the fiscal incentives, the distribution of subsidised credit had a strong bias
towards large ranches. Large ranches are much more efficient in securing land titles for
their activities and become eligible for official loans. The World Bank (1992:32) estimated
that 78 percent of cattle received subsidised livestock credit in 1980 and 63 percent in 1985,
on 13 and 6 percent of the ranches respectively. Thus, also here, large ranches
predominated.
        Road building also stimulated the extension of ranching. Until 1960, the size of the
road network in the region was only 280 km of paved roads and 6.000 km of unpaved, local
roads. There was a major expansion between 1960 and 1975, when total road expansion
was 22.000 km. As much as 50 percent of this was concentrated in the state of Pará. During


62 For a thorough description of the conflicts between ranching interests and small-scale farming also inside
the state apparatus in connection with the Transamazon Highway project, see Bunker (1985).



                                                    143
the next 10 years, more than 14.000 km of roads were constructed (Reis and Margulis
1991:351). Most of these new roads were state and local roads (World Bank 1992:14).
There was a renewed spurt of road building after 1985, adding another 14.000 km in only
three years (Reis and Margulis 1991:351). Besides providing squatters and farmers with
access to new regions, as it happened in Rondônia after the pavement of the BR-364
through the state during the 1980s, access to a road strongly increases the market value of
land (Fearnside 1989:292). According to Fearnside (1989:292), land value increases several
times when a property gets access to a road. A similar increase of value takes place when
land was cleared and a definitive title obtained. Continuous road expansion along with a
strong demand for fixed assets like land in a situation characterised by high inflation led to
a speculative boom of investment in Amazonian land. In Mato Grosso, general land prices
increased at an annual rate of 38 percent after inflation in this period (Fearnside 1989:292).
       This boom had little connection with market prices for beef. From a high level in the
early 1970s, beef prices on the world market dropped by 50 percent and remained low
during the 1980s (Hall 1989:25). In addition, large parts of Amazonian soils were not well
suited for cattle ranching and small farmer agriculture.        Without intensive inputs of
fertilisers and herbicides, pasture productivity generally declines after a decade (Fearnside
1989:291). These problems have become so serious that Amazonia today is a net importer
of beef (Hall 1989:26, World Bank 1992:39-40, Smith et al. 1995:164).
       However, it is important to note that unsuitability of soils for long-term ranching not
precludes cases of successful adaptation at the level of the individual rancher. Burning of
land provides the farmer with a nutrient spike that may last for some years. Serious nutrient
loss, which often occurs after a couple of years, is not a great problem as land is abundant
beyond the agricultural frontier. In the absence of adequate supplies of labour and subsidies
for fertiliser, clearing of new land and repetition of the cycle becomes an economically
attractive option (Schneider 1995). The emphasis on ranching must also be understood in
this context. Ranching is a viable option in the absence of labour supplies as it is labour
extensive.
       Ranching expansion in this period was also driven by more fundamental factors
favouring agricultural expansion in Brazil. Federal rules for land allocation is another



                                             144
important incentive for ranching and farming expansion in Brazil (Binswanger 1991:822-
823). Since colonial times, «improvement» of land has been an important prerequisite for
the acquisition of land titles. Formalised rights existing from 1850 state that a squatter, who
has lived on unclaimed public land for one year and one day and has used it «effectively»,
acquires user rights. Land can also be acquired by squatting on private land for a certain
period in the absence of eviction by the original owner. «Effective use» implies conversion
of vegetation, and the squatter receives a land title several times the size of the cleared plot
after five years. This rule gives incentives to clear a maximum amount of land. Conversion
of land to pastures is one of the cheapest ways to «improve land». Though seemingly
favouring small farmers, these rules apply to agricultural holdings of up to 3.000 ha
(Binswanger 1991:823). In general, squatters and small farmers have problems with finding
unoccupied land, while individual and corporate ranchers have resources to penetrate more
remote areas (Binswanger 1991:823).
       Other private incentives to clear land, once provided with land title, also played a
role. Fearnside (1992a:179) notes that the Bank of Amazonas (Banco do Estado do
Amazonas) evaluated land value in 1988 on the basis of clearing. Cleared land was
considered to be three times as valuable as forested land, and planted pasture 7,5 times as
valuable as forested land.
       Another general incentive for agricultural expansion in the Amazon was the
agricultural income and land tax system. Agricultural income in Brazil has generally been
almost exempted from income and property taxation, both because of very low taxes and
widespread evasion (Binswanger 1991). Linked to the necessity of «improving land»
through clearing to obtain secure land-titles and higher taxes on non-agricultural land, these
tax exemptions increase the relative attractiveness of investments in agriculture and
encourage clearing of acquired land areas.
       Logging stimulated ranching in some areas. Particularly in the more established
communities of Eastern Amazonia, which received few incentives after the early 1980s,
logging became a new source of investment funds for ranching expansion (Uhl and
Buschbacher 1985, Mattos et al. 1992, Mattos and Uhl 1994). Increasing hardwood prices
during the 1980s also contributed to this (World Bank 1992:44). Log production from the



                                              145
North region increased from 4,5 million m3 in 1975 to 24,6 million m3 in 1987 (World
Bank 1992:44, table II-10). Thus, even though burning was still the preferred instrument for
land clearing in many regions, logging increasingly became both an instrument of land
clearing and a source income for pasture expansion activities. Consequently, controlling
logging emerged as a prerequisite for controlling ranching expansion.
       In addition to SUDAM incentives and rural credit, two of the «development poles»
of POLAMAZONIA were expanded to large-scale development projects. This included
both a huge development project around the iron ore deposit at Carajás and a colonisation
project in the federal territory of Rondônia, the POLONOROESTE project. The Carajás
project had main implications as a stimulus for the participation of commercial interests in
Amazonian development.
       The Carajás iron deposit, discovered in the state of Pará in 1967, is one of the largest
in the world. In addition, there are significant deposits of mangane, copper, bauxite, nickel
and tin in the Carajás area. Based on these rich mineral deposits, the state owned mining
company Companhia do Vale Rio Doce (CVRD) implemented a USD 3,1 billion project in
the period between 1982 and 1987 to establish the Carajás mine. This financing, which
included money both from the World Bank and the European Community, was used to
prepare the iron mine, build a 780 km railway to the port of São Luís and a deep-water port
in this city. In addition, the government financed the construction of the big 4.000 MW dam
Tucuruí dam and roads connecting the mine with different parts of the country (Hall
1989:41-77).
       The mining project became the core of plans for a very large development project
covering vast areas of Eastern Amazonia, the Greater Carajás Plan (PGC). Fiscal incentives
and tax rebates were core instruments of this project. The tax incentives, which were
instituted one month after the official approval of the Greater Carajás project in 1980,
included exemptions from income tax on funds invested in the PGC area, subsidised
electricity, easy access to credit, exemption from import duties and subsidised iron inputs
(Hall 1989:48).




                                             146
       Project approvals for the Great Carajás Programme included more than 14.400
heads of cattle in 1987 (Hall 1989:70-71, table 2.2). The PGC incentives came in addition
to FINAM and other incentives in the same area.
       PGC also included plans for the establishment of large-scale privately owned iron
producing industries in the region. In 1989, 35 such projects were approved or under
consideration (Hall 1989:53). Experts warned that these projects could cause 1.500 km2 of
annual deforestation (Anderson 1990a:1194, 1201). Local iron production could not carry
production costs of charcoal from plantations as fuel due to declining pig iron prices from
1981 (Anderson 1990a:1194). Sawmill residues might serve as fuel for some processing,
but if the ambitious plan to develop major metal-processing industries had been
implemented to its full extent, there would have been a great demand for charcoal from the
region’s forests. This happened in the iron industries of Minas Gerais. Here, 80 percent of
non-mineral coal comes from native vegetation, collected at distances of more than 1.000
km. Wood resources closer to the metal-processing industries have been exhausted
(Anderson 1990a:1194).
       The development stimulus from the government also attracted other commercial
activities than ranching, logging and iron production. Private mining activities as well as
private migration projects were the most important among these.
       Private mining activities in the Amazon region gained momentum during the 1970s.
According to Branford and Glock (1985:115), mining received increased attention as a
spearhead for Amazonian development in government circles, and received extensive
funding through the FINAM fund as well as POLAMAZONIA. In contrasts to the
troublesome ranching sector, the mining sector was perceived as a much safer commercial
activity in terms of profits and exports. Amazonia’s mineral deposits also outside the
Carajás area are very large. Altogether, Amazonia possesses 97 percent of Brazil’s bauxite
reserves, 77 percent of the tin, 40 percent of the manganese, 59 percent of the manganese
and 22 percent of the iron reserves (Kolk 1996:91-92). During the 1970s, state companies,
private Brazilian companies and transnational companies invested in a number of huge
projects in the region. Large areas were given as concessions for possible future exploration
or prospecting. In several areas of the Amazon region, these concessions overlapped



                                            147
indigenous reserves (Kolk 1996:99). This led to a number of conflicts between protection
and exploration. These will be explored further in chapter five.
       Another activity pursued by commercial interests was private migration projects. For
several of the companies and individuals holding large land areas, this was an attractive
option when the difficulties of ranching turned emerged. While ranching was difficult,
much land had increased its value enormously since the businessmen had acquired it at the
beginning of the boom. Also entrepreneurs not previously involved in ranching, like the
large Brazilian construction company Andrade Gutierrez started colonisation projects
(Branford and Glock 1985:105). Both Branford and Glock (1985:83-106) and
Pompermayer (1984) describe how business interests from the South were active in
persuading SUDAM and the government to support this kind of projects. In addition to
financing from the FINAM fund, some projects also managed to attract funding under the
Great Carajás programme (Branford and Glock 1985:105). Most migrants were farmers
from the South and Southeast who had sold out land to large agricultural companies in
these regions, and bought larger pieces of land through the colonisation projects. According
to Branford and Glock (1985:83-106), the outcome in terms of success and failure was
highly variable. Some projects produced modest successes, while other turned out to be
large failures. Lack of adequate infrastructure, particularly roads turned out to be a major
barrier in many areas.
       Though a series of commercial activities carried out by large companies developed
in response to extensive implicit and explicit government incentives, in the following, I
argue that ranching was perceived as a dominating factor in terms of geographical
extension, deforestation, and implications for global environmental problems.




The effects of incentives: The expansion of ranching
As mentioned, SUDAM incentives, agricultural credit, logging, infrastructure expansion,
large development projects, rules for land acquisition and the agricultural tax regime in
combination with cheap and available land encouraged the extension of ranching in the
Amazon region. Though it is difficult to estimate the precise effects of each of these



                                             148
policies, together they made up a strong and encouraging framework for the extension of
ranching. Other kinds of land use, like crop cultivation, were less economically attractive.
Perhaps the most economically attractive option, mining, demanded only modest land areas.
However, the construction of roads and other infrastructure linked to mines had localised,
indirect effects on ranching expansion, which are difficult to measure.
        Data from the agricultural censuses of 1975, 1980 and 1985 demonstrate the
predominance of ranching in land use, both when looking at the expansion of total
agricultural area, its distribution on different forms of land-use and the distribution of size
of agricultural establishments.
        The table below demonstrates that there was a rapid increase of the area used for
agricultural purposes in the 1975-85-period, but that both the rate and absolute size of land-
use change decreased in the 1980-85 period. The more than 100 percent expansion of
effective63 land use in Legal Amazonia in the 1975-85 period was followed by renewed
expansion after 1985. This new trend discontinued the decrease of the pace of expansion
perhaps connected to the serious economic crisis of the early 1980s.

TABLE 10: Percentage of Brazilian Amazonia under effective land use




63Effective land use here includes perennial and annual crops, planted pastures, reforested and fallow lands. It
excludes native pastures and forests, as these land uses are not connected to deforestation and major
ecological changes, cfr. May and Reis (1993:12).



                                                     149
                6

                5


 Percentag      4                                                                1975
 e of Legal
 Amazonia       3                                                                1980

                2                                                                1985


                1

                0
                         1975              1980             1985


Source: IBGE agricultural census, here quoted from May and Reis 1993:13 table 4.


The increase of land-use in this period was primarily the outcome of the expansion of
planted pastures, as demonstrated in the table below.64 In contrast to other parts of Brazil,
the extension of planted forests was marginal. The expansion of fallow land reflects the
abandonment of croplands and pastures due to soil exhaustion following the mentioned
process of nutrient mining (May and Reis 1993:13, table 4).




TABLE 11: Effective land use distributed on main activities 1975-85




64May and Reis (1993:13) warn that the extension of planted pastures may be moderately overestimated due
to the tax deductions available from land cultivation. Thus, there are strong incentives to report clearing of
larger areas of properties than those really cleared.



                                                    150
                    4                                                          1975
                  3,5
                                                                               1980
                    3

                  2,5                                                          1985
    Percentag
    e of Legal
                    2
    Amazonia
                  1,5

                    1

                  0,5

                    0
                             Crops           Planted         Planted        Fallowlands
                                            pastures         forests


Source: IBGE agricultural census, here based on May & Reis (1993:13 - table 4).




There was also a strong tendency towards the concentration of rural establishment in larger
units. In the North Region and Mato Grosso in 1985, large agricultural establishments (area
greater than 500 hectares) covered 73,6 percent of the North Region and Mato Grosso,
while small (area below 100 ha) and medium sized (area between 500 and 100 ha)
establishments by and large divided the remaining area between them (May and Reis
1993:19).65 The distribution between various forms of effective land use on the size of rural
establishments is demonstrated in the following table:




                                            151
TABLE 12: Distribution of forms of effective land use on size of agricultural
establishments in North Region and Mato Grosso




65The definition of «small» agricultural establishments as establishments smaller than 100 ha is misleading if
interpreted as an indicator of rural poverty. A farm of 100 ha is quite large compared to the very small plots
used by many farmers.



                                                    152
                                                                                         Crops

                                                                                         Planted pastures
                 80

                 70                                                                      Planted forests

                 60                                                                      Fallowlands
 Percentage      50
 of effective
                 40
 land use
                 30

                 20

                 10

                    0
                               Small                Medium                  Large



Source: Calculated on the basis of IBGE information, here taken from May and Reis
1993:19, table 7.


This table demonstrates the strong predominance of planted pastures on large agricultural
establishments. However, both the predominance of planted pastures on medium-sized and
its substantial share of small establishments suggest that livestock is an important source of
income among all strata of Amazonian producers.66
        The table also indicates that the effects of private colonisation projects carried out by
large companies were considerably more modest in terms of land use than the large ranches.
Colonisation projects, which usually consist of holdings below 100 ha, cannot have taken
more than a very modest share of the total expansion of effective land use.
        The other main group of commercial interests apart from ranchers was the big
mining companies. Though many of them received harsh criticism for negative local and

66The World Bank (1992:30-32) claims that strong expansion took place among small and medium sized
cattle herds, and slower relative expansion among the larger herds during the 1980-85 period. Mattos et al.
(1992:5) and Mattos and Uhl (1994) describe this tendency among ranchers in the area of Paragominas, Pará.



                                                   153
regional environmental impacts, and their activities spearheaded other commercial activities
in the region, the wider impacts of the mines were modest as compared with large-scale
ranching. Their main impact in terms of the development of environmental reform, was the
fact that many mining concessions were located in areas claimed by indigenous
populations. As indigenous reserves were perceived as an instrument of forest protection,
conflicts between this aspect of reform and mining companies emerged. This will be
discussed more extensively in chapter five.
        I have demonstrated that the extension of ranching in large units driven by a broad
set of direct and indirect incentives was the most important commercial activity in the
Amazon region in terms of land use. However, more precise evidence on the effects of
ranching on the region’s forests as well as public perceptions of these effects should be
presented. Both kinds of evidence are necessary to understand the regulatory challenge to
the Brazilian state.


The effects of ranching extension on deforestation – facts and perceptions
According to INPE, the Brazilian Space Agency, deforestation in Legal Amazonia
developed like this:




TABLE 13: Development of deforestation in states of Legal Amazonia 1975-1991 -
percentage of state area

State       Geographic 1975         1978 (April)   1988      1989       1990       1991
            al area (in (January)                  (April)   (August)   (August)   (August)
            thousand
            km2)
Acre        154,7       0,76        1,60           5,78      6,33       6,66       6,92




                                               154
Amapá        142,4          0,11           0,12          0,55           0,70          0,91           1,19
Amazonas     1568           0,05           0,11          1,26           1,38          1,41           1,48
Pará         1246,8         3,89           4,52          10,39          11,17         11.56          11,87
Rondônia     238,4          0,51           1,78          12,60          13,34         14,05          14,51
Roraima      225,0          0,2            0,6           1,22           1,60          1,69           1,87
Mato         802,4          1,15           2,49          8,91           9,92          10,42          10,78
Grosso
Maranhão     260,2          23,55          24,55         34,90          35,47         35,89          36,16
Tocantins    269,9          1,26           1,14          7,79           8,26          8,48           8,67
AMAZON       4906,9         2,55           3,10          7,64           8,18          8,46           8,69
TOTAL


Source: INPE (1992), May and Reis (1993).


As the table demonstrates, Rondônia, Pará, Mato Grosso have experienced the most
intensive processes of deforestation since the 1970s. Although Rondônia experienced the
most rapid increase of deforestation as a share of state area, the largest absolute areas
deforested are found in Pará and Mato Grosso, both of them very large states.
        Fearnside (1992b:2, table 1) presents estimates of deforestation that are very close to
INPE’s estimates presented in Table 13. However, Fearnside concludes that 9,6 percent of
the Legal Amazon was deforested in August 1990 because his calculations are based on
estimates of original forest cover in the region, not the size of the geographical area, as
INPE’s estimates.67 Improvements in methodology have caused a marked decrease of
deforestation estimates as compared to estimates presented in the late 1980s (Mahar 1989,
Myers 1989, World Resources Institute 1990), and a certain increase of estimates compared
to INPE’s 1989 study published in April the same year.68 Fearnside (1992b) discusses the



67The convergence between Fearnside and INPE’s estimates may be facilitated by the fact that Fearnside’s
1992 paper was prepared together with A. T. Tardin and L. G. M. Filho, both INPE researchers.
68The main problems with the studies made by Mahar, Myers and World Resources Institute was their use of
data collected from the meteorological satellite NOAA-9. The infrared Advanced Very High Resolution
Radiometer (AVHRR) of this satellite was used to detect forest fires in the Amazon in the late 1980s. It is
difficult to use AVHRR data as a basis for sound estimates regarding deforestation due to the problems
connected to interpret the actual extent of forest removal on the basis of fire observations. Mahar also tends to
exaggerate deforestation rates, as several of his data are mere extrapolations of studies from 1980 or earlier.
All three estimates are also flawed by the partial inclusion of thick savannah or cerrado areas into
deforestation estimates, implicitly inflating estimates of deforestation of forest areas with high biomass. In
Fearnside’s and INPE’s most recent estimates based on high resolution (1:500.000 for 1978, 1:250.000 for
later years) LANDSAT images, cerrado and other savannah is by and large excluded, while 19 vegetation
types of dense and non-dense forests are included. According to Fearnside, mean biomass per ha of dense



                                                      155
distribution of deforestation on various kinds of forest and biomass densities, excluding
savannah forest conversion included in the other studies. This implies that Fearnside’s
deforestation rates correspond more closely to what is understood as the Amazon forest in
terms of biomass density and biological diversity than other studies.
        The high importance of cattle ranching in total deforestation is implied in the
breakdown of the presented deforestation rates on various states in the period between 1987
and 1988/89 below.




TABLE 14: Distribution of deforestation in Legal Amazonia on states 1987-88/89




forests (4 categories of forest) is 420 Mt, while biomass per ha of non-dense forest (15 categories of forest) is
344 Mt as opposed to a mean biomass pr. hectare of cerrado of 45 Mt (Fearnside 1992b).



                                                      156
 Square
 km/year


 6000

 5000

 4000

 3000

 2000

 1000

      0
            Acre    Amapá     Amazo       Maran     Mato        Pará     Rond      Rorai     Tocan
                              nas         hão       Grosso               ônia      ma        tins




Source: INPE 1992.


Mato Grosso, Pará, Maranhão and Tocantins are widely known as states where large-scale
ranching predominates strongly. Thus, the concentration of the bulk of deforestation in
these four states indicates the high importance of cattle ranching in large units as a dynamic
factor behind deforestation.
          This view is supported by May and Reis (1993:13-15), who correlate planted
pastures with Amazonian deforestation and find a very strong spatial covariation between
concentrations of planted pasture and deforestation.69 May and Reis (1993:11-12) as well as
Schneider (1995) suggest that squatters without land titles and ranchers interact in the
extension of the frontier. This happens when shifting cultivators have to sell out their plots


69However, as they based their calculations on IBGE data only covering agricultural establishments, these
data do not give information about non-agricultural causes of deforestation else than the construction of
hydroelectric dams, which takes a quite modest share of total deforestation.



                                                  157
after only 2-3 years to ranchers. Then they move on into the forest. In other cases ranchers
allow peasants to plant annual crops on their lands with the provision that they sow pasture
grass before the harvest (May and Reis 1993:11-12).
        Other authors also suggest that the linkages between ranching and deforestation are
complex. Smith et al. (1995:161) note that small- and medium sized farmers form pastures
only after one or more cropping cycles with annual crops. Small farmers often raise cattle to
provide milk for the family, while both small and medium-sized ranchers provide milk for
local markets as well (Smith et al. 1995:163). Even some of the larger ranchers sow maize
and/or rice with pasture grasses in order to recoup their costs (Smith et al. 1995:161).
        These observations suggest that ranching expansion is a complex phenomenon, and
that deforestation in Brazilian Amazonia is driven by a multiplicity of interacting activities.
However, there is a relatively broad consensus on the strong effects of pasture expansion on
deforestation, and that decelerating such expansion is a main prerequisite for a decrease of
deforestation rates (Fearnside 1989, Serrão and Toledo 1990:196).
        Furthermore, the analysis of environmental reform must be based on the
government’s perceptions and knowledge of environmental facts. Towards the end of the
1980s, both international and national experts and NGOs perceived the expansion of large-
scale ranching as the main culprit for deforestation in the region.70 Information about the
increasing dynamism of small- and medium-sized ranches during the 1980s started to
become known only after 1990 (World Bank 1992). Thus, the regulatory challenge the
government faced during the periods of high attention to Amazonian deforestation was
mainly focused on what seemed to be the rapid expansion of the region’s many large
ranches.




70 For Brazilian perceptions, cfr. the Nossa Natureza plan for Amazonia (SADEN/PR 1989:30-34). Here,
large-scale ranching is seen as the most important activity leading to deforestation in the Amazon region. The
Brazilian newspaper debate from this period also reflects this, cfr. the articles: «SEMA condena pecuária»,
Correio Braziliense, 31. August 1988:18, Werner Zulauf: «Medidas tímidas não evitam queimadas», Folha de
São Paulo, 12. October 1988:C-2. Cfr. also Reis and Margulis (1991). The influential ecologist Philip M.
Fearnside claimed that large ranches were of prime importance as late as 1992; cfr. the article: «Subsídios
aceleram destrucão da Amazônia», Jornal do Brasil, 24. June 1992:13. For international views, see the article
«Hope reaches the Amazon», The Economist, July 15, 1989:41-42, which focuses heavily on big ranches. For



                                                    158
Summary: two patterns of deforestation and forest depletion related to commercial
interests
In the 1980s, commercial interests were mainly involved in two different patterns of forest
depletion and destruction in Brazil and Indonesia.
        In Indonesia, particularly dense stands of commercial species and a variety of
implicit and explicit incentives encouraged the extension of reckless logging, with heavy
depletion of vast forest areas as the outcome. This is the case both because of the ruthless
logging methods adopted, and because loggers spearhead other actors involved in forest
depletion and deforestation. Thus, there are strong indications that loggers are important
agents behind the extension of the agricultural frontier into tropical moist forest regions in
addition to be important agents directly contributing to forest depletion and deforestation. I
have also shown that logging on forest concessions managed by private companies was
perceived by national and international observers to be the most important commercial
activity behind deforestation and forest depletion in Indonesia. Thus, with the emergence of
evidence on the links between deforestation, forest depletion and global environmental
problems, a demand for intervention against loggers justified by global environmental
considerations became the most pressing regulatory issue in Indonesian tropical moist forest
management.
        In Brazil, various implicit and explicit government incentives led to the extension of
cattle ranching in the wake of the military strategy for regional development initiated from
1966. Cattle ranching in big units became a major factor behind deforestation in Brazilian
Amazonia in conjunction with a broad range of indirect influences and incentives.
Ranching was perceived as the most important commercial activity involved in
deforestation in Brazil by national and international observers. Like in Indonesia,
emergence of evidence on the links between deforestation and global environmental
problems was translated into an understanding that intervention against the activities of
these commercial actors in tropical moist forest regions was a main prerequisite for curbing




expert views focusing on the detrimental effects of cattle ranching in large units during this period, see
Browder (1988), Fearnside (1989), Mahar (1989:8), Myers (1989), World Bank (1991:31-32).



                                                  159
deforestation. As big ranchers were perceived as main culprits among commercial actors,
intervention against these actors became a main regulatory challenge.
       Destructive exploitation of tropical moist forest land in Brazil and Indonesia is
similar to the extent that both logging and ranching takes the form of mining of renewable
resources instead of exploitation with following regeneration. The so-called pattern of soil-
mining in Brazil represents a short-term exploitation of the fertilising effect of burnt trees.
Instead of investing in regeneration of agricultural land, settlers continue to conquer
seemingly infinite areas of cheap and exploitable land. High-grading in Indonesia is similar
when it comes to the absence of regenerative practices. Here, natural species composition
and biomass is exploited without being tried regenerated. Instead of investing in
regeneration of logged-over land both by choosing more careful logging methods and
investing in reforestation, loggers move on into neighbouring pristine forests. These forests
are perceived as abundant as agricultural land in the Brazilian Amazon. In the following, I
argue that both states encouraged natural resources mining until it was realised that this
activity had strong implications for the emergence of serious global environmental
problems. In the late 1980s, leaders at the top level of both states to some extent realised
and recognised these global implications, though the mechanisms behind logging and
ranching expansion were not fully understood. What did they do with the problem?
       I argue that a difference between the two states emerged in the 1989-92 period.
Brazil went further in enforcing directives limiting deforestation on agricultural properties
in the Amazon region. These actions also included big ranchers; the group singled out as
the most important commercial actor behind deforestation in the region. In the Brazilian
case, there was also a considerable, if incomplete, restructuring of what I called negative
incentives to discourage investments in clearing of forests for ranching and agricultural
purposes. A comparable increase of directive enforcement did not occur in the Indonesian
case. At ground level, there were only marginal increases of enforcement as measured by
my indicators. Cancellations of the concessions of some logging companies which were
breaking logging rules did not represent increasing enforcement, but rather disguised
strategies from some big concession holders to take over the assets of competitors.




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       In addition, there was no restructuring of negative economic incentives that
encourage reckless logging by forest concessionaires. None of the states applied positive
economic incentives as a regulatory instrument. Below, I will discuss these contrasts.


4.4. Environmental reform: Brazil outpaces Indonesia in the period from 1988
to 1992/93
In this section, I look at the development of environmental policies related to the
commercial groups operating in the main forest regions of Brazil and Indonesia from the
1960s to 1992 (for Brazil) and 1993 (for Indonesia). Both countries had very weak records
in enforcing their legal environmental commitments in the use of forest land and in
designing incentives encouraging less deforestation and forest depletion.
       After the global environmental consequences of tropical deforestation became
internationally recognised in the late 1980s, policy makers both in Brazil and Indonesia
publicly demonstrated an increasing awareness of these problems. However, the following
discussion will show that the Brazilian government was willing to pursue more embracing
reforms, evaluated according to the operationalisations of reform presented above.


Environmental reforms: No incentive changes and small changes of directive enforcement
in Indonesia
From the onset of the logging boom in Indonesia in 1967 and until the early 1990s, several
laws and instructions related to commercial loggers justified by considerations for
sustainment of the local, and, increasingly, global environmental functions of the forests of
the country were introduced. However, enforcement of such directives was weak in the
whole period, with only marginal improvements in recent years. In addition, economic
incentives widely assumed as barriers to adopting more environmentally benign and less
wasteful logging methods remained unchanged. This situation contrasts strongly with
signals from the government that Indonesia was prepared to take substantial steps to
intervene in the activities of commercial interests justified by considerations for the global
environment.




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       As mentioned above, the generous foreign investment law assisted the onset of the
Indonesian logging boom, involving tax holidays and other incentives for the establishment
of forest exports. However, along with these rules, a basic forestry law was also introduced
IIED 1985). This law, Act Number 5 on Basic Forestry, subdivides Indonesian forests into
«protection forests», «nature conservation forests», «recreation forests» and «production
forests» (Art. 3). Production forests are particularly designed to satisfy the needs of
development, industry and export. Management of production forests is to be done in
accordance with specific work plans. Such work plans cover the maintenance of the forest
and collection, manufacturing and marketing of forest products (Art. 8, Art. 13). Art. 6
charges the government with producing a General Plan on the purpose, location, availability
and use of forests over the whole of the Indonesian territory, both in the interest or water
regulation, production of forest products, the community of forest inhabitants, protection of
flora and fauna and transmigration. Art. 1 states that all forest land is owned by the state,
and that responsibility with regard to forest resources extend to the tasks of determining
forest uses, management and legal affairs related to forestry (Art. 5). Abuse of forest
resources may be penalised with confiscation of timber products and prosecution (Art. 19).
Forestry officials are given special police authority (Art. 18).
       After the introduction of these broad guidelines for forest exploitation, the
government issued a series of regulations. The body responsible for forest regulations under
the New Order was the Directorate General of Forestry, connected to the Ministry of
Agriculture after 1969 (IIED 1985:123).71 Though regulations dealt with such aspects as
work plans and grading of logs, more systematic regulations of logging were not issued
before 1972. According to Decree No. 35 from the Director General of Forest Exploitation
issued this year, three systems for forest management were introduced. The TPI system or
the Indonesian Selective Cutting System was introduced as the most suitable for managing
natural forests. Essentially, the TPI is a variety of the Philippine selective logging system
(SLS) (Kartawinata et al. 1989). Kartawinata et al. (1989:597) describe the details of the
TPI system in this way: « (1) taking a stand inventory and marking trees to be cut and
healthy trees to be left as core trees, one year before felling; (2) selective felling above




                                              162
certain diameter limits; (3) taking an inventory of the residual stand after felling; (4)
removing weeds, cutting lianas, carrying out enrichment planting of commercial tree
species in poor sections of logged areas, and planting open ground – all two years after
felling; and (5) again removing weeds, restocking, and thinning overly dense regeneration,
five years after felling.»
        The TPI system specified a minimum diameter felling limit and a cutting cycle of 35
year, and demands that the concessionaire leaves more than 25 trees per ha of commercial
species of a diameter of 20-49 cm. The annual allowable cut was stipulated to be 1/35 of x
0,8 x standing stock volume of valuable tree species of a diameter above 50 or 60 cm in the
forest concession. The concession was to be divided into 35 blocks, of which only one
block could be logged annually.
        This basic selective logging system was to be implemented only in areas of
«production forests», though this land category remained undefined in geographical terms.
Protection forests and conservation forests were slowly defined after 1970. The first
definition emerged in 1970. Then it was decided that forests above an altitude of 500 m
were defined as protection forests to protect watersheds and prevent erosion. Forests above
this altitude are generally of small interest to loggers as they contain decreasing volumes of
high-value species (Potter 1991:181). From 1974, protection forests included slopes steeper
than 20 percent (Potter 1991:181).
        Regulations in these years seem to have been blatantly ignored by concessionaires
for several reasons. The most obvious was certainly the economic attractiveness of high-
grading techniques as an instrument to capture maximum profits in the short term.72
        However, there was apparently also a very modest government interest in enforcing
regulations. This disinterest is illustrated by the fragmented initial structure of the logging
industry itself, which reflected a high priority to logging expansion. In the early years of the
logging boom, both the central government and provincial governments had the right to


71From Independence to the late 60s, there was a separate Department of Forestry, cfr. IIED (1985:123).
72According to BruenigProfits in this period were also enhanced by natural conditions. Many of the first
exploited stands had particularly high densities of valuable dipterocarp species in addition to be located very
close to the coast, some of them on islands. Thus, both transportation and logging costs were very low.
Interview with Indonesian forest scientist, March 1995.



                                                     163
grant concessions (Manning 1971:42, 58). This led to a highly fragmented structure of
concessions, which made inspection by the Directorate of Forestry extremely difficult. Also
the habit of subcontracting concessions to contract partners with no direct responsibility to
the government may have reinforced these problems, not to mention the widespread
practice of buying and selling concessions (Manning 1971:42, Palmer 1978:122). However,
in 1970, when the Directorate of Forestry was given exclusive right to grant concessions,
the framework for the implementation of logging rules was considerably improved. This
notwithstanding, most commentators conclude that respect for logging regulations was
almost totally absent during the 1970s, and that enforcement attempts by the Directorate
General of Forestry were extremely weak (IIED 1985:137, Potter 1991:182).73 In 1977,
there were 2.617 government forest rangers responsible for the supervision of 53 million ha
of production forest (IIED 1985:127), clearly placing an unbearable burden on their
shoulders.
        Further attempts to regulate the logging sector took place in the wake of the zoning
of Indonesian forests through the so-called process of «land-use classification by
consensus» (TGHK) during the 1970s. This process constituted a response to Art. 6 in the
1967 Basic Forestry Law. This article charges the government with providing a definitive
plan for the use of Indonesian forests for various purposes. A decision-making group
composed of provincial representatives met to compare individual sector land development
requirements, available information and personal knowledge regarding a particular area and
to agree jointly on the land-use classification for that area (IIED 1985:89). The aim of this
was to provide a definite geographical plan for the various uses of forest land. In 1983, this
zoning was concluded, and has received only minor adjustments in subsequent years. The
total area under the jurisdiction of the Ministry of Forestry was 143.981 million ha. This
area was divided between National Park and Conservation Forest with 18.752 million ha,
Protection Forest (set aside for watershed and soil erosion protection) with 30.319 million
ha, Limited Production forest (forest with special limits on logging) with 30.526 ha,
Production Forest with 33.867 million ha and Conversion Forest (forest for agricultural
conversion) with 30.517 mill ha (World Bank 1993a:16).

73Interviews with Indonesian forest scientists, July 1993 and March 1995.



                                                    164
        As this zoning was based on the criterion of soil erodibility, it provided little
information about the extent of forest cover in Indonesia (World Bank 1993a:17, Potter
1991:93). Most reports conclude that land covered with forest formations was somewhere
between 100 and 110 million ha in Indonesia in the early 1990s. In the province of Central
Kalimantan in 1985, government studies concluded that 22 percent of National Park and
Conservation Forest and six percent of production forest was covered with scrub and
grassland (Potter 1991:194). Both Potter (1991:194) as well as several of my interviewees
point to incidences of ground level frauds in the system. In several cases, unlogged forest
land set aside for other purposes is said to have been transferred to concessionaires.74
        The TGHK system has attracted much criticism. Recalculations based on better field
data on land use, topography and rainfall data resulted in decrease of limited production
forest and production forest to about 12,5 and 20,8 million hectares respectively. This
represents a decrease of production forest of about 45 percent as compared to official
estimates (Dick 1991, here cited from World Bank 1993a:17-18). All these doubts and
problems related to the TGHK system imply that the disciplinary potentials of the zoning
system were not used. Logging had been initiated in all the most attractive lowland areas
before the system was introduced, implying that the system represented a codification of a
situation that largely satisfied commercial logging interests. Furthermore, the system itself
seems to have been open to manipulation from forest concessionaires in cases of conflict.
        The legal framework for disciplining concessionaires was refined with the
environmental law issued as Act No. 4 in 1982. The explanation of the law explicitly states
that natural resources must be used for the maximum welfare of the people, and that this
welfare must be available both to present and future generations. A main aspect of the term
«sustainable development», the distribution of the benefits of resource use between present
and future generations, is therefore included as a basic pillar of the law. Art. 20 - 22 are
important as they charge actors responsible for the damage of the environment, including
natural resources, with the responsibility to restore damage. In addition, if damage is done
intentionally, the law opens for a maximum punishment of 10 years imprisonment and very



74Interviews with anonymous staff connected to the Ministry of Forestry July 1993.



                                                   165
large fines. Environmental damage through negligence makes the violator liable for large
fines and a maximum of one year in prison.
       Thus in the beginning of the 1980s, a structure of laws and regulations providing
forestry agencies with strong disciplinary instruments had emerged. Though there were
operational problems related to the TPI system, several aspects of the system gave legal
backing for curbing some of the worst practices. Legal options for punishing and even
prosecuting concessionaires that broke the logging rules existed, both based on the 1967
Forest Law and the 1982 Environmental Law. Monitoring and enforcement instruments
were indeed existing. But the enforcement of environmental regulations was very lax, and
continued to be so throughout the 1980s.
       The laxity of enforcement of regulations also during the 1980s is well documented
in the joint FAO/Ministry of Forestry study of the forestry sector in Indonesia (MOF 1990).
The background documents for the final report includes a field study of forest management
on concessions (Hadi and Gray 1989). According to this document, the 1980s saw no
significant increase of monitoring and enforcement of logging regulations. Hadi and Gray
(1989:76-77, 17-18) identified the following problems connected to activity on the forest
concessions of Indonesia:


   Pre-logging inventories important for deciding the cut from a stand are usually not
    reported or conducted.
   Overcutting of forest inside concessions and cutting outside cutting plans is common.
   Re-logging of concessions long before the stipulated 35 year cycle is not uncommon.
   Little enrichment planting is done.
   Concessionaires allocate inadequate staff to their forest operations. Field monitoring
    and reporting by field staff is insufficient.


The MOF (1990:147) study concludes the following about the environmental performance
of Indonesian forest concession holders:




                                               166
«To a large extent, the performance of the private sector with respect to the harvesting and regeneration of
concession forests under their charge (..) has been very disappointing and even irresponsible. This may be
directly attributed to their attitude of profit maximization. Although this situation may be attribute to the
inadequacy of proper field monitoring and controls, it also reflects the absence of a sense of "corporate
responsibility" to the longer term interests of the country by the private sector.»


This was not the only negative assessment of Indonesian forestry that emerged in these
years. Indonesian forest scientists, the World Bank and other research institutions had for
several years warned against the lack of respect for logging rules in the tropical moist
forests of Indonesia and its environmental consequences (Kartawinata et al. 1981, IIED
1985, World Bank 1990). Indonesian and foreign researchers also warned against possible
links between heavy logging and the enormous forest fires that hit Kalimantan in 1982/1983
(Brookfield et al. 1995:173).
        Several researchers (IIED 1985, Sedjo 1987, Gillis 1988), the World Bank (1990,
1993a, 1994b), MOF (1990) and Indonesian NGOs (WALHI 1991) pointed to severe
negative effects of the low level of taxation due both to widespread evasion and low taxes,
and depressed log prices. Low taxation levels on output makes exploitation of marginal
stands and re-entry into previously logged land more economically attractive. After the
introduction of the log export ban, the same sources also criticised this ban for creating
depressed domestic log prices, encouraging wasteful logging and industrial operations.
        The fact that these problems existed and were pointed out by foreigners, domestic
NGOs, officials in the ministries of environment and forestry clearly made a case for
change. The government responded by appointing a new Minister of Forestry in 1988,
Hasjrul Harahap. Harahap signalled moves to «improve discipline and intensify supervision
of concessionaires» (Potter 1991:205).75 Indonesian newspapers increasingly brought
stories on non-compliance of concessionaires with rules and the intent of the new minister
to force concessionaires to comply with regulations.76 In December 1988, Harahap stated
publicly that logging and other regulations in the forest sector were violated in about 200 of
the more than 500 concessions.77 Concessionaires who were found guilty in minor
violations of rules would be fined up to 20 times their forest product dues, according to the


75See also the article: «Tug-of-war over trees», in Far Eastern Economic Review, 12 January 1989:41.
76Jakarta Post, 2. May 1988, 16. July 1988, 19. July 1988, 22. July 1988, 4. August 1988.



                                                    167
ministry (Potter 1991:205). Concession holders who were encroaching protection forest
were given a few months to retreat their equipment into the production forest. Policy
change was also signalled as a priority at the national level when the Ministry of Forestry
introduced improved concessionaire discipline as one of the main forestry targets of the
fourth Indonesian five-year plan (REPELITA IV) (World Bank 1993a:97). The complete
restructuring of the concession system to state-owned enterprises was another initiative
proposed by Harahap in 1988.78 President Suharto also warned forest concessionaires
against mismanagement on several occasions.79
        Further reforms followed this new awareness of environmental problems in
Indonesian forestry. In 1989, the TPI selective logging system was changed to the present
TPTI system. The TPTI system involved a few changes compared to the TPI-system.
Enrichment planting is obligatory and payment of the so-called reforestation tax become
compulsory and increased to USD 10 per m3.80 In 1989, rights to collect forest products
through small local forest concessions (HPHH) were withdrawn (Potter 1991:208).81 Large
tax increases on sawn timber and pulpwood exports introduced in 1988 and 1989 were also
justified by conservation concerns (Potter 1991:207).
        All these proposals were presented in the context of increased government
awareness regarding the relevance of Indonesian forestry for global environmental
problems. The Indonesian climate strategy (KLH 1991:11, 28) published in 1991 proposed
improvements of domestic forest management as a strategy for curbing greenhouse gas
emissions. The Indonesian country study on biodiversity attacked problems of commercial
exploitation of forest land, as it linked problems of biodiversity to implementation
problems related to the selective logging system (KLH 1992:32).
        Following the mentioned reforms and proposals, the Indonesian Ministry of Forestry
launched a campaign of increased law enforcement against forest concessionaires widely


77See the article: «Tug-of-war over trees», in Far Eastern Economic Review, 12 January 1989:41.
78«Tug-of-war over trees», in Far Eastern Economic Review, 12. January 1989:41.
79 See the articles: «Violators of forestry law to face prison», Jakarta Post, 15. May 1990:7, «Suharto warns
against heavy logging», in Jakarta Post, 12. September 1990:7.
80In 1993, the reforestation fee was further increased to USD 15/m3, cfr. World Bank 1993a:82.
81See also «Forest concession ban threatening workers in Riau», Jakarta Post, 25. April 1989:3.



                                                    168
reported in Indonesian media. According to Potter (1991:205), 56 concessions were
revoked in 1988 for violations of rules. Several news stories in the following years cover
increased enforcement through the distribution of fines and the cancellation of concessions,
though the number of cancellations published varies widely.82
        Though there was an apparent step-up of disciplinary measures, surveillance and
monitoring operations on ground level were not increased or improved (World Bank
1993a:36-37, 96-107).83 Especially at the provincial level (Dinas), which has primary
responsibility for field implementation of rules, resources and personnel persisted to be
scarce, wages very low and task definition very diffuse (World Bank 1993a:36-37).84
        According to a centrally located interviewee inside the Ministry of Forestry,
excessive cutting of forests within concessions and cutting outside concessions, which may
make the violator liable for heavy fines and imprisonment, are very seldom punished, even
when the ministry is informed. This is also the case for cutting into protection and
conservation forest, which is rampant.85 Both absence of surveillance and monitoring
capacity and a lack of willingness to follow up cases reported from the field are problems
explaining this situation.86
        The plywood producers’ union APKINDO commanded much more sophisticated
surveillance and monitoring equipment than the Ministry of Forestry, including satellite
(LANDSAT and SPOT) equipment not readily accessible to the ministry.87 This weakness
persisted even though the Indonesian government has access to LAPAN’s (the National
Institute of Aeronautics and Space) services. LAPAN has access to LANDSAT, the most

 82According to the Ministry of Forestry, until June 1992, 29 concessionaire licenses had been revoked for
breaking regulations, and USD 20,5 million had been imposed for breaches on regulations (World Bank
1993a:35). In 1991, Harahap admitted that 326 logging companies violated cutting regulations (Setiakawan,
July 1991:41). According to Harahap at this time, the amount paid by concessionaires was Rp. 39 billion;
similar to the amount published by the Ministry of Forestry in 1992. However, less than a third (Rp. 14 billion
or 7 million USD) of this had been successfully collected. For other news stories on increased enforcement
under Harahap, see Jakarta Post, 6. April 1993, 19. April 1993.
83Interview with Indonesian forestry scientists and one high-ranking official at the Ministry of Forestry July
1995, interview with Indonesian forestry scientist and consultant to a large plywood company March 1995.
84Interviews with Indonesian forest scientists June and July 1993
85Interviews with officials at the Ministry of Forestry June 1993.
86Interviews with officials at the Ministry of Forestry, July 1993.
87Interview with Ir Hendro Prastowo, APHI/APKINDO, own interview with Indonesian forest scientists June
and July 1993, see also Sumitro 1994:5.



                                                     169
relevant satellite for land use monitoring (MOF 1990:87). The satellite is able to provide
pictures with a resolution high enough to be useful in concession monitoring. According to
APHI/APKINDO, the ministry of forestry is very weak in the field.88 Consequently, the
forest concessionaires’ organisation APHI claims that concessionaires have to rely on «self-
justice» to overcome problems of non-compliance with logging rules.89
        Another problem related to the forestry sector, which remains unreformed, is the
level of log prices. Low log prices are pointed out by the World Bank (1990, 1993a) as well
as the environmental NGO WALHI (Ramli 1991) and many other observers (IIED 1985,
MOF 1990) and Indonesian forest experts as a main incentive for environmentally malign
logging practices and waste in logging and industrial operation. In spite of this, log prices
have remained low as compared with the world market (World Bank 1993a:84-85). Thus, a
main incentive for reckless logging, including a high degree of waste production, did not
disappear.
        Seemingly, there is a considerable contrast between the to improve the
environmental constraints put on the logging industry and recent conservation efforts.
Indonesia has an extensive system of protected areas covering substantial areas of forest
land. To a certain extent, this system is based on Dutch conservation efforts during the
colonial period. At the time of independence, 15.048 km2 had been set aside as
conservation areas. Only about 500 km2 was established during the next 25 years (MOF
1990:72). The establishment of conservation areas accelerated considerably during the early
1980s, when more than 10 million ha was added (MOF 1990:72). From 1980, the
identification of conservation areas was based on criteria outlined by the International
Union for Conservation of Nature             (Hadisepoetro and Wardojo 1991). The first five
national parks were established in 1980, when the government of Indonesia adopted
IUCN’s World Conservation Strategy (PHPA 1990:17).90 Eleven more parks were


88Interview with Ir Hendro Prastowo, APHI/APKINDO, July 1993.
89Interview with Ir Hendro Prastowo, APHI/APKINDO, July 1993.
91 At that time, national parks were only functional management units comprising one or more reserves (MOF
1990:71). This changed with the establishment of Act No. 5 on the Conservation of Living Natural Resources
and Their Ecosystems of 1990 (Hadisepoetro and Wardojo 1991:17-18). This act also regulates the use of
national parks in accordance with various zoning criteria. National parks contain both areas of limited
exploitation, and strictly protected areas (Hadisepoetro and Wardojo 1991:17-18). Ten out of 24 existing



                                                  170
established in 1982 (PHPA 1990:17). Though some marine reserves were established
between 1984 and 1989, the rate of establishment of conservation areas decelerated
drastically during this period (PHPA 1990:17-19, MOF 1990:72-73). From 1989,
conservation areas expanded rapidly. While the total area of terrestrial conservation areas
was 12,2 million ha in May 1989 (MOF 1990:71), it had expanded to 16,02 million ha in
August 1990 (KLH 1992:24). Such conservation areas had increased to about 19 million ha
in the beginning of 1994 (World Bank 1994b:43). This trend made Indonesia one of the
global leaders in establishing terrestrial conservation areas, as conservation areas in 1994
represented almost 10 percent of total land area (World Bank 1994b:43).
        However, there are numerous limitations to this system of protected areas as a
regulatory instrument evaluated by the indicators and operationalisations presented in
section 4.2.
        First, lowland forest ecosystems, situated in the areas most in demand by the wood
industry, are poorly represented (World Bank 1994b:43). This is the most obvious argument
against evaluating the expansion of the Indonesian protected areas system as an indicator of
reform.
        Second, conservation units are frequently encroached by various groups. This
includes large commercial actors. Among these are logging companies with concessions in
the vicinity of conservation areas, and in some cases even overlapping conservation areas.91
A high level employee at the Directorate General of Forest Protection and Nature
Conservation (PHPA) complained that there were several examples of intrusions by logging
companies into conservation areas.92 The interviewee further complained about these cases
that «nobody were ever punished», indicating that logging into conservation areas is


national parks are managed by the Directorate General for Forest Protection and Nature Conservation in the
Ministry of Forestry, the rest of the parks by the Regional Office of Nature Conservation (Hadisepoetro and
Wardojo 1991:116).
91KLH (1992:123) and MOF (1990:74) report that the Gunung Palung National Park in West Kalimantan was
threatened by overlapping forest concessions. Other commercial interests are also cutting into conservation
areas. The KLH report concludes that over 50 percent of the giant Gunung Lorenz nature reserve at Irian Jaya
were under concession for petroleum exploration (KLH 1992:175). See also the article «Timber thefts on the
rise in East Kalimantan», Jakarta Post, 1989:3. Here, local politicians point out concessionaires as culprits
behind the removal of forest from non-concession forests. The sources wanted to stay anonymous because
they feared the revenge of logging companies.
92Own interview, July 1993.



                                                    171
virtually without risk for concessionaires.93 Another official at the PHPA pointed out local
corruption as a constraint to the management of conservation areas.94 This situation is
reflected in the MOF (1990:75) report. Here, the following is said about the serious
situation in some national parks due to encroachment of logging companies: «There is
unlikely to be much improvement in the situation, even if budgetary and management
constraints are dealt with, unless the existing laws are enforced and PHPA provided with
necessary authority.» 95
        Third, degradation of reserves also includes indirect impacts from logging. There is
a relatively broad consensus that heavy logging of production forest was a main factor
behind the enormous forest fires that ravaged Kalimantan in 1982/83 and the years
following 1991. Heavy logging made the forest more susceptible to fire in periods of
drought (Brookfield et al. 1995:170-178). The Kutai National Park in East Kalimantan
suffered heavily under these fires (Brookfield et al. 1995:81), in addition to a series of other
reserves at Sulawesi and Sumatra.96
        Fourth, guarding of conservation areas is often insufficient. One top official at the
PHPA concluded that the number of people in the field for the management of conservation
units in 1993 was about 3.000.97 Most of this staff has attended the School for
Environmental Conservation Management, which provides background training in wildlife
management and other subjects (MOF 1990:73). There is little equipment at disposal for
transporting staff inside conservation areas, and aerial monitoring is non-existent.98
Furthermore, though some parks have adequate staff, other parks are virtually unguarded

93This situation is also indicated in MOF (1990:75). Here, it is concluded that no company has ever been
prosecuted for serious offences, but that some companies have been penalised or in rare cases had their
licenses revoked. The complicated procedures for reporting cases of encroachment may explain some of the
problems. According to a senior officer at the PHPA, cases were reported to provincial governments, who
then reported to the Ministry of Forestry. The Ministry then (in principle) verified the cases, and sent them to
the courts. Interview June 1993.
94Interview at PHPA in July 1993.
95Sandbukt (1995:58-59) offers a seldom case study of how a forest concession in Riau was allowed to be
extended into an area proposed as a National Park status by the PHPA. The concessionaire was allowed to
establish pulp wood plantations in this area.
96See also the articles «Forest Fire: The Cases» in Setiakawan, No. 7, January-June 1992:40-41, as well as
«Forest Fire: An Analysis of the Causes», in Setiakawan, No. 7, January-June 1992:41-43.
97Interview with Widoko Sukohadi Ramono, PHPA - Directorate of Nature Conservation, June 1993.
98Interview with officials at PHPA June 1993, cfr. also MOF (1990:74).



                                                     172
(MOF 1990:73-74). The total annual budget of the PHPA was about USD 5,6 million in the
1988-1991 period, corresponding to USD 0,35/ha/year (KLH 1992:38-39). From 1990,
there was a strong increase of external grants to the conservation system. Though much of
this funding was project-related and did not contribute to routine expenditure, these grants
made funding for the conservation area system equal about USD 12 million per year in the
early 1990s, or about USD 0,75/ha/year (KLH 1992:40). In the Indonesian country study on
biological diversity, it is indicated that spending needs for a satisfactory system of
conservation areas would amount to about USD 78 million per year over 10 years. This is
based on a rough estimate of USD 5/ha/year as a minimum prerequisite for 12,5 million ha
of «key top priority reserves» and USD/2,5/ha/year as a minimum of spending for another
6,2 million ha of other «top priority reserves» (KLH 1992:53).
       Thus, although Indonesian efforts to set aside protected areas represent a laudable
environmental policy, they cannot count as strong indicators of reform in the context of this
study. There are few cases in which protected areas were established on lowland moist
forest land claimed by commercial interests, and officials in the Ministry of Forestry as well
as other sources claim that these interests remained unpunished in spite of frequent
intrusions into protected areas.
       One important indication that regulatory reform, both inside and outside protected
areas, by and large was absent in Indonesian during this period, was the absence of protests
from commercial interests. There were no cases of public protest against law enforcement
efforts from forest concessionaires during this period. On the contrary, the powerful
chairman of APKINDO and APHI and large forest concessionaires Bob Hasan expressed
enthusiasm for what he called the «strictness» of the Ministry of Forestry and Hasjrul
Harahap (Hasan 1991). On the background of my discussion of operationalisation of reform
in section 4.2, Hasan’s reaction should attract particular attention. I cited theorists (Stigler
1971, Tirole 1992) who pay much attention to the fact that government regulations may be
attractive as instruments favouring the interests of particular business organisations.
However, I also noted that absence of protests from business groups apparently regulated to
the public benefit was nothing more than an invitation to further empirical investigations. If




                                              173
regulations have become tools to protect particular groups, this should be demonstrated
empirically.
        One aspect of this is that several cancellations seem to be motivated by absence of
logging rather than excessively heavy logging. Potter (1991:205) notes that of the 56
cancellations of concessions in October 1988, 32 of these were unworked concessions at
Irian Jaya.
        However, much more important, Cullen (1994) claims that press reports related to
breaches of environmental rules and other rules in forest concession management have been
deliberately used by the most powerful industrial groups as instruments to expand their own
concession area. According to Cullen (1994), the most powerful concession holders often
report breaches of logging rules by less powerful concessionaires to newspapers, media and
the Ministry of Forestry. When the concession is cancelled, the cancellation is reported as a
case of tough law enforcement in the media. However, In turn, the concession is added to
the concession area of one of the big groups at very low cost.99
        A Jakarta businessman supported Cullen’s claims with special reference to the
biggest concessionaire and plywood producer, Barito Pacific Timber. The businessman
described the following procedures as «well-known in the business community»:
Environmental complaints are used by Barito to get concessions belonging to less powerful
concessionaires cancelled. In turn, Barito gets access to the concession through the Ministry
of Forestry. To make this process of concession acquisition work smoothly, Barito pays
some fines to the Ministry for its own violations of various concession terms (including
environmental violations). This makes everybody happy. The Ministry of Forestry is
portrayed in the media as a tough player against concessionaires and Barito gets access to
concessions that are much more valuable than the symbolic fines paid as «compensation» to
the ministry. According to Cullen (1994), this system is smoothened by large bribes or
«envelopes»    to journalists for providing a nice media picture of the Ministry of Forestry.



99 Taking over a concession from the Ministry of Forestry is much cheaper than buying it from a
concessionaire. While the price on the market could be 3-4 billion Indonesian Rupiah , the Ministry of
Forestry only demands about 400 million Indonesian Rupiah to cover its expenses. Interview with a forestry
scientist in Indonesian March 1995.



                                                  174
        The incentive changes presented as pro-environmental by the government and
APKINDO, for example the tax increases on sawn timber and the revoking of smaller
licenses for wood-product utilisation (HPHH), had effects that closely resemble Cullen’s
(1994) and my findings related to the effects of the Ministry of Forestry’s «disciplinary
campaign».       Vatikiotis (1993:44) claims that these reforms had little to do with
environmental concerns, but represent successful moves from APKINDO and the most
powerful plywood groups to appropriate and monopolise the country’s timber resources and
squeeze out smaller competitors.
        A story from the newspaper Jakarta Post about the increases in the sawn timber
export taxes in November 1989 supports Vatikiotis claims. According to this article,
members of the Indonesian sawmill association (ISA) who prefer to stay anonymous in fear
of retaliation, complained that they were not involved in this decision.100 The article goes
quite far in suggesting that the sawn timber producers perceived the new regulation as a
move by APKINDO and Hasan to squeeze them out of the industry. There is no doubt that
the new regulations were effective in doing this. The smaller sawn timber mills were hit by
a wave of bankruptcies and massive layoffs in several regions when the smaller forest
utilisation contracts (HPHH) were eliminated in early 1989.101
        Several interviews with staff linked to the Ministry of Forestry as well as an
Indonesian businessman confirmed the general view that Hasan and the most powerful
plywood groups have captured forest policy-making in Indonesia to the extent indicated by
these examples.102
        However, though there are several indications that these and other regulations
favouring the most powerful business have been «window-dressed» as environmental
policies, it is also true that these regulations have been enforced with remarkable rigour.
The log export ban, the sawn export taxes as well as law enforcement against small timber



100See the article: «Increases in sawn timber export taxes will boost wood industry», Jakarta Post, 29.
November 1989.
101 «Forest concession ban threatening work in Riau», Jakarta Post, 25. April 1989:3. See also Fenton
(1996:13).
102Interviews with staff linked to the Ministry of Forestry, as well as an Indonesian businessman, July 1993.
Confirmed by Mufti 1993. See also Dauvergne (1994, 1997).



                                                    175
thieves103 are all policies that have been enforced with remarkable consistence and success.
They make up a considerable contrast to the enforcement of existing directives focused on
curbing short-term profit maximisation modes of forest exploitation. This contrast gives
strong indications that reforms in Indonesia are not curbed because the state lacks the ability
to adopt reforms, but that there is a strong lack of willingness to adopt reforms that could
reduce the short-term profits of the most important business group.
        This impression is further bolstered by the fact that reforms of taxation and log
pricing regimes, recommended by so many researchers and institutions both inside and
outside Indonesia, have been shelved. These reforms could have had positive environmental
and economic effects, but would most probably harm profits in the plywood industry
(Fenton 1996). Altogether, these findings seem to produce a picture of environmental
reform in Indonesia that closely resembles Stigler’s (1971) view of regulation in general.
According to Stigler (1971:3),       «…as   a rule, regulation is acquired by the industry itself and
operated primarily for its benefit.» Stigler (1971:5) notes that one of the                «…major     public
resources commonly sought by an industry is control over entry by new rivals.» Strong
evidence indicates that the absence of business protests against policy changes marketed as
environmental reform is explained by the fact that these reforms represented measures not
only to block entry of new business rivals, but to get rid of established competitors.
        However, though I argue that this is the general picture of environmental reform in
Indonesia during this period, it should also be mentioned that there were at least two cases
of policy change in the mentioned period that seemed to represent a real constraint on
concessionaires. The first was the cancellation of several concessions at the island of
Siberut, in the chain of four Mentawai islands lying off the West Coast of Siberut, in late
1992.104 The second was the partial overtaking of the concession of the Kalamur group, PT




103There are several stories in Jakarta Post reporting about the serious legal sanctions against small timber
thieves on the Outer Islands: «Illegal logging rife in Western Sumatran conservation forest», Jakarta Post, 15.
June 1989:3, «Two charged with illegal logging in Central Kalimantan, Jakarta Post, 8. November1989:3,
«Illegal logging uncovered in East Kalimantan forest», Jakarta Post, 22. May 1990:7, «Eighteen loggers to be
tried in South Sumatra», Jakarta Post, 17. December 1990:10.
104 Interview with staff at SKEPHI June 1993, cfr. also SKEPHI (1992).



                                                     176
Alam Nusa Segar at the Maluku island of Yamdena, by the government forestry company
PT Inhutani I in late 1993.105
        The last case may symbolise a certain change of environmental regimes in forestry in
Indonesia, though recent news reports suggest that conflicts between loggers and local
people have re-emerged at Yamdena.106 It took place under the minister who took over after
Hasjrul Harahap in 1993, Djamaloedin Soeryhadikoesoemo. Djamaloedin is known as an
ardent proponent of forestry reform. He initiated a disciplinary campaign which main
content has been to buy shares of mismanaged forest concessions. In some cases,
responsibility for management and restoration of these concessions has been given to the
state forestry companies PT Inhutani I, II and III (Dauvergne 1997:83).107
        However, the implications of these reforms have been modest. It is clear that the
reforms were not strong enough to stop the World Bank from postponing the Forestry
Institutions and Conservation Loan III in 1994 for reasons connected to bad forestry
performance. Reforms seem to be at best partial. According to a centrally located person in
the Indonesian forestry industry, ground level corruption was as bad in 1995 as it used to be
under Harahap. Ross (1996) and Dauvergne (1997) also evaluates these reforms as very
moderate.
        To summarise, strong evidence seems to indicate that environmental reforms were
very modest. Some of the most important regulations for better forest management were not
enforced, some were not adopted in spite of strong consensus about their attractiveness.
And the regulations that were enforced during the period in focus in reality represented
favours to the most important commercial interests involved in destructive activities.
        However, it should be noted that even though some big Indonesian business groups
were able to benefit from and influence regulatory efforts during the period in question, this
observation does not necessarily explain the particular pattern of influences in Indonesian


105See the articles in Jakarta Post: «Government stops logging activities on Yamdena island», Jakarta Post,
10. April:8, «Resumption of logging on Yamdena allowed», Jakarta Post, 20. October 1993:8.
106 These news reports cast doubt on the government’s seriousness in this case. According to «Down to
Earth», an international mailing list on the environment, new local protests against PT Inhutani I and its
private partner, PT. Mochtra Agung Persada, in 1996. According to the list, the private partner is a company
belonging to Bob Hasan,               cfr. «Loggers move in on Yamdena island forests again»,
http://forests.org/gopher/indonesia/logmovin.txt.



                                                   177
forest industries. The regulatory story above does not in any systematic way evaluate
possible motives for the particular policies adopted in Indonesia. The government could
have been forced to permit the evolution of such policies by economic constraints or other
political and economic considerations. In chapter five, I discuss alternative explanations.
        However, now I turn the focus of attention to Brazil. What happened in this country
during the period in question?


Brazil 1966-1985: Environmental policies in Amazonia receive low priority
Along with the decision to encourage cattle ranching in Amazonia after 1966, a separate
forest code for Brazil was established with Law No. 4771 of 15. September 1965.108 The
forest law pays attention to the environmental functions of forests, like watershed
protection, wildlife protection, protection against erosion and protection of the native forest
population (Art. 2-3). A section of the law also prohibits deforestation of areas exceeding
50 percent of each property in the North region and the Northern parts of the Centre-West
region (Art. 44). Equally important for Amazonia, article 27 prohibits the use of fire as an
instrument for forest clearing. However, a major flaw in the law is the lack of logging
regulations. Art. 15 makes technical management plans for logging operations obligatory,
but does not specify the content of such plans. According to art. 15, precise technical
regulations are to be defined within a year by the public authorities, but such regulations did
not arrive before 1991. In the meantime, the 50 percent limit on deforestation and the
prohibition of using fire for clearing was the only clear legal limit on the commercial
activities in Legal Amazonia.
        In February 1967, the military government established a new federal body for forest
administration, IBDF, or the Brazilian Institute for Forest Development. IBDF was charged
with implementing the new forest code, and placed under the Ministry of Agriculture. The
body was faced with enormous implementation problems and very scarce resources.
Allocations for monitoring and control were particularly scarce. In the 1974-85 period, only



107See the article: «State takes over licenses of 12 logging operations», Jakarta Post, 6. April 1993:1.
108Environmental legislation in Brazil started already in the 1930s with the definition of a water code and a
wildlife protection code in 1934 and the establishment of the national parks of Itatiaia (1937), Iguaçu (1939)



                                                    178
about 8 percent of the resources for the IBDF were channelled to monitoring and inspection
(Prado 1990:13). Furthermore, total budget for the body declined with more than 50 percent
between 1976 and 1985 (Prado 1990:14).
        In the North Region, legal problems made it virtually impossible to enforce the
regulations in the forest law. The 50 percent rule was either directly evaded or bypassed by
splitting properties between members of the same family to increase the area eligible for
deforestation (Fearnside 1979:340-341, Uhl and Buschbacher 1985:266, Hall 1989:143,
Vieira 1993:119).
        IBDF’s enforcement problems may be illustrated by the experiences of the agency’s
Altamira office in the 1970s. According to Fearnside (1979:340), the local IBDF office was
staffed with two guards and one forest officer. They had responsibility for enforcing the law
in an area of about 20 million ha in addition to inspecting exports of skins and forest
animals and distributing licenses to sawmills and timber extractors. Field reports from the
area concluded that the law was totally unimplemented even on properties within full view
of the highway through the area (Fearnside 1979). According to Arnt and Schwartzman
(1992:282), there was also a tendency that the isolation of IBDF forest guards face to face
with local strongmen like ranchers and loggers caused widespread corruption.109
        The establishment of the Special Secretariat for the Environment (SEMA) in
October 1973 did not produce any visible difference in the formulation and implementation
of policies to increase the protection of forests or redirect the economic exploitation of
Amazonia in a less destructive direction.110 SEMA was only a consultative body, with no

and Serra dos Órgãos (1939). Descriptions of laws and regulations in the following are taken from Costa and
Ramos (1992).
109Binswanger (1991:827) suggests that there were no economic incentives for forest guards to enforce the
law. Low wages and lack of any individual reward for law enforcement opened the IBDF to bribery and
political pressure. Attempts to enforce the law were sometimes resisted by the government itself. In the 1970s,
IBDF tried to prosecute Volkswagen of Brazil for illegal clearing on their Amazonian ranch. Instead of
following up the prosecution, parts of the regional IBDF administration was simply dismantled by the
government (Foresta 1991:130).
110According to Guimarães (1991:161) the main event motivating the establishment was not the Stockholm
Conference on the Environment in 1972, but an incident of pollution involving high-ranking officials as
victims. In 1971, the wind blew stench from a wood-pulp factory towards the home of the Chief of Staff of the
President in the state of Rio Grande do Sul. The chief of staff, João Leitão de Abreu, proposed the installation
of a pollution abatement agency. In 1973, after the close scrutiny of the National Security Council, the
establishment of SEMA was decreed. As Guimarães (1991:161) writes: «Brazil gained a new agency. And the
chief of staff got rid of a smelly problem».



                                                     179
veto power or influence on planning activities or economic activity. Decree-law 1.413 and
Decree 76.389 concentrated all power to discontinue environmentally damaging activities
in the hands of the government, which was charged with finding the optimal balance
between environmental concerns and concerns for national security and development
(Decree 76.389, Art. 5, Art. 10). In addition, SEMA’s general orientation was directed
towards technical questions related to pollution, and not towards the management of
renewable resources (Guimarães 1991:162-163).111
        The establishment of a National Policy for the Environment (PNMA) in 1981 and a
National System for the Environment (SISNAMA) provided further legal and institutional
improvements of the framework for environmental policy-making. PNMA (Art. 2) does not
mention Amazonia or forests especially, but represents a clearer integration of renewable
resources as it defines environmental resources as: «atmosphere, surface and subterranean
freshwater, estuaries, territorial waters, soil, underground and the elements of the
biosphere». The objectives of the national environmental policy include the «establishment
of criterions and standards for environmental quality and norms related to the use of
environmental resources» (art. 4). The same article charges polluters with the responsibility
for repairing environmental damage.
        SISNAMA was established with SEMA as executive body and a newly established
environmental council CONAMA as superior body defining environmental policies. In the
law, CONAMA was established as a body that included ministries, business societies, and
one environmental NGO: The Brazilian Foundation for the Conservation of Nature, FBCN.
The instruments of environmental policies were defined as the following: establishment of
standards of environmental quality, environmental zoning, environmental impact
assessments and licensing of polluting activities (Art. 9).
        The law (Art. 18) also required that slopes and watersheds protected from
deforestation in the 1965 law should be protected by SEMA as «forest reserves». This was


111One exception was the establishment of a series ecological stations during after 1978, of which 10 are
situated in Amazonia and cover more than 2 million hectares (IDB 1992:50, 52). Also in this case,
environmental concerns were subordinated to the government’s emphasis on economic development and
national security. Decree 18.973 of July 1980 states that nuclear power stations may be situated inside the
domain of ecological stations. The combination of ecological stations and nuclear power stations is explicitly
considered to be an excellent combination for environmental protection (Costa and Ramos 1992:382).



                                                    180
entirely absurd, as the enforcement of this paragraph would render a substantial share of
Amazonian deforestation over the last 15 years illegal. However, SEMA used this option to
charge CONAMA with further refining the provisions for forest reserves in the forest code,
partially by giving more precise operational definitions of forest reserves, and partially by
establishing more flexible rules for urban areas (Foresta 1991:228).112
       In turn, SEMA used the demands of SISNAMA as an instrument to establish a
series of state environmental agencies. In 1978, there were only state environmental
agencies in the states of São Paulo, Rio de Janeiro, Paraná, Minas Gerais and Bahia. After
that, SEMA contributed to the creation of 18 new environmental agencies (Arnt and
Schwartzman 1992:277). The responsibility for securing compliance with the new rules,
along with other regional environmental matters, was passed on to the state environmental
agencies. This gave the state agencies a potential source of income as they were given the
authority to collect fines by SEMA (Foresta 1991:228). However, the willingness of the
Brazilian states to involve themselves in legal actions varied considerably. The
sophisticated and well-funded environmental agency of São Paulo (CETESB) established
surveillance and monitoring operations of «forest reserves» on their own state area as part
of an increasingly advanced state environmental policy. But the states of the Amazon region
did generally not use this opportunity to boost income. The newly created environmental
agencies of the region were virtually powerless and also lacked the motivation to enforce
laws (Arnt and Schwartzman 1992:279). According to Arnt and Schwartzman (1992:229-
230), in the key state of Pará, the state environmental agency had a staff of about 20 people
who perceived their agency as «completely fictious» during the late 1980s. This was in the
same period as parts of the enormous Great Carajás programme was implemented in Pará,
land clearing and logging increased, and gold-mining and associated mercury pollution
emerged as a major problem.
       In general, the new environmental policy did not function well (Guimarães 1991).
CONAMA did not convene before 1984 to define its internal regime, and SEMA remained
without influence on Amazonian development.



112See CONAMA resolution No. 4/85.


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1985-1988: The beginning of change
The first period (1985-88) of the first civilian government after 21 years of military rule, the
Sarney administration, involved three important political changes related to regulation of
private interests in the Amazon region.113 These were the clarification of standards for
environmental impact assessments (RIMAs) by CONAMA, the environmental clauses put
into the new Brazilian constitution and the preparation of an environmental plan (PMACI)
for the approval of a loan from the Interamerican Development Bank for the pavement of an
Amazonian road.
        The national environmental council, CONAMA, defined rules and standards for
environmental project assessments in 1986. Such assessments were made obligatory for
public and private projects above a certain size (Arnt and Schwartzman 1992:117). This
resolution, 001/86, was followed by more detailed instructions in 1987 concerning the
design of environmental impact assessments or RIMAs. Until December 1988, a total of
140 RIMAs had been analysed and another 85 studies were being evaluated. Almost half of
these projects were located in the state of São Paulo. Only 15 projects were located in the
Amazon region (Serôa da Motta 1991:214). Since responsibility for approving RIMAs was
distributed to the environmental agencies of Brazil’s states, this made the evaluation of
RIMAs vulnerable to the same political and economic constraints as these agencies.114
        The Brazilian Constitution of 1988 provides an important framework for
environmental regulation in Amazonia. Apart from compelling the state to protect

113The very first sign of the change was the federal bill 4.970/85 presented to Congress a few days before the
Figueiredo government left. This bill addressed forest policies in a broad and rather progressive way.
According to Vieira (1993:108), it was based on the recommendations of a working group on forest policies in
Amazonia established in 1979 by the presidency. These advises included strict provisions related to the use of
timber, agricultural activities, energy projects, mining, Indian reserves, areas for preservation of natural
resources, land tenure, construction of roads, reforestation and environmental impact assessments. The 1985
bill was signed by the ministers of agriculture and the interior and by the Secretary General of the powerful
National Security Council. According to Vieira (1993:108) it introduced a broad policy reform including
timber use, agricultural activities and areas for preservation for natural resources. This bill was never voted
over by Congress. Vieira suggests that powerful business interests blocked the proposal from reaching the
Congress (Vieira 1993:108).
114An undated information leaflet from IBAMA in 1989 states the following about the procedures for RIMA
treatment by the state environmental agencies: « - the RIMA is being handled by the state agencies, which
have not always been discerning in the granting of concessions. (...), many times the requirement is
fraudulent» (IBAMA 1989a:1). According to Hall (1989:183), the COSIPAR pig iron smelter and the whole
industrial zone of the city of Marabá under the Great Carajás mining program had been set up without
presenting a RIMA.



                                                     182
biological and genetic diversity, article 225 demands punishment of environmental crime in
addition to the obligation to repair environmental damage. Furthermore, the paragraph
demands the reparation of environmental damage done by mineral explorers. Amazonia is
recognised as a national patrimony together with Serra do Mar, Pantanal, the Atlantic Forest
and the Coastal Zone. Article 225 demands special protection of the environment in these
areas, including the use of natural resources. The article also opens RIMAs for public
examination. Article 231 and 232 regarding the rights of indigenous populations are
especially important for Amazonia as 60 percent of the 236.000 remaining Brazilian Indians
live in Amazonia (Albert 1992:36). The articles recognise the lands of indigenous peoples
as their property, and demand the preservation of their environment as a prerequisite for
their well being. In addition, article 231 demands approval from the National Congress as a
precondition for the utilisation of water resources, including energy resources, fish and
mineral resources.
        A third case of reforms that involved some regulation of commercial interests was
the environmental impact assessments related to funding from the Interamerican
Development Bank (IDB) for the pavement of the BR-364 highway from Porto Velho
(Rondônia) to Rio Branco (Acre). Local commercial interests, both ranchers and loggers,
perceived the road as a precondition for the expansion of their business. The presentation of
a Programme for the Protection of the Environment and Indigenous Communities (PMACI)
for the IDB was prepared by an interministerial working group co-ordinated by the planning
research unit IPEA, including representatives from SEMA, IBDF, INCRA,115 FUNAI116
and IBGE.117 A provisory plan was refused by IDB in 1985 because it failed to provide
detailed descriptions of environmental problems in the region as well as operational plans
for the programme (Arnt and Schwartzman 1992:166). This forced the government to
include groups like the Rubber Tapper Union of Acre in the preparation of a better
provisory plan.



115National Institute for Colonisation and Agrarian Reform.
116 The National Indian Foundation. Federal Agency established in 1967 to protect Brazil’s indigenous
populations.
117 The Brazilian Institute for Geography and Statistics.



                                                   183
        The provisory plan was improved and extended in 1986. Among other initiatives, it
contained proposals for the demarcation of 58 indigenous reserves, conservation units
(proposed by the IBDF), environmental state agencies in Acre and Amazonas (proposed by
SEMA), soil studies (proposed by EMBRAPA)118 and comprehensive studies of socio-
economic conditions and natural resources (proposed by the IBGE) (Arnt and Schwartzman
1992:167). IDB accepted the provisory plan. In October 1987, a definitive plan was
presented to the bank. This version was not accepted, and the loan was suspended.
        A new version of the definitive plan, among other things containing proposals
regarding integration of the indigenous populations with economic and mining interests in
so-called national forests, was presented to the IDB in September 1988. This plan was co-
ordinated by the Secretariat of the National Security Council (SADEN),119 which took over
the responsibility for the PMACI from SEPLAN120 in early 1988 (Albert 1992:48).
According to Albert (1992:48-49) and Arnt and Schwartzman (1992:172-176), the new
version was influenced by military priorities. It divided the lands of the Apurinã, Kasharari,
Kashinawa, Paumari, Yamamadi and Yaminawa Indians into a mosaic of 20 «indigenous
colonies» and six National Forests (Albert 1992:49, Arnt and Schwartzman 1992:171-172).
        The effect of this zoning of indigenous land on forest conservation was modest. It
allowed economic activities like mining inside indigenous areas, and it avoided to
guarantee the permanent right of Indians to their land (Arnt and Schwartzman 1992:173).
The new definitive action plan also proposed the creation of 4 extractive reserves for the
region’s rubber tappers. Though this was a victory for the idea of extractive reserves for
independent rubber tappers, combining extraction of forest products with conservation in a
sustainable way, the concept used in the definite plan was criticised for being bureaucratic,
expensive and offered minimal influence and involvement to the rubber tappers (Arnt and




118The Brazilian Agricultural Research Institute.
119 The Secretariat for National Defence Assessments. Superior military planning secretariat directly
connected to the president’s office. Established in 1988 by changing the name of the former Secretariat-
General of the National Defence Council.
120 Planning Secretariat of the Republic. Superior planning agency.



                                                     184
Schwartzman 1992:172).121 The criterion for defining extractive reserves was the same as
the one used by the colonisation institute, INCRA, namely that land area should be without
competing claims. This implied that the PMACI avoided land areas claimed both by
ranchers and by other groups. Thus, established ranching and logging interests were not
challenged (Arnt and Schwartzman 1992:174). In this way, the PMACI in its final version
did not imply any strong limitation on the extension of ranching in the areas surrounding
the BR-364 through Acre (Schwartzman 1991).


Incentive and directive changes in the Amazon 1988-90
The 1988-90 period was characterised by a strong increase in the number of new laws,
decrees and administrative measures to control deforestation in the Amazon region. These
measures also included considerable restrictions on commercial interests, on important
points pushing reforms well beyond the compromises of the PMACI.
        In October 1988, President José Sarney held a speech related to the environment, in
which he introduced broad policy changes related to Amazonia (Hurrell 1992:409). The
proposal for a new plan related to environmental protection in Amazonia was decreed the
12. October 1988 and called «The Programme for the defence of the complex of ecosystems
in Legal Amazonia». It was marketed under the name «Nossa Natureza» («Our Nature»).
The targets of the programme included restraining «predatory» actions, disciplining the
exploitation of the region, to regenerating the region’s ecosystems and protecting
indigenous populations and the region’s rubber tappers (Decree No. 96.944/88). Global
environmental problems emerged as environmental policy motives in Brazil for the first
time in this plan. In the report from the executive committee of Nossa Natureza submitted
in February 1989, this is stated clearly (SADEN 1989:26, my translation from Portuguese):


«However, much more important than microeconomic considerations is the fact that the natural ecosystems of
the earth, fundamental for the maintenance of processes of regeneration in the biosphere and atmosphere, are
becoming rare, and therefore valuable. The destruction of tropical moist forests, in particular the Amazon
forest, attract the interest of industrialised countries, not only because they constitute the ecosystems with the
most biological species, but above all because of their possible influences on the global climate.»

121The top-down approach to extractive reserves resulted in protests from the National Council of Rubber
Tappers, the NGO IEA (Institute of Amazon Studies) and their partners in the US NGO movement, cfr. Arnt
and Schwartzman (1992:172).



                                                      185
The core of the first phase of the programme was the establishment of six interministerial
working groups on topics related to environmental problems in Amazonia.122
        The groups were co-ordinated by an executive interministerial committee headed by
General Rubens Bayma Denys from the SADEN/PR. The committee included
representatives from the ministries of agriculture, science and technology, agriculture,
agrarian reform, the cabinet of the president and the secretariat for planning.
        The establishment of the interministerial working groups was introduced together
with Decree no. 96.943/88, which also prohibited the approval of new fiscal incentives for
ranching and agriculture in Legal Amazonia for a period of 90 days, later indefinitely. As
mentioned above, fiscal incentives for ranching in the Amazon was perceived as one of the
main culprits of deforestation.123 The decree also prohibited the disbursement of official
agricultural credit for new ranching projects in areas covered by forest. The same
restrictions were put on incentives and credit for agricultural and ranching projects in the
Atlantic rainforest (Art. 4). Though the government’s decision only included new fiscal
incentives and implied that incentives for already established ranches continued to be
disbursed, it provoked strong protests from business interests in the Amazon region.124
        In February 1989, the report from the working groups was delivered to president
Sarney. During the following months, several laws, decrees and administrative acts were
approved. Here, I will concentrate on the parts of legislation that put restrictions on the
operations of commercial actors. It should be noted that most of the legislative changes
were aimed at the strengthening of existing laws. But these changes were now justified by
global environmental concerns through the «Nossa Natureza» plan.

122 The groups addressed the following topics: Forest cover in Amazonia, chemical substances and
inadequate processes in mining, structure of the administrative system for environmental protection,
environmental education, research and protection of the environment, indigenous communities and
populations involved in extractive activities.
123Though this assumption had been questioned by scientists (Yokomizo and Gasquez 1986), fiscal
incentives was at that time perceived as a leading cause of deforestation.
124Opposition from UDR, the Rural Democratic Union, was particularly strong. UDR is a powerful
organisation for large landowners set up in 1985 to contest the Sarney government’s agrarian reform proposals
(Hall 1989:87). For protests against Sarney’s cancellation of fiscal incentives, see for example the article:
«Emprésarios criticam as restrições impostas a projetos agropecuários», Folha de São Paulo, 12 October,
1988:C-2. Protests from UDR confirmed in interview with Fernando Mesquita, November 1993.



                                                    186
       Several decisions by the government were published on 10. April 1989. Decree No.
97.637/89 prohibits the disbursement of official rural credit and new fiscal incentives for
agricultural and ranching enterprises in forest areas in Legal Amazonia until a definitive
zoning of Legal Amazonia into various user purposes has taken place. Decree No.
97.635/89 prohibits the use of fire for clearing of new land. Decree No. 97.632/89 makes it
obligatory for mineral enterprises to present reforestation plans as an integrated part of their
RIMAs. Decree No. 97.628/89 makes reforestation obligatory for companies that consume
timber as a raw material. Sawmills, metal industries and cellulose industries have to present
integrated replanting plans to IBAMA. The decree gradually decreases the allowable supply
of timber from natural forests from 60 percent in 1989 to zero in 1995.
       Several law amendments were also decided in 1989. Law no. 7.803 of 18. July 1989
contains prohibitions of subdivisions of plots as a loophole to exceed the 50 percent
maximum limit on deforestation of properties. It also makes logging dependent on license
from the newly created environmental authority IBAMA. Furthermore, it contains an
obligation to register all chainsaws at IBAMA. Law No. 7.875/89 of 13. November 1989
prohibits all exploitation of land in national parks and biological reserves and guarantees
that 50 percent of income from payments from visitors to such conservation units is used to
finance their management. In addition, several laws and decrees addressed other questions
than these directly related to forest exploitation and deforestation. This was the Law on
Pesticides, the creation of the National Environmental Fund and the partial amendment of
the law regulating the National Environmental Policy.
       The rule that defined land clearing as «land improvement» and foundation for land
title was also removed. However, this rule was not implemented, as the National Institute
for Agrarian Reform (INCRA) which is a main body for land title provision, continued to
use clearing as a qualifying criterion when granting land title (World Bank 1992:35).
       Law No. 7.735/89 of 22. February established a new executive body responsible for
implementing the new legislation. This was the Brazilian Institute for the Environment and
Renewable Resources (IBAMA) through Law No. 7.735 of 22. February 1989. IBAMA




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emerged by merging SEMA, IBDF, SUDEPE125 and SUDHEVEA126, and was placed under
the Ministry of the Interior. IBAMA was subdivided into departments of administration,
research, ecosystems, renewable resources and inspection/control (Art. 3). For the first time,
an executive body dealing both with urban pollution and the use of natural resources was
established. The new body was an autarchy under the Ministry of the Interior, a legal status
that made the body able to add income from the distribution of fines and other activities to
its government funding (Carvalho 1991). The new body was also decentralised, with the
majority of its employees in special state branches. The state branches were charged with
the task of complementing the efforts of state environmental agencies when these were
hampered by capacity problems. The state superintendents were placed directly under the
instruction of the president of IBAMA. As the regional offices of IBAMA are responsible
for environmental licensing of ranching and logging projects as well as environmental
monitoring inspection, the state leaders of IBAMA were given considerable power.
Politically, this implied a transfer of power over the licensing and inspection process from
state to federal level as the superintendents are appointed by the President of IBAMA, and
not by state politicians.
        The main accomplishment of IBAMA in 1989 was the implementation of a
monitoring and inspection programme for the Amazon region called the Emergency
Programme for Legal Amazonia (PEAL). PEAL was financed by transferring 30 percent of
World Bank funding (USD 8 million) for the POLONOROESTE programme to IBAMA.127
Seventy inspection groups (of them 50 mobile) consisting of about 1.000 officials from the
Federal Police, the Road Ministry, the Marine Ministry, state environmental secretariats and
Forest Police patrolled the Amazon region.128




125 Superintendency for fishing.
126 Superintendency for rubber production.
127Information provided by former director at IBAMA, José Carlos Carvalho, in response to questionnaire,
March 1993.
128The problem of lacking economic incentives to forest guards, pointed out by Binswanger (1991) as an
important barrier to law enforcement, was also addressed during Mesquita’s period as IBAMA president.
IBAMA staff doing service in remote regions received a bonus of between 40 and 80 percent. This bonus was
especially relevant to servants in the Amazon region (Arnt and Schwartzman 1992:285).



                                                  188
        The programme was assisted by observations from the meteorological satellite
NOAA (which is especially suitable for fire detection because of its infrared sensor) relayed
through the Brazilian space agency INPE, and by observations from airline pilots. Nine
helicopters assisted the surveillance activities and increased the mobility of inspection
groups (Arnt and Schwartzman 1992:287). Until November 1989, IBAMA had distributed
838 fines in the Amazon region (IBAMA 1989b:3). Rondônia, with its rapidly expanding
agricultural frontier, attracted more fines than any other state. 382 fines were given for
violations of environmental regulations in this state (Arnt and Schwartzman 1992:287).
        During 30 days of monitoring and inspection, the six teams that accomplished the
so-called «Operation Carajás» started legal proceedings against three pig iron producers,
which had not carried out their reforestation requirements), 22 sawmills, which had
acquired timber illegally, and 1.110 vehicles for not having licences for timber transport
and for carrying species which exploitation was prohibited (Arnt and Schwartzman
1992:287). According to Hall (1991:298), in July 1989, the SIMARA pig-iron smelter in
the city of Marabá was fined the equivalent of about USD 0,5 million by IBAMA for
buying illegally cut timber, and suspended its operations.129 The larger Companhia
Siderúrgica do Pará (COSIPAR) smelter on the same place, owned by the Minas Gerais
steel company Itaminas, was fined the equivalent of USD 25.000 for similar offences, but
continued its operations (Hall 1991:298).
        The PEAL programme provoked strong protests among ranchers in the Amazon
region. Reports from the field indicated that the IBAMA inspectors were physically
attacked and in some cases wounded (Arnt and Schwartzman 1992:287, Margolis
1992:309). In a public meeting in Imperatriz in the state of Maranhão, members of the
rancher dominated Rural Democratic Union (UDR) threatened IBAMA’s president
Fernando Mesquita (Arnt and Schwartzman 1992:287).130 Big rubber entrepreneurs and
ranchers in Rio Branco (Acre) made similar threats (Arnt and Schwartzman 1992:287). In
addition, the São Paulo based organisation Association of Amazonian Entrepreneurs (AEA)
was active on behalf of its members, many of them big ranchers, in political lobbying


129Cfr. also Margolis (1992:127). According to Smith et al. (1996:108), the SIMARA smelter is planning to
reopen its operation.



                                                  189
against the distribution of fines and legal charges against ranchers.131 Complaints from
governors and congressmen from the Amazon region representing farmers and commercial
interests talking about a «massacre of fines» from IBAMA indicate that the new
surveillance programme represented a substantial change of government attitude to law
enforcement.132
        A series of new protected areas were also established in the Amazon region under
the Sarney government (FUNATURA 1992). As part of the introduction of the «Nossa
Natureza» plan in April 1989, one new national park in the Amazon was established. Two
more parks in the Amazon region were established in June the same year. Altogether, these
three parks covered 754.000 ha. Two biological reserves, covering 444.650 ha were also
established in the region in 1988 and 1989. This brought the total area of federal
conservation units up to an area of more than 27 million ha in 1990, or 7,6 percent of the
Legal Amazon (Pádua 1992:23).
        In general, the identification of the protected areas was not much more than a series
of symbolic decisions. As mentioned, financial resources for monitoring and administration
of protected areas both to SEMA and IBDF declined considerably during the 1980s. This
problem was transferred to IBAMA. In 1990, IBAMA had only 548 employees to take care
of all its 97 federal conservation units (IBAMA 1990:34). This implied that the average
employee had to look after 60.000 ha, often considerably more in remote areas like
Amazonia (IBAMA 1990:34). Furthermore, conservation units in the Amazon region were
exposed to high levels of fire damage from neighbouring farmers and ranchers. In 1988,
seven national parks in the region lost 500.000 ha of forest cover due to fires (IBAMA
1990:40). Though this problem was partially addressed under the PEAL programme, both

130Interview with Fernando Mesquita, November 1993.
131Interview with Fernando Mesquita, November 1993.
132Though these actions involved a clear step-up of law enforcement in Amazonia, legal problems curbed the
efficiency of government action. According to Fernando Mesquita, IBAMA only managed to collect about 2
percent of the fines. This happened because the routines for collection were excessively bureaucratic. The
offenders first turned to IBAMA for reassessment, and after that tried the cases for the court. Until a year
could pass before the offender paid the fine (Arnt and Schwartzman 1992:289). This problem was tried solved
during the last months of the Sarney government. Provisory measure no. 136 of 20 February 1990, later on
confirmed by the Congress by law no. 8.005 in March 1990, gave IBAMA the authority to collect fines
without waiting for court decisions. Cfr. also the article: «Arrecadação de multas engorda caixa do Ibama», in
Jornal do Brasil, 11. October 1990:12.



                                                    190
the limited capacity and period of this programme made these efforts insufficient (IBAMA
1990:40).
       Furthermore, the World Bank (1992:89, 1994a:281) notes that the correspondence
between protected areas and biodiversity is at best uncertain. Protected areas have been
selected on the basis of land availability as well as biodiversity criteria (World Bank
1994a:281). In addition, none of the protected areas seem to have been established in areas
claimed by ranchers or other commercial interests in the region. No protests against the new
protected areas emerged in the national press. The President of IBAMA in this period,
Fernando Mesquita, could not remember any protests against the establishment of these
protected areas.133
       Thus, the expansion of protected areas in this period, mostly «paper parks» with
uncertain value in terms of biodiversity, cannot be characterised as any substantial reform.
       However, the creation of extractive reserves for small-scale rubber tappers exposed a
substantial commitment to confront commercial interests, though the identification of these
reserves was done on the basis of land demands by rubber-tappers, and not on the basis of
clear environmental criteria. The establishment of 4 extractive reserves in Acre, Rondônia,
and Amapá covering 2.162.989 ha in early 1990 confronted regional rural interests to an
extent that went far beyond what had been proposed by the government in the PMACI.
There were conflicts between local ranchers and rubber-tappers over sections of the new
reserves, and the ranchers protested against the decision (Silva 1994: 707-708). Thus, on
the background of the discussion in section 4.2, where the establishment of protected areas
on forest land claimed by commercial interests was identified as an important indicator of
reform, the establishment of the new extractive is a case of substantial reform, according to
the criteria outlined in section 4.2.
       Other reforms under Sarney were of a contradictory nature. The new national forests
and reserves for indigenous populations which was created did not confront commercial
interests to the same extent as the monitoring and surveillance programme and the
establishment of the extractive reserves. The indigenous areas of Brazilian Amazonia are
generally understood as important in terms of their content of large pristine forest areas




                                             191
containing considerable species and ecosystem diversity. According to FUNATURA
(1992:22), «…the indigenous areas in Amazonia give a very important contribution of the
region’s ecosystems, particularly when duly demarcated and protected from invasion».
       However, the establishment of 23 national forests covering almost 12 million ha in
1989 and 1990 (FUNATURA 1992) should not be considered a strong disciplinary measure
under the prevailing circumstances. The laws regulating national forests in general permit
limited extraction of natural resources, like minerals, and they are generally even less
monitored than other categories of protected areas. Furthermore, in several cases, they were
used as instruments to secure the access of placer miners to indigenous areas. When doing
this, the government did not only create difficulties for the indigenous populations. The
influx of placer miners also led to severe damage on ecosystems caused by the use of large
quantities of mercury used in gold-exploitation. In addition, the placer miners were widely
perceived as spearheads both for agricultural interests and large mining companies
(Monbiot 1991, Albert 1992).
       The use of national forests as tools to break up indigenous territories was most
visible in the Sarney government’s decisions regarding the huge Yanomani reservation in
Roraíma. The government’s response to the influx of placer-miners who poisoned the forest
ecosystem and mistreated its native inhabitants, was to break the Yanomani territory up into
19 pieces surrounded by national forests and encourage further immigration (Albert 1992,
Allen 1992). This strategy led the Sarney government into a conflict with a federal judge,
who in 1989 judged the subdivision of the Yanomani land in the state of Roraíma to be
unconstitutional (Albert 1992, Monbiot 1991:97). However, the government did not obey
this court order. Placer miners were allowed to continue to move in.


Further reforms: Collor’s environmental policies in Amazonia 1990-92
The 1990-92-period was marked by a further increase of environmental reforms related to
the Amazon. This implied both a further increase of environmental monitoring and
inspection, and a more protective attitude to Indian land. Both sets of measures implied a



133Interview with Fernando Mesquita, November 1993.



                                                192
substantial increase of constraints on the actions of a wide range of commercial interests,
including ranching interests.
       The first document on the environmental policies of the new government of
Fernando Collor de Mello was a 77-page document presented between the first and the
second round of presidential elections in 1989. The document was written by Helio Setti, an
environmental activist from the movement focused on the protection of Brazil’s Atlantic
rainforest.134 The document provided the main background for the environmental reforms
under Collor (1990-92). Priority targets were effective zoning efforts in the region aiming to
identify areas for protection and economic exploitation and the creation of a system of
permanent monitoring of the most vulnerable regions. Furthermore, the list of targets
included creating new protected areas, better monitoring and inspection services in these
areas, developing less predatory agricultural systems, strengthening state and municipal
environmental administration, cancelling of the natural forest based iron production poles
in the Great Carajás programme, further extending extractive reserves and speeding up
demarcation of indigenous areas with a special priority on the Yanomani reserve (Collor,
undated:17-22).
       These proposals were not implemented through coherent policy «packages» to the
same extent as under the Sarney government. Rather, reforms came in uneven clusters.
       One of the first steps made by the Collor government was to establish a separate
Secretariat for the environment at government level, SEMAM.135 For the first time, an
environmental agency at the level of the federal government existed in Brazil. IBAMA was
transferred from the Ministry of the Interior, and now became the executive body of the
new secretariat. The National Environmental System (SISNAMA) now consisted of
CONAMA as a consultative body providing broad directives for environmental policy,
SEMAM/PR as the central body defining policies, and IBAMA implementing policies
(Carvalho 1991:12).136


134Confirmed by Bruno Pagnoccheschi , director of planning at SEMAM 1990-92, in interview in December
1993.
135 The Secretariat of the Environment.
136Also sectional, state and local bodies were integrated into the SISNAMA. The government was still, of
course, the highest body defining policies. Here only the main federal bodies of SISNAMA are mentioned.



                                                 193
        Several incentives understood to encourage agricultural expansion and deforestation
in the Amazon region were scrapped or revised during the 1990-92 period. Collor cancelled
new regional fiscal incentives for all kinds of projects in March 1990 as part of the
economic stabilisation plan (World Bank 1992:xxi).137 A new law for the application of
incentives from the FINAM fund was established in January 1991. The new law, Law No.
8167 of January 1991, changes the money previously allocated as fiscal incentives to
debenture bonds, changing substantial parts of stocks in projects to loans (World Bank
1992:xxi).
        The new law was accompanied by a regulation on the use of fiscal incentives for
ranching in Decree No. 101 of April the same year. Decree No. 101 makes the approval of
fiscal incentives for crop and livestock activities dependent on the previous consent of SAE
(Secretariat of Strategic Affairs, by and large filling the same function as SADEN), INCRA,
IBAMA and FUNAI. This implied a new position of influence for IBAMA and FUNAI on
the extension of agricultural projects. Decree No. 153 of June 1991 extended this regulation
to imply all kinds of projects and included SEMAM consent as a criterion for project
approval. It also gave IBAMA the authority to inspect all projects and cancel them on the
basis of environmental considerations.138 According to Serôa da Motta (1993:22), from



Undoubtedly, the new administrative structure led to serious co-ordination problems as IBAMA and SEMAM
had overlapping mandates. IBAMA’s internal structure remained unchanged from the period 1989-90 when it
was both executive and consultative body under the Ministry of Internal Affairs. Interview with Bruno
Pagnoccheschi , director of planning at SEMAM 1990-92.
137 Provisional Measure 161, 1990. Cfr. also Collor’s website: http://www.collor.com/plan5.htm.
138However, as the environmental zoning that is anticipated as a basic criterion for approval of fresh
incentives in Decree No. 101 and Decree No. 153 was unfinished, it was difficult for SAE (which headed the
zoning committee) to answer SUDAM’s requests for incentive approval. Moreover, the current project
proposals for fiscal incentives do not provide enough information to allow a detailed analysis by IBAMA
(Serôa da Motta 1993:21). Therefore, from 1991 until June 1992, the consensus process between the agencies
was done on ad hoc basis. In June 1992, IBAMA issued a directive (Portaria No. 138) with a set of
requirements to be met by those projects using FINAM resources, including a topographic survey, fauna and
forest inventories and environmental impact assessments (Serôa de Motta 1993:21). Though Decree 101 and
153 imply a strong increase of SEMAM and IBAMA influence over the process of project approval, it should
be noted that FINAM incentives for already existing SUDAM-supported ranching projects continued. For a
criticism of the government, see the article «Subsídios aceleram destruição da Amazônia», Jornal do Brasil,
24 June 1992:13, in which Philip M. Fearnside attacks the government for avoiding to cancel all incentives, a
decision that led to continuing deforestation in already approved projects. Another problem was that mining
and logging projects could still benefit from the FINAM fund. In the beginning of 1992, the Superintendency
for the Free Trade Zone of Manaus (SUFRAMA), which also has the right to approve FINAM incentives in
parts of Western Amazonia, approved FINAM incentives for 57 logging projects in Rondônia and Amazonas,



                                                    194
January to April 1992, USD 81 million was disbursed from the FINAM fund. Sixty-six
new projects had been approved.139 The distribution of projects on activities is unknown,
but it is clear that sawmills and other wood industries as well as mining projects were still
eligible for fiscal incentives, though both kinds of activities had become dependent on
environmental licenses from IBAMA based on proper environmental impact assessments.
Licences could be withdrawn by violations of environmental rules.140
       The Great Carajás programme was also revised further under the new government.
After the initiative of the government (Decree No. 99.353/90), directives were established
for the Great Carajás programme, significantly altering the legal basis of the programme.
       Directive No. 140/90 from the Secretariat of Regional Development requires that the
steel and iron companies in the Great Carajás project comply with a new set of regulations
to be eligible for regional fiscal incentives (distributed through SUDENE and SUDAM).
The approval of fiscal incentives is made dependent on five criteria. Among them, the
obligation to fuel factories with other energy resources than native forests and to use energy
conserving technologies in production are most important from an environmental point of
view. Furthermore, projects only aimed at the production of pig iron are not eligible for
fiscal incentives. If energy inputs from forests are used, these inputs have to be provided by
planted forests, and accompanied by investments in equipment that reduces the demand for
wood. Together with the general environmental criteria for approval of SUDAM fiscal
incentives for projects, these detailed provisions for the provision of fiscal incentives for
wood-consuming steel industries implied a considerable change of incentives for
ecologically devastating projects connected to wood-consuming industries and agriculture.
In addition to these incentive changes, Decree 99.353/90 also charges IBAMA with the
responsibility to give priority to the Great Carajás area in their surveillance and monitoring
operations.



see the article: «SUFRAMA aprova 57 projetos para produçao de madeira em Rondônia e no Amazonas»,
Gazeta Mercantil, 21 March 1992:15.
139It should be mentioned that the financial basis for the FINAM fund was cracking because of the heavy
depression, see the article «SUDAM alerta que cortaram os recurson devidos a Amazônia», Desequilibrio
Inter-Regional, Vol. 1, No. 4, August 1992.
140See SUDAM Resolution No. 7077, 16. August 1991, art. 12 (SUDAM 1991:37).



                                                 195
       What came out of the revision of the Great Carajás programme? According to
Roberts (1995:390), both government restrictions and problems of economic viability
contributed to a dramatic downscaling of the original proposal for the pig iron sector.
Roberts (1995:390) refers to four functioning smelters, two in Marabá and two in
Açailândia. This information is confirmed by Smith et al. (1996:106). They also indicate
that one of the smelters near Marabá was out of production in 1992. These smelters are
fuelled by charcoal from sawmill residues and agricultural clearing. Furthermore, according
to Smith et al. (1996:109) as well as Margolis (1992:130), at least one smelter, COSIPAR,
started to establish plantations of fast-growing species in 1992.
       Other incentive changes related to deforestation through the system of agricultural
taxation were also pursued, but with less success.
       Perhaps most important, the land tax system was modified in 1992. The tax reforms
introduced this year included a provision which exempted sections of properties with native
or replanted forests from land tax (Serôa da Motta 1993:10, World Bank 1994a:105). This
reduced the incentive to clear land as a method of tax reduction. Together with substantial
increases of effective taxation of already cleared agricultural land, this could have provided
a strong incentive to leave properties under forest cover.
       There was actually an attempt by the government to increase the land tax. Reforms
related to the land tax led to an increase of the collection of such taxes, but from a very
modest base. According to the World Bank (1994a:98), revenues increased from 0,2 percent
of GDP in 1988 to 0,5 percent in 1992. Such marginal variations in taxation are not likely
to have influenced deforestation.
       Attempts to increase the income tax from rural properties were also introduced. The
tax policies of the Collor government were meant to decrease the tax shelter for large rural
properties. Steps were taken to increase the tax rate of corporations from six percent to 25
percent of their profits from «rural activities» (agriculture, forestry, livestock and processing
of such products) (World Bank 1994a:97). This would leave such taxation only ten percent
below those for industrial profits. Tax deductions related to investments in equipment and
inputs were also removed.




                                              196
       However, a variety of exemptions watered out the reform. The Collor government
did not manage to increase taxation of agricultural income; a measure which could have
influenced the rate of clearing of new land in all regions, including the Amazon (World
Bank 1994a:97).       Furthermore, except from the tax reduction on forested sections of
properties, the mentioned tax reforms were not motivated by considerations for the
environment, but by considerations for economic efficiency and government revenue. Thus,
due both to the marginal character of changes of agricultural taxes and the lack of a clear
pro-environmental justification for most of these tax changes, these changes cannot be said
to have been strong reforms on the basis of the criterions for evaluation of policies outlined
in section 4.2.
       Surveillance and monitoring efforts to enforce clearing and other environmental
regulations were also further increased in the 1990-92-period. During a visit to Pantanal in
June 1990, Collor announced a programme to combat deforestation and fires in Amazonia
(Programa de Combate as Queimadas da Amazonia).141 The programme was marketed
under the name «Operation Amazonia», commemorating the military regime’s first
development programme in the Amazon region.
       Operation Amazonia was based on a more sophisticated connection between ground
level inspection and satellite monitoring. In co-operation with the Brazilian space agency
INPE, a new system that relayed fire observations from the infrared sensor of the NOAA
meteorological satellite to IBAMA’s regional offices within hours was successfully
introduced (Cleary 1991a:39). Six helicopters and about 300 IBAMA staff members and
federal policemen were involved in the campaign.142 Close to the end of 1990, IBAMA had
distributed the equivalent of about USD 9 million as fines. The number of fines for
violations of environmental rules distributed under «Operation Amazonia» represented
more than 50 percent of the total number of fines distributed by IBAMA in 1990, and
slightly less than 50 percent in terms of value.143 This indicates that Amazonia received




141Gazeta Mercantil, 5 June 1990:15.
142«Multas altas diminuem desmatamento», Correio Brasiliense, 16 December 1990:19.
143«Multas altas diminuem desmatamento», Correio Brasiliense, 16. December 1990:19.



                                                 197
high priority in the new government’s programme for environmental monitoring and
inspection.
        Fines were distributed to several large companies. Examples of these were the
mining company Mineração Taboca, a subsidiary of the Brazilian mining giant
Paranapanema, and the Jerdau logging company. Mineração Taboca was fined the
equivalent of about USD 1,1 million for its operations in the cassiterite mine at Pitinga
(Amazonas). The company had been infamous for years for its unpunished ecological
disturbances of the Waimiri Atroara Indian reserve close to the mine (Fearnside 1990b:210
). The Jerdau logging company was fined the equivalent of about USD 2 million for illegal
logging in the state of Amazonas.144
        While the fines distributed in 1989 had been concentrated on illegal forest removal
and forest burning, the fines distributed in 1990 were dispersed over a wider range of
activities. The most important activity was still forest clearing and illegal forest burning for
ranching purposes, but illegal transport and storage of timber gained importance.145 About
87 percent of illegal deforestation detected by IBAMA in 1990 (altogether 87.000 hectares)
were concentrated in the ranching state of Mato Grosso.146 The extent of the area of illegal
and detected deforestation corresponded to about 7,8 percent of deforested area as estimated
by INPE in the 1990/91 period (INPE 1992).
        Operation Amazonia was repeated in 1991. This year, monitoring efforts were
hampered by a strike by IBAMA employees protesting against low wages. The campaign
was postponed to the middle of August this year. Though constrained by this problem,
actions seem to have been accomplished with considerable energy. Before 30. October,
4.478 fines had been distributed, equalling a value of 1,5 billion cruzeiros.147 The total
costs of the operation were estimated to about 1 billion cruzeiros in August 1991.148 The


144«Arrecadação de multas engorda caixa do Ibama», Jornal do Brasil, 11. October 1990:12.
145«Multas altas diminuem desmatamento», Correio Brasiliense, 16 December 1990:19.
146«Ibama retoma nesta semana Operação Amazônia contra desmatamenteo e quiemadas», Gazeta Mercantil,
10. August 1991:15.
147Copy of document provided in meeting with staff members of the Directorate of Control and Inspection
(DIRCOF) at IBAMA in October 1992.
148«Ibama retoma nesta semana Operação Amazônia contra desmatamenteo e quiemadas», Gazeta Mercantil,
10. August 1991:15. It is difficult to compare public costs and income on different points of time through the



                                                    198
area of illegal deforestation detected in the 1991 version of Operation Amazonia was about
96.305 ha, or close to 10 percent of deforested area estimated by INPE that year.149 About
20 percent of the fines were given for illegal deforestation, 50 percent for illegal actions in
the broad category of transport, trade and consumption of prohibited products. About 20
percent of the fines were given for damages to the fauna of the region.150
        The problems related to collecting fines, which were related to insufficient
provisions in the forest law, were tried solved in 1991 by submitting to the Congress a bill
which clarified and extended the concept of environmental crime and clarified IBAMA’s
rights to collect fines. However, this bill was slowed down by the Congress, and was not
passed before very recently.151
        In 1992, monitoring and inspection efforts decreased, apparently due to lack of
funding. Though there was a further change towards less expensive high-tech satellite
detection in the so-called «Olho Verde» (Green Eye),152 a 60 percent decrease of funding for
monitoring purposes almost halted the programme.153 The IBAMA president, Maria Tereza
Jorge Pádua, confirmed the breakdown of financing for monitoring and inspection efforts in
1992.154 In the key state of Pará, ground level monitoring and inspection operations were
cancelled completely for 3 months because of lack of money to buy fuel for IBAMA’s cars
and other basic inputs.155


fiscal year in periods of high inflation. In addition, IBAMA was still hampered by its inability to collect fines.
However, these figures still demonstrate the potentially self-financing character of environmental monitoring
and law enforcement.
149Calculated on the basis of INPE (1992).
150Information from meeting with staff members of the Directorate of Control and Inspection (DIRCOF) at
IBAMA in October 1992.
151 Cfr. Reuters reports referred on Worldwide Forest/Biodiversity Campaign News: «New Environmental
Crimes Bill Approved», 29. January 1998 http://forests.org/gopher/Brazil/apnewbi.txt, and «Brazil Introduces
New Law to Protect Environment», 13. February 1998 http://forests.org/gopher/Brazil/brintlaw.txt.
152 See the article: «Subsídios aceleram destruição da Amazônia», Jornal do Brasil, 24 June 1992:13.
153The Secretary for the Environment, José Goldemberg, tried to play down these problems, see the article:
«Falta de recursos limata a fiscalização», Correio Braziliense, 24. May 1992:18. «Fires burn in the Amazon»,
Jornal do Brasil [English edition], 3. June 1992:6.
154Interview with Maria Tereza Jorge Pádua, October 1992.
155Interview with IBAMA superintendent Reginaldo Anaisse at TV-Pará, 9 November 1992, confirmed in
interview with Anaisse in November 1992. Dr. Luix Alberto Vieira Dias at the Brazilian Space Agency
(INPE) stated the following about monitoring and surveillance operations in 1992, commenting on
Goldemberg’s statement: «About “Olho Verde”, unfortunately the funds available were much under the
minimum needed. Dr. Goldemberg is a very optimistic person. » However, Dias emphasises that inspection



                                                      199
        Other directive changes were also decided in other tropical moist forest regions than
the Amazon. Land clearing in the Atlantic forest (Mata Atlantica) was totally banned by
IBAMA in July 1990.156
        As for the Sarney government, the Collor government’s record when it comes to the
establishment of protected areas in Amazonia was mixed. The Collor government
demonstrated a clear advance in willingness to define and enforce new environmental
directives on miners and ranchers in its decision to set aside a large series of reserves for the
indigenous populations of Amazonia. The number of demarcated indigenous territories
increased rapidly under Collor: Seven areas had been demarcated in 1986, 11 areas in 1987,
none in 1988 and six areas in 1989. The number of areas demarcated increased substantially
under Collor, particularly after the appointment of the highly respected expert on
indigenous populations Sidney Possuelo as president of FUNAI in 1991. Eight areas were
demarcated in 1990, 104 areas in 1991, nine areas in 1992, 14 areas in 1993.157
        The indigenous reserves contain large areas of tropical moist forests, and many of
them have large natural timber and mineral resources. A majority of the indigenous reserves
decided demarcated in 1991 and 1992 were claimed by ranchers, loggers, and mining
companies.158 Thus, their protection through legal recognition should be perceived as
giving environmental and related interests strong priority over commercial interests.
        However, the Collor government’s general record with reference to protected areas
other than indigenous reserves was poor. Though the definition of new conservation units
continued, large budget cuts for IBAMA rendered the protected areas in a state of
disarray.159




and monitoring, though incompletely funded, was increased substantially: «Unfortunately the number of
helicopters available (maybe ten) were (sic) very small for the 5 million square kilometers of the Legal
Amazonia (sic). Of course, to put ten helicopters available to this program was a unheard of effort in Brazil.
Previously we had none!» Written statement from Dr. Vieira Dias, 15. March, 1995.
156Portaria IBAMA 1.201 of 18. July 1990.
157Answer to questionnaire from Sidney Possuelo, president of IBAMA 1991-1993, August 1994.
158Answer to questionnaire from Sidney Possuelo, president of IBAMA 1991-1993, August 1994.
159Between 1989 and 1992, federal expenditures on conservation units were reduced by more than 75 percent
(World Bank 1994a:280).



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Brazil 1989-92 - regulations of ranchers and other commercial interests on Amazonian
forest land
I have shown that both the Sarney and Collor governments imposed new regulations on
commercial interests operating in the Amazon region through incentive changes, legislative
changes and the implementation of substantial increases of surveillance and monitoring of
compliance with federal rules.
       Directive and incentive changes implied further defining and initiating enforcement
of existing laws, like the 1965 Forest Code and the Constitutional requirements for
protection of indigenous land, as well as the formation of new policies, like the
environmental strings on agricultural credit and fiscal incentives. These changes were
explicitly motivated by global environmental concerns under both presidents, and designed
to decrease forest conversion for ranching and other activities. They responded to analyses
of the causes of deforestation in the Amazon region that emphasised the importance of big
ranchers and some other commercial interests, particularly pig iron producers in the Great
Carajás programme and mining companies. With the benefits of hindsight, it is clear that
these analyses were insufficient, as Amazon deforestation in the mentioned period to a
certain extent shifted from being caused by big corporations and wealthy landowners
towards small and medium-sized ranchers and farmers (World Bank 1992, Schneider
1995). However, as pointed out in section 4.2, the policies of a government should be
evaluated on the basis of available information.
       It is also true that there were considerable weakness in the policies of both the
Sarney and Collor governments. The ambiguities of protection of Indian land under Sarney,
the financial crisis and institutional destabilisation of IBAMA under Collor, the almost
complete negligence of protected areas particularly under Collor and the incomplete
reshaping of the land tax and agricultural income tax are good examples. However, I also
argue that the actions connected to the surveillance and monitoring programmes and the
reduction and redirection of incentives for projects on forest land (both agricultural credit,
FINAM and the Great Carajás Programme subsidies) were clear improvements as compared
to the period before 1989.




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        In section 4.2, I outlined some indicators of reform. Evaluating reforms in the light
of these indicators supports the view that Brazilian directive and incentive changes really
implied increased constraints on commercial interests in the Amazon region.
        First, fierce protests from commercial actors and their organisations indicate that the
enforcement of directives for agricultural conversion really implied constraints on the
activities of the most important commercial interests perceived to be main agents of
deforestation in the Amazon region. All the IBAMA presidents during the 1989-1992
period, from Mesquita to Pádua, gave testimonies on political pressure and threats from
important business organisations with members in the region, particularly AEA and the
UDR. Regional politicians did the same.160 Under the monitoring programme, at least one
minister in the Collor government was fined for illegal deforestation and illegal timber
transport.161 Tania Munhoz, president of IBAMA in 1990-91, had to leave office because of
the increased efficiency of monitoring operations.162
        Commercial interests, particularly large ranchers, also protested against incentive
changes. Important business organisations, like the UDR and AEA, were active in protests
and lobbying against the cancellation of the approval of new agricultural credit and fiscal


160Interviews in November 1992 and November and December 1993. Though marking a considerable
increase of control in Amazonia, the «Operation Amazonia» programme was criticised for being insufficient.
This criticism was mounted both because the programme received insufficient funding, and because its staff
was insufficiently trained and educated. Both Tania Munhoz, president of IBAMA in 1990-91, and the
superintendent of IBAMA’s Pará branch in the same period, Reginaldo Anaisse, emphasised that the most
important effect of the programme was its demonstration effect in forest regions (interviews with Tania
Munhoz and Reginaldo Anaisse in November 1992). The monitoring programme was still far from sufficient,
but marked a considerable change of to inspection efforts compared to the period before the late 1980s.
Another problem with the monitoring programme was its strong focus on the punishment of trespassers at the
expense of educational and prevention measures (IBAMA 1990:86, answer to questionnaire from former
interim president of IBAMA José Carlos Carvalho in 1993, cfr. also Margolis 1992:310). This situation
became more serious in 1990 and 1991 as IBAMA failed to define regulations related to reforestation
requirements (PIFI) before September 1991. This implied that there was a serious lack of information on
specific regulations for several kinds of forest industries, like sawmills and logging operations.
161Confirmed in interviews with the former IBAMA leaders Tania Munhoz in November 1992 and Edouardo
de Souza Martins in November 1993. The minister was Ricardo Fiuza, who was fined for illegal deforestation
on his ranch in Pernambuco.
162Confirmed by Munhoz, Congressman Fabio Feldmann and José Goldemberg in interviews in November
1992. See also the article «CPI da Câmara quer demissão de Lutzenberger», Folha de São Paulo, 19.
September 1991:A-12, and the article «Presidenta do IBAMA pede demissão», Folha de São Paulo, 3.
October 1991, A-10. In the last article, it is also concluded that the dismissal of Munhoz was connected to
conflicts between Munhoz and Lutzenberger over IBAMA’s future. However, pressure from Amazonian
politicians played a key role. In the CPI, the article tells, IBAMA was pointed out as «enemy number one».



                                                   202
incentives to ranching and agriculture in the Amazon region.163 When the pace of
demarcation of indigenous reserves was speeded up under Collor, big mining companies
also joined this loose political coalition. More details about the participants in these
campaigns are presented in section 5.4 below.
        The impression that IBAMA inspection and licensing activities became more
rigorous and put stronger constraints on commercial interests is also bolstered by
conclusions from a major Congressional Investigation (CPI) in 1991. In the report from the
CPI, it is demanded that responsibility for environmental monitoring and control in the
Amazon is taken away from IBAMA and passed over to state agencies.164 Politicians from
the Amazon region dominated the CPI.165 Amazonian politicians also protested against
restriction on projects imposed by IBAMA.166
        Second, several students of Brazilian environmental policies related to the Amazon
region in this period support the view that an increase of directive enforcement and
important incentive changes took place.167
        Third, developments in policy areas relevant for speeding up the process of
commercial exploitation of the Amazon region did not match the vigour of environmental
policies. SUDAM, the former powerful economic development agency for the region, was
paralysed by investigations of corruption scandals in the region, and its freedom to
distribute incentives was seriously curbed. Official agricultural credit for ranching and
agricultural purposes was constrained by similar environmental restrictions.                                Road
construction and other infrastructure declined considerably, though this was mostly the


163For UDR, see the articles: «Empresários criticam as restrições impostas a projetos agropecuarios», Folha
de São Paulo, 12. October 1988:C-2, «Secretário do Meio Ambiente pede demissão e faz crítica a ministro»,
Folha de São Paulo, 20. September 1988:2.
164See the article: «CPI recomenda criação de 2 territórios no Amazonas», Jornal do Brasil, 29. November
1991:4.
165Of the 13 deputies participating in the commission, only one was from a state outside Legal Amazonia. It
was headed by Atila Lins, congressman for the conservative party PFL from the state of Amazonas, see «CPI
recomenda criação de 2 territórios no Amazonas», Jornal do Brasil, 29. November 1991:4.
166See the protest by the governor of Amapá, Anibal Barcellos from the right-wing party PDS, against
IBAMA’s decision to deny the construction of a road linking the capital of the state, Macapá, with Jari, a main
cellulose production site. The denial to construct the road was justified by the fact that it was projected to pass
through an extractive reserve, see the article: «Mestrinho insiste em exploração do subsolo», O Globo, 18.
July 1991:10.
167 Margolis (1992:308), Schmink and Wood (1992:122-123), Serôa De Motta (1993), Viola (1992, 1996).



                                                       203
consequence of the serious fiscal and organisational crisis that undermined the previously
so powerful Brazilian state under Sarney and almost destroyed it under Collor’s neo-liberal
«bureaucratic reform».
        The context of serious fiscal and institutional crisis with reference to the state also
bolsters the impression that environmental policies were pursued with relative vigour.
Disorganisation and financial instability increasingly paralysed the Brazilian bureaucracy
during the period in question. Increasing inflation, harsh fiscal austerity measures, massive
layoffs and unsuccessful reorganisation attempts increasingly undermined the state’s ability
to implement policies in an effective and coherent way. Bernardo and Bastos (1993)
emphasise that environmental policy achievements related to the Amazon region under
Sarney and Collor were more of a relative than absolute character. In a period of increasing
social, institutional and political disorganisation, these efforts were remarkable when
compared with the general development of state actions. One example is that IBAMA was
less exposed to Collor’s campaign to reduce staff in the federal bureaucracy than other
agencies.168 However, funding was still cut so sharply that the agency became more or less
paralysed in 1992.
        Another example is the relatively successful administration of IBAMA under
Mesquita (1989-1990). All the interviewees at IBAMA, among them scientists and people
with a background from the environmental movement, expressed considerable enthusiasm
for Mesquita’s ability to organise and attract government backing for IBAMA.169
        The weakest point of both administrations was the management of protected areas in
the region. Though there was a strong expansion of conservation units, extractive reserves
and indigenous reserves in the region, expenses for the management of these units were
totally insufficient. This was especially the case under the Collor government, when federal
allocations for conservation units decreased disastrously. The difference between actual
funding for conservation units and necessary funding was even higher than in Indonesia. In
1992, it was calculated that expenses necessary to manage and protect the current system of
conservation units amounted to USD 377 million. Maintenance costs amounted to between


168Written response to questionnaire from José Carlos Carvalho, March 1993.
169Interviews at IBAMA October and November 1992 and December 1993.



                                                  204
USD 18 and 20 million (FUNATURA 1992:17). Costs of implanting a well-functioning
system of conservation units covering 30 percent of the Legal Amazon was estimated to
cost as much as USD 12 billion (Pádua 1992). The bulk of these costs consist of land
purchases, as management of several conservation units is hampered by the fact that they
remain under private ownership (Pádua 1992).


4.5. The contrast between reforms in Brazil and Indonesia from the late 1980s
to 1992/93
There were substantial contrasts between environmental reforms of the actions of
commercial interests in Brazilian Amazonia and the Outer Islands of Indonesia between
1988 and 1992/93. The governments of Indonesia and Brazil were faced with different
challenges in the regulation of commercial interests operating on their tropical forest land.
In Indonesia, the regulatory challenge to the government was based on a broad perception
that a small number of combined forest concessionaires and wood industry groups were
depleting vast areas of forests through reckless logging operations. In Brazil, the regulatory
challenge was based on the perception that a somewhat larger number of big cattle ranchers
and some other groups of commercial actors were responsible for deforestation of large
forest areas. In both cases, these commercial groups used exploitation methods that
destroyed the natural resources they were exploiting instead of sustaining them for the
future. In both countries, such indiscriminate exploitation was illegal.
       Moreover, both states exposed that they understood the implications of further forest
destruction both on local and global environmental problems. Both states demonstrated an
increasing commitment to improve their efforts to change the situation in a more benign
direction at the rhetorical level.
       Neither Brazil nor Indonesia exploited the disciplinary potentials of protected areas
as an instrument to regulate these groups to any large extent. True enough, both states took
initiatives to increase the area of protected forest land. There is little doubt that old and new
protected areas were better managed in Indonesia than in Brazil. Though faced with severe
financial and other constraints, protected areas of forest land in Indonesia seem to have
been better managed, staffed and funded than in Brazil. Furthermore, various government



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agencies initiated efforts to make the establishment of protected areas a deliberate tool for
biodiversity conservation, as part of a national biodiversity conservation strategy. In Brazil,
the establishment of protected areas did not seem to be guided by the same principles.
Nevertheless, the system of protected areas was only a weak instrument for regulating the
most important commercial interests behind forest depletion in Indonesia.
       Drawing on the discussion in section 4.2, two arguments justify this conclusion.
First, the areas set aside did not conflict with logging interests to any large extent. Lowland
rainforest areas, the forest type most in demand by the logging and wood industry, are
under-represented in the present Indonesian protected areas system. As mentioned in
section 4.2, only when protected areas are established on land demanded by commercial
interests, forest protection can be perceived as interventions against these interests. In
addition, the lack of punishment of forest concessionaires intruding into commercially
attractive sections of protected areas experienced by the PHPA indicate that the protected
areas system, though in many ways laudable, should not be counted as an effort to regulate
the groups perceived as the main culprits for commercially motivated forest depletion in
Indonesia. On this background, it is also easy to understand the absence of protests from
these groups when protected areas were established, as the protected areas did not frustrate
their interests to any substantial extent.
       Brazil makes up an interesting contrast. In Brazilian Amazonia, during the 1988-90-
period, there was a strong expansion of federal conservation units in addition to the
establishment of large extractive reserves for the region’s rubber tappers. While the new
protected areas at best were symbolic exercises on the map, and at their worst represented a
deliberate opening of indigenous land for commercial exploitation, the establishment of
extractive reserves represented a substantial reform. Loggers and ranchers claimed these
areas, and they were established against protests from these interests.
       Under Collor, further cuts in federal funding for protected areas made the tokenism
of protection efforts even clearer. These cuts had disastrous effects on IBAMA’s already
very modest capacity to manage these areas. However, in contrast, the Collor government
also decided to demarcate enormous areas of indigenous land in the Amazon region. These
decisions did not only improve the living conditions for several of Amazonia’s indigenous



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groups, but they also contributed to the protection of vast expanses of forest land.
Furthermore, the decision to demarcate these areas implied denial of access for several large
mining companies that held prospecting rights in these areas, as well as denial of land
claims from ranchers and other commercial interests. These decisions were made against
the most ferocious protests from the commercial actors in question as well as their allies
within the bureaucracy; a response that will be further described in section 5.4 below.170
        The use of protection as an instrument of regulation in the two cases may indicate
that Indonesia, in spite of its relatively well functioning system of protected forest areas,
failed to exploit the disciplinary potentials of protection. Logging interests and the protected
areas system seem to co-exist in a way that puts few restrictions on loggers. Although
Brazil’s protected areas were poorly managed, the government on occasions chose to
confront commercial actors and distribute management rights to groups who favoured more
sustainable forest management. Thus, I argue that the Brazilian model represented a
stronger effort to limit the extension of potentially environmentally harmful commercial
actors into tropical moist forest areas.
        This contrast becomes more profound when analysing events in non-protected areas.
Environmental policy changes in Indonesia in forestry were to a relatively large extent
window-dressing for policies that favoured the most powerful logging and wood industry
interests at the expense of the less powerful. The incentives and directives that could have
influenced logging performance remained unchanged and not enforced. Instead, direct
controls and incentives were enforced and changed in cases in which they could benefit the
biggest and possibly most powerful wood industries. Thus, regulations that favoured the
biggest industrialists and speeded up exploitation were changed and enforced, while
regulations that could have increased the costs of harmful exploitation somewhat remained
unchanged and not enforced. No wonder there was so little protest!


170 More general zoning efforts as tools for regulation were relatively undeveloped in both countries, and are
not analysed here. In Indonesia, as we have seem the TGHK zoning system was based mostly on soil erosion
data and developed in a period when global environmental problems connected to deforestation and forest
depletion were unknown. In Brazil, agro-ecological zoning of the Amazon region based both on broader
environmental and economic criteria was initiated in 1989 and not yet completed in 1993. Consequently, it is
difficult to compare government efforts in these areas, as they were relatively undeveloped or addressed only
local environmental problems.



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       In contrast, policy changes in Brazil, though suffering from important limitations
and problems, reflected a genuine effort to do something to change the legacy of destruction
associated with commercial actors in the Amazon region. Though limited both by legal and
financial problems, the ferocious protests from local interests clearly indicated that
enforcement of directives was increasing. In spite of the fact that several economic
incentives for forest clearing remained unchanged or received only marginal changes, many
of the most heavily criticised incentives were weakened or removed.
       Very roughly, one might say that Indonesia’s response to the challenge of global
environmental problems was to continue to favour some of the country’s most
environmentally destructive commercial actors. Brazil at least attempted to restrict
thecountry’s most destructive commercial actors. Thus, the contrast I try to explain is not
between a disaster and a perfect case, but between very limited and somewhat less limited
reforms. As indicated in the introduction, this observation may raise two problems. First,
and this is still the main problem: Why did Brazil choose reforms to a larger extent than
Indonesia. However, a second problem also emerges: Why were reforms still so limited in
the Brazilian case? I try to answer these questions in chapter five.




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   CHAPTER FIVE: EXPLAINING THE CONTRAST
In chapter four, I described a difference in environmental reforms between Brazil and
Indonesia in the 1988-92/93 period, defined as constraints effectively imposed on the
commercial actors perceived to be most important for forest depletion and deforestation. In
this chapter, I discuss alternative explanations of this difference. In this discussion, I will
draw on the approaches and propositions presented in chapter three. The questions are
rather simple. Did differences in the pressure on decision-makers from the international
economic order or foreign business interests lead to the difference in outcome? Was it a
difference in external political pressure related to environmental questions? Alternatively, is
the explanation to be found in purely domestic relations, either in the relations between
decision-makers and the bureaucracy or in the relations between decision-makers and
groups in society? Could it be a combination of these forces? In that case, which
combinations of forces made up the ingredients of this combination and in which ways
were they interconnected?
          As in chapter three, I start my discussion with the various brands of dependency
theory.


5.1. Variations in dependency - no consistent explanation
In this section, I discuss the relevance of the following proposition with reference to the
contrast between Brazil and Indonesia presented in chapter four:


Proposition 1: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by 1) a difference in the necessity for export
maximisation in the two cases, and 2) a difference in fiscal constraints on the
environmental sector necessitated by an externally imposed need for fiscal austerity.


This proposition deals with two main arguments. The first points to the constraints put on
the states of developing countries by global economic structures like debt and trade
regimes, which may put a squeeze on the current account balance of developing countries.




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These structures have a possibly combined negative effect on environmental policies by
forcing the state to over-exploit natural resources and tighten public budgets to fulfil the
demands of creditors. The effect may be accelerated resource destruction eventually
accompanied by the effects assumed in the second argument, namely decreased public
budgets to mitigate damage. Is this the explanation of the contrast between reforms in
Brazil and Indonesian in the mentioned period?


Variations in external financial pressure - is there a connection between debt-burden,
pressure for exports and forest destruction?
Both Brazil and Indonesia are known as countries with a heavy debt-burden. In 1989, when
environmental reforms set off, Brazil had a total external debt burden of USD 111 billion,
while Indonesia’s total debt burden was USD 53 billion (World Bank 1993c). Public and
publicly guaranteed debt, which is relevant as an indicator of the state’s debt burden was
somewhat lower, with about USD 40 billion for Indonesia and USD 84 billion for Brazil in
the same year (World Bank 1993c).
        However, total debt is only a crude measure of the external economic constraint on
an economy. The debt service/exports ratio is a more commonly recommended indicator.171
An additional advantage of the debt/service ratio compared to indicators like total debt or
the debt/GDP ratio is that this measure includes the positive effects of loans given on
advantageous terms in contrast to loans given on commercial terms, as it focuses on the
debt constraint made operational as actual debt payments.
        In 1989, total debt service as a percentage of exports of goods and services was 31,3
in Brazil and 35,2 in Indonesia. Compared to other major developing economies, these rates
are high. Apart from African economies, only Colombia, Mexico and Argentina were above



171Kraemer and Hartmann (1993:51-53) argue that the debt/service ratio may be an irrelevant measure of the
constraints on a government to convert forests into export income as it will ceteris paribus be falling if a
government is really successful in turning its natural resources into foreign currency. This argument is not very
convincing as it presupposes that the export baskets of developing countries are dominated by forest products.
It is certainly possible to imagine a situation in which the decline of prices of other major export items than
forest products or increases in interest rates may make the debt/service ratio increase and that the government
tries to decelerate the increase by increasing the extraction of natural assets without being completely able to
mitigate the external shock by adopting this measure.



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these levels among major developing economies in Asia or Latin America (World Bank
1993c:42).
       In both countries, the external debt was perceived as a major problem. Though the
Brazilian total debt was relatively stable over the 1980s, Brazil declared a moratorium on
debt payments in 1987 (to be withdrawn later the same year). Although the Brazilian
economy suffered from one of the highest debt service/export ratios in the world in 1989,
the Brazilian economy had demonstrated substantial recovery based on increased
manufactured exports since the climax of the debt crisis. In 1982, the debt service/exports
ratio was as high as 98,5 percent (Dinsmoor 1990:33).
       Nevertheless, the external debt continued to be one of the main problems of the
Brazilian economy. Among other problems, the debt was a constraint on the consumption at
the domestic market as considerations for debt payments constrained public spending
(Dinsmoor 1990). Public spending became increasingly the motor of the Brazilian economy
during the 1970s because of the increasing number of public enterprises.
       In 1988, an IMF agreement forced the Brazilian government to accept reductions in
the public sector deficit and to adopt plans to achieve larger trade surpluses (Dinsmoor
1990:11). In spite of rapid export expansion, the trade surplus was partially a consequence
of austerity measures (Dinsmoor 1990:11).
       Remembering Kraemer and Hartmann’s (1993) objections to use the debt service
ratio as a measure of the external pressure for increased natural resources extraction in an
economy, as improvements may be the outcome of already successful conversion of natural
resources to foreign exchange, I take a short look at the development of exports products
related to deforestation in Brazil. Export expansion up to 1988 was largely the outcome of
soaring manufactured exports. This involved an increasingly satisfactory trade balance in
capital goods (up from a negative balance of USD billion 1,021 in 1980 to a positive
balance of USD billion 3,9 in 1988) and basic inputs (up from a negative balance of USD
billion 2,6 to a positive balance of USD billion 1,85 in 1988). Beef and cattle, the products
most directly associated with deforestation in Amazonia, did not account for any share of
export expansion. Brazil’s performance in livestock trade was very disappointing for the
1986-90 period, when substantial beef imports were necessary to serve the Brazilian market



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(World Bank 1994a:20). Exports from Amazonia were also hampered by the fact that hoof-
and-mouth disease is rampant in the region (Fearnside 1989:291). Though output of beef
has increased, population and income increases in the region have made Legal Amazonia a
net importer of beef from the rest of Brazil (Hecht 1985:689, Hall 1989:26).. The heartland
of beef production in Brazil is still the South and the Southeast, which together supplied 58
percent of all cattle production according to the 1985 agricultural census (World Bank
1994a:20). Thus, in spite of a heavy debt-burden that motivated export expansion, there was
no link between the most environmentally destructive activity in the Amazon region, cattle
ranching, and external debt service.
       In the 1973-82 period, Indonesia enjoyed the advantage of huge trade surpluses
produced by high prices on her petroleum and gas. In this period, there were few export-
related arguments in favour of heavy logging. Since 1983, however, decreasing petroleum
prices172 reintroduced balance of payments constraints as a major problem in the Indonesian
economy (Robison 1986:373-400). Especially in 1982/83 and 1986/87, there were huge
deficits in the current account balance, following declines in the oil price. In 1982/83, the
deficit was about USD 7 billion, and in 1986/87 almost USD 4 billion (World Bank
1993b:179, table 3.1). In 1989/90, successful export expansion had lowered the deficit to
USD 1,6 billion, the lowest since 1981 (World Bank 1993b:179, table 3.1). Export
expansion continued into 1993, but the current account deficit widened again, due to import
increases following a boom of domestic demand (World Bank 1993b:179, table 3.1).
       Indonesia experienced rapidly increasing debt after the oil price declines in 1983 and
1986. Total debt increased from about USD 26 billion in 1981 to about USD 71 billion in
1992 (World Bank 1993b:183, table 4.1). Debt increases were mainly caused by the need
for fresh funding, but appreciation of the debt was also a significant factor. About one-third
of the total was denominated in the rapidly appreciating yen (Hill 1990:191). Only
increased external borrowing and large devaluations of the Rupiah in 1983 and 1986 kept
the Indonesian current account balance and government expenditures going. The debt
increase resulted in a 300 percent increase in the debt-service/exports ratio in the same
period (Hill 1990:191, figure 10.3). Development expenditure was reduced from 13,4




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percent of GDP in 1983 to 7,1 percent in 1987 (Hill 1990:209). Although debt has been a
weaker obstacle to GDP growth in Indonesia than most of Latin America, including Brazil
(Hill 1990:193, Sodedisastro 1995:36), debt has provided a very strong motive for export
expansion also here.
        In contrast to Brazil, the main commercial actors that contribute to forest destruction
in Indonesia were also key actors in the manufactured export drive that followed the
increase of external debt. Plywood exports increased in value terms from USD 697 million
in 1984/85 to USD 2.950 million in 1991/92 (World Bank 1993b:180, table 3.2). In the
same period, plywood increased its share of non-oil exports from 11, 8 percent to 16,2
percent. This expansion took place in a period when non-oil exports increased more than
three times (World Bank 1993b:180, table 3.2). Thus, it seems like Indonesia may have had
far better debt and export related reasons to be reluctant to enforce environmental
regulations than Brazil in the same period. The somewhat lower Indonesian exposure to
debt may only reflect a higher ability to extract natural resources and degrade the forest
environment. However, this presupposes a counterfactual hypothesis that the adoption of
environmental regulations would necessarily have curbed exports. Below, I argue that such
a conclusion is doubtful. Several environmental improvements could be combined with the
overall target of export maintenance.
        Environmental reform of logging in Indonesia might be achieved in two basic ways.
One way might be to reduce total area set aside for logging. As I have shown, there are
strong environmental arguments in favour of decreasing the areas set aside for logging in
Indonesia. From the point of view of biodiversity, lowland rainforest ecosystems are not
well represented among protected areas. Decreasing the area for logging could also reduce
forest depletion and deforestation, and enhance the ability of the forest to function as a
carbon sink. However, reducing the area set aside could reduce timber output, plywood
production and exports.
        The other basic direction of environmental reform might be to decrease the
environmental impact of logging operations on the area currently set aside for logging. Such
reforms would be much less prohibitive in terms of reduced production and exports. The

172From 1982 to 1987, crude petroleum prices declined with more than 50 percent.



                                                  213
World Bank (1993a:28-33) has examined costs connected to improved management
regimes. The improved management regime includes more care in logging operations
combined with post-harvest protection and tending ten years after the logging operation.
This management regime would meet much of the criticism against Indonesian forestry
today, and would fulfil requirements in the TPTI logging regime (Kartawinata et al. 1989).
        The World Bank estimates indicate that more care in the logging operation is
virtually free and post-harvest protection and tending only moderately expensive (USD 10
per ha/year).173 Such improvements are economically justifiable from a national and global
point of view. They would produce positive externalities like improved erosion control,
increased biodiversity protection and decreased biomass/carbon loss during logging and
more rapid increases in biomass/carbon sequestration in the post-logging period.174 From
the point of view of the individual concessionaire, profits would remain stable or decrease
somewhat under realistic profit rate expectations.
        Another interesting conclusion is that if domestic log prices were increased towards
international levels, profitability of improvements would increase. Thus, implementation of
a main incentive for logging improvements and reduction of waste in industrial operations
would not threaten the profitability of logging in itself, but make more sustainable practices
profitable.
        This analysis highlights the fact that environmental reforms and the sustainment of
profits and production in concession management are only moderately in conflict with each
other, as the costs of improvements of present logging regimes are modest. Especially more
careful logging operations seem to have the potentials to reduce environmental damage at
very low cost. The analysis also highlights the fact that low log prices work as a
disincentive for restoring logged over land.


173These conclusions are supported by later research. See Cedergren et al. (1994) and Pinard and Putz
(1996). Fenton (1996:87) states the following about care in the logging process as a tool for improved
sustainability in Indonesian logging operations: «If the prescribed silviculture, and the enormous amount of
aid money had been spent on this one point of controlling logging, the net result could well have been a
second forest with a good sustainable potential».
174Pinard and Putz (1996) estimate that reduced-impact logging along the mentioned lines increases
decreases biomass loss (and thereby carbon loss) one year after the logging operation substantially. While 44
percent of forest biomass in a given area remained when standard logging techniques were applied, 67 percent
remained in reduced impact logging areas.



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       These conclusions are supported by calculations made by Barbier et al. (1993:14-15,
see also table 10). They argue that even if harvesting costs increased as much as 25-50
percent following environmental improvements, sawnwood and plywood exports would
suffer decreases of maximum 2,05 percent. This modest reduction reflects the declining
importance of the log component in the total factor costs of Indonesia’s wood processing
industries.
       Also, as mentioned by Barbier et al. (1993:15) as well as the World Bank
(1993a:94), increasing log prices as an incentive for improved logging operations could be
introduced as long-term changes rather than over-night increases of log prices. The
Indonesian plywood industry has previously demonstrated a certain ability to respond to
other economic incentives by increasing other aspects of productivity.
       To summarise, the most important activity for commercially related deforestation in
Brazil, namely cattle ranching, has been irrelevant to exports and debt service for a long
time. The most important activity for commercially related forest depletion and
deforestation in Indonesia, commercial logging, could be a potent and viable earner of
foreign exchange and work as an instrument for debt service also in a situation of
environmental improvements of logging. This observation is relevant only for reforms that
imply improvements within existing areas set aside for logging. If the area of forest land set
aside for logging was reduced, log output and exports could suffer. Although some authors
(Potter 1991, World Bank 1993a) indicate that relatively high and more environmentally
sustainable output most probably could be achieved on substantially smaller areas than
those set aside for logging today with more intensive management and silviculture, it is also
likely that a transition to such management techniques could be more costly than the easy
and cheap improvements envisaged by the World Bank (1993a).
       Together, these observations weaken the debt-explanation. The suggested
connection between increased environmental regulations and decreased exports of products
from forest land is weak or non-existent in our two cases.
       However, in section 3.2, I also focused on the impacts of debt and export
considerations on the state’s ability to implement environmental reforms. Debt may be a




                                             215
prime motive for fiscal austerity and thereby reduce the government’s ability to organise
reforms by undermining government budgets.
         Both countries have reacted to the debt-burden by cuts in the public sector. In Brazil,
the initial shock of the debt crisis in 1982/83 led to severe cuts in public consumption and
investment (Dinsmoor 1990:121). Though public investment and consumption varied
considerably from year to year during the 1980s, there was a consistent drive towards fiscal
austerity motivated by considerations for the external debt. The 1988-accord with the IMF
demanded substantial reductions of the federal deficit (Dinsmoor 1990:11). Such
restrictions on the public sector were also introduced with the «Summer Plan» in 1989
(Dinsmoor 1990:12-13). Collor’s first austerity plan, the draconian «Plano Collor», was
designed to address the problems related to external debt, internal debt and inflation at the
same time. This plan was a much heavier blow to the public sector than any stabilisation
programme under Sarney. Important parts of the central administration were dismantled,
and there were plans to privatise Brazil’s many public enterprises. Massive cuts of
expenditure for wages to the public administration were also planned (Moura 1990:55-56).
         For the environmental sector in general, this implied increasing budgetary
constraints. There are many examples of this. Foresta (1991:230-237) describes how SEMA
experienced budgetary cuts through the 1980s that made the body virtually inoperable. The
other central administrative body for implementing environmental policies in forest areas,
the IBDF, experienced a decline of funding between 1975 and 1985 of more than 50 percent
(Prado 1990:24, table 8). Altvater (1987:310) mentions that budgetary cuts also reduced
investments in measures preventing environmental damage during the construction of the
Carajás iron mine and associated infrastructure. The establishment of IBAMA in 1989 was
accompanied by warnings that budgetary constraints made the new environmental agency a
«paper   tiger».175 However, at least during its first year of existence (under the Sarney




175See the article: «Ecologia e pobreza», Folha de São Paulo, 8. February 1989. In this article, a fear that the
disastrous insufficiencies of IBDF in monitoring and control in the Amazon region would be transferred to
IBAMA.



                                                     216
government), funding for the body was perceived as reasonable, though not sufficient.176
Under Collor, IBAMA was protected against his administrative reform.177
        However, from 1990 to 1992, the inflationary environment combined with fiscal
austerity measures reduced funding for IBAMA substantially. Fiscal austerity measures
made the situation particularly serious in 1991, when 40 percent of initial government
funding was held back by the Ministry of the Economy (Carvalho 1991:34). The measures
were so harsh that they made IBAMA unable to exploit international funds. IBAMA did not
manage to raise the supplementary Brazilian funds necessary for disbursement of foreign
funding (Carvalho 1991, Margolis 1992:316).178 On the other hand, both in 1989, 1990 and
1991, IBAMA managed to implement its monitoring and inspection campaigns in
Amazonia in a reasonably coherent way, though the body’s Department for Inspection and
Control was increasingly hampered by budget shortages and economic and organisational
disorder (IBAMA 1990:86-89).179 Budget constraints did not paralyse IBAMA before in
1992, though these constraints created increasing problems.
        At the same time, Brazil got increasingly access to external funding on generous
terms in the mentioned period to improve the environmental sector in Amazonia.
        First, the cancellation of the Power Sector II loan in 1989 was followed up by a USD
400 million loan for environmental purposes related to the energy sector and energy saving.
        Second, POLONOROESTE funding equalling USD 8 million was transferred
directly to IBAMA to finance the surveillance and monitoring campaign (PEAL) in 1989.180
        Third, the World Bank approved a USD 117 million loan in January 1990 to
strengthen the National Environmental Policy (PNMA) in its programmes in Amazonia,
Pantanal and the Atlantic Forest as well as to solidify IBAMA. Although Collor’s extreme


176Meeting with IBAMA directors in October 1992, answers to questionnaire from José Carlos Carvalho
March 1993, interview with Marilia Cergueira at IBAMA in December 1993.
177José Carlos Carvalho, director of the Department of Administration and Finances at IBAMA under
Sarney/Mesquita, and interim director and director of the Department of Natural Resources during the first 7
months of the Collor administration states the following about the effects of Collor’s bureaucratic reform
(response to questionnaire March 1993, my translation from Portuguese): «The effects of the administrative
reform of the Collor government were not serious for IBAMA. At that time, we managed to prove that to carry
out its institutional mission successfully, IBAMA (already) had a small staff.»
178«Uma gestão de resultados», Jornal do Brasil, 27. October 1991:5,
179Meeting with IBAMA directors, October 1992.



                                                   217
austerity programme contributed to block mobilisation of IBAMA funds necessary to
release parts of the loan for a considerable period, the existence of the loan demonstrates
the ample opportunities for external financing of reforms in this period.
        Fourth, the German proposal of an environmental programme for the Brazilian
Amazon during the 1990 G-7 meeting in Houston was initially a potential source of very
large amounts of grants and favourable loans for environmental reform in the Brazilian
Amazon. Initial proposals mention total expenses of 1,6 billion USD. In December 1991,
the G-7 agreed on contributions to the first three-year phase of the programme. Total budget
for this phase was USD 252,3 million (Kolk 1996:149).181 About 50 percent represented
«new and additional» funds, while the rest included previously approved funds (Kolk
1996:149). The first phase involved support to environmental zoning, conservation units,
science and technology, IBAMA inspection and enforcement, natural resource management
(rehabilitation of cleared areas, timber extraction, extractive activities), environmental
education as well as demonstration projects (Batmanian 1994:5-6).
        However, serious problems in the definition of projects, mechanisms for funding,
definition of funds eligible as well as waning interest in the project among some G-7
members led to serious delays and problems with the programme. These problems also
reflected a decline in general G-7 attention to environmental problems in general during the
1989-1991 period. Ungar (1992:495) notes that the G-7 leaders devoted almost a third of
their final declaration to environmental issues in 1989, while the environment received
virtually no attention in 1991. The Brazilian government and Brazilian politicians also felt
the waning of G-7 interest.182 Negative attitudes to sections of the proposals among sections
of the Brazilian bureaucracy also contributed to delays and waning of G-7 interest.183


180Response to questionnaire from José Carlos Carvalho, March1993.
181Batmanian (1994:4) talks about an amount of USD 280 million.
182 See the articles: «Playing politics with Amazonia», Latin American Weekly Report, No. 26, 1991, 11.
July, and the article: «Ricos perdem interesse pela Amazônia», O Globo, 14. October 1991:7. Both articles
conclude that the Brazilian government is experiencing increasing problems with external funding for the Pilot
Programme due to waning international interest.
183Kolk (1996:147) notes that the Ministry of Foreign Affairs, also called the Itamaraty, was sceptical to the
project and perceived it as interference in Brazilian affairs. Sidney Possuelo, president of FUNAI 1991-93,
confirmed that the Itamaraty was against the transfer of funding from Germany to demarcate indigenous
reserves under the programme. Answer to questionnaire from Sidney Possuelo in August 1994.



                                                    218
       Our second indicator of environmental reform, namely incentive change, was not a
costly affair for Brazil in terms of foregone public revenue. Cancellations of «negative
incentives» like rural credit and regional fiscal incentives, as well as the changes of land
acquisition rules and the agricultural tax regime did not require disbursements from the
state. Future savings in tax rebates and subsidy payments involved savings for the
government. On the other hand, as fiscal incentives with strong environmental clauses were
reintroduced in 1991, most probably this demanded additional financial resources for
project evaluation and control by the agencies involved, IBAMA, SEMAM and FUNAI in
addition to SUDAM. It is difficult to evaluate the balance between savings on stricter rules
on incentives and additional disbursements for project evaluation and control. However, as
I have shown, these bodies were increasingly hampered by budgetary constraints. Though it
is difficult to estimate savings on increased strictness in the distribution of incentives, it is
clear that none of these savings were distributed to IBAMA or other environmental
agencies, which faced a harsh struggle to survive.
       In Indonesia, the increasing debt also influenced the fiscal situation considerably.
After the oil price crash in 1986, the Indonesian government came under severe financial
pressure. As tax income is heavily dependent on oil prices and income, and these have been
declining, the government was forced to increase external borrowing to keep the economy
going. Debt service increased its share of central government expenditure from 14,1 percent
in the fiscal year 1984/85 to 30,9 percent in the fiscal year 1989/90. After 1989/90, this
share declined somewhat (World Bank 1993b:190, table 5.3).
       Although this situation led to cuts in development expenditures, it did not impede
the expansion of the bureaucracy. The number of civil servants in Indonesia expanded from
3,63 million in 1988/89 to about four million in 1992/93 (Booth 1994:14). Salaries for civil
servants also increased (Booth 1994:14). The environmental bureaucracy expanded in the
mentioned period. One new institution, BAPEDAL or the Environmental Impact
Assessment Agency, was established in 1990.184




184In 1994, the headquarters staff of BAPEDAL consisted of «less than hundred» full-time professionals»
(World Bank 1994b:182).



                                                 219
        It should also be remarked that the funding situation for the forest sector was
excellent. Resources from the reforestation fund controlled by the Yayasan Sarana Wana
Jaya financed the construction of the splendid Manggala Wanabakhti building in the centre
of Jakarta during the 1980s. This building houses the Ministry of Forestry and the most
important forest business organisations.185 However, as Ross (1996) and the Jakarta Post186
indicate, the reforestation fund accumulated more rapidly than it was used. In the end of
1993, the fund contained some USD 1,6 billion. Only 16 percent of the annual receipts were
disbursed during the 1989-93-period.
        Foreign funding for conservation related efforts in forestry also increased in this
period. In 1989, the Jakarta Post reported that foreign aid for various forestry and forest
conservation purposes reached USD 16,6 million.187 By September 1992, Indonesia had
received funding for 63 forestry projects, 40 supported by grants, 23 by favourable loans,
totalling USD 300,4 million (Ross 1996). According to the Ministry of Environment’s
national biodiversity strategy, in 1991, the PHPA had received about USD 36,2 million in
funding (most of it grants) for the next seven years for various conservation projects. This
represents a strong increase as compared with the USD 6,55 million received in the 1977-
1990 period (KLH 1992:37-38). The World Bank financed two loans to strengthen
environmental aspects of forest management. These were Forestry Institutions and
Conservation I in 1988 (USD 34 million) and Forestry Institutions and Conservation II in
1990 (USD 20 million)(World Bank 1991:85). This funding was very important both
because of its substantial size of total funding and as a positive signal to other funding
institutions.
        In addition to these increases of external funding, there were huge potential rewards
for the government in the improvement of control over logging operations and wood
industries. As already mentioned, the volume of unreported log output from concessions is
relatively huge. In addition, rent capture of reported log output is relatively low. A low level



185 See the article: «Implementation of reforestation programme runs into problems», Jakarta Post, 15 April
1989:7.
186See the article: «Implementation of reforestation programme runs into problems», Jakarta Post, 15 April
1989:7.



                                                   220
of rent capture is perceived as a main incentive for reckless logging operations, as
mentioned in chapter four. The World Bank (1993a:82-88) has estimated the fiscal gains
from improved tax collection if illegally logged timber was registered. Given that official
log removals averaged about 25 million m3 in the mentioned period, and that actual log
consumption by the wood industry was at a minimum of 40 million m3, potential tax gains
from registering excessive log consumption were at least USD 231 million in the period
before the increases of the reforestation tax in 1993.188 These estimates are based on
existing government fees, and do not consider the rent capture issue.
        Calculations of current and potential rent capture from logging operations in the
mentioned period are almost impossible to make precise, as information on costs in logging
operations are extremely vague. A number of other information problems also prevail.189
However, for our purpose, conservative estimates are most interesting, as these provide
more robust conclusions. The World Bank (1993a:88) estimated that very modest increases
of government fees (to USD 32/m3) along with increasing the volume of logs object to fee
collection to a modest 33 million m3 could produce income gains for the government
amounting to more than USD 500 million. This would represent a doubling of government
revenue from forestry operations based on the 1993 situation. Furthermore, it would most
certainly leave the wood industries with very high profit margins and probably still allow
the industry to keep most of the economic rent (World Bank 1993a:88).190




187See the article: «Foreign aid for forestry in 1989/90 to reach USD 16,6 million», Jakarta Post, 8. July
1989:7.
188This calculation is based on World Bank figures (1993a:82) that estimate pre-1993 government fee
collection to be USD 15,30 per m3, and unreported log removals by the industry to be about 15 million m3.
189 According to the World Bank (1993a:83), reports from field questioning of operators conclude that
logging costs are about USD 33-45 per m3. For the serious problems connected to rent calculation, see Fenton
(1996:80-84).
190 Dauvergne (1997:93) argues that Japanese import taxes contribute to mismanagement of Indonesia’s
forests as they «…deplete Indonesian revenue that, in theory, is essential for sustainable management».
However, in the context of the funds available for financing sustainable management, and the modest costs of
parts of such management, it is not easy to understand this argument. In the context of section 5.4. below, it is
also difficult to understand his claim that these taxes fuel unsustainable logging (Dauvergne 1997:97). On the
basis of my discussion in section 5.4, one could rather expect that higher prices might imply more
appropriation of profits from forestry by the powerful. Dauvergne (1997:177) admits this problem later on in
his manuscript.



                                                      221
       Although both Brazil and Indonesia found themselves in unfavourable fiscal
positions in the late 1980s and early 1990s, I conclude that there were no differences in the
financial situation of the environmental bureaucracies that might explain the difference
presented in chapter four. Comparisons between the fiscal situation of the two countries in
fact suggest that Indonesia should be far in front of Brazil in terms of reforms. Although
both countries enjoyed increasing access to external funding for environmental
programmes, Indonesia also had the advantage of very large domestic funds available for
the forestry sector, as well as very high potential economic rewards for closer monitoring of
logging operations and/or increases of government fees from the sector. Thus, while a
contradiction between urgent demands for fiscal austerity and the establishment of a solid
financial foundation for environmental institutions existed in Brazil, the same was not the
case in Indonesia. This difference does not emerge primarily because of the more modest
debt burden experienced by Indonesia, but because of the existence of abundant funds
earmarked for the forestry sector, as well as the enormous fiscal gains that could be made
from closer monitoring of logging operations.
       However, at least one area of reform was clearly out of reach for both countries for
fiscal reasons. This was the provision of sufficient funding for the protected area system. As
both countries found themselves in a very tight fiscal situation, the very large expenses
necessary to enlarge the system of protected forest areas, to provide them with the necessary
infrastructure and guard them properly would have represented a very heavy fiscal burden.
External funding for conservation, though increasing, was grossly insufficient to finance
such reforms. Furthermore, the benefits of such well-functioning systems for forest
conservation would provide all countries with huge benefits connected to biodiversity
conservation and carbon sequestration, while the heavily indebted and relatively poor
countries Brazil and Indonesia would bear most of the financial burden. Thus, it seems to
have been a substantial fiscal constraint behind the failure to establish adequate protected
area systems in both countries.
       However, in section 3.2, I also formulated a second proposition based on another
brand of dependency theory as a possible explanation of the contrast in question:




                                             222
Proposition 2: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 is explained by a difference in the presence and power of
transnational companies, «transnationalised sections» of nationally controlled companies
and the links of transnational corporations with domestic political «brokers» and
«middlemen».


Transnational participation and influences
The recent development of the tropical moist forest areas in Brazil and Indonesia was
initiated with strong participation by transnational companies.
        In Brazil, the growth of cattle ranching from the 1960s was dominated by large
Brazilian as well as transnational enterprises aiming to establish modern beef production in
the region.
        One example is Volkswagen, which owned the 140.000 ha Vale do Rio Cristalino
ranch in Araguaia. Branford and Glock (1985:108) mention that Volkswagen was the prime
mover behind the meatpacking plant Atlas Frigorífico close to the Rio Cristalino ranch.
Shareowners included national companies as well as Xerox do Brasil, an affiliate of the US
office machines giant. Another important investor was the Italian company Liquigas which
bought the enormous 678.000 ha Suiá Missu191 ranch from the Ometto family from São
Paulo in 1972 (Branford and Glock 1985:110-111, Hall 1989:22). According to Branford
and Glock (1985:110-111), Liquigas experienced considerable trouble connected to bush
invasion and soil erosion. In 1979, 78.500 ha of pasture had been formed. Branford and
Glock (1985:110-111) mention that Liquigas was taken over by the Italian petroleum
company ENI in 1981. ENI decided to maintain the ranch, but apparently planned to
diversify into plantation development (Branford and Glock 1985:110-111).
        Swift-Armour in association with King Ranch of Texas were other important foreign
investors in ranching during the early ranching boom. Their holdings were transferred to the
Canadian mining company Brascan and the Brazilian Caemi holding company in 1972
(MacKerron 1993:155).


191According to Branford and Glock (1985:111), Suia Missu was called Liquifarm after the Italian takeover,
but it remained known to the wider public under its original name.



                                                  223
         The Italian Ferruzzi group held the enormous 300.000 ha Fazenda Mogno ranch in
Alta Floresta (Mato Grosso) at least until 1991 (de Onis 1992:84). However, the impact of
transnational companies even in the initial ranching boom should not be overestimated.
Hecht (1985:671) points out that the share of transnational investments in Amazon ranching
was generally lower than the share of foreign investment in the Brazilian economy as a
whole.
         Moreover, already during the late 1970s, large transnational enterprises started to
retreat from cattle ranching. Volkswagen’s Rio Cristalino ranch has been transferred to a
Brazilian entrepreneur (MacKerron 1993:156). Swift’s holdings were also sold to
Brazilians.192 Ferruzzi’s investment has been transferred to Brazilian entrepreneurs.193
According to SUDAM (1990:22), by 1988, there were no foreign ranching investments in
the North region, Mato Grosso or Maranhão from the biggest 1.000 companies in Brazil.
This observation is important, as the lack of involvement of the largest companies also
narrows the likeliness of efficient economic pressure for environmental policy changes
from foreign investors.
         On my request, experts at the São Paulo based cattle research consulting company
FNP Consultoria & Comércio in São Paulo could not identify any remaining foreign
investments in Amazonian cattle ranching in 1996. According to their information, all
foreign investors went bankrupt or sold out during the early 1990s. Amazonia increasingly
lost its competitive edge as a destination of corporate investments in ranching to the Centre-
West region during the early 1990s, according to FNP.194
         Interview information bolsters the impression of a retreat of foreign investments
from ranching in Amazonia. None of the interviewed IBAMA presidents (Mesquita,
Munhoz, Martins, Pádua) from 1989 to 1992 could remember any example of pressure
from foreign companies to change policies on cattle ranching or to resist the enforcement of


192Personal communication with Brascan October 1996. According to Roberto P. C. de Andrade at Brascan,
Brascan sold out its Amazonian operations to the Brazilian meat-packing group Bordon in the late 1980s.
Bordon also owned vast areas of pasture in the Amazon region, much of it in Acre (Branford and Glock
1985:34). According to de Onis (1992:206), Bordon sold out in the early 1990s when conflicts with rubber-
tappers emerged. Several other out-of-state investors did the same, according to the same source.
193Personal communication with Victor Abou Nehmi Filho, FNP Consultoria & Comércio, September 1996,
November 1996.



                                                  224
clearing rules. In contrast to this, they consistently reported strong mobilisation by domestic
ranchers and their organisations.
        The activity of foreign mining interests, however, was high. All interviewed ex-
presidents of IBAMA could tell about strong participation of mining companies like Alcoa,
Shell and Paranapanema195 in lobbying for IBAMA licensing of operations as well as for
exceptions from fines distributed by IBAMA. However, this does not explain the contrast
between Indonesian and Brazil, although it may have added to IBAMA’s problems. Protests
from these interests were apparently ignored by Collor when he decided to initiate
demarcation of indigenous reserves in 1991.
        What about Indonesia? If the Indonesian government was exposed to continuing
influence and pressure from foreign or «transnationalised» domestic investors in the wood
industry during this period, this might explain the observed difference in outcome between
Brazil and Indonesia. However, also Indonesia experienced a decline in foreign investments
in logging and wood processing.
        The first important limits to foreign investment in Indonesian forestry were
introduced at an early stage of the logging boom. From 1970, forest concessions were
granted only to Indonesian domestic investors or joint ventures between Indonesian and
foreign investors (Gillis 1988:74). This shift of policy was not much more than nominal,
however. Usually, the foreign partner was the active part, while the Indonesian counterpart
(usually groups connected to the army) only invested a nominal share (Robison 1986:256-
257).
        More substantial policy changes were introduced in 1975. According to Jakarta Post,
Government Regulatory order No. 18 and Presidential Executive Order No. 20 of this year
restricted the distribution of forest concessions to private domestic companies and exclude
joint ventures.196 Widespread protests against the denationalisation of the Indonesian
economy to the benefit of Chinese and foreign investors as well as internal dissatisfaction


194Personal communication with Victor Abou Nehmi Filho, FNP Consultoria & Comércio, September 1996.
195According to Kolk (1996:94, note 7), Paranapanema is a joint venture between the Japanese groups Sanyo
Kokusaku and Marubeni.
196«Foreign concessionaires reminded of mandatory investment», Jakarta Post , 16. March 1991:1, cfr. also
Gillis 1988:74.



                                                  225
with the willingness of foreign partners to invest in domestic processing were main political
impulses behind this shift of policy. The decision was made in the context of broader
changes of ownership and control promoted by the government (Robison 1986:164-172).
Moreover, in forestry, there was particular dissatisfaction with the reluctance of foreign
investors to involve themselves in forest-based industrialisation. As I have shown,
investments in secondary processing like plywood were virtually non-existent during the
1970s. Though concession agreements contained what Gillis (1987:74) calls «ambiguous»
clauses on investments in processing facilities, repeated statements from the authorities
demonstrated dissatisfaction with the investment efforts of foreign concessionaires
(Robison 1986:170, Gillis 1987:74).
       Although the incentives offered during the 1960s and 1970s had attracted
considerable foreign investments, like in Brazil, the share of foreign ownership should not
be exaggerated. Table 16, based on Walker and Hoesada (1986) and Gillis (1987), suggests
that neighbouring developing countries were the main foreign investors around 1980.
Furthermore, as Walker and Hoesada (1986) indicate, the share of total concession area
given to foreign investors and joint ventures was modest in comparison to total concession
area (about 21 percent).




                                            226
TABLE 15: Foreign investments in Indonesian forest concessions at the end of the logging
boom

                 Investing        Total           Investment      Number of      Number of
Study/year       country/region   concession area (million USD)   joint          100 % foreign
                                  (1000 ha)                       venture        owned
                                                                  concessions    concessions
Gillis 1987      Developing        6496           218,3           50              7
(Information     countries
from 1979)       (Malaysia,
                 Singapore, South
                 Korea,       Hong
                 Kong,
                 Philippines)
                 Japan             1263           46,2            11              1
                 USA               1081           48,7             2              2
                 France             260            7,2             0              1
                 Italy              110            3,5             1              0

Walker     and   Developing        5501           182,65          42             10
Hoesada 1986     (Malaysia,
(Information     Singapore, South
from 1981)       Korea,       Hong
                 Kong,     Panama,
                 Philippines)

                 Japan            1362            50,15           10              2

                 USA              1081            48,7             2              2

                 France            260               7,2           0              1
                 Italy             236               3,5           1              0

                 INDONESIA        40.019          1.201.229       55             15


Sources: Walker and Hoesada (1986), Gillis (1987).


However, one should be aware of the fact that the table below may underestimate the extent
of foreign involvement in logging during this period. During the timber boom, Indonesian
concessionaires frequently subcontracted logging companies from neighbouring countries
(usually Malaysia or the Philippines) to carry out operations. In joint venture operations, the
Japanese were usually able to control the whole operation through the provision of loans




                                               227
that made up the Indonesian share of capital.197 Shipping and financing was usually carried
out in close co-operation with especially Japanese importers connected to large trading
houses (Nectoux and Kuroda 1990:79). Altogether, Indonesian operations during the timber
boom seem to have been carried out with seldom more than formal involvement from
domestic concessionaires.198
        However, from the beginning of the 1980s, the share of foreign investment in the
Indonesian forestry sector declined. Because of an uncertain legal framework for
investments and a preference not to establish local processing operations, some large US
transnationals withdrew altogether from the forest sector in the early 1980s (Robison
1986:186-188, Gillis 1987:86, MacKerron 1993:48-49). This was the case with the
transnational logging giant Weyerhauser. This company sold out its share of joint ventures
with PT Tri Usaha Bakhti to the state bank BPI in 1981 (Robison 1986:262). Georgia
Pacific, another big transnational forestry company, sold out to the Indonesian Kalimanis
group in 1983 (Gillis 1987, MacKerron 1993:79).
        Other foreign interests have also sold their concessions. The South Korean Korindo
group sold out their logging operations in 1991, but maintained their plymills, arguably
their most valuable asset.199 The Korindo group, with its 323.700 m3 plywood production
capacity (APKINDO 1992a:48) is, together with the 108.000 m3 capacity South Korean
Kodeco plywood mill (APKINDO 1992a:48), the only fully foreign owned plywood
producer. In 1991, the Minister of Forestry indicated that there were «less than 10» forest
concessions in which the foreign partner held more than 50 percent.200 In 1991, the Director




197This was a familiar pattern for many Japanese investments in this period, as suggested by Bresnan
(1993:149).
198It should be noted that there is little evidence that foreign investors were more ruthless exploiters of the
forest than domestic investors. According to MacKerron (1993:48), Weyerhauser, that divested all its
Indonesian operations in 1981, complained that its Indonesian partner PT Tri Usaha Bakhti was pressing for
the abandonment of reforestation efforts for short-term profit reasons. Such complaints are also mentioned by
Gillis (1987:86), who also ascribes the most destructive logging practices to the smaller multinational
companies from neighbouring states without presenting further evidence (Gillis 1987:85).
199Jakarta Post, 10. April 1991:7 (name of story lost), interview with Ir. Hendro Prastowo, APHI/APKINDO
July 1993.
200«Foreign forest concessionaires reminded of mandatory investment», Jakarta Post, 16. March 1991:1.



                                                     228
General of Forest Utilisation stated that the government would not prolong joint venture
concessions.201
       Japanese interests have remained, but certainly not to the extent suggested by
Robison in the middle of the1980s (Robison 1986:187). According to JETRO’s (Japan
External Trade Organisation) 1995 directory (JETRO 1995:199), Sumitomo Forestry still
controls 39 percent of shares in PT Kutai Timber, a plywood company with an annual
production capacity of 100.000 m3.             According to the same source, the Indonesian
companies PT Sangraha Andika and PT Gunung Raya Utama hold remaining shares. In
addition, an Indonesian co-operative holds a minor share. Kutai Timber apparently leases a
50.000 ha concession on East Kalimantan and owns a plywood factory at East Java. Mitsui
(Mitsui Corporation and Mitsui Timber) controls 49 percent of PT Katingan Timber Co,
which logs and has a plywood factory at South Sulawesi. Indonesian shares in the project
are held by PT Kayu Arah Jaya Raya (40 percent), PT Sarvha Ana (8,65 percent) as well as
a minor share held by an Indonesian co-operative (JETRO 1995:182, Mufti 1993).
According to JETRO (1995:14), C. Itoh holds a 70 percent share in a plywood factory at
Central Kalimantan; the PT Arut Bulik Timber Company. Apparently, PT Indokayu holds
30 percent of the shares as well as a 180.000 ha concession in the same province.202
       Japanese interests also co-operate with major domestic groups in Indonesian forest
industries in other sectors than plywood. Sumitomo Forestry is involved in a joint venture
particle board factory (PT Rimba Partikel Indonesia) at Central Java in co-operation with
PT Kayu Lapis Indonesia, both partners holding a 47,5 percent share. Kayu Lapis is
controlled by the Sutanto family and Bob Hasan.203 The World Bank connected company
International Finance Corporation holds the remaining 5 percent (JETRO 1995:307). The
Noda Corporation holds 49,58 percent of the shares in PT Sura Indah Wood Industries, a
producer of housing equipment with a plant in East Java. Bob Hasan, whose central
position in the Indonesian forest sector is described below, holds the remaining shares




201Jakarta Post, 10. April 1991.
202Information in this case is ambiguous. APKINDO (1992a:26) refers to Arut Bulik Timber as a company in
the Korea controlled KORINDO group.



                                                 229
(JETRO 1995:364). Mitsui holds a 19 percent share in PT Sumber Sofue Fancy, a fancy
floor producer operating at East Java since 1991. The PT Sumber Mas Indah Plywood
(member of Joes Soetomo’s Sumber Mas group) controls 51 percent (JETRO 1995:355).


       A particularly destructive operation is apparently associated with the joint venture
PT Chipdeco. PT Karyasa Kencana (20 percent) and «an Indonesian private group» (31
percent) are the Indonesian partners and MDI Co. (49 percent) the Japanese (JETRO
1995:55). According to Jakarta Post, MDI is an association of five Japanese companies.204
Chipdeco is operating on an 85.000 ha concession in the mangrove forests of the island of
Tarakan (East Kalimantan). According to Jakarta Post, the Japanese partners are totally in
charge of the chipwood export operation despite the formal majority of the Indonesian
partner.205 Destructive logging of mangroves for chipwood also goes on at the concession
of the Marubeni joint venture PT Bintuni Utama Murni in Bintuni Bay at Irian Jaya
(Carrere and Lohmann 1996:215, MacKerron 1993:88, Nectoux and Kuroda 1990:82).206
       The persistence of such destructive investments, and the participation of Japanese
investors in the emerging Indonesian pulp and paper industry, has inspired a popular belief
that Japanese interests are important actors behind the design of Indonesian forest policies.
However, this is not substantiated by a closer look at Indonesian-Japanese bilateral relations
over wood industry issues. Since the phasing out of log exports during the early 1980s,
Japanese plywood and wood trading interests have been in conflict with Indonesia. The
establishment of an Indonesian plywood industry contributed to the decline of the Japanese
plywood industry during the 1980s spectacularly symbolised by the bankruptcy of the
leading Shin Asahigawa plywood group in 1986 (Nectoux and Kuroda 1990:50). Another


203 «Indonesia’s timber tycoons», Economic & Business Review Indonesia, No. 5, 7. May 1992:13. Hasan’s
involvement in KLI is claimed in the article: «Top Players in Forestry», Environesia, No. 11-2, Vol. 6,
1992:6.
204«Tale of Tarakan forest exploitation», in Jakarta Post, 27. March 1989:3. According to Carrere and
Lohmann (1996:215), the Japanese counterpart was made up of Kojin, Kanzaka Paper, Sanyo-Kokusaku and
Jujo Paper in addition to MDI. Carrere and Lohmann indicate that the Tarakan operation was finished some
time after 1989. According to JETRO (1995:55), it was still active in 1995.
205«Tale of Tarakan forest exploitation», in Jakarta Post, 27. March 1989:3.
206According to the article «Greens field a swamp campaign», South, May 1990:66, the Indonesian joint
venture is responsible for chip production, while Marubeni buys and exports the chips.



                                                 230
indication of the separation of the Indonesian wood industry from Japanese interests is the
establishment of NIPPINDO. This is a plywood trading house owned by the Indonesian
plywood association APKINDO (95 percent) and Kanmatsu trading (5 percent) with its
main Japanese office in Osaka.207 NIPPINDO has a monopoly on Indonesian plywood
imports to the Japanese market. In this way, the organisation bypasses the traditionally very
powerful Japanese trading houses.208
        Indonesia’s move into plywood has also implied a considerable diversification of
trading partners.209 Although Japan emerged as the most important market for Indonesian
plywood after 1986 (Sutigno 1991), the country is not in a situation that is comparable to its
domination of timber exports during the 1970s. Between 1970 and 1980, Japan accounted
for 59 percent of Indonesian log exports (Dauvergne 1997:90). According to Sutigno
(1991), Japan’s share of Indonesia’s plywood exports increased from 28 percent in 1987 to
40 percent in 1989 in volume terms. Data from the Indonesian Ministry of Forestry indicate
that this share stabilised during the 1990s. In 1993/94, Japan’s share of plywood exports
was about 38 percent in volume terms and 37 percent in value terms.210
        The increased Japanese share in Indonesian plywood exports is not a symptom of
any Japanese strategy to buy more plywood from Indonesia. Rather, it emerged because
Japan was forced by the US to reduce its duty tariffs on plywood imports after 1986. Import
duties on hardwood plywood were reduced from 20 and 17,5 percent in 1986 to 15 and 10
percent (depending on plywood thickness) in 1988 (Nectoux and Kuroda 1990:75-76).
APKINDO, through its trading affiliate in Japan, NIPPINDO, has used this chance to
market Indonesian plywood aggressively (Fenton 1996:49).




207«Berpaling dari Jepang», in TEMPO, Vol. xxi, No. 35, 26. October 1991:29.
208Both a businessman in Jakarta and JATAN (Japan Tropical Forest Action Network) conclude that
Kanmatsu is a small family-based trading company. Interview in Jakarta March 1995 and e-mail contact with
JATAN in August 1996.
209Trading houses servicing other major markets have also been established. This is Plywood Indah in Hong
Kong, Fendi in Singapore and Selandin in the UK, cfr. «125 plywood plants operate with 10 million cubic
meter capacity», Jakarta Post, 1. March 1990.
210«Eksport Kayu Lapis Menurut Negara Tujuan», Directorate General of Forest Utilisation, Internet
address: http://mofrinet.cbn.net.id/STATISTI/I23.HTM. Fenton (1996:48, table 16) operates with a slightly
smaller volume based on APKINDO data.



                                                  231
        The increased Indonesian control over the plywood market has caused the eruption
of conflicts on the bilateral Japanese-Indonesian relationship. Meetings between
representatives of the two governments in Jakarta in July 1991 on the plywood trade ended
up in a conflict. Japan asked for a reduction in plywood exports to protect its domestic
industry, while Indonesia rejected any trade barrier.211 According to Sodedisastro
(1995:38), Indonesian cartel pricing through NIPPINDO and the other import monopolies
has led importing nations to switch to supplies from Malaysia and Papua New Guinea.
        The impression of waning Japanese influence over the Indonesian forest sector is
supported by information on revoked forest concessions. By combining JETRO (1995:x-xi)
information on revoked investments in Indonesian forestry and APKINDO’s 1992
(APKINDO 1992b) list of forest concessions in Indonesia, it emerges that the forest
concessions PT Swoody (South Sumatra), PT Triomas (Riau), PT Daisy Timber (East
Kalimantan), PT East Kalimantan (East Kalimantan) and PT Mangole Timber (Maluku)
were among Japanese forest concessions revoked or transferred to Indonesian domestic
investors. In addition to these changes, 14 other forest projects were revoked or transferred
to Indonesian domestic investors since the second half of the 1970s (JETRO 1995:x-xi,
437-439).
        The mentioned conflicts between Japan and Indonesia do not support claims that the
Japanese through their Indonesian clients controls these cancelled concessions, and that
Japanese interests still dominate policies «behind the scene» in Indonesia.212 It is not easy to
understand that Japanese companies could have an interest in losing control over the
immensely profitable logging, shipping and marketing operations they dominated during
the 1970s. Neither is it easy to understand the high-level conflicts between Indonesia and
Japan over plywood trade if Indonesian policies still further Japanese interests.
        Carrere and Lohmann’s (1996:211-228) overview of foreign investments in the
Indonesian pulp and paper industry may be interpreted as a claim that foreign interests, in


211Jakarta Post , 24. June 1991:7, 9. July 1991:1, 11. July 1991:1, 26. July 1991:7. See also statements from
APKINDO chairman Bob Hasan in Far Eastern Economic Review, 4. June 1992:62. Here, Hasan states the
following: «Japan is protecting its factories; they still impose 15% import tax on our plywood... The Japanese
should move to higher technology areas and leave the forestry business to us».
212 Dauvergne (1997:87) cites these claims from Asian Wall Street Journal’s reporter Raphael Pura in 1993.



                                                    232
particular Japanese, Finnish and Canadian, exert anti-environmental influence on
Indonesian forest policies. There is substantial foreign investment in Indonesia’s emerging
pulp and paper industry, which is based on a combination of log supplies from natural
forests and plantations on recently deforested tropical forest land. According to Dauvergne
(1997:87), in 1990, foreign investment was a little less than 10 percent of total investment.
Beside Japanese, Swedish, Finnish and Canadian investors and exporters of industrial
equipment participate heavily, and also assist the expansion of the pulp and paper industry
by acting as consultants and financial supporters (Carrere and Lohmann 1996). Thus, real
influence from foreign interests could exceed their share in investments. It could also be
argued that the foreign interests might exert stronger influence than their investment share,
since the pulp and paper industry was targeted as a future big export industry by the
government.213 Although timber plantations are planned to meet the wood demand of the
pulp and paper industry in the future, in their initial stages, pulp and paper mills are often
fed by natural (though often previously logged) forests (WAHLI 1992, Carrere and
Lohmann 1996:219). Thus, the pulp and paper industry may increase the motivation to re-
enter forest concessions already heavily logged. This stage, which may imply very heavy
destruction of secondary forests, may be followed by the establishment of plantations of
fast-growing species. Such plantations, called HTI, receive very favourable economic
incentives from the government (WALHI 1992, Carrere and Lohmann 1996:219).
       However, it should also be noticed that even though the Indonesia pulp and paper
industry has demonstrated remarkable growth rates over the last 10 years, and has been
targeted as a major export industry in the future, the importance of the industry was dwarfed
by the plywood industry during the period in focus.214 The domestically controlled plywood
industry was still expanding when the implications of heavy logging methods for the global
environment became widely known. Nevertheless, domestic ownership did not produce
reforms, only a series of decisions targeted to increase the timber supply to the big plywood
groups at the expense of most other interests.


213 «RI will sharply expand pulp and paper production capacity», Jakarta Post, 13. May 1992:7.
214According to World Bank (1993a:3, table 1.3), paper exports, which is considerable higher than pulp
exports, amounted to USD 239 million in 1991. Plywood exports contributed with USD 2,871 million.



                                                233
       Some of the features of the well-known events connected to the pollution scandals
surrounding the big pulp and paper factory PT Indorayon Utama at Sumatra also weaken
the assumption that foreign investors contribute consistently to a weakening of
environmental standards (Potter 1996). After a series of scandals particularly connected to
pollution from a pulp and paper factory, pressure from foreign participants who contributed
to the financing of the project became an important factor behind the pro-environmental
steps made by the Indonesian government in relation to the project. According to Potter
(1996), US investors demanded pro-environmental changes in fear of pressure and publicity
from US NGOs. MacKerron (1993:48-49) also claims that in some cases, foreign investors
have exposed a stronger interest in reforestation and long-term forest management at forest
concessions than their Indonesian counterparts during the 1980s. Together, these
observations weaken the assumption that foreign investors have a consistently anti-
environmental role.
       Together, these observations indicate that weak environmental reforms in Indonesia
during the period mentioned are not satisfactorily explained by pointing to the persisting
influence of transnational investors. First, their participation in forestry and wood industries
was very modest. Second, serious conflicts with the Japanese over plywood exports
surfaced in this period. Third, there are few indications that foreign investors were pursued
more anti-environmental strategies than domestic investors in the period in question.
       This notwithstanding, it might be argued that the role of the ethnic Chinese in
Indonesia, who dominate all aspects of forestry and wood industries, could be understood as
similar to the role of foreign investors. They could also be seen as middlemen or political
brokers for foreign investors in the forestry business, including lobbying for lax
environmental rules.
       However, the ethnic Chinese in the forestry business, as the ethnic Chinese
populations in general, expose strong diversity when it comes to the degree of their
integration into the Indonesian society. Some of the biggest tycoons like Pangestu. Uray and
Sutanto are totok Chinese. This means that they were born in China and speak a Chinese
dialect or mandarin (Suryadinata 1995.260-261). Even second or third generation children
of totok Chinese living in Indonesia are usually classified as totok if their mother tongue is



                                              234
Chinese (Suryadinata 1995:261). However, perhaps the most powerful ethnic Chinese in
the forest business, Bob Hasan, is peranakan. This term implies that he uses some kind of
Malay or an indigenous dialect as his medium of communication, and is more strongly
integrated into the indigenous culture (Suryadinata 1995:255-256).
       Such diversity could be expected to produce more heterogeneous interests among the
ethnic Chinese, making it difficult to understand their role as a closed and uniform group
with clear interests diverging from any «national Indonesian interest».
       Heterogeneity also characterises their degree of economic diversification and
internationalisation. While the prime totok capitalist in Indonesia, Liem Sioe Long, has an
enormous international trading and financial network and is involved in several activities in
the Indonesian economy, the largest forest concessionaire Burhan Uray’s Djajanti group is
almost exclusively focused on plywood production in Indonesia (Robison 1986, Bresnan
1993, Suryadinata 1995:140-141, Djajanti undated).215 Thus, while some of the Chinese
tycoons involved in the timber business may be representatives of a «transnational
bourgeoisie» operating on a regional or even global scale, other timber tycoons have the
bulk of their activities in Indonesian forestry. In addition, since forestry is a rent-producing
activity that only may take place in a few countries, the bargaining power of the national
state against foreign investors may be expected to increase dramatically (Krasner
1995:275). Thus, it is not likely that the Chinese groups may influence the Indonesian
government’s environmental policies by using the strategy suggested by Bergstø and
Endresen (1992); namely to threaten to withdraw their investments from the business.
       In addition, the Chinese in Indonesia are often seen as politically vulnerable to
widespread anti-Chinese sentiments in the Indonesian population (Crouch 1979, Anderson
1990:115-116). This makes them heavily dependent on powerful patrons in the army, the
bureaucracy and the presidential family. This dependence on other actors also makes it very
difficult for the ethnic Chinese to translate their economic wealth into political power. Ross
(1996) explains the emergence of marginal reforms in Indonesian forestry by pointing to the
expansion of Chinese control in the sector at the expense of the powerful military.




                                              235
According to Ross (1996) the Chinese involved in forestry in Indonesia are politically
weaker, and consequently easier to control than the powerful military. Robison (1986:319)
even notes that part of the foreign investments among this group of businessmen in
Indonesia has been motivated by fear of a resurgence of anti-Chinese economic policies.
        The Chinese have undoubtedly played a major role as brokers for foreign investors
in the Indonesian economy due to their large domestic and regional business networks
(Robison 1986, Bresnan 1993). However, the conflicts between APKINDO, which is
dominated by ethnic Chinese entrepreneurs, and Japan over the plywood trade do not
support a categorisation of the large forestry tycoons as puppets of foreign interests.
        To summarise, I conclude that differences in the influence of transnational
companies and their associates are unlikely explanations of the contrast in question. Though
the share of foreign investment in the Indonesian wood industry has been consistently
higher than the share of foreign investment in Amazonian ranching, there was a decrease in
this share during the late 1980s. The same trend of waning foreign investment characterised
the Brazilian case. In addition, some observations may indicate that foreign investors not
consistently influence Indonesian policies in the anti-environmental directions predicted by
the dependency approach. The only hypothesis inspired by dependency theory which could
be defended in the Indonesian case, and to a somewhat more modest extent in the Brazilian
case, is that foreign investments have facilitated the development of commercial activities
with negative environmental effects in the two countries (Carrere and Lohmann 1996).216
However, facilitating exploitation is not the same as influencing government policies. The
explanation of the contrast must be found elsewhere.




215 Uray and his Djajanti group apparently started its process of internationalisation in 1994 when 31,5
percent of the Djajanti company PT Artike Optima Inti’s shares were sold to the Malaysian Karamat Tin
Dredging Company in exchange for a share a 25 percent share in this company (Suryadinata 1995:215-216).
216While technology and capital for the onset of ranching, mining and logging in Amazonia case existed
within Brazil, Indonesia has been more dependent on supplies of foreign technology and capital. The logging
boom, the expansion of plywood industries and the emerging pulp and paper industry boom have to varying
extents been dependent on imported capital and technology.



                                                   236
5.2. Explanations related to environmental interdependence: Environmental
reform as co-operation.
If variations in dependency do not provide adequate explanations, then what about
variations in external pressure related to environmental issues. Were the two states exposed
to external pressure of comparable strength in the mentioned period? Did the two countries
experience comparable sets of incentives in the form of positive and negative sanctions to
reform their forest policies? Did external pressure interplay with huge differences in
domestic costs and benefits related to environmental reform?
       In the following, I argue that Brazil was exposed to stronger external pressure in the
form of sanctions against external financing than Indonesia. In the first place, in the
mentioned period, Indonesia experienced no cancellations from donors of aid and
concessional loans for environmental reasons in the 1988-1993 period, although some
donors expressed serious consideration over forest management. Brazil experienced several
cases of cancellation and postponing of external financing for environmental reasons.
Though such cancellations mostly hit loans related to the development of the Amazon
region, and were directly linked to environmental policy failures, some of the cancellations
also included financing of other vital economic sectors, most importantly the energy sector.
Moreover, threats from US politicians to make the foreign debt regime dependent on the
government’s environmental performance constituted a serious challenge to the heavily
indebted Brazilian economy.
       The Indonesian government did not experience comparable cancellations of loans or
concessional funding related to the country’s forest policy performance. However, some
private companies had problems with obtaining financial support for the establishment of
forest related industries dependent on external financing. This especially hit some big
companies in the pulp and paper sector.
       When it comes to trade, Indonesia was exposed to embargoes and threats of
embargoes against its plywood exports. European states and customers to some extent
introduced labelling schemes and taxation on plywood imports from Indonesia as part of an
environmentally grounded shift away from the use of tropical timber. Such boycotts were
also adopted by groups of customers on the Japanese and the US markets, including



                                            237
municipalities, states, business organisations in the construction sector and importers. To a
certain extent, these changes implied a constraint on the vital Indonesian wood exports,
though some of the labelling schemes by European governments were withdrawn after
intensive lobbying from a coalition of the Malaysian and Indonesian governments.
However, neither international organisations nor foreign states were behind a substantial
share of the embargoes against Indonesian wood-based exports. Instead, several of the
embargoes were based on changes in consumer attitude and decisions made by organised
consumer groups. Thus, they were perhaps more difficult to deal with in the long run.
          In addition, the rules on sustainable supplies of timber before year 2000 introduced
by ITTO represented a strong potential environmental conditionality on a main section of
Indonesian exports. However, I argue that lobbying from timber producing countries during
the ITTO process watered down the strictness of the ITTO 2000 target.
          Brazilian exports were also exposed to threats, though no embargoes were
introduced. However, the threats to Brazilian exports were of a more general nature.
Particularly politicians in the United States linked Brazilian market access with changes of
policies in the Amazon region. As for most developing countries, access to the US market
is very important. Thus, though not implemented, these threats were clearly of a vital
nature.
          Although comparisons of external economic incentives indicate stronger reforms in
Brazil, the inclusion of domestic costs and benefits undermines this conclusion. Domestic
costs connected to reform in Indonesia were actually negative. As I demonstrated under the
analysis of the dependence approach, Indonesia had strong domestic fiscal reasons for
reforming its forestry sector. Rent capture and taxation was relatively low, and this situation
contributed both to irresponsible logging, wasteful wood industries and losses of potential
government revenue. In fact, modest increases of economic rent through relatively simple
taxation instruments could have weakened incentives towards waste in logging and
production operations, and provided the government with a huge increase of tax revenue.
          Thus, while Indonesia was not exposed to external negative economic incentives
comparable to Brazil, the internal positive economic incentives for reform were
considerable. This implies that attempts to look at variations in reform as generated by



                                              238
variations in the economic gains and losses of governments associated with reforms
produce ambiguous predictions not consistent with the contrast presented in chapter four.
As differences in motives related to economic gains and losses fail to a conclusive answer,
this paves the way for the investigation of more purely politically based motives among
domestic and international/domestic explanations after the detailed discussion below.


Approach 1: The degree of co-operation as rational economic choice
Under this approach, I suggested the following proposition as an explanation of the
difference between Brazil and Indonesia in section 3


Proposition 3: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 is explained by a difference in external positive and negative
economic incentives, the vulnerability to negative external incentives and/or by differences
in the indirect and direct domestic economic costs of reform.


Foreign direct and financial investments – Brazil is exposed to markedly stronger sanctions
than Indonesia and is more vulnerable to sanctions.
As I indicated above, both Indonesia and Brazil were sensitive and vulnerable to events that
influenced the size of the inflow of external funds into their respective economies.
       Foreign direct and financial private investments have been very important forces
behind Brazilian economic development since the middle of the 1950s. Both sources of
capital were prime movers behind the «economic miracle» during the 1970s. The debt
shock that accompanied the increases of the interest rate on Brazil’s increasing foreign debt
during the early 1980s was followed by a serious decline in the inflow of such funding for
investments and development (Kolk 1996:90, table 3.1). Huge debt obligations during the
1980s aggravated the consequences of this drought of external inflows. Domestic saving
and investment failed to match decreasing inflows (Dinsmoor 1990:71-72). Since the
domestic economy failed to meet the external economic shock by mobilising domestic
resources, this indicates that Brazil was both short term sensitive and long run vulnerable to
further external financial shocks. Thus, in the late 1980s, the combination of decreasing



                                             239
inflows and increasing outflows placed Brazil in a situation in which the country was both
sensitive and vulnerable to events that could reduce the level of foreign investments further.
       Indonesia’s economic history before the early 1980s was different. High income
from the petroleum sector after the OPEC price increases in 1973 and 1979 decreased the
country’s dependence on external inflows dramatically. However, declining oil prices after
1982 led to dramatic reductions of domestic revenue (Robison 1986:373-400). The
government adjusted to this shock by adopting a policy of partial liberalisation of the
foreign investment regime and increasing external borrowing, mainly from Japanese banks.
The strategy of deregulation and increased openness to foreign investments was a success.
Foreign direct investment in the Indonesian economy increased dramatically towards the
end of the 1980s. Net foreign direct investment rose from USD 0,2 billion in the fiscal year
1985/86 to USD 1,7 billion in the fiscal year 1992/93 (World Bank 1993b:49). At the same
time, loans to the government and the private sector flowed in. Altogether, external inflows
increased from 6,6 billion USD in the 1986/87-1989/90 period to 16,4 billion USD
(estimated) in the fiscal year 1992/93. Public and private loans, increases of foreign direct
investment as well as inflows related to trade made up the bulk of this increase (World
Bank 1993b:49, table 2.8). Increasing inflows were matched by stable domestic savings
(World Bank 1993:Table 2.10:55).
       Thus, on the one hand, Indonesia had moved towards a situation of relatively high
sensitivity and vulnerability to events that could threaten the flow of foreign direct and
financial investments. On the other hand, the country was not in a situation that resembled
Brazil’s drought of foreign financial and direct investments. A state experiencing
withdrawals of foreign investments when such investments are becoming increasingly
scarce may be assumed to perceive itself as more sensitive to such withdrawals than a
country experiencing strong increases of foreign investment over a longer period. Above, I
also demonstrated that Brazil’s vulnerability to such external shocks was high, as it turned
out to be difficult for the domestic economy to compensate the loss in external savings by
increasing domestic savings.
       International attention to the forest issue in Brazil and Indonesia during the 1980s
was closely connected to projects funded by the World Bank. Linkages between foreign



                                             240
financing and environmental performance were at the heart of international attention to the
rainforest issue from the beginning. The fight against World Bank funding for the migration
projects Transmigrasi in Indonesia and POLONOROESTE in Brazil are among the most
well-known elements of the NGO campaign for the preservation of tropical moist forests in
the 1980s (Rich 1994). Both campaigns were quite successful, as the targeted projects were
scaled down and to some extent reshaped.217
          In Brazil, international pressure continued into other multilaterally funded projects.
Two important multilateral loans faced serious difficulties. The first was the temporary
suspensions in 1987 and 1988 of a loan from the Inter-American Development Bank for
paving the Porto Velho - Rio Branco road connecting Rondônia and Acre. The second was
the indefinite suspension in March 1989 of negotiations on the USD 500 million Power
Sector II loan for financing improvements of the Brazilian power sector, including the
construction of dams in the Amazon region.
          Brazil’s negative environmental record in the Amazon region became a barrier to
other World Bank and external funding in general. Early in 1989, the World Bank stated
that it would transfer funding for Amazonian development to poorer countries. In Brazil,
newspapers published this together with other news on environmentally inspired
international criticism of the Sarney government.218 These events demonstrated the growth
of linkages between the environment and issues essential for growth and investment in
Brazil.
          External pressure also implied bilateral pressure from the US, one of Brazil’s main
trading partners and investors. US politicians like senator Al Gore linked environmental
reforms in Amazonia to a more liberal debt regime and the inflow of fresh investments into
the Brazilian economy.219 At a more general level, Brazil became increasingly isolated




217World Bank funds for the Indonesian Transmigration project were only disbursed to existing settlements
after 1986, cfr. Rich (1994:37-38). The POLONOROESTE programme experienced delays in disbursement in
1985 because of the lacking willingness of the Brazilian government to fulfil the programme’s environmental
obligations.
218«Bird transfere verbas da Amazônia para areas pobres», O Globo, 31. March 1989:7.
219«Visita influi na divida», Correio Braziliense, 18. January 1989:12.



                                                   241
internationally. Most foreign policy initiatives related to a very wide range of issues were
eclipsed by the country’s bad reputation for its policies in the Amazon region.220
        The World Bank also criticised Brazil for its policies in some of its publications.
Particularly the fiscal incentives scheme, but also other implicit and explicit subsidies, were
attacked in reports and by World Bank officials as wasteful and destructive both in
economic and environmental terms (Binswanger 1989, Mahar 1989). The main thrust of
this criticism was inspired by the World Bank’s neo-liberal outlook that emphasises the
benefits of economic instruments and market reform. However, the absence of active
government regulation, including the lack of adequate surveillance and monitoring efforts,
was also criticised (Binswanger 1989).
        Indonesia also experienced increasing World Bank pressure against its forest
policies after the reduction of the Transmigration programme. World Bank reports (World
Bank 1990, 1993a) criticised the environmental and economic record of Indonesian logging
and wood industries heavily. The main thrust of the criticism closely resembles the
criticism of Brazilian policies. Distorting and inefficient incentives for logging and
plywood production should be corrected both to the benefit of the national economy and the
forest environment. However, also in the Indonesian case, the need for a more determined
policy of inspection and monitoring by the authorities was emphasised.221
        However, at the same time, the World Bank disbursed the loans Forestry
Conservation and Institutions I and II in 1988 and 1990.222 A break between the World
Bank and the Indonesian government only emerged in 1994, when Indonesian authorities
denied to accept the reformatory clauses put on the Forestry Conservation and Institutions
III loan (Ross 1996).223 Also, in addition to the World Bank, Indonesia had access to

220Interview with Macedo Soares November 1992, cfr. Hurrell (1992).
221This is particularly the case in the 1994 report on Indonesia’s environment. Here, it is argued that if the
environmentally and economically detrimental incentive included in the low log price is corrected, the demand
for inspection and monitoring will probably increase, as illegal logging will become more profitable (World
Bank 1994a:54).
222Forestry Institutions and Conservation I (1988): 34 million USD, Forestry Institutions and Conservation II
(1990): 20 million USD, cfr. World Bank (1991:85).
223 These clauses were the conclusions of the document backing the loan proposal (World Bank 1993a),
namely hikes in the timber royalties collected by the government, an inspection force independent of the
government, increased participation by local communities in forest management and reform of the way
concessions for timber plantations (HTI) are allocated. The conflict had not yet been settled in May 1995.



                                                    242
concessional funding through the International Governing Group on Indonesia (IGGI).224
IGGI had yearly meetings deciding the size of grants and soft loans to Indonesian and
advising on economic policies until June 1992. Then, the Consultative Group on Indonesia
chaired by the World Bank substituted IGGI. Though criticism against Indonesia’s
environmental record surfaced from time to time, IGGI financing was not made conditional
on any improvement of environmental policies.225
        When it comes to restrictions on foreign private direct investments initiated by
foreign private companies, I have not managed to identify any case of retreat of investments
or restrictions on new investments done by foreign investors in Brazil. Environmental
problems and concerns for the environmental reputation of certain companies may have
been among the factors that motivated the retreat of the large transnational companies from
cattle ranching in the Amazon region. However, even if this was claimed by the foreign
investors, it would not be easy to single out the impact of this factor. As I have
demonstrated above, the profitability of large-scale ranching in the region declined in the
same period. Anyway, this retreat was not any problem for the government. As indicated
above, Amazonian ranching was not important in terms of GDP or exports, and local
landowners took over most of the ranches abandoned by foreign investors.
        Some Indonesian companies with forest operations experienced problems with
external financing. Most of these problems were due to campaigns in foreign countries. The
most well-known case of environmental pressure related to foreign investment in Indonesia,
is the withdrawal of Scott Paper’s investment plans at Irian Jaya. Scott Paper is a big

224IGGI consisted of the US, Australia, Austria, Belgium, Netherlands, Germany, Britain, France,
Switzerland, Italy, Japan, Spain, New Zealand and the multilateral agencies IMF, the World Bank, UNDP,
International Finance Corporation and the International Fund for Agricultural Development. IGGI was
established in 1967 and was chaired by the Netherlands.
225The criticism raised by IGGI chairman Jan Pronk was relatively moderate. See the articles «RI’s rapid
deforestation concerns IGGI chairman», Jakarta Post, 10. April 1990:7, and «Pronk against unhealthy
behavior of business», Jakarta Post, 20. May 1991:1. Indonesian NGOs were also dissatisfied by Pronk’s
willingness to respond to their claims; cfr. the articles «IGGI meneer Pronk meets with activists», «IGGI and
Pronk betrayed Indonesian activists», Setiakawan no. 6, July 1991:38. However, at one occasion Pronk
criticised the management of a specific forest concession, namely PT Alam Nusa Segar’s concession on the
island of Yamdena in Maluku, after a trip to the island together with Hasjrul Harahap, «Logging on Tanimbar
island to continue despite criticism», Jakarta Post, 9. August 1991:6. IGGI conditionality became related to
another issue, namely human rights. Dissatisfaction with such issue-linking by the Netherlands was part of the
background for Indonesia’s initiative to dismantle IGGI in 1992 and to substitute it with the present World
Bank chaired Consultative Group on Indonesia (CGI) (Vatikiotis 1993:47).



                                                    243
transnational pulp and paper company that planned to establish a large eucalyptus plantation
at Irian Jaya together with the big Indonesian conglomerate PT Astra in the early 1990s.
Environmental and human rights organisations claimed that the project involved the
clearing of tracts of virgin rain forest and the removal of 15.000 to 25.000 native
inhabitants of the area (MacKerron 1993:33).226 After a campaign against Scott Paper, in
which the Indonesian NGOs SKEPHI and WALHI as well as the San Francisco based
Rainforest Action Network (RAN) played major roles, the company withdrew from the joint
venture with Astra (MacKerron 1993:19).227 Since pulp and paper is targeted as an
important export branch in the future, this withdrawal represented a threat to Indonesian
exports and an incentive to the government to change environmental policies. However, this
threat was moderate. Scott’s withdrawal did not necessarily imply environmental
improvements in the project itself. Astra responded to the withdrawal by moving forward
with an expanded proposal together with the state-controlled logging and wood-processing
company PT Inhutani II (MacKerron 1993:19). However, after Astra’s financial crisis in
1993 and the following take-over by the Barito Pacific conglomerate, the status of the
project is uncertain.
        Altogether, it is clear that the strength and impact of pressure from multilateral
banks and private investors on Indonesia during the mentioned period was lower than the
strength of such pressure on Brazil for three reasons. Cancellations of World Bank
financing were not introduced before 1994, they did not influence funding for other
economic sectors, and Indonesia had access to substantial concessional funding for forestry
projects from other sources (Ross 1996). In contrast, Brazil faced cancellations or
postponements of several loans directly related to the Amazon region, and lost vital funding
for its energy sector when negotiations on the World Bank’s Power Sector Loan II were
discontinued in 1989. Serious dissatisfaction with Indonesian forestry policies in the World
Bank did not involve restrictions on loans in the Indonesian case before in 1994. In Brazil,

226See also the article «Development and indigenous peoples», Inside Indonesia, March 1994:25-26.
227In an interview with the Internet magazine Multinational Monitor in November 1993, SKEPHI’s leader
Indro Tjajhogo stated the following on the NGOs role in the campaign against Scott: «The company felt more
pressure from overseas than from inside Indonesia. As a huge and established corporation, it is immersed in
international markets; potential repercussions in the environment-conscious world markets forced the
company to review the project.»



                                                   244
loan embargoes did not only hurt Amazonian development, but also other economic sectors.
Negative external incentives were both stronger in the sense that they involved
implemented threats, and in the sense that they also threatened the financing of other
important economic sectors in the Brazilian case. Furthermore, withdrawals of external
financing to Brazil took place in the context of decreasing external inflows and low
domestic savings, making Brazil much more vulnerable to external economic sanctions.
       Scott’s withdrawal from its companionship with Astra was not a very serious threat.
In the Scott Paper case, the Indonesian company seemed to be able to move on in the
project without dealing seriously with its environmental problems. Moreover, a financial
threat against the expansion of a single factory, though big and in an important industry is
much less serious for a government than direct withdrawals of external funding to
important economic sectors. Indonesian authorities responded to the withdrawal of Scott’s
investment by assuring the public that Indonesia’s forest policies remained unchanged, and
they played down the importance of this event.228
       It should also be remembered that the major consumer of wood and chief generator
of foreign exchange, the plywood industry, was independent of foreign financing and
technology from the late 1980s. Most of the plywood mills had been installed in the
beginning and middle of the 1980s. Thus, the most important industry in terms of foreign
exchange was virtually invulnerable to investment bans.
       Furthermore, sanctions may be assumed to have had a stronger impact in the
Brazilian case than indicated by this comparison of external events for reasons related to the
state of the domestic economy. While Indonesia had experienced increases in external
savings for several years, Brazil’s external savings had been declining for a long time
without being compensated for by increased internal savings. Thus, the damage done to the
Brazilian economy by financial boycotts was magnified because additional withdrawals of
external savings added up to a substantial fall in internal savings in the Brazilian economy.
The low ability of the Brazilian economy to recover investments based on internal savings
had disclosed the realities of high vulnerability to the Brazilian government well before the
emergence of withdrawals of financing connected to environmental issues.




                                             245
External negative sanctions on trade – somewhat stronger in Indonesia than in Brazil.
Threats of trade embargoes against Brazil related to policies in the Amazon region emerged
from time to time towards the end of the 1980s. However, as the main product from the
region associated with deforestation, beef, was not exported, it offered no natural focus of
embargoes. No threats of trading sanctions against the country were implemented except
from some boycotts against tropical wood products among consumers in industrial
countries. However, wood products from the Amazon region only made up a tiny share of

Brazilian exports during the period in question (Kolk 1996:73).

        Nevertheless, the relationship between environmental reforms and prospects for
trade expansion should also be taken into account. Trade relations with the US on issues as
patents and computers became increasingly strained during the 1980s (Hurrell and Felder
1989). Collor, who wanted to scrap the old inward-looking state guided industrialisation
strategy and adopt an outward-looking strategy, perceived barriers to future export
expansion as vital threats (Collor undated, Hurrell 1992, Kasa 1997). Moreover, it is
reasonable to assume that Collor perceived linkages between a liberalisation of the import
regimes of industrial countries and Brazil’s environmental policies as more of a vital threat
than Sarney. Sarney was more closely associated with the military and other groups who
favoured the import substitution policies of the previous military governments (Flynn
1993). Environmental problems were perceived as important obstacles to improvements of
the trade regime between the US and Brazil by Collor.
        With a risk of simplification, it could be argued that Sarney was linked to the heavy
industrialisation strategy of the military, which again was inspired and facilitated by the
communist fear of the cold war. Collor was much more perceptive of the new economic
demands of globalisation. His agenda for growth and development was trade liberalisation,
privatisation and a liberalised foreign investment regime; altogether a general dismantling
of the old import-substitution strategy. Consequently, Collor was much more aware of




228See the article: «Harahap says forestry policy to continue», Jakarta Post, 16. November 1989:1.



                                                    246
barriers to trade expansion and external inflows than Sarney, including barriers associated
with the country’s negative reputation for its policies in Amazonia.
         This also explains the content of environmental policies under Collor. The Sarney
government’s policies related to Amazonia were based on extensive investigations of
problems in the region and carried out under strong military influence. In contrast, the
Collor government’s reforms to a greater extent pinpointed the issues addressed by
international criticism without preceding detailed policy analyses. Thus, while the
institutional and legal reforms carried out under Sarney were more coherent, Collor’s
policies more openly addressed the issues pointed out by international critics. This is
particularly clear for reforms related to Amazonia’s indigenous populations. While the
military made Sarney drag his feet on the issue of indigenous reserves, and exposed him to
severe international criticism, Collor ignored military worries about territorial sovereignty
and started a vigorous campaign of demarcation of indigenous reserves.
         However, in this discussion, I depart from the paradigm of the «interest based
approach», which analyses environmental reforms as the outcome of objective costs and
incentives, and not variations in political perceptions of these factors (List and Rittberger
1992:102). These factors are discussed in more detail from section 5.3 and onwards. I
conclude that when analysing only external incentives in the form of sanctions against
Brazil’s trade; only tiny sanctions were implemented. However, there was an atmosphere of
hostility against economic co-operation with Brazil. This was a potential barrier to future
export expansion. Although less serious than implemented sanctions, such a threat was a
clear incentive to environmental reform.
         Due to the high and increasing importance of plywood and other wood products
from tropical moist forests in Indonesian exports, the country was in a very different
situation. Various trade embargoes on timber and timber products provided clear negative
incentives for improved forest management. Some of the most important are described
below.
         Boycott threats against tropical timber motivated by environmental concerns were
important at the US and European markets, and also started to emerge on the important
Japanese market from the early 1990s. From the late 1980s, several European countries



                                            247
discussed restrictions on timber imports through taxes, quotas and labelling schemes as a
response to reports on destructive logging practices in the world’s tropical moist forests.
About 200 city councils in Germany, half the municipalities of the Netherlands and several
hamlets in Belgium have banned purchases of tropical timber (MacKerron 1993:66).
Already in 1989, the federal government of Germany stopped purchasing tropical timber
and tropical timber products (MacKerron 1993:66). In 1991, the Netherlands signalled that
the country would only import tropical timber produced in an environmentally sustainable
way after 1995 (Kolk 1996:161).
        Austria introduced a mandatory tropical timber-labelling scheme together with a 70
percent tropical timber tax in September 1992, and several other European governments
considered the same.229 Malaysia claimed to have lost considerable timber exports to the
European market due to such bans.230
        Labelling was also introduced on the US market. According to MacKerron
(1993:66), the states of Arizona, California and New York, as well as the city of
Minneapolis banned or considered banning inputs of tropical timber in public construction
projects, except from certified sources. According to MacKerron (1993:66-67), log
importers resisted other labelling proposals at the municipal and federal level. However, the
threat against timber imports loomed continuously on the US market in the early 1990s.
        Similar trends also emerged at the very important Japanese market. In 1991, several
Japanese trading houses and wood industries signalled that they considered switching from
tropical to temperate log supplies for environmental reasons. This shift took place on the
background of changes in consumer attitudes as well as industrialisation efforts in
Malaysia, Japan’s main log supplier.231 In 1991, the Tokyo metropolitan government
announced a plan to reduce the use of tropical hardwood products in its construction
projects. Other local authorities were preparing similar moves in 1992. In addition, the


229See the article: «ASEAN condemns timber labelling», Financial Times, 6. November 1992.
230See the article by Michael Vatikiotis: «Malaysia’s war. Government hits back at its critics», Far Eastern
Economic Review, 4. June 1992:65. Here, Malaysia’s primary industries minister, Datuk Seri Lim Ken Yaik,
estimated that the country had lost 11 percent of its timber exports to Europe due to campaigns against tropical
wood.
231 «Ecological concern brings down tropical log imports», cited by «panderson» from Nikkei Weekly 13. July
1991 at the peg:rainfor.general mailing list, 12. August 1991.



                                                     248
private sector, namely the Building and Construction Industry Association, announced a
target of 35 percent reduction in the use of concrete panels over the next five years. The
justification of this move was both environmental and economic (World Bank 1993a:56-
57).
        Labelling efforts, embargoes and embargo threats have caused serious concern in
Indonesian government circles and the forestry business community. At government level,
trade boycotts have been met by intransigence and alliances with other wood exporters,
primarily Malaysia.232 Together, Malaysia and Indonesia managed to force Austria to
withdraw its tropical hardwood labelling and taxation programme by threatening with a
trade embargo of Austria in 1993.233
        The International Tropical Timber Organisation (ITTO) was an additional source of
pressure in the Indonesian case. ITTO was established in 1985 to supervise and co-ordinate
the 1983 Tropical Timber Agreement negotiated under the auspices of the United Nations
Conference on Trade and Development (UNCTAD). The ITTO is a commodity
organisation, regulating the relationship between producers and consumers of tropical
timber. However, the ITTA also includes clauses that charge ITTO with the responsibility
to «…conserve tropical forests and their genetic resources» (Humphreys 1996). In 1990, the
producer caucus adopted the Target 2000. This target states that in year 2000, all tropical
timber traded internationally should come from sustainable sources.
        However, conflicts between developing and industrial countries have watered down
this target. While developing countries favoured environmental clauses both on temperate
and tropical forests, developed countries favoured clauses exclusively on tropical forests.
This conflict characterised the ITTO negotiations during the early 1990s.
        The conflict between industrial and developing countries emerged against the
background of the developed countries’ wish to establish a global forest convention (GFC).
Including temperate forests into ITTA would reduce the chances to develop a binding
regime (Humphreys 1996:234). The outcome of the negotiations was a non-binding
agreement in 1994, which has not yet been formally adopted (July 1996). However,


232See the articles: «Indonesia will continue to tap its forest resources despite criticism», Jakarta Post, 16.
May 1990:7, «ASEAN will counter anti-timber lobby», Jakarta Post, 22. May 1990:7



                                                     249
Indonesia committed itself to the ITTO 2000 target during the process (GOI/Department of
Foreign Affairs 1993). APKINDO, the most important business organisation in forestry,
also uses its adherence to ITTO standards for sustainable forestry and the ITTO 2000 target
in marketing efforts (APKINDO 1992a), but there are few sanctions to back up this target.
       To summarise, while Brazil was exposed to much stronger international pressure
against financing than Indonesia, the picture when it comes to trade was to a certain extent
the opposite. Barriers motivated by environmental considerations at several important
foreign markets, including Japan, Indonesia’s major plywood customer, threatened the
important Indonesian wood-based exports. It is difficult to estimate Indonesia’s losses from
these embargoes, since plywood exports actually increased in the mentioned period. While
there were threats of general trade embargoes against Brazil, especially at the US market,
these embargoes were not implemented. On the other hand, it is clear that any programme
to increase Brazilian exports would have to take the «environmental constraint» into
account in this period. According to Hurrell (1992:417) discovered the links between
government policies in the Amazon region and a set of issues vital to the Brazilian
economy, among them trade issues, during his pre-inauguration trip to Europe and the US
in early 1990. Thus, the effects of threats on policy makers may have been stronger than
indicated by the virtual absence of sanctions against the country’s foreign trade.
       Furthermore, it should also be remarked that threats of boycotts of both financing
and trade vanished as Brazil gradually moved from an intransigent international position in
1988 towards a co-operative position in the early 1990s along with the changes of the
country’s domestic environmental policies described in chapter four.234 Pressure against
Brazil in terms of threats of negative sanctions was very strong at its climax in 1988-89, but
it declined rapidly after Brazilian changes of international positions and domestic policies
in 1989/90. However, one of the main elements of the new Brazilian strategy to appease
foreign criticism, the decision to make Brazil host of the UNCED conference made in 1989,
also fixed international attention on Brazil’s domestic environmental policies until the

233«Austria revokes Eco-Labelling law for tropical timber», The Straits Times, 18. March 1993:4.
234According to Macedo Soares at the Ministry of External Relations, external pressure «almost ceased to
exist» after Collor changed policies in a more co-operative direction. Interview with Macedo Soares in
Brasília, November 1992.



                                                 250
arrangement of this conference. This maintained international attention to Brazil’s
environmental record at a relatively high level. One of the costs of a more pro-active
domestic policy and more co-operative international positions was continuously strong
attention to Brazil’s domestic policies during the pre-UNCED period.
       Altogether, external pressure against Indonesia was less acute in the mentioned
period. At the same time, it was more of long-term nature and more difficult to deal with, as
it was founded as much in markets and consumer sentiments as in the attitudes of states and
international organisations. Labelling schemes and trade barriers from European
governments were successfully encountered by threats of counter-embargoes. Together with
other timber producing nations, Indonesia was able to avoid any strong environmental
clauses on its wood-based trade during the ITTO negotiations without ruining its
environmental reputation. However, the threats against Indonesia’s timber trade from
groups of consumers on all the major markets were more difficult to deal with. Though
Indonesian plywood exports to most markets increased substantially during the 1990s, it
became increasingly clear that these threats might be dangerous for one of Indonesia’s main
export sectors in the long run.
       Though the conclusions from the previous discussion are somewhat ambiguous,
since Brazil and Indonesia were exposed to somewhat different external negative
incentives, I conclude that both due to a more marked difference between sanctions against
financing than against exports and due to higher vulnerability to sanctions against external
financing in the Brazilian case, Brazil was exposed to stronger external economic
incentives to change its policies. However, in proposition 3, I also signalled that differences
in domestic costs and benefits should be taken into account as potential explanatory
variables under this approach. This is done in the following.


Domestic costs and benefits of reform – reforms imply much stronger domestic economic
benefits in Indonesia than in Brazil.
As mentioned, the effects of external pressure on policies must also be assessed in the light
of the domestic costs incurred by remedial action in terms of lost revenue and the costs of
remedial action itself. If the costs of action are very high, even combinations of strong



                                             251
international pressure and high vulnerability may not be enough to motivate environmental
reforms. In the previous section, I concluded that costs in terms of foregone export revenue
for reforms of the activities I focus especially on; namely ranching and logging, were very
low.
       However, also other indicators are important. Employment is one of the most
important. For Brazil, it should be emphasised that reductions of deforestation for ranching
would not necessarily reduce existing employment in ranching. More intensive soil
treatment to improve pastures would probably demand more stable employment in the long
run (Serrão and Toledo 1990:205). In addition, one should be aware of the labour extensive
nature of ranching in large units. Of the about 100.000 persons employed in ranching
operations in Amazonia in the late 1980s, more than 80 percent were involved in integrated
agricultural/ranching operations with a size of less that 100 ha, which is small scale in the
Brazilian context (World Bank 1992:29). The importance of small scale farming in terms of
employment is even higher. 1.800.000 were employed by crop cultivation on farms smaller
than 100 ha in 1980 in the Amazon region (World Bank 1992:29). Thus, limits on ranching
expansion in large units produce very moderate costs in terms of employment loss.
       In the Indonesian case, the plywood sector is not very labour intensive. Estimates of
the share of employment of the forestry sector vary considerably. While the World Bank
concludes that the employment share of forestry and the wood industries is about 1 percent
of the Indonesian workforce, or 680.000 (World Bank 1993a:2), official estimates are as
high as 3,7 million (GOI/Ministry of Foreign Affairs 1993:17, Brookfield et al. 1995:98).
However, one should be aware that aggregate figures might mask the dependence on wood
industries in some regions. In East Kalimantan, 71,5 percent of industrial employment was
in plywood mills, and 13,3 percent in sawmills as early as 1985. Almost 30.000 people in
the province were directly dependent on the local wood industry. This number increased
dramatically during the late 1980s (Pangestu 1991: 173, table 6.16).
       However, as already mentioned, environmental improvements during the logging
operation and increased collection of waste from logging operations following higher log
would not necessarily imply any substantial reduction of activity and employment even in
the regions most dependent on the forest industries. More careful logging operations and a



                                            252
modest level of post-logging care might even increase employment. It may also be argued
that current methods of logging and processing threaten long-term sustainment of
employment in important regions. Declining log supply, following reckless logging
methods, is a major threat to economic activity and employment in the sector in the
relatively near future (Brookfield et al. 1995:106-107).235 In this context, it should also be
mentioned that employment concerns seem to have been of secondary importance in recent
decisions related to the wood industries. The cancellation of small, locally distributed forest
concessions in 1989 along with the sawn timber export ban the same year, created much
unemployment in parts of Sumatra and Kalimantan as numerous small sawmills were
forced to close down.236
        Tax income would not suffer from reforms in the two countries. As mentioned
above, increasing rent-capture in the Indonesian wood-industries could increase government
tax income substantially without undermining the industry. According to the World Bank,
which calculated the rent-capture percentage in Indonesian logging to be somewhere
between 19 and 33 percent (World Bank 1993a:83), by using very simple taxation
instruments, conservative estimates indicate that government revenue could be doubled
from USD 500 million to more than a billion (World Bank 1993a:86). In the Indonesian
case, considerations for tax revenue are actually very strong positive domestic incentives
for reform.
        In Brazil, both implemented and potential incentive changes with a presumed ability
to decelerate forest conversion were also essentially of a nature that might decrease
government expenses. Incentive changes in the Amazon region did imply decreases of
direct subsidies to the ranching sector. Both reduced fiscal incentives and reduced outlays
for agricultural credit contributed to this. Increases of taxation of agricultural income, under
way in 1992, could have discouraged clearing of forest for pastures. It could also have



235 This is also admitted by the present Indonesian Minister of Forestry, Djamaloedin Soeryhadikoesoemo. In
1993, he stated that: «If we continue producing plywood in Kalimantan, for example, I’m afraid that the
natural rain forests on the island will be damaged soon. We have to anticipate this possibility», cfr. the article:
«Jungle of laws of environment confusing foreign investor», Jakarta Post, 15. May 1993:1.
236«Forest concession ban threatening work in Riau», Jakarta Post, 25. April 1989:3. See also Fenton
(1996:13).



                                                       253
increased government revenue by increasing the taxation of the generally under-taxed
agricultural sector.
       Thus, measured both by export income, employment and tax income indicators,
environmental reforms of the main destructive commercial activities in the tropical moist
forest regions of Brazil and Indonesia, namely ranching and logging, did not imply major
economic problems. While Brazil saved some outlays for subsidies in tropical moist forest
regions, and could have saved more by adopting more radical tax reforms, the potential
fiscal gains for Indonesia could most probably have been much higher. Furthermore, in the
Indonesian case, tax increases would be a very precise instrument, largely influencing only
the wood industries and associated logging operations.
       However, in addition to these costs and benefits, the respective governments would
also have to take into account the direct costs of environmental action. In section 4.2, I
mentioned two sets of important government instruments; incentives and directives.
       Changes of what I called «negative incentives» impose only marginal
implementation costs on the government (Baumol and Oates 1988:171-172). In the cases
evaluated here, some incentive changes carried out by the Brazilian government had these
properties. The decree that banned regional fiscal incentives completely in March 1990 was
of this kind. Increases of taxation of already registered logging in Indonesia could have
involved the same moderate costs, as could changes of the agricultural tax regime in Brazil.
However, several incentive changes were more costly to implement than these, as they were
selective and charged the government with some kind of monitoring responsibility
       In Brazilian Amazonia, the removal of fiscal incentives for agriculture and ranching
on forest land in Amazonia under the new 1991 law on FINAM incentives required
increases of government expenditure for project licensing. During the first part of 1992,
project approval was based on ad hoc evaluations by IBAMA rather than clearly defined
criteria. In 1992, IBAMA issued an instruction that defined requirements for fiscal
incentives, including topographic survey, fauna and flora inventories and environmental
impact assessments (Serrôa da Motta 1993:21). However, insufficiencies in monitoring and
surveillance, including shortages of qualified staff and equipment at IBAMA, have limited




                                            254
the government’s ability to select the right projects in terms of environmental impact.237
This is also the case for logging projects in the Amazon region. These are regulated by strict
formal criteria for receiving fiscal incentives. Insufficient funding tends to make efficient
monitoring of projects difficult.238
        The same problems prevailed in the Indonesian logging sector. The low rate of rent
capture is a major incentive for reckless logging. Improvements of the rent capture situation
would rely on stricter controls of log consumption in the wood-processing industries. In
1992, a system under which the industry’s payments to the government relies on «self-
assessment» was introduced to counteract ground level fraud and corruption (World Bank
1993a:41). It is unclear if this has had the desired effect on corruption, but the system gives
the government very unreliable information on log output. Thus, costly investments in
surveillance and monitoring are also necessary in the Indonesian case to make incentives
work at ground level.
        However, both places, establishment of surveillance and monitoring operations to
remove «negative incentives» has also demonstrated that such operations may have a
revenue-generating effect. In Indonesia, which developed such monitoring operations less
than Brazil, foregone rent capture in the logging sector due to underreporting of log
production represents large amounts of money, as mentioned in chapter four. Thus,
enforcement of company obligations to pay taxes on a larger share of extracted logs could
increase government income, as would fines distributed for fraudulent underreporting. In
Brazil, the tendencies towards more pervasive environmental monitoring of the distribution
of fiscal incentives, for example under the Greater Carajás programme, has implied fiscal
advantages for the government as fewer projects became eligible for incentives and tax
breaks. Although IBAMA’s capacity in the assessment of projects that receive fiscal
incentives has been too weak, the improvements of environmental assessments of projects
in the 1989-92 period most probably implied that projects that would have demanded
substantial government outlays were cancelled.



237Interview with Reginaldo Anaisse, superintendent of IBAMA in the state of Pará, November 1992.
238 Interview with Reginaldo Anaisse, Superintendent of IBAMA in the state of Pará, November 1992.



                                                  255
        Increasing enforcement of directives usually implies increases of government costs.
In Brazil, the monitoring operations implemented in the 1989-92-period, though of a
precarious and imperfect nature, involved increases of federal expenditure. In principle, the
campaigns had a potential to finance themselves to a certain extent through the application
and collection of fines. According to Arnt and Schwartzman (1992:287), the 1989 PEAL
programme distributed fines corresponding to about 10 percent of IBAMA’s expenses on
the programme.239 In 1990, IBAMA invested USD 2,5 million in that year’s surveillance
and monitoring operation in Amazonia, while about USD 9 million was distributed as
fines.240 However, since legal procedures for collecting fines were obsessively bureaucratic
and made payment difficult to enforce, income from fines became a very volatile tool of
IBAMA financing.
        In general, as mentioned in the previous section, IBAMA’s financial situation
became increasingly precarious and unstable after 1990 (Carvalho 1991:34). As mentioned,
in 1992, that year’s «Operation Amazonia» collapsed under the burden of such problems.
This was the outcome of a combination of very strict fiscal austerity measures and inflation.
However, the outlays necessary to avoid the 1992 collapse were indeed modest. IBAMA
itself suggested (IBAMA 1990:88) that the expenses necessary to achieve a minimum
acceptable level in inspection and monitoring were USD 28 million over a 5-year period.
Such a programme would have implied improved education of generally poorly educated
ground-level staff as well as purchases of monitoring equipment.
        In Indonesia, staff connected to the Ministry of Forestry told that there were several
cases in which reported violations of concession regulations were ignored at high levels in
the Ministry of Forestry, and the collection of corresponding penalties or cancellations of
concessions avoided.241 Avoiding such practices could produce considerable government
revenue.


239The PEAL programme was financed through a transfer of USD 8 million from the POLONOROESTE
programme. Response to questionnaire from José Carlos Carvalho in February 1993.
240See the articles: «Arrecadaçao de multas engorda caixa de Ibama», Jornal do Brasil, 11. October 1990:12,
«Multas altas diminuem desmatamento», Correio Braziliense, 16. December 1990:19..
241See also the article «Rapid Loss of Forest Worries Indonesia», Asian Wall Street Journal, February 2-3
1990:14. Apparently, some of the ground level staff may have been relatively courageous. There is heavy



                                                   256
        In the Brazilian case, the intensive protests against IBAMA’s monitoring and
inspection operations indicate that reports from field level staff were followed up to a
considerable degree both by regional superintendents and IBAMA’s headquarter. The
presidents of IBAMA in 1990-91 and 1991-1992, Tania Munhoz and Eduardo Martins,
stated that firm backing from the Secretary of the Environment, José Lutzenberger, was
crucial for their ability to resist pressure from regional politicians to cancel fines and
approve environmentally dubious projects.242 Such backing, which is essentially a factor of
a political and not a financial nature, seems to have improved IBAMA’s ability to enforce
regulations in Amazonia.
        Recruitment procedures are equally important non-economic factors that influence
agency performance in the enforcement of directives. This factor is relatively independent
of economic constraints, although the level of salaries may influence the availability of
adequate staff. Migdal (1988:256) points out the importance of transparent recruitment
procedures in the following: «…many strongmen have captured parts of states. They have
succeeded in having themselves or their family members placed in critical state posts to
ensure allocation of resources according to their own rules, rather than the rules propounded
in the official rhetoric, policy statements, and legislation generated in the capital city or
those put forth by a strong implementator.»
        In Indonesia, interviewees connected to the Ministry of Forestry, the forest industry
as well as the World Bank (1993a:98) conclude that the recruitment of ground-level staff
responsible for monitoring and surveillance of concessionaire discipline (as well as high-
level staff) was not based on meritocratic routines. Military staff, which is deeply involved
as owners in many plywood and logging operations, are also strongly represented in the
Provincial Forestry Service (Dinas).243 Improvements of employment routines could
improve monitoring and surveillance at ground level without increasing government outlays
significantly. A main factor behind the improvements of monitoring and inspection as well


pressure against these from forest concessionaires to ignore the implementation of various logging rules, cfr.
the article «Many foresters unable to reform their tasks», Jakarta Post, 3. March 1989:7.
242Interview with Tania Munhoz, December 1992, interviews with Eduardo de Souza Martins in November
1992 and December 1993.
243 See section 5.3 and 5.4 below.



                                                    257
as the nascent improvements of environmental impact assessments in Brazilian Amazonia
was the reluctance of IBAMA presidents in the 1989-92 period to employ candidates
nominated by regional politicians with strong links to commercial actors.244
       However, the implementation of a more pervasive programme of monitoring and
surveillance of Indonesian concessionaire operations would certainly also incur substantial
costs on the government. Key issues here are improvements of the educational background
of ground-level staff, increases of the number of such staff, wage increases, and
investments in more sophisticated monitoring equipment. No readily available estimates of
costs connected to an upgrading of monitoring and surveillance operations by the Ministry
of Forestry are available. A short and medium-term solution suggested by the World Bank
(1993a:41-42) has been to establish a centrally directed powerful, well-equipped and well-
educated inspection service with strong government backing to perform random checks of
all aspects of concession and log management. In principle, this is the same solution as the
one chosen by the launching of PEAL and «Operation Amazonia» in Brazil 1989-1992,
though these operations were increasingly hampered both by lack of funds and access to
educated staff (IBAMA 1990:86-87).245
       It should also be remembered that the existence of high amounts of foregone tax
revenue from illegal and unregistered logging in Indonesia as well as the possibility of
imposing fines for breaking rules might compensate the expenses necessary for upgrading
concessionaire monitoring and inspection.
       However, establishing protected areas is clearly one area of directive change that
would have implied increasing direct and indirect costs. As mentioned in section 5.1, it
would most probably have implied substantial costs for Indonesia to reduce the area set
aside for logging, as log output would most probably have been reduced in the short term.
This is particularly the case if such reductions were enforced together with increasing
enforcement of directives and incentive changes for less destructive logging.



244 See section 5.3 and 5.4 below.
245Parts of IBAMA were also exposed to corruption problems comparable to those prevailing in the
Indonesian case. However, I argue that these problems were on a more moderate scale, and that they were
addressed more adequately by some of the IBAMA presidents, see the discussion of IBAMA in section 5.4.



                                                 258
        Proper management of new protected areas would also be very expensive. Thus, in
the case of protected areas, the claim that domestic costs represented an economic barrier to
reform is reasonable.
        Such costs were even more prohibitive in the Brazilian case. As mentioned in
chapter four, Pádua (1992) has estimated that a substantial expansion of the Brazilian
protected areas system would be very expensive, as much of the forest land with the highest
attractiveness in terms of biodiversity, and probably biomass density, is already controlled
by private owners.
        On the other hand, one should be aware of the fact that Brazil from 1989 started to
set aside considerable areas claimed by commercial actors, more specifically ranchers and
mining companies. Both the huge extractive reserves established by Sarney and the
demarcation of large indigenous areas under Collor represented considerable costs in terms
of foregone revenue. The indigenous reserves, in particular, represented enormous potential
wealth for mining companies and tax income for the state, as they contained highly valuable
mineral resources (Albert 1992, Allen 1992).
        The sacrifice of income represented by setting aside indigenous areas and rubber-
tapper reserves might be explained by the existence of an economically motivated desire to
avoid negative economic financing and trading sanctions against Brazil and to improve
Brazil’s environmental image before UNCED.246 The rubber-tappers and the indigenous
populations were at the heart of the international and domestic focus on Amazonia during
the late 1980s, and represented potentially valuable assets for Brazil in the bargaining that
followed in the wake of international pressure. Comparable Indonesian groups that claimed
land desired by commercial actors certainly existed. However, they were far from enjoying
a level of international attention comparable to Brazil’s rubber-tappers and Indians. This
case highlights a question that underlies most of this section. Why was Brazil exposed to
stronger international pressure than Indonesia?




246 For a related explanation of the establishment of indigenous reserves, see the article: «Playing politics
with Amazonia», Latin American Weekly Report, No. 26, 1991.



                                                    259
Positive external incentives
The assessment costs and benefits of reform mentioned above must be completed by a few
words on positive external incentives that worked in favour of reform in this period. As
mentioned in section 5.1, strong positive international incentives were available for the
management of tropical moist forest land in Brazil and Indonesia in the period in question.
In the Indonesian case, World Bank funding and substantial amounts of concessional
funding or grants added up to the money amassed in the reforestation fund, although
reforms were lagging. Brazil also started to receive external funding as concessional loans
and grants for environmental reforms in the Amazon after the initial «Nossa Natureza»
reform package was presented in 1989. Both World Bank financing and G-7 financing
could have increased IBAMA’s capacity for implementing environmental programmes
considerably. The fact that these opportunities were not fully exploited by the Brazilian
government for austerity and other reasons does not conceal the fact that external inflows
for reforms in Amazonia were increasing from 1989 and well into 1991, when the outside
world seems to have lost some of its interest in the Amazon region.
       Although it is true, as remarked by Ross (1996), that Indonesia continued to enjoy
inflows of concessional loans and grants for forestry projects in spite of its reluctance to
carry out reforms in this period, it remains a problem why Indonesia was so reluctant. After
all, by making a stronger reformatory effort the Indonesian government could have
protected its present and future plywood exports against the threat of embargoes and
increased strongly needed tax revenue. Thus, the Indonesian government’s avoidance of
reforms is still a research problem. However, as mentioned, the previous discussion also
produced a new problem. Why was external pressure on Brazil so strong as compared to
pressure on Indonesia?


Summary and reformulation of the research problem
My findings under the brand of the environmental interdependence approach focused on the
actions of states as the outcome of complex calculations of domestic and international
economic incentives are the following:



                                            260
   Both Brazil and Indonesia were exposed to negative external incentives from a variety
    of external groups, organisations and states. International sanctions were based on
    worries related to the two countries’ contribution to global environmental problems.


   External negative sanctions, which connected external financing and access to external
    markets to environmental pressure, both differed in intensity and content between the
    two cases. Brazil was exposed to rapidly increasing linkages between external financing
    and environmental performance in the Amazon region, while Indonesia was exposed to
    gradual increases of various restrictions on plywood and other wood imports among
    several important buyer countries. However, pressure on Brazil was more intensive
    measured by the economic goods Brazil was deprived of; in particular foregone
    financing for sectors other than those directly related to environmental problems in the
    Amazon region.


   Brazil was also more vulnerable to external pressure as financial embargoes hit the
    country in a situation in which there was a decline of external savings not matched by
    sufficient increases of domestic savings. In contrast to this, external savings in the
    Indonesian economy were generally on the increase, and wood based exports increased
    substantially in spite of emerging embargoes of tropical wood products.


   Both countries could afford substantial reforms without sacrificing substantial economic
    resources and economic growth measured in terms of tax income, employment or
    exports. In fact, incentive changes and increased enforcement of regulations could in
    some cases increase government revenue both by saving government outlays to
    subsidies, improve the collection of taxes and to enforce regulations through the use of
    fines. This was particularly the case for Indonesia. Here, tax payment evasion by
    concessionaires and plywood producers represented financial resources that grossly
    exceeded the economic losses caused by most scenarios for lost revenue and increased
    domestic costs in the wake of reforms.



                                             261
   The direct costs of reforms, defined as directive and incentive changes, were substantial.
    To work properly, incentive changes like increased rent collection or improved
    environmental evaluation of fiscal incentives were dependent on improving the
    government’s information base on the actual performance of proposed and ongoing
    projects. This would require increases of the number of employees and improvements of
    the quality of staff in environmental agencies as well as investments in monitoring and
    surveillance equipment. Increased enforcement of directives would require similar
    investments in staff and monitoring equipment. However, just as crucial is the political
    backing for the staff’s field operations. High-level backing for improved employment
    practices in field monitoring and environmental impacts assessment evaluation as well
    as similar high-level backing of the disciplining measures imposed by IBAMA through
    PEAL and «Operation Amazonia» led to modest improvements of IBAMA
    performance, though these progresses were gradually thwarted by a lack of funds. The
    absence of high-level backing for disciplining measures against logging companies and
    plywood industries as well as strong influence of military agencies co-operating with
    concessionaires and concessionaires themselves on employment policies at field level
    (as well as other levels) provide powerful barriers to improved implementation of
    incentives and directives in the Indonesian case. However, these factors are not to any
    great extent influenced by the magnitude of economic resources. The availability of
    such inexpensive options for increased directive enforcement by environmental
    agencies sharpens the question: Why did Indonesia avoid to exploit these options given
    that they could imply increases of income from taxation of registering unreported log
    extraction, a certain increase of revenue from collecting fines, and a better
    environmental image?


   The financial barriers to improved performance of the environmental agencies in
    question could have been overcome by the use of external financing. In both cases,
    external financing on concessional terms has been high enough to finance more
    pervasive enforcement efforts than those actually carried out. This contrast between



                                             262
   funding and performance is especially striking in Indonesia. Not only because Indonesia
   represents the least reformatory case, but also because the country was in a more
   favourable fiscal situation than Brazil. In addition, internal funds for the forest sector
   have been so abundant that substantial resources have remained unused.


Altogether, these observations support the view that Brazil was exposed to more acute
pressure of a more vital character than Indonesia during the period in question. Thus, this
difference seems to contribute substantially to explaining Brazilian reforms. However, the
same economic factors that made Brazil exceptionally vulnerable to external pressure and
motivated reforms, also seem to have provided powerful barriers to reform. Fiscal austerity
measures, partially motivated by considerations for problems with debt payments,
contributed to cripple environmental institutions and programmes.
       In Indonesia, the situation was to a certain extent the opposite. The Indonesian
government was exposed to more moderate pressure, and was less economically vulnerable
to pressure. However, in Indonesia, the internal economic motives for reform were much
stronger than in Brazil. Here, increased enforcement of directives and incentive changes
targeted to improve the environmental record of logging and plywood production could also
be powerful tools for improving tax revenue collection. The increased tax payments to the
government available through an increase of rent collection would most certainly outstrip
any increases in outlays to monitoring and inspection improvement.            Though such
favourable options existed in Brazil, for example in the abandonment of fiscal incentives
and subsidised agricultural credit, they represented considerably smaller economic gains. In
terms of the framework presented by Vanbergeijk and Vanmarrewijk (1995); while sanction
damage was higher and adjustment more difficult in the Brazilian situation, the yield of
misconduct measured in terms of direct and indirect costs of remedial action was higher in
Brazil than in Indonesia. While sanction damage was comparatively modest, and
adjustment easier, the economic yield of misconduct was certainly strongly negative from
the point of view of the Indonesian government.
       One factor usually addressed by interest-based approaches to environmental policy
change has not been addressed here, namely costs of environmental damage. Although a



                                            263
certain consideration for the consequences of climate change and biodiversity loss has
emerged from time to time in both countries in particular among various experts and in the
wider public, the uncertainties of these problems in terms of domestic economic losses did
not produce strong domestic worries. Both the Indonesian climate strategy (KLH 1991) and
particularly the Brazilian «Nossa Natureza» (SADEN 1989) as well as Collor’s (Collor,
undated) environmental plan are mainly focused on international pressures. In Indonesia,
the Biodiversity Action Plan (KLH 1992) demonstrated potential economic losses related to
biodiversity loss, but these considerations have mainly been confined to the Ministry of the
Environment and related agencies.247 Brazilian reports on losses of genetic resources due to
deforestation also surfaced in Brazilian media during 1989 (Hurrell 1992:416), but
uncertainties related to costs made such economic considerations less important. The same
was the case for costs related to soil erosion. There were worries about the costs of soil
erosion and land degradation due to deforestation in the Amazon region among people at
the Brazilian Agricultural Research Institute (EMBRAPA) as well as the federal
environmental administration, but uncertainties about costs as well as the fact that these
costs were invisible in government budgets or the budgets of commercial actors, dampened
government considerations.248 However, though calculations of costs are difficult and costs
dispersed on many actors, it could be argued that reductions of deforestation and forest
depletion in both countries could have increased total national benefits from reform. Thus,
these benefits strengthen the case for reforms in both countries.
       After this clarification, I will proceed by trying to clarify the relevance of the rest of
the propositions under the environmental interdependence approach. The review of
economic costs and benefits of reform have sharpened the basic research question. The
basic question is now to explain why Indonesia lagged behind, although the government
could have increased its tax income substantially without other heavy losses through the
implementation of reforms and gained a better environmental reputation which could have
paid off in terms of avoidance of wood export embargoes.



247Interview with staff at the Ministry of Environment, June 1993.
248 Interview with Emanuel Adilson Serrâo, EMBRAPA, Belém, November 1992.



                                              264
        On the other hand, I will also ask why the difference in external pressure between
the Indonesian and Brazilian cases, particularly related to external financing, became so
substantial.
        However, before proceeding in the direction of evaluating the relevance of the
remaining propositions under this approach, I have to examine a set of other hypotheses.
After all, the problem of the difference in question could be explained simply by pointing to
purely domestic differences. Indonesia’s pro-environmental domestic groups may have
been considerably weaker than in Brazil. Or the anti-environmental actors in Indonesia may
have been much stronger. If this was the case, the international context is perhaps only a
complimentary explanation of a difference mainly based in a difference in the distribution
of power and influence between domestic actors in the two cases.


5.3.   Bureaucracy-oriented            explanations:        Weak       environmental          agencies
confronting strong and powerful military agencies
Cleavages within the state apparatus are obvious candidates to explanations due to the size
of the bureaucracies of the two states. Both the Brazilian and Indonesian bureaucracies are
very large, and they may be assumed to be housing a diversity of agencies with strongly
conflicting interests connected to environmental reform.249 As mentioned in section 3.4,
such large and diversified bureaucracies may provide fertile ground for what Poggi
(1990:133-134) calls «bureaucratic politics», implying that agencies directly influence
policy outcomes.
        A second argument bolsters the argument that intra-state cleavages may be
important. This argument is connected to the nature of environmental policies.
Environmental policies may cut across several policy areas and activate many agencies.
However, the activation of agencies does not take place according to some predictable
pattern as both diversity in institutional tradition and the mix of environmentally relevant
activities tend to vary considerably between countries.



249In the beginning of the 1990s, Indonesia had about 4 million civil servants (Booth 1994:14). Brazil is
well-known for its large bureaucracy, cfr. Guimarães (1991).



                                                  265
       The analysis below will demonstrate two essential points. First, the agencies pushing
in favour of environmental policies in both countries enjoyed marginal influence on policies
until the end of the 1980s. In Brazil, there was a change from 1989, with the establishment
of IBAMA (1989) and SEMAM (1990), as well as the vitalisation of FUNAI as an agency
in favour of indigenous reserves after 1991. However, rather than being main forces behind
the onset of reforms, the creation of these environmental agencies should be perceived as
symptoms or instruments of reform.
       Second, in both countries, agencies in favour of reform faced very powerful military
bureaucracies with an interest in resisting reforms.
       This implies that variations in the balance of power between pro- and anti-
environmental agencies in the bureaucracies of the two cases are weak candidates for
explaining the contrast I described in chapter four.


Brazil and Indonesia - weak pro-environmental bureaucracies against strong anti-
environmental bureaucracies
Here, I will discuss the relevance of the following proposition as an explanation of the
contrast in performance between Brazil and Indonesia:


Proposition 6: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the balance of power and
influence between domestic pro-environmental and anti-environmental agencies.


The bureaucratic politics of environmental reform in Brazil
In Brazil, one of the first manifestations of federal interest in the Amazon region during the
post-war period was article 199 in the new Brazilian Constitution of 1946 that proposed a
regional development plan for the Amazon region including special funds (Hall 1989:4).
The long period between this decision and its implementation in 1953 indicates the low
priority given to Amazonia in these years. In 1953, a new government body under the direct
command of the president was established, called SPVEA, or the Superintendency for the
Valorisation of Amazonia. The purpose of this body was to stimulate «extractive,



                                             266
agricultural, livestock, mineral and industrial activities» (Hall 1989:4). SPVEA got
authority over an extended Amazonia, including parts of the states of Goías, Mato Grosso
and Maranhão; 60 percent of Brazil’s territory. SPVEA was to achieve its goals through
five-year plans. The first of these plans was published in 1955. Self-sufficiency in food,
improvement of river transportation and port facilities and improvement of health services
were the main targets of the plan. The SPVEA was blamed for persistent corruption and
lack of efficiency. The Congress also seems to have ignored SPVEA. Both budget cuts and
lack of willingness to disburse money for longer periods than a year curbed the ability of
the body to carry out its tasks (Hall 1989:5).
        However, the SPVEA did implement two important changes in the Amazon region.
First, the 2.000-km road connecting Belém with Brasília was constructed. Second, a bank
established during the second world war to facilitate the improvement of Brazilian rubber
supplies to the US war industry, BCB, was transformed to a regional development bank
with wider permissions, BASA. However, the main thrust of Brazilian development
planning in the 1950s was characterised by a strong preoccupation with the problems of the
South and the Southeast.250 Legal Amazonia was still virtually neglected by a state geared
towards the development of its populated regions.
        The Amazon region gained attention in government circles with the military coup in
1964. The main motive for opening up of the Amazon region was territorial security.
Maybe the most powerful Brazilian military personality251 during the dictatorship years,
General Golbery de Couto e Silva, was also one of the chief figures of the military «think
tank» of the 1950s and the 1960s, the Superior War College, or the ESG, founded in 1949.
In 1959, Couto e Silva published a book called «Geopolítica do Brasil» (Allen 1992). Here,
he discusses the strategic goals of Brazilian development in the light of the ESG outlook.
The general tendency in «Geopolítica do Brasil» is to link the concept of security promoted


250If one takes a look at a map describing the distribution of the different projects of the Target Plan (Plano
de Metas), one of the most ambitious development plans ever implemented in a developing country, this
concentration is striking, cfr. Dickenson (1982:102, map 10).
251 Couto e Silva had participated in the forces which fought under US command in France during World
War II. In the 1950s, he was a high-rank intelligence officer. In 1960, he became Chief of Operations of the
General Staff, and in 1961 chief of the National Security Council. As one of the main planners of the coup, he
became leader of Brazil’s powerful secret service, SNI, in 1964 (Skidmore 1988).



                                                     267
by ESG not only with the reduction of internal conflict and increased economic growth, but
also with the extension of territorial control. The taming of civil society through military
repression had its counterpart in the taming of the Brazilian interior. For the last matter,
Amazonia had a crucial status (Allen 1992:87-88). Couto e Silva envisioned the conquest
of the territory as a three-phased project. First, communications and transport between the
Northeast and the South, the populated parts of the country, were to be strengthened. In this
phase, the river valleys of Tocantins, Araguaia and São Francisco would also be brought
under control to reduce the opportunities of guerrilla subversion. Second, the «heartland of
the country», Goiás and southern Mato Grosso, was to be integrated with the South to serve
as a base for a wave of colonisation in the Northwest (the state of Acre and the federal
territory of Rondônia).    Third, from this territorial base a general offensive for the
settlement of the whole Amazon region and the protection of the border was to be launched
(Hecht and Cockburn 1989:103, Allen 1992).
       The main instrument of this strategy was SUDAM (see chapter four for a further
description of this body). Several studies conclude that SUDAM was the most important
and powerful agency in policy-making and implementation for the Amazon region until late
in the 1980s outside the military (Pompermayer 1984, Bunker 1985). Bunker (1985)
demonstrates how SUDAM managed to influence the Amazon development strategy in the
direction of large-scale cattle ranching and mining and block alternative solutions (like
smallholder colonisation) promoted by the National Institute for Colonisation and
Agricultural Reform (INCRA). Pompermayer (1984:426) similarly identified an alliance
between SUDAM, the Ministry of Planning and the Ministry of the Interior (and private
ranching interests) able to sabotage the thrust for farmer colonisation supported by INCRA
and the Ministry of Agriculture. However, during the 1980s, the capacity and legitimacy of
SUDAM was undermined as funding for subsidies distributed by this body dried out and
criticism against a very liberal policy of subsidy approval soared (Yokomizo and Gasquez
1986, Yokomizo 1989). Towards the end of the decade, the agency was under investigation
for corruption (Margolis 1992). This implied that demands for environmental reforms
increased in a period marked by great difficulties for SUDAM.




                                            268
        However, other agencies had become more important. The most powerful agency
shaping environmental policies in the Amazon region in the Sarney government was the
inheritor of the traditionally very powerful National Security Council. This was the
Secretariat for the Assessment of National Defence (SADEN/PR). According to Allen
(1992), SADEN inherited General Golbery’s perception of Amazonia’s importance for
national security. General Rubens Bayma Denys was leader of SADEN/PR as well as
Secretary of State under the Sarney government. Denys and SADEN/PR were responsible
for the «Calha Norte» programme, a military programme designed to increase the presence
of military and civilian authorities in Brazil’s northern border regions (Allen 1992). Denys
was also the top co-ordinator of «Nossa Natureza», the main plan for environmental reform
under Sarney. Thus, the military had strong influence on the reforms initiated in this
programme (Zirker and Henberg 1994).
        It seems like the military, though very reluctant to change established policies in the
region, was not necessarily hostile to all kinds of reforms. Some reforms, like the creation
of IBAMA, the launching of the PEAL programme and the abandonment of the fiscal
incentives were not considered as vital threats to national security.252 Other reforms,
however, were perceived as more risky. The military was the main force behind the Sarney
government’s denial to set aside large forest areas as indigenous reserves.253 Especially the
remote Yanomani territory in Roraíma was perceived as a security risk and a potential
bridgehead for foreign influence in the region.254 The military saw the placer-miners that
invaded the Yanomani area and caused great ecological and human damage as instruments
of national sovereignty over the region (Allen 1992).255 The military expressed fierce
resistance to the idea of including Amazonia in international agreements. A fear of losing
sovereignty over the region inspired this resistance.



252 Interview with Fernando Mesquita, November 1993, Herbert Roger Schubart, SAE/PR, November 1992,
November 1993. Allen (1989) notes that Couta e Silva perceived settlement of Amazonia as less important for
defending national sovereignty when high-tech remote sensing equipment became accessible.
253 Interview with Fernando Mesquita, November 1993.
254Interview with Herbert Roger Schubart, SAE/PR, December 1993.
255See the articles: «Forças Armadas rejetam Estado Ianomami», Correio Braziliense, 14. July 1991:8,
«Mestrinho diz que faria guerra pela região», Folha de São Paulo , 25. July 1991:A-12.



                                                   269
        In the Collor government, the military ministers opposed the decisions to demarcate
indigenous areas in the region.256 Several military institutions, as well as the military
ministers,257 also protested against the Collor government’s more co-operative international
positions. ADESG, a diplomatic affiliation of the superior war college ESG joined in the
campaign against environmental reforms with their support to the campaign against the
«internationalisation of Amazonia» in 1991.258 So did also the military institutions Escola
de Comando e Estado Maior do Exército (ECEME) and Centro Brasileiro de Estudos
Estratégicos (CEBRES) by hosting a seminar on external threats to Amazonia in October
1991. Both high-ranking officers and regional politicians from the Amazon region like
Gilberto Mestrinho and Atila Lins participated in the seminar.259
        Equally important, the military vision of Amazonia may have penetrated the
Brazilian bureaucracy in a more general way as lots of technocrats and government advisers
have participated in ESG’s courses in «politics and strategy».260
        However, the military’s political influence on environmental policy-making
decreased considerably under Collor. In the first place, SADEN/PR (under Collor, it was
reorganised and called SAE/PR, the Secretariat for Strategic Affairs) lost its central role in
the co-ordination of policies related to Amazonia.261 Debates on environmental policies
were instead taken more directly into governmental discussions. Here, proponents of
reforms like Lutzenberger (Secretary of the environment) and Goldemberg (Secretary for
Science and Technology, later Minister of Education, and after March 1992 also interim
Secretary for the Environment) were able to influence Collor, sometimes at the expense of
the military ministers.262 The waning influence of the military on government decisions is
also indicated by the military’s participation in media campaigns against reforms of


256See the references in the previous note. Interview with interim Secretary of the Environment in 1992, José
Goldemberg, November 1992. Interview with Herman Otto Roger Schubart, SAE/PR, December 1993.
257Interview with former Secretary of the Environment, José Goldemberg, November 1992.
258See the article: «Diplomados da ESG temem intervenção na Amazônia», Folha de São Paulo, 25. July
1991:A-12.
259See the article: «Militares temem internacionalização», O Globo, 14. October 1991:7.
260See the article: «Escola forma assessores para governos», Folha de São Paulo, 25. July 1991: A-12.
261 Interview with Herman Otto Roger Schubart, SAE/PR, November 1992.
262Interview with Goldemberg, November 1992.



                                                    270
international positions and indigenous policies in this period.263 Several statements by
military leaders were shaped as protests against the government, indicating a loss of
influence on decision-making. Military interests; especially the army, attempted to sabotage
the implementation of FUNAI’s programme for demarcation of indigenous reserves under
Sidney Possuelo264, and the body was ghost-writer for the report from the special
Congressional investigation (CPI) on Amazônia arranged in 1991 (Bernardo and Bastos
1993).
         What about the environmental bureaucracy? Among segments of the bureaucracy
resisting the strong and development-minded coalition of military and technocratic
agencies, before 1989 only the small federal environmental agency SEMA played any role
as an environmental opposition. According to Guimarães (1991:161-163), it seems very
difficult to trace any direct influence on the exploitation of natural resources as SEMA
worked mostly with narrow issues like urban pollution.
         Viola (1992) emphasises that SEMA increased its efficiency under the dynamic
leadership of Messias Franco 1986-88. In this period, SEMA raised the environmental issue
internally in the state apparatus and promoted both internal co-operation and co-operation
with the scientific community. However, one should not overestimate this impulse. Though
acting more dynamically, SEMA was still quite ineffective as a source of political pressure
due to its peripheral position inside the state apparatus, organisational deficiencies and the
Sarney administration’s ambiguous attitude to environmental questions (Viola 1992:9,
Guimarães 1991:167). The publicly exposed dissatisfaction of the agency’s leaders in the
late 1980s is a clear indication of this. SEMA’s leader Messias Franco criticised the
government’s environmental policy fiercely on several occasions.265 In 1988, Franco quitted
because the Minister for Social Affairs, Prisco Viana, refused to sign a CONAMA decision
prohibiting the use of mercury in mining in Amazonia.266 Franco justified his action by


263 I disagree slightly with Zirker and Henberg (1994), who claim that the military had more extensive power
and influence during this period. My argument is more in accordance with Tollefson (1995), who suggests that
there was a general waning of military influence on government decision-making in this period.
264Personal communication with Sidney Possuelo July/August 1994.
265 «Messias Franco reafirma criticas a Ministro em simpósio», O Globo, 25. September 1988:18.
266See the article «Secretário do Meio Ambiente pede demissão e faz critíca a ministro», Folha de São
Paulo, 20. September 1988:2.



                                                   271
pointing to a general absence of government willingness to deal with environmental issues
in a serious way (Guimarães 1991:200). Two years before, Franco’s predecessor, Paulo
Nogueira Neto, had quitted as head of SEMA for the same reasons as Franco (Guimarães
1991:200).
         A second potential source of pro-environmental pressure in relation to forests, the
Brazilian Forest Development Institute (IBDF), also seems to have had marginal influence
on decision-making in the 1980s.
         On the one hand, IBDF was important as participant in the research team that
presented the high estimates of deforestation that contributed to intensify global attention to
the problem of deforestation (Setzer et al. 1988). Moreover, the agency presented a
progressive programme for increased monitoring of the Amazon region in 1988 (IBDF
1988).
         On the other hand, there is no doubt that IBDF was in a state of disarray and
economic crisis during the late 1980s. According to Foresta (1991:163-188), the body was
hardly able to maintain its internal regime due to the lack of funding and political backing.
         Altogether, these observations indicate that neither SEMA nor the IBDF had any
bearing on the shift towards a more progressive policy in the Amazon region adopted after
1988.
         The institutional newcomers IBAMA (1989) and SEMAM267 (1990) undoubtedly
added to the weight of pro-environmental forces in the bureaucracy. As mentioned in
chapter four, a presidential decree on SUDAM fiscal incentives in 1991 implied that
IBAMA, SEMAM and FUNAI had to approve projects supported by SUDAM before
implementation. The establishment of SEMAM also implied that environmental issues got
a separate voice in the government for the first time. This involved for example the
participation of SEMAM as a voice of environmental concerns on line with other
secretariats and ministries in the working group on agro-ecological zoning in Amazonia
established by Collor in 1990.




267Secretaria do Meio Ambiente. Closed down and recreated as the Ministry of the Environment in 1993
under Itamar Franco.



                                                272
        However, the importance of IBAMA and SEMAM should not be overestimated. The
«green» Congressman Fabio Feldmann points to the weakness of these institutions as a
great problem connected to the Brazilian reforms after 1988. According to Feldmann, the
period of reforms between 1988 and 1993 left no institutional legacy of powerful and well-
organised public agencies that could defend the advances made in this period.268
        The federal Indian authority FUNAI also became important as a voice in favour of
reform when Sidney Possuelo, a highly respected expert on indigenous populations, was
appointed to the position as president of the body in June 1991. Possuelo launched a
determined policy for defining and demarcating reserves for indigenous groups. President
Collor and the Minister of Justice, Jarbas Passarinho, backed up this programme strongly
and protected it against resistance from other parts of the bureaucracy, business groups and
politicians.269 Possuelo’s co-operation with Collor was remarkably intensive, given the
peripheral position of FUNAI in the bureaucracy.270 However, FUNAI did not become a
pro-reformatory agency before Collor decided to appoint Possuelo in 1991. Before that,
FUNAI was dominated by corrupt presidents with strong ties to the military and business
interests in the Amazon region (Albert 1992). In other words, the onset of reforms that also

268Interview with Fabio Feldmann, November 1992
269Sidney Possuelo’s answer to questionnaire, August 1994. The inclusion of the old military politician and
colonel Jarbas Passarinho as a supporter of indigenous groups is highly interesting. Passarinho participated in
a special congressional investigation regarding the definition of Indian rights in the Constituent Assembly. The
investigation was demanded by politicians from the Amazon region who accused the supporters of the Indians
of threatening national security. The representatives of the Amazon region acted on behalf of the military and
mining interests. The mining company Paranapanema is said to have orchestrated the media campaign in the
conservative newspaper «O Estado do São Paulo» that blamed pro-Indian deputies for being strawmen for
foreign mining companies. Allegedly, this was to avoid the prohibition of mining on the land of indigenous
populations. Passarinho became increasingly sympathetic to the cause of the indigenous groups during the
investigation. The investigation rejected all accusations against the pro-Indian deputies. After this, Passarinho
became a driving force behind the recognition of the rights of the Indians in the constitutional assembly. As a
highly respected conservative politician from Amazonia, he became indispensable as a partner for the
supporters of Indian rights. The source of this information is Marcio Santilli, leader of the pro-Indian NGO
NDI, in own interview, November 1993. Possuelo stated the following in his written response to my
questionnaire in August 1994: «Jarbas Passarinho was always in favour of the indigenous peoples». According
to Possuelo, firm backing from the president and Passarinho was a prerequisite for resisting the pressure from
Amazonian politicians and the military which emerged because of the demarcation programme. Possuelo
stated the following in response to my questionnaire in August 1994 (my translation from Portuguese»: «I
could only resist this pressure because of the personal support from president Collor, and also because of the
assistance from the Minister of Justice, Jarbas Passarinho, and later, Minister Celio Barjas».
270Possuelo had personal meetings with Collor more often than once a month. Questions related to the
environment, FUNAI and indigenous populations were discussed during these meetings. Possuelo in response
to questionnaire, August 1994.



                                                      273
covered the extension of indigenous reserves under Collor was not the outcome of FUNAI’s
bargaining power versus the government and its ability to compete with other sections of
the bureaucracy. Rather, FUNAI’s emergence as a proponent of reforms was the outcome of
a decision to give priority to establishing indigenous reserves prior to the appointment of
Possuelo.271
       Altogether, it seems very difficult to explain the onset of reforms by pointing to
increasing influence of pro-environmental federal agencies. SEMA and IBDF’s lack of
power and influence in the pre-reformatory period is a clear indication of this. The creation
of IBAMA and SEMAM and the activation of FUNAI should be interpreted as outcomes of
a previous decision to choose a policy with stronger considerations for the global
environment in the Amazon region.272
       The same is the case for the decreasing influence of military agencies under Collor.
These agencies did not lose influence because pro-environmental agencies were able to
outweigh them politically in bargaining with the government, or because they became
weaker as institutions. Their vigorous campaign against the demarcation of indigenous
reserves is a clear indication of their considerable organisational strength. Nevertheless, in
spite of their considerable activity, Collor chose to ignore their protests. Thus, the onset of
reforms in Brazil does not seem to be adequately explained by changes in the balance of
power and influence between government agencies.


The bureaucratic politics of environmental reform in Indonesia
In Indonesia, a Department of Forestry was established after independence (IIED
1985:125), and a Provincial Forestry Service (Dinas Kehutanan) established in 1957 (MOF
1990:144). However, timber was among the least important natural resources in terms of
economic value in these days. Instead, the main attraction of the heavily forested Outer
Islands was petroleum resources, coal, rubber and other agricultural export crops. These

271Though this is the case, it should be remarked that Possuelo sometimes confronted the military
bureaucracy directly. See for example Possuelo’s attacks in the article: «FUNAI critica os militares da
Amazônia», Folha de São Paulo, 12. October 1992:1-9.
272Fernando Mesquita denied that the presence of any domestic pro-environmental forces, neither in the
bureaucracy nor in society, might explain the onset of reforms in Brazil. According to Mesquita,
considerations for external pressure dominated totally. Interview November 1993.



                                                 274
resources made the Outer Islands much richer on a per capita basis than the heavily
populated island of Java. These natural resources were mostly controlled by local military
groups that made huge profits from smuggling operations. Local commanders resisted any
attempt by the central government to stop this business (Ricklefs 1981:241-242). In 1957,
this conflict erupted as civil war between army factions at Java and military groups on the
Outer Islands. Army units on these islands tried to break free from Javanese rule and
establish autonomous governments. The Javanese army branch defeated the rebels, but
according to Hill and Weidemann (1991:3), the problems of separatism and contraband
were not solved before the establishment of Suharto’s New Order regime.
        As the new military regime very soon proved capable of pacifying regional
resistance, army groups from the victorious Javanese factions started to appropriate some of
the natural resources of the Outer Islands. The system of funding for the military is a key to
this interest. As budget allocations for the military were insufficient in the 1950s, military
agencies became dependent on finding their own sources of income (Robison 1986). In
addition, economic benefits were increasingly used as sources of patronage in the post-1965
period. This involved distributing various economic benefits, including forest concessions,
to various military factions as measures to secure political support as well as rewards to
retired staff (Crouch 1979, 1988).
        Military involvement in the booming logging industry in this period is an established
fact. Manning (1972:58) and Robison (1986:261-266) note how military welfare institutions
and groups of officers associated with foreign investors gained control over forest
concessions during the logging boom in the 1970s. Though there was a substantial transfer
of concessions from retired generals and other military bureaucrats to Chinese businessmen
after the log export ban, the military is still represented in the forest industries (Ramli 1991,
Ross 1996). According to Mufti (1993), 99 percent of all APKINDO registered plywood
companies have direct or indirect connections to the military.273 This implies both direct
ownership and alliances between company owners and high-ranking military personnel at



273The extensive involvement of military personnel in concession control was confirmed in interview with
Dr. Hadi Daryanto, Ministry of Forestry, Directorate General of Forest Utilisation, June 1993, and other staff
connected to the Ministry of Forestry.



                                                    275
local and national level. Below, I describe some of the most important links between
companies and military personnel in the period in focus.
        In many cases, the military has joined the prime upcoming business elite of the
1980s, the Chinese clients of the Suharto family and the Suharto family itself, as new
partners in their forest operations. Military personnel still control forest concessions or
wood industries, either as wholly owned operations or as joint ventures. PT Tri Usaha
Bhakti is one of the main business instruments of the military.274 It is wholly owned by the
Yayasan Kartika Eka Paksi, a foundation chaired by the Army Chief of Staff with the
«objective to improve the welfare of the army members» (Tri Usaha Bhakti 1987:2). In
1987, this institution had the following economic investments in forest concessions and
wood industries:


TABLE 16: PT Tri Usaha Bhakti investments in wood industries 1987

                     Forest concessions                      Plywood factories
Wholly owned PT Taliabu Luna Timber (Maluku - PT Panca Usaha Palopo Plywood
                     82.000 ha)275

                     PT Palopo Timber (Sulawesi - 77.000
                     ha)
Joint ventures       PT Sumber Mas Timber (East PT Sumber Mas Indah Plywood
                     Kalimantan - 182.000 ha)
                                                         PT Kayan River Indah Plywood
                     PT Kayan River Timber Products
                     (East Kalimantan 325.000 ha)        PT Meranti Sakti Indah Plywood

                     PT Meranti Sakti Indonesia (East PT International             Timber     Corporation
                     Kalimantan - 32.500 ha)          Indonesia

                     PT International Timber Co-operation
                     Indonesia (East Kalimantan - 602.000
                     ha)


Source: Tri Usaha Bhakti (1987), APKINDO (1992 a and b), Mufti (1993)


274Tri Usaha Bakhti was headed by Sudjono Hurmurdani until 1986. Hurmurdani, first major and key
business broker for Suharto together with people like Bob Hasan in the Diponegoro period, ended up as one of
his closest economic advisers and general (Vatikiotis 1993).
275According to JETRO (1994:438), PT Taliabu Luna Timber changed status from being a joint
Japanese/Indonesian venture to a wholly owned Indonesian company in 1978.



                                                   276
The joint ventures in logging and plywood production include co-operation with the
Sumber Mas Group. The Chinese businessman Joes Soetomo, also known under his
Chinese name Kang King Tat controls the Sumber Mas Group. The ITCI logging and
plywood operation is controlled by other interests in alliance with Tri Usaha Bhakti. Tri
Usaha Bhakti has 51 percent of the shares in ITCI while the Bimantara Group controls 34
percent (Bimantara, undated, Dauvergne 1997:71-72). The Bimantara Group is controlled
by Suharto’s son Bambang Trihatmodjo and the president’s son-in-law Indra Rukmana
(Bimantara, undated). According to Dauvergne (1997:71-72), Bob Hasan, the chairman of
APKINDO and chief ethnic Chinese «tycoon» of the Indonesian forest industry, holds 15
percent of ITCI.
        Hasan cultivates extensive business ties with the army. According to Robison
(1986:354), in the mid-1980s, Hasan owned the forestry company PT Sarana Buana
Handana with General Subroto Kusmarjo. According to the same source, top military
families and business groups are heavily involved in Hasan’s business empire (Robison
1986:260).276
        The navy was involved in forestry before Chinese interests took over. Their interests
included a 100.000 ha East Kalimantan concession under the name of the holding company
PT Sangkurilang (Robison 1986:266). In 1993, PT Sangkurilang was apparently taken over
by Barito Pacific Timber.277
        Dauvergne (1997:72) mentions that the military controls PT Yamaker, a company
controlling a number of concessions in East Kalimantan, close to the border of Malaysia.
        Military influence on the logging industry also involves other aspects than direct
control of industries and concessions. The military also provides personnel for the forest
administration at various levels. At the local level, military influence on forest policy



276For example, Tri Usaha Bhakti controls a share of the airline PT Sempati together with Bob Hasan and the
Suharto family-related Humpuss group. After the takeover of the Sempati airline in 1989 by Humpuss and
Hasan, this airline got access to subsidised credit to buy the company the most modern air fleet in Indonesia,
cfr. the article «Monopoly under fire», Far Eastern Economic Review, 30. April 1992:58. Confirmed by an
anonymous source in the Indonesian business community. This is a recent development. Tri Usaha Bakhti
(1987) describes Sempati as an enterprise fully owned by this military institution.



                                                    277
implementation is bolstered by strong political representation. In 1983, 21 of Indonesia’s 27
provincial governors and 40 percent of district leaders were military personnel (Ranis and
Stewart 1994:43, Dauvergne 1994:504). Military personnel are also involved in ground
level inspection activities at the provincial and regional level (Dinas).
        Activities at the local level seem to be motivated by the same considerations for
profits as national level behaviour. Jakarta Post and Sandbukt (1995:59) present cases of
co-operation between concessionaires and military staff at the local level.278 According to
several interviewees in important positions, this pattern is also visible at the national level
through the lobbying of military personnel.279 The content of the co-operation frequently
involves sabotaging monitoring and surveillance efforts motivated by relatively modest280
bribes at the local level and more substantial bribes at higher levels. Several commentators
claim that concessions controlled by the military are particularly poorly managed, though
no transparent evaluations of concession management in Indonesia are available.281
        Thus, like the Brazilian military, the Indonesian military has strong interests in the
economic development of areas of tropical moist forest land. However, while the Brazilian
military’s interest is inspired by an ambition to prevent threats to territorial sovereignty, the
Indonesian military’s interest is based on the economic needs of individual officers and
army groups. The system of distribution of economic benefits, of which forest concessions



277Interview with anonymous forestry researcher and consultant for a large Indonesian conglomerate in the
wood industry, April 1995.
278See the article «Illegal logging of wood rife in South Kalimantan», Jakarta Post, 21. November 1991:3.
Here, legal and illegal logging companies expose how the military at the local level can be bribed to assist
illegal operations. See also the article «Many foresters unable to perform their tasks», Jakarta Post, 3. March
1989. The high prevalence of such patterns of co-operation at local level were also confirmed in interviews
with Indonesian forest researchers as well as staff connected to the Ministry of Forestry. Sandbukt (1995:58-
59) demonstrates how concessionaires influenced both the Ministry of Forestry and the Governor of Riau to
change the status of a protected area in the province to a concession/plantation area with the assistance of
powerful retired military officials. Surprisingly, due to joint efforts by WWF-Indonesia and other pro-
environmental actors, this decision was partially revoked in 1996 (Sandbukt 1996). SKEPHI staff claimed in
interview in July 1993 that regional military commands (KODAM) received equipment like motorcycles from
Barito Pacific in the company’s operational areas, and that the company offered jobs to KODAM staff.
279Interview with anonymous Indonesian forestry researcher, April 1995.
280Jakarta Post’s information from the field in 1991 estimates the necessary payment to make a forestry
official neglect an illegal logging operation to be about 25.000 Rupiah or about USD 11. Denial to pay such
bribes could multiply this sum 10 ten times. See the article: «Illegal logging of wood rife in South
Kalimantan», Jakarta Post, 21. November 1991:3.



                                                     278
is a prime example, is categorised as a case of «patrimonial» political rule by Crouch
(1979). The meaning of Crouch’s term is essentially similar to my use of the term
neopatrimonialism in section 3.5, where I linked distribution of economic benefits and
privileges to regime needs for security and long-term survival. In Indonesia, such rewards
are distributed as rewards to appease factions of the military and to reward retired army
staff.
         Although there is certainly no necessary conflict between some aspects of improved
sustainability in logging and economic motives, empirical evidence indicate that military
concession holders in Indonesia have perceived environmental reforms in logging as
contrary to its own interests. As the military is the most powerful faction of the Indonesian
bureaucracy, this implies that military leaders are often able to resist the enforcement of
rules by local forestry staff through bribery and threats.             282   The fact that power at the
provincial and local level is in the hands of military staff bolsters the influence of military
groups at the bureaucratic levels responsible for directive enforcement. At this level, they
are indispensable partners for the affluent, but politically weak Chinese timber tycoons.
         The power and interests of the Indonesian military in logging and wood industries
has contributed to curb the ability of pro-environmental sections of the bureaucracy to
influence logging activities in Indonesia. The main agency with responsibility for the
management of Indonesia’s tropical forests is the Ministry of Forestry. The Ministry of
Forestry was promoted from being a Directorate General of Forestry under the Ministry of
Agriculture in 1983 to become a full-scale cabinet ministry. The Ministry is the major body
formally responsible for the implementation of Indonesia’s forest policies, including
policies related to the forest concessions. Like other ministries, it consists of a central
headquarter in Jakarta with provincial and regional offices (Kanwil and Kandep). On paper,
the ministry has a strong pro-environmental design. At least two directorates general,
namely the Directorate General for Reforestation and Land Rehabilitation (also known as


281Interviews with staff connected to the Ministry of Forestry, June 1993. Interview with anonymous
Indonesian forestry researcher, March 1995, cfr. also MacKerron (1993:48-49).
282 See for example the articles «Many foresters unable to perform their tasks», Jakarta Post, 3. March 1989,
«Illegal logging of wood rife in South Kalimantan», Jakarta Post, 21. November 1991:3, Sandbukt (1995),
interviews with Indonesian forest researchers in June 1993 and March 1995.



                                                    279
the RRL) and the Directorate General for Forest Protection and Nature Conservation (also
known as the PHPA) perform important pro-environmental functions.
        According to interviewees in the PHPA, both directorates have little influence on the
general trend of forestry policy development in Indonesia. PHPA’s area of responsibility is
limited to the management and planning of national parks and other conservation areas,
while the RRL performs similar management and planning functions in connection to
various reforestation efforts. At the PHPA, interviewees expressed serious doubts if the
department has had any influence on the adoption and implementation of pro-
environmental policies on any important scale outside the protected areas, and the same was
assumed for the RRL.283
        The directorate with formal responsibility for monitoring/inspection of logging
concessions, namely the important Directorate General for Forest Utilisation, has in periods
been an ardent proponent of improved enforcement of regulations. Especially after the
appointment of the present Minister of Forestry, Djamaloedin Soeryohadikoesoemo, as
Director General for Forest Utilisation in 1987, this agency is reported to have operated in
favour of improved enforcement of regulations (Ross 1996). Interviews with staff in this
directorate unveiled a strong motivation to improve concessionaire records, but also a
certain disillusion with the opportunities for pursuing this goal effectively against the
resistance of the concessionaires.284
        The Ministry of the Environment is the second institution playing a pro-
environmental role. Like many similar agencies in other countries, this ministry was
established in the wake of the UN sponsored «Conference on the Living Environment» in
Stockholm in 1972. As a follow-up to the preparations for the conference, a «Committee for
the Formulation of Environmental Policies» was set up under the leadership of the Vice-
Chairman of BAPPENAS. In 1978, a position as Minister of State for Development



283These assumptions were made by officials at the PHPA. The selected interviewees in the RRL denied to
comment upon any substantial forest policy matters.
284Own interview with Dr. Hadi Daryanto and Ir. Heru Basuki, Directorate General of Forest Utilisation.
This failure is also connected to problems in the institutional structure of forestry services in the field. While
Kanwil or the Regional Forestry Service is responsible for field monitoring and control programmes, the
Provincial Forestry Service or Dinas, which is subordinated to the provincial governor and the Minister for



                                                      280
Supervision and Environment (PPLH) was created. In 1983, the State Ministry for
Population and Environment (KLH) was established. Cabinet changes in 1993/94
transferred the population responsibilities of KLH to the Family Planning Program
(together constituting a new ministry), and KLH became the Ministry of the Environment
MLH (World Bank 1994b:179). The Ministry does not have implementation
responsibilities, but performs a consultative and supervisory role in relation to the other
ministries. According to Cribb (1988) and MacAndrews (1994:375), the Ministry was the
most important proponent of the expansion of Indonesian protected areas during the 1980s.
The key person behind the influence of this ministry was Emil Salim, Minister for
Population and the Environment from 1983 until the early 1990s (Cribb 1988:14). Salim is
one of the so-called «Berkeley Mafia»; a group of market-oriented technocrats with a
central position in economic policy-making under the Suharto regime.285 The Ministry for
the Environment has also pushed for a wide range of other environmental policy changes,
like the successful Prokasih clean-river programme. In this case, the KLH was able to
transcend the constraints on its implementation capacity by recruiting other ministries,
NGOs and the media as agents in the task of water pollution monitoring (MacAndrews
1994:377). As a consequence of the Prokasih programme, a company was actually taken to
court and found guilty of pollution (World Bank 1994b:177).
       The ministry has at least at one occasion been able to put constraints on forest
concessionaires to the benefit of forest protection. This was in the case of Siberut. Siberut is
a small island off the coast of West Sumatra. It is attractive to logging interests, as 90
percent consists of lowland Dipterocarp forest (SKEPHI 1992:1). During the late 1960s and
early 1970s, Siberut’s forests were distributed to forest concessionaires. The logging
operations have included heavy and destructive logging, pollution of rivers, ignorance of
traditional land rights, societal destruction and encroachment of a small forest reserve
(SKEPHI 1992:7-27). In this case, the Indonesian forest conservation NGO SKEPHI
managed to ally with the Ministry for Population and Environment (KLH) and launch an


Home Affairs, is responsible for the approval and application of sanctions on logging operations (MOF
1990:143).
285Salim was deputy director of the national planning agency BAPPENAS 1971-78 and Minister for
Development Control 1978-83 (Robison 1986:127, note 6).



                                                281
international campaign to protect the island against logging and other activities. This
alliance confronted both concessionaires and the Ministry of Forestry (in this case the
PHPA). Both these actors resisted claims for protection of the island. However, in 1992, the
forest concessions were cancelled.
           The Ministry has chosen a critical position on the issue of forest concession
management. It has produced highly critical reports on concessionaire behaviour, and it has
participated in a dialogue with NGOs on forestry issues.286 However, the lack of formal
authority over other ministries and the forest industries has led to a very weak ability to
influence these. Shortages of qualified staff and a very modest budget also contributed to
this.287
           In a comparative perspective, the similarities between the Ministry for the
Environment and SEMA in Brazil are striking. As pointed out, SEMA was able to raise
environmental issues on the political agenda, and functioned as a pro-environmental force
in relation to the government. This was primarily caused by the exceptional dynamism of its
leaders, Nogueira-Neto and Franco, whose exceptional skills may be compared to Salim.
However, the lack of formal authority and the negligence of its advice in government
circles contributed to the institution’s lack of influence on more powerful state institutions.
           The limits on the Ministry for the Environment’s ability to implement policies were
to some extent removed by the creation of an executive environmental protection agency in
1990. In November this year BAPEDAL; the Environmental Impact Management Agency,
was created. BAPEDAL is chaired by the Minister of MLH and reports directly to the
President. The agency is charged with the implementation of Indonesia’s 1982
environmental law, which calls for environmental impact assessments for activities
expected to have significant environmental effects. Regulation no. 29 issued by the
Ministry for the Environment in 1986 established procedures for carrying out
environmental impact assessments.


286See for example the interaction between the NGO SKEPHI and the ministry over the case of logging on
the island of Siberut (Setiakawan, no. 7, January-June 1992:88-91, 95). For examples the Ministry’s criticism
of concession management, see Hadi and Gray (1989:76-77).
287Interview with staff at the Ministry of Population and the Environment in June 1993. See also Dauvergne
(1994: 515).



                                                    282
         BAPEDAL is responsible for the environmental impact assessment programme
called AMDAL.288 During the early 1990s, attempts were made to extend the AMDAL
programme to the provincial level. These branches of the programme report directly to the
governor. Constrained by the same problems of manpower and financing as the MLH,289
BAPEDAL is also object to political and social constraints typical for Indonesia. According
to commentators in the Jakarta Post, collusionary agreements between the authorities,
consultants preparing environmental impact assessments, and the business sector, is the
main problem of AMDAL.290 In addition, BAPEDAL is a very new institution that did not
establish itself as an active proponent of improved forest policies in the period until
1993.291


Summary
However, the observations in the final phase of the previous section should not be mixed
with the fact that pro-environmental agencies in both Indonesia and Brazil were weak. As I
have demonstrated, it is unlikely that the onset of reforms in Brazil was the outcome of any
concerted pressure from SEMA/IBDF before 1989, or from IBAMA after 1989. Neither
were the reforms the outcome of weaker anti-environmental forces in the state apparatus of
Brazil than in Indonesia. SADEN and other military agencies which worked against reforms
in several cases were well-connected and well-organised organisations, in contrast to their
pro-environmental counterparts.
        However, it should be remarked that different motives for interest in forest land in
Brazil and Indonesia led to variations in anti-environmental strategies as well as variations


288«Indonesia establishes environmental control agency», Jakarta Post, 24. November 1990:1, World Bank
(1994b:181).
289In 1993, the agency had less than 100 full-time professionals of variable quality, World Bank (1994b:182).
290See the article written by Samsudin Beklian: «Can new AMDAL regulation stop collusion?», Jakarta Post,
23. November 1993:6. The provincial level may be supposed to be very vulnerable to such influences due to
the low wages of local staff and the relative low power of provincial officials facing powerful and politically
well-connected companies.
291See the article: «HPH holders unwilling to make environment study», Jakarta Post, 21. May 1991:7. In
this article, it is reported that only two concessionaires have submitted their compulsory environmental impact
assessments. The number of such prepared assessments had apparently increased in 1994, but shortage of
expertise seems to have constituted and important barrier to the effective use of this instrument in most
sectors, including forestry, cfr. World Bank (1994b:271).



                                                     283
in resistance against environmental reform in the period in focus. In Brazil, the military
worked against the adoption of specific environmental policies at the level of policy
formation, while in Indonesia, the main thrust of anti-environmental pressure was towards
the level of enforcement (Dauvergne 1997:72). Moreover, as the Brazilian military had no
direct economic stakes in projects in Amazonia, they were also less hostile to ground level
enforcement of directives or other interventions against commercial actors perceived as
unproblematic in terms of protecting national sovereignty in the Amazon region. This
permitted the military to accept and participate in the shaping of substantial reforms under
Sarney. Indigenous policies and policies related to international co-operation over the
formation and implementation of policies in Amazonia were the main targets of military
resistance. Sarney chose to accept these limitations on environmental reform, while Collor
transcended them by pushing for the establishment of indigenous reserves and to choose a
more conciliatory international position related to Amazonia and the environment (Kasa
1997).
         The broadening of reforms under Collor to embrace increases of demarcation of
indigenous land and a positive attitude to co-operation with other states over conservation
projects in the Amazon region took place against the will of these military actors. However,
all evidence indicates that neither these reforms nor the reforms carried out under Sarney
emerged because the pro-environmental bureaucracy was more influential in Brazil than in
Indonesia.
         After having found little evidence supporting the proposition that differences in the
balance of power between pro-environmental and anti-environmental agencies in the
bureaucracies of the two states were main explanatory factors behind the contrast in
reforms, I discuss another set of explanatory factors in the following. This factor is among
the most commonly used explanations of political outcomes, namely the balance of power
and influence between various domestic societal groups.




                                             284
5.4. Brazil and Indonesia - weak domestic environmental movements confront
well-organised and powerful domestic commercial actors
Both Marxist, pluralist and many corporatist approaches are focused on the particular
characteristics of third world states are mainly focused on the balance of power between
domestic societal actors. I now turn to a discussion of the political influence of this group of
actors. The theoretical basis of the discussion is section 3.5, where I discussed some sources
of power and influence for various groups and actors, and some social and political factors
that could be expected to influence their power. The proposition I outlined as background
for the discussion was the following:


Proposition 7: The contrast between environmental reforms in Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the balance of power and
influence between domestic pro-environmental and anti-environmental societal groups.


Commercial actors and their organisations – strong and powerful anti-environmental
actors in both countries
As described above, the emergence of military regimes in Brazil and Indonesia during the
1960s implied a dramatic increase in economic activity in the tropical moist forest regions
of the two countries. In Indonesia, regions that had been attractive because of their mineral
and land resources now gained a new economic attraction, namely timber. In Brazil, the
economically empty region of Amazonia became attractive as a target of investments
because of the massive tax incentives offered. In both countries, this led to the emergence
of organised business interests in favour of continued economic expansion.
       In the Brazilian case, which I start this discussion with, these interests were
associated with activities like mining and cattle ranching in addition to industries in the
free-trade zone of Manaus. Pompermayer (1984), Bunker (1985) and Branford and Glock
(1985) describe how large investors from Brazil’s industrialised Southeast were able to
influence incentive policies in their own favour. The main instrument of these interests was
the São Paulo-based business organisation AEA or Association for Amazonian
Entrepreneurs. AEA managed to lobby successfully in favour of changing the direction of



                                              285
regional development policies from small-scale farming to a renewed emphasis on huge
cattle ranching projects and colonisation projects in the second half of the 1970s
(Pompermayer 1984, Branford and Glock 1985). Branford and Glock (1985:68) also
describe how SUDAM’s project implementation was a process wide open to bribery and
corruption.
       One should be aware that during the 1970s, AEA was mainly an organisation for
corporate ranchers and other businessmen from the Southeast, and not for the somewhat
smaller, but increasingly numerous non-corporate ranchers. These smaller and less wealthy
and well-connected ranchers relied on co-operation with local authorities instead of putting
pressure on government decision-makers. There was a Union of Rural Landowners, but
according to Pompermayer (1984:423-424), this organisation failed to develop a consistent
strategy in order to lobby the federal government.
       However, in the mid-1980s, a new organisation for big landowners emerged. This
was the União Democrática Ruralista (UDR), or the Rural Democratic Union, formally
established in 1986 (Hall 1989:118). According to Hall (1989:87), the UDR, which is a
national organisation of large landowners, was organised to counter government proposals
for agrarian reform. In 1987, the organisation had 270.000 members with branches in all
Brazil’s major towns and cities (Hall 1989:87). Skidmore (1988:394) mentions the
Amazonian states of Pará, Maranhão and Goiás (later subdivided into Goiás and Tocantins)
among the organisation’s political strongholds. The organisation’s strong connection to
ranching is illustrated by the fact that auctions of donated cattle were its prime sources of
income (Skidmore 1988:394). The UDR was successful in thwarting land reform proposals
in the second half of the 1980s, crippling the Sarney government’s ambitious plans (Hall
1989:118-122). One of the instruments of this strategy was a massive political offensive in
the congressional elections of 1986. The successful outcome of this offensive provided
UDR with the political power to dilute the constitutional clauses on land reform proposed
under the Constituent Assembly in 1988 (Skidmore 1988:394).
       According to Schwartzman (1991:406), UDR successfully united traditional rural
oligarchies with modern agribusiness interests. Furthermore, the organisation is widely held




                                            286
to have participated in the organisation of private militias to solve local land conflicts with
violent means (Schwartzman 1991:406).
        In the same period, members of the AEA still had about 200 members who had
investments in ranching in the Amazon region. Though the organisation had economic
problems, it represented some of the biggest corporate interests in the region.292
        The reactions of commercial interests in the Amazon region to the reforms of the
1988-1992 period provide some indications of the power, political networks and strategies
of these actors. Although the following discussion pre-empts the discussion in 5.5, as it
partly deals with interactions between international pressure and domestic politics, the
interests, alliances and strategies of commercial actors become more visible in situations
when they act to meet a challenge to their interests.
        First, both the AEA and the UDR were active as lobbyists against the Brazilian
government’s initiatives to reduce deforestation in the Amazon region. This was the case
for the decision to cancel SUDAM-distributed fiscal incentives for new ranching projects in
forest areas in 1988. The Pará co-ordinator of UDR, Lincoln Bueno, claimed that the
decision to abandon the fiscal incentives emerged because the Sarney government «gave in
to World Bank pressure», and blamed the position for being a reflection of Brazil’s
«eternally colonial position».293 The President of AEA, Roberto Paranhos from Rio Branco
(Acre), criticised the cancellation of the fiscal incentives.294 Fernando Mesquita, president
of IBAMA from 1989 to early 1990, confirmed that the AEA was active in lobbying against
the cancellation of new fiscal incentives.
        Both organisations also protested against IBAMA’s inspection campaign in the
Amazon region. Local UDR members threatened Fernando Mesquita during a meeting
arranged by IBAMA in 1989 in the city of Imperatriz, Maranhão.295 The AEA was very



292 I am grateful to Susanne Jakobsen at Center for Development Research, Copenhagen, for being allowed
to read her notes from an interview with AEA’s president in 1996. These notes are the source here.
293See the article «Empresários criticam as restrições impostas a projetos agropeuários», Folha de São Paulo,
12. October 1988:C-2.
294See the article «Secretário do Meio Ambiente pede demissão e faz crítica a ministro», Folha de São
Paulo, 20. September 1988:2.
295Interview with Fernando Mesquita in November 1993, cfr. also Arnt and Schwartzman (1992:287).



                                                    287
active in lobbying for favours that included environmental licenses for commercial
activities and cancellation of IBAMA fines.296
        Second, other business organisations at state level also protested against
environmental reforms. The president of the Federation of Industries of the State of Pará
(Federação das Indústrias do Estado do Pará - FIEPA) attacked Lutzenberger’s reform
attempts and supported the military commander of the Amazon region, General
Thaumaturgo Sotero Vaz in his attacks on Lutzenberger for not «understanding the
problems of the Amazon region».297 The coalition between military and commercial
interests was also visible during what was called the first meeting of Amazonian
entrepreneurs («O I Encontro dos Empresários da Amazônia») in August 1990. Here, the
military commander of Amazônia, General Antenor de Santa Cruz, participated together
with regional politicians and business interests.298
        A third source of opposition to environmental reforms also gained importance
during the late 1980s, namely regional politicians. The increasing number of states in the
region strengthened this federal lobby. During the 1980s, Roraima, Amapá and Rondônia
changed from being federal territories to states. This implied rights to send congressmen
and senators to Brasília, increasing representation from the North in both Congress
chambers. The Amazon half of the state of the ranching state and UDR stronghold Goías




296Interview with José Goldemberg, November 1992. In the answer to my questionnaire in January 1993,
Goldemberg stated the following when asked about the strategies of AEA: «They were always fighting for
favours and cancellation of fines, not changing policies». Fernando Mesquita also confirmed AEA activity
against the cancellation of fines given to member companies in my own interview with him in December 1993.
Tania Munhoz also confirmed AEA activity against IBAMA licensing and inspection, but remarked that most
cases of pressure from this organisation were related to logging, not ranching.
297See the article: «Governador boicota reunião», Jornal do Brasil, 12. September 1991:9. FIEPA has strong
representation from ranching and logging interests. In 1992, Danilo Olivo Carlotto Remor was vice-president
of the organisation, cfr. Jornal da Fiepa, Volume VI, No. 42, June/August 1992:2. Remor is president and
major shareholder in MAGINCO, a combined logging and ranching enterprise which was established in 1972,
under the fiscal incentives boom (MAGINCO, undated). MAGINCO has a plywood factory in Ananindeua
outside Belém.
298See the article: «Empresário toma decisão politica sobre Amazônia», Jornal do Brasil, 15. August 1989:8.
In the meeting, representatives of national agrarian interests (Alysson Paulinelli from the National Agricultural
Confederation - Confederação Nacional da Agricultura) as well as the old military regime politician Roberto
Campos participated together with regional interests.



                                                      288
was also established as a separate state; the state of Tocantins.299 Altogether, this created a
marked increased of political influence of Amazonia at the federal level.
        To a certain extent, politicians from the region were directly involved in commercial
activities relevant to reforms. This is for example the case with some politicians who
received attention in the media like Senator Carlos de Carli300 (PTB-AM), governor of
Amazonas Gilberto Mestrinho (PMDB)301 or governor of Pará Jader Barbalho (PMDB).302
Partly, there was also a large number of politicians whose constituency was made up of
voters engaged in commercial activities in forest areas or whose election campaigns were
financed by ranchers, loggers or mining interests. The Congressman Francisco de Assis
Canuto from Rondônia, for example, based his complaints on IBAMA’s 1989 surveillance
and monitoring operations on the fact that he had received «innumerable protests» from the
state’s farmers and ranchers (Arnt and Schwartzman 1992:289).
        The cutting of new fiscal incentives and agricultural credit for ranching projects in
forest areas was unpopular also among regional politicians. Helio Gueiros (PMDB), the
governor of the key ranching, mining and logging state of Pará in 1988, mounted vigorous
criticism against this move.303
        Regional politicians were among the most ardent opponents to IBAMA’s
surveillance and inspection campaigns in the Amazon region during the 1989-1992 period.
In interviews, two of the IBAMA presidents in the Collor period, Munhoz and Martins, and
one very high-ranking official serving at IBAMA in 1992, identified a regional political
elite very active in asking for political favours to themselves and their political clients.
These were favours like the cancellation of fines, licenses for environmentally dubious


299 Schwartzman (1991:406) notes that the UDR was created after a meeting for big landholders in Goías in
July 1985.
300Carlos de Carli owns the União ranch in Itacoatiora in the state of Amazonas, and he is involved in
logging in this state (Fleischer 1991:29, personal communication with Philip M. Fearnside November 1992).
He has been accused for involvement in illegal log smuggling, cfr. Correio Braziliense, 11. January 1989:11).
De Carli’s grandfather with the same name is referred to as Gilberto Mestrinho’s political «boss» in
newspapers, see the article «Mestrinho e seu chefe desde 62», Jornal do Brasil, 2. January 1987:2.
301Mestrinho has interests in mining in the state of Amazonas. Information from the pro-Indian NGO NDI in
1995.
302Barbalho has investments in ranching in the state of Pará, see Fleischer (1991:77).
303See the article «Empresários criticam as restrições impostas a projetos agropecuários», Folha de São
Paulo, 12. October 1988:C-2.



                                                    289
projects and the appointment of easily controlled political clients in positions as IBAMA
state superintendents. The most frequently mentioned names were the governor of
Amazonas, Gilberto Mestrinho,304 and Senator Carlos de Carli305 from the state of
Amazonas. The activity of other politicians from the region like Jader Barbalho,306 Aluízio
Bezerra307 and João Maia,308 seems to indicate that this pressure was a common
phenomenon among politicians from Amazonia.309 The participation of Senator Jorge
Bornhausen from Santa Catarina and Minister and Congressman Ricardo Fiuza from
Pernambuco in such activity demonstrates that such attempts to resist the environmental
bureaucracy in implementing forest regulations were common also in states outside Legal
Amazonia.310 Senator Jarbas Passarinho pointed to a certain level of co-operation between
politicians from the state of Santa Catarina and the Amazon region over attempts to
moderate IBAMA monitoring and surveillance.311 Santa Catarina has limited and rapidly
declining areas of coastal rainforest. Traditionally, these areas have been important as
sources of timber, and large areas have been cleared for agriculture. A ban on land clearing
in the Atlantic Forest in 1990 created strong protests among logging companies in this state.
        Especially Martins and an anonymous high-standing IBAMA source emphasised that
this pressure was a big problem as it occupied much time. They seem to have resisted the
pressure to an extent that provoked the interests in question to protest publicly. Newspapers
brought reports on Munhoz’ stubborn resistance to cancel fines for deputies and their

304Mentioned by Munhoz and Martins.
305Mentioned by a very centrally located source at IBAMA in addition to Martins.
306Governor of Pará, mentioned by Martins.
307Senator from Acre, mentioned by Martins.
308Congressman from Acre, mentioned by Martins.
309Marcio Santilli, Executive Secretary of the indigenous rights’ NGO Instituto Socioambiental (a fusion of
the NGOs CEDI and NDI) in Brasília, indicated in personal communication that these networks were only a
small part of extremely complex Amazonian political networks connecting politicians at all levels, business
interests and public agencies. Personal communication with Marcio Santilli, 23. February 1995.
310Bornhausen mentioned by a very centrally located IBAMA source, an anonymous SEMAM adviser as
well as Goldemberg. Ricardo Fiuza mentioned by Tania Munhoz as well as Eduardo de Souza Martins.
Martins told that Fiuza put pressure on IBAMA to cancel two fines. One of them was given for illegal
deforestation on Fiuza’s ranch in Maranhão. The other was given for illegal transportation of timber in the
state of Pernambuco. In both cases, Fiuza exerted pressure to remove IBAMA’s superintendent.
311Own interview with Jarbas Passarinho, November 1992. Passarinho also included the governor of Santa
Catarina among participants in such co-operation. Goldemberg indicated in response to questionnaire in
January 1993 that also congressmen from Santa Catarina were active.



                                                   290
clients and Bornhausen’s attacks on José Goldemberg for Maria Tereza Jorge Pádua’s
appointments at IBAMA.312
        Amazonian politicians managed to achieve some results in this period. They were
involved in the dismissal of Tania Munhoz from the position as president of IBAMA in
1991.313 Bornhausen used his position as Secretary of State to push for the firing of
Lutzenberger.314 In general, reforms also had the unwanted effect that some regional leaders
gained popularity and a better public image by confronting federal environmental
initiatives. Mestrinho and other politicians gained considerable support as symbols of
regional resistance against policies that hampered economic development. Thus, to a
considerable extent, federal attempts to impose reforms tended to bolster political resistance
against reforms.315
        Many of the Amazonian politicians involved in pressure against IBAMA also
participated in a major media campaign against environmental reforms as well as against
the most important proponents of reforms at IBAMA and in the government. Gilberto
Mestrinho, the governor of Amazonas, was very active against the reforms of the Collor
government.       He     was     also    important       in   the    campaign        against     the    alleged
«internationalisation» of Amazonia as well as in efforts to establish a separate, liberal law
for commercial activity in Amazonia.316 In this campaign Mestrinho and other Amazonian
politicians participated along with military agencies and commanders, who feared foreign
influence in the region.



312Maria Tereza Jorge Pádua was president of IBAMA for a short period when Goldemberg was Secretary of
the Environment in 1992. For Munhoz’ resistance, see Folha de Sao Paulo, 3. October 1991:A-10, for
Goldemberg, see Jornal do Brasil, 4. May 1992:2.Bornhausen’s motive for his attack was according to
Goldemberg: « (..) to force Pádua to appoint political nominees, which were involved in illegal activities in the
past. Some of them were linked to local politicians that favoured deforestation and other commercial
interests.» Goldemberg’s answer to my questionnaire, January 1993.
313«Presidenta do IBAMA pede demissão», Folha de São Paulo, 3. October 1991:A-10, own interview with
Goldemberg November 1992.
314Interviews with Fabio Feldmann in November 1992 and an anonymous SEMAM adviser.
315 Cfr. Bernardo and Bastos (1993:13), for Mestrinho’s enormous popularity in the state of Amazonas, cfr.
the article: «Eco-Disneyland – is it simply for the birds?», Financial Times, Weekend complement, 26.-27.
October 1991:x.
316See the articles «Mestrinho diz que faria guerra pela região», Folha de São Paulo, 25. July 1991:A-12,
and «Mestrinho defende código e diz que a Amazônia é só do Brasil», Jornal do Brasil, 17. July 1991:13.



                                                      291
        Senator Carlos de Carli attacked Lutzenberger on several occasions and blamed him
for corruption.317 Aluizío Bezerra attacked Lutzenberger heavily for resisting the
construction of a road from Acre to Peru, linking Western Amazonia to Pacific ports.318 As
already mentioned, a special congressional investigation (CPI) on the «internationalisation»
of Amazonia in 1991 was led by Atila Lins, congressman from Amazonas. The committee
in charge of the CPI consisted mainly of Amazonian politicians. Among the proposals of
the CPI were the reduction of indigenous territories, limitations on IBAMA’s surveillance
and inspection activities in the region, creation of new investment funds and the
revitalisation of the Calha Norte military border protection and development project.319
During the investigation, the special committee also demanded the dismissal of Munhoz
and Lutzenberger.320
        FUNAI was also exposed to pressure from some of the mentioned actors. When
commenting on the activities of regional politicians, Sidney Possuelo, FUNAI President
under Collor, pointed out the governors of Pará and Amazonas as the most active actors
trying to resist the demarcation of Indian reserves in the Amazon region. The governor of
Roraíma, Ottomar Pinto, was also a very active opponent to the demarcation of indigenous
reserves.321
        Regional politicians also enjoyed direct access to the preparation of the «Nossa
Natureza» programme under Sarney. Decree no. 96.944/88 that established the «Nossa
Natureza» programme opens the executive committee of the «Nossa Natureza» programme
only for political representatives from the North (after invitation). Governors from the states
of Legal Amazonia and the leader of the executive committee of the programme, Bayma
Denys, held at least one joint meeting in which the different decrees, directives and laws




317«Senador acusa Lutzenberger», Correio Braziliense, 24. March 1992:5.
318Jornal do Brasil, 3. May 1990.
319«CPI recomenda criação de 2 territórios no Amazonas», Jornal do Brasil, 29. November 1991:4
320«CPI da Câmara quer demissão de Lutzenberger», Folha de São Paulo, 19. September 1991:A-14.
321Response to questionnaire from Sidney Possuelo in November 1994. The methods used by the anti-
indigenous interests were the following (my translation from Portuguese): «Congressmen bogged down my
administration, principally to accuse me of anti-patriotism. In the press, various columnists attacked me and
published material against the interests of the indigenous populations.»



                                                    292
published in the beginning of April 1989 were discussed.322 However, although regional
politicians were consulted, it is interesting to note that the once so powerful business
organisation AEA was excluded from this meeting against its will (Schmink and Wood
1992:123).
       The networks of interests surrounding commercial activities in the Amazon region
had important neopatrimonial characteristics before reforms were initiated in 1988. During
the early phase of SUDAM ranching in the region, which coincided with a high degree of
government dependence on support from the São Paulo business elite, this group received
generous fiscal incentives and cheap credit. These spoils included preferential treatment of
individual businessmen and lax law enforcement as personal favours (Branford and Glock
1985, Bunker 1985, Hecht and Cockburn 1989). These «good connections» also involved
benefits to local politicians when the military dictatorship tried to shore up votes during the
late 1970s and early 1980s (Cammack 1982). The incentives for such practices continued
after the end of military rule in 1985, as electoral rules provided regional politicians, who
could deliver blocks of votes, with high influence (Souza and Lamounier 1990). The
outcome was a system of personal rewards like public contracts and projects delivered in
exchange for votes. In Amazonia, these rewards included fiscal incentives, subsidised credit
and participation in various big public projects (Hall 1989:268). This system of exchange
of votes for private benefits is quite similar to what Lemarchand (1988) calls patronage,
namely the distribution of private benefits for electoral support. In the absence of
international pressure on the Brazilian State, the alliance between regional politicians and a
powerful military eager to develop Amazonia seems to have fuelled subsidies for
agricultural expansion in the region and largely blocked environmental reform. It should be
remembered that President Sarney denied any plans to abandon fiscal incentives and other
subsidies to ranching as late as in the middle of 1987 (Hall 1989:268).
       However, although these leaders had considerable power as they controlled electoral
support, and received rewards from the government that led to deforestation, they did not
control power resources essential for regime survival. These limits to power emerge clearly


322«Governadores reagem a pressoes do Bird», O Estado de São Paulo, 30. March 1989:17. Interview with
Fabio Feldmann, November 1992.



                                                293
when looking at the proposals they were unable to stop. They were not able to block neither
the PEAL programme, nor the establishment of rubber-tapper reserves under Sarney, or the
reforms under Collor.
        One reason for this weakness was that these networks were relatively unorganised
and included heterogeneous interests. First, some of the politicians that were closely
associated with military and business interests in the region were reluctant to join the
extreme hard-line outcries against the government.
        The most militant public protests against reforms in Amazonia came from Gilberto
Mestrinho, governor of the state of Amazonas, as well as military staff. Mestrinho was an
exceptionally active hard-liner in the debate on the «internationalisation» of Amazonia.
Other federal politicians from the state of Amazonas like José Dutra, and Atila Lins also
participated in this campaign. However, Mestrinho was not able to unite all important
regional politicians behind his claims. The opinion of the governor of Pará, Jader Barbalho,
was that the external threat to the Amazon was grossly exaggerated.323 I have also
mentioned that the former colonel and military hard-liner Jarbas Passarinho, Minister of
Justice under Collor, favoured the expansion of indigenous reserves and to some extent
confronted mining and ranching interests in these areas.
        Other splits also occurred. The governor of Roraima, Ottomar Pinto, supported
Mestrinho’s proposal for a liberal economic law for the Amazon region (Bernardo and
Bastos 1993:20). However, the suggestion attracted protests both from the governor of
Rondônia, Osvaldo Piana, Jader Barbalho and the governor or Acre, Edmundo Pinto. Pinto
accused Mestrinho for wanting to transform the Amazon region to an «empire of the chain-
saw» (Bernardo and Bastos 1993:20).324




323 See the article «Jader nega ameaca estrangeiro á região», Folha de São Paulo, 23. September 1991:A-6.
324 For Pinto’s views see also the article «Governador ataca “império da moto-serra”», O Globo, 19. July
1991:7.



                                                  294
        A few pro-environmental congressmen from the Amazon region also existed.
Lourival Freitas (Amapá) and Beth Azize (Amazonas) supported the environmental
initiatives of the Collor government in the Amazon region.325
        In the previous section, I also mentioned that there were tendencies towards a split
between the military and regional commercial actors over issues like environmental
monitoring and inspection in the region. There were tendencies within the military to re-
evaluate former policies in the Amazon region and to favour more protective policies,
although the issue of international co-operation and indigenous reserves continued to be a
focus of strong resistance.326
        Thus, though the networks of interests described above commanded considerable
political resources in the form of votes and alliances with military agencies, their
heterogeneity in terms of interests as well as organisations and their gradual alienation from
decision-making from 1988 implied that their relationship with the government in the field
of environmental policy-making lost most of its neopatrimonial characteristics. This also
implies that even though commercial actors and regional politicians had a relationship with
the government that had important neopatrimonial features during the period before 1988,
the political support exchanged against various favours were not of a character that was
crucial for regime survival. Neopatrimonial relations may be expected put stronger
constraints on decision-makers when clients have coherent economic interests, are well-
organised and have a relatively high degree of control over political assets perceived as
crucial for regime survival.
        The regional political networks were divided over several issues. Some prominent
politicians favoured several aspects of environmental reform in the region. Furthermore,
hard-line politicians from the region did not control political assets essential for regime
survival. Although the Amazonian block of deputies and senators had a considerable size,
they did not control any majority in Congress (Bernardo and Bastos 1993). Particularly
President Collor made several decisions that confronted the wishes of the Amazonian hard-


325For Freitas, see the article written by him, Fabio Feldmann and Tuga Angerami: «A CPI do ridículo»,
Folha de São Paulo, 10. December 1991:A-3. See also Bernardo and Bastos (1993:18). For Azize, see her
sympathy to Lutzenberger in the article: «Uma gestão dos resultados», Jornal do Brasil, 27. Ocotber 1991:5.
326Interview with Herman Otto Roger Schubart, SAE/PR, November 1992.




                                                   295
liners. The political costs of these decisions were considerable, but not in any way fatal for
the government.
       The increasing political independence of regulatory agencies in the region after 1988
is another indication of declining influence of commercial actors. There were fierce protests
from several sources on IBAMA presidents to fire local IBAMA superintendents, and
pressure on Collor to fire IBAMA presidents and FUNAI staff. Although regional interests
managed to get rid of IBAMA’s Tania Munhoz through a concerted offensive in Congress,
environmentalists with a good reputation followed Munhoz as IBAMA presidents.
Substantial evidence indicates that these presidents tried to avoid employment of regional
clients and resisted requests for particular personal favours like licensing of dubious
projects. They were to some extent backed and protected by Lutzenberger and Goldemberg,
who were attacked for their denial to employ political clients. Although all IBAMA staff
interviewed complained about the absence of backing and attention from Collor, it is
beyond doubt that FUNAI and its president Sidney Possuelo received personal backing
from the president.
       These observations also suggest that the relations between the president and regional
commercial actors in Amazonia that closely resembled Wilson’s (1980) client politics
before 1988, were somewhat weakened after 1988, and largely disrupted under Collor.
Partly because of their failure to establish a coherent and well-organised regional political
block exerting unified influence through representatives in Congress, and partly because of
the fact that they were unable to dominate elections, these commercial actors could not
continue to dominate policies related to the Amazon region in Brazil when international
pressure for change increased.
       Theoretically, the interest representation of commercial actors in the Amazon region
on issues related to environmental reform particularly after 1988 may be categorised as
quite similar to what is called issue networks or policy networks in the literature that tries to
identify nuances in the concept of corporatism. Based on the work of Marsh and Rhodes
(1992), Hill (1997:73) identifies a number of characteristics of issue networks Such
networks are large and diverse, they have fluctuating levels of internal contacts and varying
levels of agreement on policy targets, they have varying resources and an inability to



                                              296
regulate their use on a collective basis, and the power distribution between participants is
unequal. All these characteristics are relevant as descriptions of the federal political
representation of economic interests in the Amazon region. Moreover, this situation marked
a disintegration of such representation as compared to previous periods, when commercial
actors in the Amazon region were tightly organised and enjoyed a very high level of
influence over policy-making as described by Pompermayer (1994) or Bunker (1985).327
        Nevertheless, there were clear domestic political barriers to reform in Brazil.
Reforms that only implied losses for ranchers and other commercial actors in the Amazon
region were adopted. However, attempts to increase national taxation of agricultural
properties and agricultural income were rapidly watered out by resistance in the Congress.
        The ability of agricultural interests in Congress to thwart these initiatives was
bolstered by the fact that less populous regions dominated by large landowners like the
Centre-West, the Northeast and the North included in the 1988 Constitution held a majority
in the Congress (Lamounier 1994). The strong representation of these groups in Congress is
one aspect of the persisting influence of rural oligarchies in Brazil pointed out as a colonial
heritage by scholars (Souza and Lamounier 1990, Weffort 1992, Hagopian 1994). Thus, the
colonial legacy had important consequences for the distribution of interests and power and
political outcomes in Brazil; also in relation to Amazonia and the environment.
         In Indonesia, the actors involved in the wood industries have been the most ardent
anti-environmental lobbyists when it comes to attempts to enforce logging regulations and
initiate incentive changes.328 While regional interests in ranching and other commercial
activities failed to establish a unified political position in Brazil, logging interests and the
wood industries in Indonesia were increasingly organised in a tight network of professional
organisations during the 1980s. As mentioned in chapter four, the most important
organisation of forestry interests in Indonesia is the plywood producer association


327 This also distinguishes these networks from the approach of Marsh and Rhodes (1992), as they explain
the existence of such modes of interest representation in terms of state needs for stability in the decision-
making process. In the case of interest representation in the Amazon, these networks were the outcomes of
regional processes of organisation, and not primarily state initiatives. However, as noticed by Hill (1997:73),
this implies that the concept is difficult to distinguish from pluralist clusters of organisations. I prefer the term
policy network as the periodically intimate co-operation with the military fits better to the basic outlook of
corporatist theory than pluralist theory.



                                                        297
APKINDO. APKINDO’s internal cohesion is based on the leadership’s power to grant
export licenses and dictate export prices on its members (Dauvergne 1997). As mentioned
in chapter four, APKINDO is dominated by the largest mill owners. In addition to
APKINDO, there are several other organisations for the wood-based industries in Indonesia
integrated in the umbrella organisation MPI or the Indonesian Wood Panel Society. Besides
APKINDO, MPI includes the concessionaires’ organisation APHI and the sawn timber
producer organisation ISA in addition to some smaller organisations. The ethnic Chinese
businessman Bob Hasan is chairman of the three most important organisations, APKINDO,
APHI and MPI.
        Several members of APKINDO, including Hasan, are connected to the Indonesian
President by neopatrimonial networks. These networks give the industry exceptional power
and influence over forest policies.
        As mentioned by Manning (1971), Hurst (1990) and Ross (1996), during the logging
boom in the 1960s and 1970s, concessions were usually controlled by military personnel in
co-operation with foreign investors or Chinese businessmen. In this period, forest
concessions were distributed to military leaders to appease factions of the military that
could threaten the regime’s survival, a classical neopatrimonial political strategy.
        However, following the log-export ban, many military concessionaires trying to
establish plymills went bankrupt or sold out to Chinese businessmen with the financial
strength necessary to establish larger, integrated industries (Ramli 1991). In other words,
after the log-export ban, forest concessions gradually changed from being rewards for
loyalty to military staff to become parts of larger ethnic Chinese business empires. Though
this process to a certain extent was market-driven, neopatrimonialist practices rapidly
pervaded the sector.
        The most important expression of the changing character of the wood industry is the
establishment of APKINDO and the appointment of the ethnic Chinese business tycoon
Bob Hasan as its chairman in 1988. Hasan (alias The Kian Siang) has a long-standing
relationship with Suharto. Hasan was an important business associate of Suharto when he
commanded the Diponegoro division at Central Java during the 1950s (Vatikiotis 1993:14).

328Various interviews with various people connected to the Ministry of Forestry, June/July 1993.



                                                    298
Robison notes that Hasan was among the people that benefited greatly from Suharto’s coup
in 1965 (Robison 1986:263).
       Hasan controls considerable forest assets. The forest properties of his Kalimanis
group during the late 1980s included two large forest concessions at East Kalimantan, as
well as four plywood factories (Capricorn 1989:198, APKINDO 1992a).
        Though Hasan’s interests stretched out far beyond the forest industry, he enjoyed
enormous influence over this special branch in the early 1990s.329 Besides his very
powerful position as chairman of APKINDO, strong ties to the presidential family and the
military bolster his influence. He has joint operations with the sons Sigit Harjojudanto and
«Tommy» Suharto (Hutomo Mandala Putra). Their corporate vehicle, the Humpuss group,
had joint operations with Hasan in the construction of a liquid natural gas pipeline in East
Kalimantan.330 Humpuss is also directly involved in forestry through its control over a
114.000 ha forest concession and wood production facilities in South Sulawesi through the
company PT Rante Mario (Humpuss 1993). After the take-over of the Sempati airline in
1989 by Humpuss and Hasan, Sempati got access to subsidised credit to buy the company
the most modern air fleet in Indonesia.331 One of Sempati’s major shareholders is PT Tri
Usaha Bakhti, a major military conglomerate presented in the previous section.
        One of the core holding companies in the Hasan business empire, PT Pasopati, is a
partnership between Hasan and the brother of Mrs. Suharto, Ibnu Hardoyo (Robison
1986:260). Two of the charitable foundations or yayasans controlled by President Suharto
control large parts of Hasan’s main holding company, PT Nusamba, often only called the
Bob Hasan group (Bacani and Loveard 1997).
       The top groups in forestry share the characteristic that almost all of them have strong
connections to the president’s family and/or the military. Below, the most important groups
are ranked after their estimated timber assets in 1992. The table is based on an article from
the business journal Indonesia Business Weekly. It indicates only crude trends. Detailed,


329Interviews with staff connected to the Ministry of Forestry, June/July 1995, Mufti (1993), Vatikiotis
(1993:14).
330An anonymous source in the Indonesian business community
331See the article: «Monopoly under fire», Far Eastern Economic Review, 30. April 1992:58. Confirmed by
an anonymous source in the Indonesian business community.



                                                 299
reliable and comprehensive information on control over economic assets in the Indonesian
forest industry is extremely difficult to find.




TABLE 17: Main groups in the Indonesian forest industry 1992

                                                                                           Plywood
                         Estimated                Holding           Concession             production
Person                   timber assets            company           area                   capacity
in control               (Rp billions)            (group)           (Hectares)             (m3/year)

Prajogo Pangestu*                 96              Barito Pacific    2.215,000              1.100.000332
(Phang Djun Phen; Peng Yunpeng)
Burhan Uray (Bong Swan An,        91,5            Djajanti          2.278.500              864.000
Huang Shuangan)
Bob Hasan (The Kian Siang)        90,5            Kalimanis          505.000               365.000
Sukanto Tanoto (Liem Sui Han)     85              Raja Garuda Mas    359.000               390.000
Susanto Lyman(Lie Siong Thay)     57,7            Satya Jaya Raya 1.597.500
         662.000
Bakrie family                     57,4            Tanjung Raya         669.000             308.500
Alex Korompis (Kho Teng Kwee)     48              Hutan Raya Indo   1.587.000
         752.600
Windya Rachman                    40              Daya Sakti          718.000              346.000
Soedono Salim (Lim Sioe Liong)    28,5            Kalamur           1.105.000              204.000
Gunawan Sutanto                   27              Kayu Lapis        1.789.000              396.900
Hanafi (Tan Siong Kie)            22,5            Roda Mas            549.500              162.500




332Compiled from APKINDO (1992a), including PT Jabar Utama Wood Industry, which is not usually listed
among the companies of the Barito Pacific Group, but is led by Prajogo Pangestu, see APKINDO (1992a:42).



                                                  300
Simon Rahardjo                     21,8              Gunung Raya Utama 658.000                    275.100
Andi Tabusalla                     20                Satya Jaya Raya 1.597.500                    662.000
Nyoto Widjojo                      19,2              Kayu Mas           685.000                   318.000
Slamet Sarojo                      18,9              Dwimajaya Utama 494.000                      174.000
Budiono                            18,2              Benua Indah        523.000                   110.000
Agustinus Adiono                   18                Bumi Raya Utama 1.060.000                    606.000
Akie Setiawan                      17,6              Hutrindo         1.587.000                   752.600
Adijanto                           17                Bumi Raya Utama 1.060.000                    606.000
Muharno Ngadiman                   16,8              Uni Seraya         929.000                   193.700
Johannes Empel                     15                Korindo            828.500                   746.000
Martias                            14                Surya Dumai        904.500                   343.000
Yacobis Pattiasina                  9,8              Jati Maluku       519.000                    176.000
Yos Sutomo (Kang King Tat)          7,4              Sumber Mas        710.000                    383.000
Thomas Sutandjadi                   5,1              Jadi Maluku       519.000                    176.000


Sources: «Indonesia’s timber tycoons», Economic & Business Review Indonesia, No. 5, 7.
May 1992:13, Suryadinata (1995), APKINDO (1992a).

* These figures are particularly unreliable, as Barito Pacific seems to be in continuous expansion. It should be
noted that following the bankruptcy of PT Astra, Barito has taken over the Astra group’s timber assets
totalling about 1 million ha of production forest and plywood production capacity totalling about 200.000 m3
per year.


Together, these 25 groups control 25.445.000 ha of forest concession area, or about 45
percent. However, the concentration of concession control is supposed to be much higher,
as most concessionaires sell timber or lease out their concessions to these groups. This is
reflected by the fact that nearly all plywood production capacity in Indonesia is under the
control of these groups. As shown in chapter four, logs are cheap on the internal market due
to the log export ban. Thus, concentration of plywood production capacity is a better
measure of the concentration of income in the logging sector. Most of the rent produced in
logging ends up in the plywood industry, which profits from high international prices.
        Common characteristics of several of the members of this group are their close links
to the presidential family and the military. These connections especially characterise
Prajogo Pangestu (alias Phang Djun Phen; Peng Yunpeng), who controls Barito Pacific
Timber, the largest wood industry group in Southeast Asia. Prajogo is of Chinese origin and
was an employee in the Djajanti group until 1976. In the late 1980s, the Barito Pacific
Group controlled 9 wood processing factories, mainly plywood, at Maluku and Kalimantan
supported by 22 forest concessions in these two provinces and at Irian Jaya (Capricorn
Indonesia 1989:183-184, table 28). However, when concessions leased from partners in the



                                                     301
military and other business contacts are included, the total concession area was estimated to
about 5,5 million ha.333
        While Japanese funds were important in the early phase of Barito’s history, domestic
banks became more important during the mid-1980s. This was due to his ability to bail out
smaller, unsuccessful timber operators who had borrowed heavily to become plywood
millers.334 Prajogo’s increasing involvement with the presidential family seems to have
facilitated access to domestic financing and been an important factor behind Barito’s rapid
growth and diversification from the late 1980s. The state bank Bank Bumi Daya is an
important source of financing for Barito (Schwarz 1994:141). Public pension funds is
another important source of capital to which Prajogo has privileged access.335 The state
owned insurance and pension fund PT Taspen has substantial investments in the Barito
Pacific Timber company. In 1993, Taspen had a 20,32 percent share in Barito Pacific
Timber.336
        Prajogo’s business contacts with the presidential family are very extensive, and only
a few of the most well known are presented here. Prajogo co-operates with Suharto’s
daughter Siti Hardijanti Rukmana (Tutut) in forest estates and pulp and paper. A 300.000
ha plantation in South Sumatra, which is a joint venture between Hardijanti and Prajogo,
was formally opened by Suharto in 1991.337 The name of the partnership in pulp and paper
is PT Tanjung Enim Pulp dan Kertas (Suryadinata 1995:129). Tutut’s husband, Indra
Rukmana, is President Director of one of the Barito Pacific plywood mills at East
Kalimantan, PT Sangkurilang Bhakti (APKINDO 1992a:62). Prajogo also co-operates
closely with the Bimantara group, headed by Suharto’s son Bambang Trihatmodjo, in


333«Green fingers. Indonesia’s Prajogo proves that money grows on trees», Far Eastern Economic Review,
12. March 1992:42-44.
334«Green fingers. Indonesia’s Prajogo proves that money grows on trees», Far Eastern Economic Review,
12. March 1992:43. For information regarding the bankruptcy of smaller plywood producers, cfr. Ramli
1991:20.
335Interview with anonymous businessman, Jakarta.
336See the article: «Prajogo plays down government’s review of Taspen’s equity», Jakarta Post, 16. July
1993. Taspen is identified as a state owned insurance and pension fund company in the article: «Pension
funds: The curbs are off», Economic & Business Review Indonesia, No. 154, March 25 1995:13. According to
the same source, pension funds were only allowed to make investments in domestic stock markets after 1995.
337«Top players in Forestry», Environesia, Vol. 6, No. 1-2/April 1992:6. This connection was confirmed by a
source in the Jakarta business community.



                                                   302
finance and petrochemicals.338 Together with Henry Pribadi (or Lin Yunhao, head of the
Napan group), Bambang and Prajogo established Andromeda Bank in May 1990, and later
the large petrochemical complex PT Chandra Asri (Suryadinata 1995:129).
       Prajogo is also said to be involved directly with president Suharto in economic
affairs. When Bank Duta, controlled by three charitable foundations or yayasans connected
to Suharto and his family, faced bankruptcy in 1990-1, he is believed to have stepped in to
save the bank together with Liem Sioe Liong.339
       Several explanations of Prajogo’s increasing infiltration with the presidential family
have been introduced. Besides the widespread assumption that he has bought access to
several attractive contracts and credit through his alliances with the presidential family, it
has also been suggested that Prajogo was particularly interesting for the children because of
his connections to Japanese companies. His integration with the Suharto family has also
been interpreted as a strategy to try to protect himself from the powerful APKINDO
chairman Bob Hasan, himself an important partner of the Suharto family.340
       However, for this project, the main lesson to be drawn from the links presented is
that Prajogo’s connections give him enormous power in conflicts with the Ministry of
Forestry. The combination of his connections with the presidential family and the military
gives him very strong cards in confrontations with the Ministry of Forestry. In July 1991,
Barito was fined Rps. 11,1 billion by Forestry Minister Hasjrul Harahap for logging outside
a concession area in East Kalimantan. Barito refused to pay the fine, and the matter was
apparently dropped.341
       Number two on the list, Burhan Uray (Bong Swan An, Huang Shuangan), is directly
connected to the presidential family through Suharto’s foster brother Sudwikatmono.
Sudwikatmono is head of Djajanti’s «Supervisory Board» (Djajanti, undated:12).

338«Green fingers. Indonesia’s Prajogo proves that money grows on trees», Far Eastern Economic Review,
12. March 1992:43.
339«Green fingers. Indonesia’s Prajogo proves that money grows on trees», Far Eastern Economic Review,
12. March 1992:42.
340«Green fingers. Indonesia’s Prajogo proves that money grows on trees», Far Eastern Economic Review,
12. March 1992:43.
341«Forest Framework», Far Eastern Economic Review, 12. March 1992:45. The same source also indicates
that the permission to establish his plantation in South Sumatra was given as a consequence of direct
instructions from president Suharto.



                                                303
Sudwikatmono’s business interests are deeply integrated with the President’s children and
Liem Sioe Liong (Bresnan 1993:249-250, 259).
       The Raja Garuda Mas group, led by the «timber king» of North Sumatra, Sukanto
Tanoto, has backing from Suharto’s oldest son in his pulp and paper company PT
Indorayon at North Sumatra (Potter 1996:17).
       The 9th company on the list, the Kalamur Group or Kayu Lapis Asli Murni (also
called the Indo Plywood Group), is dominated by another long-standing client of president
Suharto, the immensely rich Soedono Salim or Liem Sioe Liong. Salim controls the
Kalamur group through his son, Anthony Salim (Liem Fung Sen). Liem Sioe Liong is
Indonesia’s richest man and also controls the country’s largest business conglomerate, the
Salim Group. Liong’s relationship with Suharto is as old as Hasan’s, and presently includes
Suharto involvement in Salim Group operations.342 Salim has also an immense network of
business contacts with several of the president’s children. Anthony Salim is of course
connected to his father through several business links, and also to the Sutanto family (which
shares ownership of PT Kayu Lapis, the 10th largest group on the list, with Bob Hasan)
through Djuhar Sutanto’s (Liem Oen Kian) and Anthony Salim’s shares in the First Pacific
Group, the holding company for Soedono Salim’s overseas operations (Robison 1986:308).
Djuhar Sutanto and his family members are also major shareholders in Salim’s Indonesian
operations like PT Indocement and PT Bogasari (flour milling). The Sutanto family ranks
as the largest shareholders in the Salim business empire outside the Salim family (Robison
1986:298-299, Suryadinata 1995:141, 164).
       The Suharto family has also interests in forestry through their yayasans or charitable
foundations commanding vast financial resources. According to Robison, the Yayasan
Harapan Kita and Yayasan Trikora, both having Suharto family members as shareholders,
control the forestry company PT Hanurata. PT Hanurata owns a 300.000 ha concession in
East Kalimantan (Robison 1986:344, APKINDO 1992b).
       The business constellations and networks in Indonesian forest industries have a
variety of neopatrimonial characteristics. In some cases, the military still control
concessions they received to secure their loyalty to the President. However, it is also clear




                                            304
that Chinese groups give access to military interests to secure their economic assets. As
mentioned, most of the Chinese are not very powerful politically, and they need strong
allies to protect themselves against widespread anti-Chinese sentiments (Crouch 1979,
Anderson 1990, Ross 1996). According to Mufti (1993) 99 percent of the plywood
production companies have strong links with sections of the military for political
protection. The biggest companies were still dependent on co-operation with some military
concession holders in the early 1990s.343
        The Chinese are also instruments of nepotism, another neopatrimonial political
practice. The increasing economic co-operation between the President, his family and the
biggest Chinese tycoons are arrangements that benefit both parties. While the Suhartos get
rich, the Chinese tycoons gain access to subsidised credit and financing, special contracts
and general political protection. To a certain extent, these practices fit well into
Lemarchand’s (1988) concept of prebendalism344 or Evans’ (1989) concept of a predatory
state. The alliances between the Suhartos and the Chinese indicate that Suharto has become
so powerful that he can afford to ignore wide-spread resentment both from sections of the
military and the population at large. There is little doubt that the President has the upper
hand in his relationship to the richest Chinese groups. However, at the level of influence, it
is likely that these interests have increased their access to decision-making through these
arrangements. Both Schwarz (1994) and Bresnan (1993) note that Prajogo, Hasan and Liem
Sioe Liong increased their influence on Suharto in the 1980s and the early 1990s. MacIntyre
(1994:254) even suggests that since that only a limited number of business people can get
close to the President enable some of the richest businessmen to become political sub-
patrons themselves.


342Interview with an Indonesian businessman.
343Zulkarnen (1994:23-24) cites from an interview with Prajogo Pangestu, the biggest plywood producer, in
1993: «The Forest Exploitation Right area really being under the flag of Barito is only to the extent of 1,9
million hectares. The rest is the area in co-operation with the holders of the Exploitation Right at middle and
small scales. For instance, the Forest Exploitation Right area of General Panggabean is managed by us. We
enter into co-operation with the Army, the police, the Air Force (such as in Morotai island) and the Navy (in
Halmahera).»
344 Lemarchand does not use the word prebendalism. However, he talks about prebends and prebendal
accumulation as an aspect of patronage systems in Africa (Lemarchand 1988:156. He understands prebends as
(Lemarchand 1988:153): «The appropriation of state resources for personal gain, rather than for amassing
public support…».



                                                     305
        These ties produce a peculiar and very strong form of client politics in Wilson’s
(1980) terminology. Interests in the Indonesian forest industry are concentrated and well-
organised; a precondition for power and influence according to Wilson. However, in
Indonesia, concentration and organisation is the outcome of a particular strategy from the
president to enrich his family and some of his closest associates, and to appease and reward
some military factions. Thus, the process of concentration and organisation in the
Indonesian forest industries is not mainly the outcome of strategies of concentration and
consolidation among independent economic actors. Rather, the process of concentration is
the outcome of a mutually beneficial strategy promoted by the President and his family in
companionship with the ethnic Chinese, with the military as less dominant partners. The
discipline and tight organisation of APKINDO, the main organisational expression of the
Indonesian wood industries, is based on the unique positions of Hasan and his associates’
position in Suharto’s personal economic strategy. APKINDO and the other wood industry
organisations have not emerged as a consequence of economic incentives for organisation
and lobbying, but as a consequence of Hasan’s relationship to Suharto.
        The top-down character of APKINDO is a symptom of the organisation’s role as a
private benefit to Bob Hasan. Hasan dictates his rules on the wood industries, and is not
accountable to his fellows in APKINDO in spite of his claims to be «only a chairman».345
Membership in APKINDO is compulsory for all plywood producers (World Bank
1993a:148, Dauvergne 1994:514).
        A story from the newspaper Jakarta Post about the increases in the sawn timber
taxes in November 1989 is illuminating in two ways. In the first place, it demonstrates
Hasan’s power in forestry as he as a chairman of a business organisation is given the task of
orienting members of the Indonesian parliament (DPR) about the tax changes. If APKINDO
was an independent business organisation and Hasan just a business leader, why is Hasan
given the task of orienting the People’s Consultative Assembly? 346 The second point is


345Interviews with staff connected to the Ministry of Forestry, June and July 1993. For Hasan’s claims cfr.
the article: «Shades of green», The Economist, 18. April 1992, pp. 62-63.
346The Jakarta Post gives other examples of Hasan directly informing the People’s Consultative Assembly
and the press on forest policies. See the Jakarta Post : «Sixty licenses revoked due to reckless logging», 15.
February 1990:7, «Indonesia will continue to tap its forest resources despite criticism», 16. May 1990:7.



                                                    306
equally striking. According to this article, members of the Indonesian sawmill association
(ISA) who prefer to stay anonymous in fear of retaliation, complained that they were not
involved in this decision.347 This interpretation of Hasan’s autocratic role vis-à-vis other
forestry interests is supported by Vatikiotis (1993:44) and sources connected to the Ministry
of Forestry as well as the Indonesian business community.348 One may also ask why Hasan
does not take into account the opinions of the members of his own business organisations,
and why these members choose to expose their objections in anonymity? If Hasan was only
a chairman and an instrument of APKINDO’s members, as he claims himself, why did not
this debate take place openly?
        Moreover, APKINDO seems to be a considerable source of self-enrichment for
Hasan. APKINDO puts high charges on exported plywood, and it requires exporters to use
the Nusamba controlled Karana Shipping Lines and Tugu Mandiri insurance company
(Thompson and Duggie 1996).349 The funds channelled to Hasan through these
arrangements are large, and may represent a significant share of the profits of plywood
owners. This makes Hasan a substantially more important player in terms of profit and rent
acquisition from the wood sector than what his direct control over forest assets through
Kalimanis should indicate. Moreover, since the Suharto family controls a majority in
Hasan’s Nusamba group through the yayasans, it may be argued that Hasan’s self-
enrichment through his control over Kalimanis, Karana and Tugu Mandiri is equally
advantageous for the Suharto family. In this way, there is a direct link between the profits
from logging and plywood production and income for the Suharto family.350 These direct


347See the article: «Increases in sawn timber export taxes will boost wood industry», Jakarta Post, 29.
November 1989.
348Interviews with Indonesian forest researchers with links to the Ministry of Forestry, as well as an
anonymous Indonesian businessman, July 1993. Confirmed by Mufti (1993).
349Cfr. the article: «Apkindo’s All-Encompassing role», Indonesia Business Weekly, No. 12, 6. March
1995:8. Here based on Dauvergne (1997:91). According to Robison (1986:260), Hasan’s Pasopati group held
shares in Karana in the middle of the 1980s. Karana was a log carrier in this period, According to the same
source Karana pays dividends to Mrs. Suharto’s Yayasan Kartika Jaya. In addition, powerful military families
were involved in Karana. According to the article: «Tugu Mandiri Ekspansi ke Banjarmasin», Banjarmasin
Post Online, 4. April 1997,
http://bjm.mega.net.id/bpost/pustaka/0404/ekbis/eks2.htm, Nusamba, controlled by Hasan and the Suharto
family’s yayasans, controls 30 percent of the shares in Tugu Mandiri. Various pension funds control the rest.
350My claim that Hasan and Suharto has a very high level of control over the forestry sector is to a certain
extent in conflict with Dauvergne (1997:94), who claims that Suharto is forced to use logging concessions as



                                                    307
links between clientelism and self-enrichment for the presidential family substantiate my
claims about the prebendal (Lemarchand 1988) characteristics of the logging and plywood
sector in Indonesia.
        Clientelist networks at the regional and local levels match the enormous influence
that Hasan and some of the most privileged businessmen enjoy over forest policies at the
central level. In the previous section, I mentioned the importance of collusion between
military staff and concessionaires at the regional and local level as an explanation of
inefficient field monitoring and inspection. These local and regional micro-networks,
assisted by lack of transparent employment routines, enhance the influence of
concessionaires also at the local and regional level, and impede enforcement of logging
rules. Thus, while aggressive rule enforcement in Brazil, though severely restricted by
shortages of staff and money, was tried achieved by IBAMA’s superintendents in the early
1990s, similar attempts very seldom take place in Indonesia. Local forestry offices are
easily manipulated through bribes, or so- called «envelopes».351 However, I also argue that
there are clear limits to such corruption defined by the centralised character of prebendal
practices in Indonesia. While lax rule enforcement, low rent capture and other regulatory
weaknesses benefit the most powerful parts of the logging industry as they increase the flow
of profits, decisions that help to sustain this flow of profits are more rigorously enforced.
The prime example here is the log export ban. As large-scale smuggling of logs out of the
country would deprive central figures in Indonesia from their profits, the log export ban is
enforced more rigorously than decisions that could reduce these profits.
        Thus, I conclude that the regulatory problems in Indonesia described in chapter four
are well explained by these domestic social and political relations. The capture of
Indonesian regulatory agencies by business interests has become so complete because of the
strength of the ties between the President, the military and the most important companies
and organisations in logging and wood processing. These groups have captured the main


patronage due to the «web-like» character of the Indonesian society. I find that the extreme centralisation of
control in the hands of Suharto and his unconstrained moves to enrich himself and his family demonstrate an
independence of competing actors in the military and society that makes him virtually independent of «local
strongmen», who are the main barriers to the development of strong states according to Migdal (1988).
351 Interview with Indonesian forest researchers and staff connected to the Ministry of Forestry in June and
July 1993 and March 1995.



                                                    308
regulatory agency, the Ministry of Forestry, and resisted incentive changes and increases of
enforcement that may reduce their profits. Drawing on Medard (1996), it can be argued that
the Ministry is charged with enforcing the law, but unable to enforce the law on the most
powerful business interests because these groups are based in social and political relations
above the law. Concentration and internal organisation in the wood industries is an outcome
of existing power arrangements ultimately based on the army’s and Suharto’s power
monopoly, and not on processes of market based processes of concentration that again lead
to tight internal organisation and the emergence of concentrated and powerful organisations
independent of the state.
       The distinction between processes of concentration and organisation based on
benefits distributed from a powerful patron and processes of concentration and organisation
based on collective organisation among politically independent commercial actors is a
common focus for some prominent analyses of the New Order. Robison (1986:393-395)
and MacIntyre (1994:257.259) expect some kind of regularisation of business-government
interaction and the development of rule of law when capitalists become many enough and
tired enough of the volatility of property rights and investments caused by neopatrimonial
practices. However, forestry in Indonesia is not regularised by any rule of law. When
looking at forestry in Indonesia, it is easy to agree with Winter (1988:122-125) that growth
and diversification of the Indonesian economy may co-exist with widespread
neopatrimonial practices, as these practices simply tend to favour many of the biggest
companies.
       The fact that the veil of enforced regulations in forestry all favour the most well-
connected industrialists largely at the expense of intertwined long-term economic and
environmental problems, supports the view that regulation in Indonesian forestry is little
more than a covert and quasi-formal instrument for the rich and powerful individuals to
increase their wealth. This is also the reason that the public choice inspired analyses of
regulation (Stigler 1971, Tirole 1992) presented in section 4.2 fit so well into the
Indonesian case. As pointed out by Evans (1993), states with strong predatory
characteristics easily disintegrate into political markets accessible for the parochial interests
of wealthy individuals. The inability of such states to deliver collective goods is in



                                              309
accordance with Medard’s (1996) warning that neopatrimonialism, if carried far enough,
may destroy the state.352 However, it should also be mentioned that I make these claims
only for the Indonesian forestry sector. Many authors have remarked the tension between
macro-economic policy-making carried out by professional agencies largely insulated from
neopatrimonial pressures and policy-making in various economic sectors fragmented by
extreme pressures from a multitude of parochial interests (Robison 1986, MacIntyre 1994,
Booth 1995:303-304).
       Both Robison (1986:391-395) and MacIntyre (1994 indirectly link the pervasive
influence of neopatrimonial practices in Indonesia to the legacy of colonialism. Dutch
colonialism failed to produce domestic classes or groups that could constrain those in
control of the state to any considerable extent. Both a low level of industrialisation at the
end of the colonial period and the cleavages between Chinese and indigenous businessmen
prevented the rise of an entrepreneurial class that could have acted collectively in favour of
predictable rules by supporting the creation of a Weberian bureaucracy and rule of law. The
absence of such political constraints on the state grounded in the absence of an emerging
bourgeoisie has created (Robison 1986:391): «…a relative vacuum of class-based political
power, [in which] the officials, in particular the military, have been able to appropriate
freely the apparatus of the state...few constraints are placed upon the ruling politico-
bureaucrats». It may be argued that this absence of socially based political constraints has
facilitated the neopatrimonial practices that characterise the forestry business in Indonesia,
and that the political forms that constrain reforms today have colonial roots.
       Ross (1996) has argued that declining military involvement in the industry permitted
some very limited reforms in Indonesian forestry, as the ethnic Chinese are more politically
vulnerable. Although this may be a correct conclusion, I argue that the neopatrimonial
patterns in Indonesian forestry are still of a kind that provide extraordinary obstacles to
reform. The military is still involved in the industry, and the networks surrounding the
largest companies and APKINDO are extremely powerful in comparison with regulatory
agencies. Moreover, as suggested by MacIntyre (1994), some of the richest Chinese are


352 Booth (1995) points to similar tensions and dangers in the Indonesian political system. Her main
inspiration is neo-institutional theory.



                                               310
becoming «proxy» political patrons themselves due to their privileged access to the
President.
         These observations have important implications for the comparison between Brazil
and Indonesia. There is a similarity between Indonesia and Brazil in the way that reforms
were avoided in both cases before international incentives for reform emerged. In both
cases, relatively concentrated and well-organised business groups in alliance with sections
of the bureaucracy had privileged access to decision-making. Thus, it is tempting to draw
the conclusion that the somewhat lower concentration and organisation of commercial
actors and their political allies produced a less serious barrier when confronted with
configurations of international and domestic economic incentives in Brazil than in
Indonesia. However, to draw this conclusion, I have to (1) demonstrate that domestic
processes of organisation among domestic pro-environmental actors able to outweigh the
power and influence of commercial actors and their networks did not coincide with and
pre-empt the effects of emerging international incentives in Brazil. Moreover, (2) to be
absolute sure that the groups that dominate the forestry business in Indonesia were able to
influence the Indonesian State largely resist the mounting incentives for reform, I must
demonstrate that pro-environmental actors were less influential and powerful than
commercial actors in Indonesia.
         To respond to this challenge, I will analyse in what ways domestic environmental
NGOs were able to influence the national governments in question. More specifically, I ask
the question whether Brazilian and Indonesian NGOs were able to match or outweigh the
power and influence of the commercial actors in the two countries on the domestic arena at
the same time as incentives for reforms started to emerge. If this was the case in Brazil,
reforms could be the outcome of domestic processes. If this was the case in Indonesia, the
failure of reforms here would have to be found elsewhere.


The domestic environmental movements – weak, divided and less powerful than commercial
actors
In section 3.5, I mentioned that I would focus on two different kinds of power and influence
of NGOs. The most obvious kind of NGO power explaining outcomes in environmental



                                            311
policies is the influence enjoyed by NGOs either because they are integrated into
government decision-making forums or agencies and can exert influence on decision-
makers, or command domestic political resources important for the government that make
them able to bargain over political outcomes.
       The first question I ask is whether Brazilian NGOs were involved in the main
reformatory events in the Brazilian case. The first change here is connected to the
introduction of the «Nossa Natureza» environmental programme in 1988/89. It is clear that
Brazilian NGOs were not involved in the initial phase of this programme. NGOs
participated in several of the «Nossa Natureza» working groups, together with
representatives of various ministries and the academic community. However, they were not
consulted before the initiative was initiated or designed.
       As I have described above, the main actor behind the shaping of «Nossa Natureza»
was General Rubens Bayma Denys from the Secretariat for Defence and Strategic Affairs
(SADEN/PR). Bayma Denys, the secretary-general of SADEN/PR, headed the executive
committee responsible for the plan. SADEN/PR was represented in all the interministerial
groups. Bayma Denys and SADEN/PR were already involved in the planning of the Calha
Norte, a military project for border protection and development in the Amazon region
(Allen 1992). As mentioned above, they perceived external pressure for environmental
reform in Amazonia as camouflage for attempts to challenge Brazilian territorial
sovereignty over the region. Their outlook inspired a strong scepticism also to national
Brazilian NGOs, perceived as potential traitors because of their close contacts with
international NGOs.353 SADEN’s influence on the «Nossa Natureza» programme is
emphasised by the fact that the SADEN-dominated executive committee was free to
appoint the NGO members they wanted as participants in the working groups.354


353In a central document on the military’s outlook on Brazilian affairs from 1989, Brazilian and other
environmental NGOs are considered as possible threats to the security of Amazonia and also as possible
spearheads of foreign economic imperialism (Arnt and Schwartzman 1992:69-70). See also «Ambientalistas
sob suspeita», O Estado de São Paulo, 9. February 1989:13 and Albert (1992:54).
354 Decree no. 96.944, article 4, part VI, § 2. Members of some of the executive groups as well as non-
military members of the programme’s executive committee also reported that the activity of the working
groups was allowed to proceed without interference from SADEN and in communication with NGOs.
Interview with Marilia Cergueira, Department of International Affairs, IBAMA, December 1993. Cergueira
participated in working group II in the Nossa Natureza programme. Interview with Bruno Pagnoccheschi,



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        It should be noted that several of the decrees, laws and suggested by the groups were
in accordance with NGO demands. Examples of this are the PEAL monitoring and
surveillance programme described in chapter four as well as proposals for the establishment
of national parks and national forests. Nevertheless, government decisions were widely
perceived as autocratic. Congressman Fabio Feldmann, leader of the «Green Congressional
Front», remarked that no NGOs or NGO representatives were consulted before the proposal
to establish IBAMA was sent to Congress.355 Vieira (1993:109) also claims that the «Nossa
Natureza» plan was decreed by the executive without a broad dialogue with society: «The
new provisions were, for a great part, issued without further public discussions or active
congressional participation and culminated as a collection of fragmented legislation almost
exclusively by the executive power.»356
        As mentioned, the executive committee of the «Nossa Natureza» programme was
opened only for political representatives from the North region. NGOs were represented
only in the working groups. Governors from the eight states of Legal Amazonia and the
leader of the programme’s executive committee, Bayma Denys, held at least one joint
meeting in which the different decrees, directives and laws published in the beginning of
April 1989 were discussed. Thus, it seems likely that these interests enjoyed a higher degree
of influence on the overall shape of the programme than NGOs, who had to push for
amendments in Congress and public meetings.357
        The favouring of military interests as well as regional business groups in the shaping
of policies for the Amazon region by the Sarney government was most obvious in policies
related to Amazonia’s indigenous populations. Albert (1992) and Allen (1992) demonstrate
how SADEN was able to take full control over this policy area and implement a de facto


representative of SEPLAN/PR (Planning Secretariat of the Presidency of the Republic) in the executive
committee of «Nossa Natureza».
355 Interview with Fabio Feldmann, November 1992.
356Though this view may be correct in general, it should be mentioned that there were occasions when the
environmental movement was able to negotiate changes of the plan. In Congress, Fabio Feldmann, leader of
the «Green Congressional Front», with extensive contacts with the NGO community, was able to negotiate
changes of several of the decrees and laws that came out of «Nossa Natureza». Some of these amendments
implied an increase of NGO influence over the formulation of environmental policies through the inclusion of
NGOs in important forums (Oliveira and Born 1989).
357«Governadores reagem a pressoes do Bird», O Estado de São Paulo, 30. March 1989:17. Interview with
Fabio Feldmann, November 1992.



                                                   313
fragmentation and opening of the Yanomani land in the state of Roraíma for gold miners.
These acts were guided by a strategically motivated fear that indigenous populations
inhabiting the border regions could pose a threat to the security in Amazonia’s border areas
through subversion and alliances with foreign powers (Miyamoto 1989, Albert 1992, Allen
1992). The Sarney government denied giving in to the international and national outcry
against this policy and upheld its decisions. The government stuck to this policy even after
a federal court judged the invasion of the Yanomani land illegal (Monbiot 1991:97).358 The
decision to ignore criticism and even act in conflict with court orders clearly illustrates the
strong influence of SADEN on Sarney’s policies. In this context, it also reveals the narrow
limits to NGO influence on Sarney’s environmental policies.
        The impression that environmental NGOs enjoyed very limited influence on the
Sarney government is bolstered by a digressive look at foreign policies related to reform in
this period. The Sarney government’s position on the international dimension of the
environment and especially on questions related to Amazonia was very defensive. The
government tended to perceive the concerns of foreign NGOs and governments as
camouflage for a desire to challenge Brazil’s sovereignty over Amazonia. Rhetorically, this
idea was presented together with elements of a classical G-77 outlook, relating
environmental degradation to the absence of growth and exploitative North-South
relations.359
        The foreign policy of the Sarney government seems to have been shaped by a
convergence of influence from the military, most notably SADEN, and the Ministry of
External Relations (Itamaraty). For Amazonia, this convergence was particularly clear, as
the official reactions to the pressure on Brazil in this period both touched upon the strategic
vulnerability of Amazonia and the importance of the region for growth and development.
The high level of co-operation between the Ministry of External Relations and the army
during the 1980s regarding a complex of diplomacy and military policies directed to
decrease the vulnerability of the border regions of the Amazon confirms this picture of
foreign policy making (Miyamoto 1989). Miyamoto (1989) analyses both the military


358See also Latin American Weekly Review, 2 November, 1988:12.
359 See for example the article «Presidente acusa desenvolvidos», Jornal do Brasil, 31. March 1989:7.



                                                   314
Calha Norte border protection project and the revival of the Brazil-initiated Amazon pact
(1978) in the 1980s as a unitary political initiative, shaped by the co-operation between
Itamaraty and sections of the armed forces.360 The Amazon Pact is a treaty between Brazil
and its neighbouring countries in the Amazon region which basic idea was to pre-empt
territorial disputes and rivalry. Under president Sarney, it was revived both as an instrument
under the Calha Norte project and as a tool for the construction of a coalition of Amazonian
countries against ecological criticism from the industrialised countries (Santilli 1989). In
May 1989, an Amazon pact summit was held in Manaus on Brazilian initiative. Here,
Brazil’s nationalist position was restated in a declaration supported by all the members of
the pact, also including a rejection of conditionality on multilateral financing (Cleary
1991a:25, Hurrell 1992:407).
        Brazilian NGOs361 and scientists362 denounced the official Brazilian position and
demanded a more co-operative and constructive international position. There was also a
fear that the defensive official position might deprive Brazil of international rewards for
environmental preservation, like World Bank financing or debt-for-nature swaps.363
However, this domestic pressure had little effect; foreign policy formation seemed to be
even more difficult to influence than environmental policy-making.
        To summarise, Brazilian environmental NGOs were not included in environmental
policy-making related to Amazonia under President Sarney. The formation of policies
related to Amazonian environmental questions was dominated by the outlook and initiatives
of various military agencies, most importantly SADEN/PR. Depending on the policy-area
in question, also civilian sections of the bureaucracy with a similar outlook, like the
Itamaraty, co-operated in the shaping of initiatives. The «Nossa Natureza» environmental
plan for Amazonia was clearly controlled by these actors, although NGOs were invited to
participate in the shaping of policies not directly related to the government’s concept of


360 This interpretation is supported by the observation that a revitalisation of the Amazon Pact was included
in the report from an interministerial group responsible for outlining the Calha Norte project in further detail
(Allen 1992:74).
361See for example Allegretti (1988) or Santilli (1989).
362José Goldemberg, rector of the prestigious University of São Paulo, was particularly active. See his
articles: «A Destrução da Amazônia», Folha de São Paulo, 23 April 1989:A-3, or «A Amazonia e os
politicos», O Estado de São Paulo, 30. March 1989:2.



                                                     315
sovereignty and national security. However, it should be emphasised that Brazilian
environmental NGOs had very modest importance as architects behind policy initiatives.
        What about electoral influence? Viola (1988) notes that the environmental
movement had considerable success in overcoming internal cleavages and playing an
important role in local and regional politics in the course of the 1980s. This success also
reached the federal level. The establishment of the Inter-State Organisation of Ecologists
for the Constituent Assembly in November 1985 organised the environmental movements
of six states (Rio Grande do Sul, Santa Catarina, Paraná, São Paulo, Rio de Janeiro and
Minas Gerais). This coalition, later known as «The National Front for Ecological Action»,
organised the environmentalist strategy for the 1988 Constituent Assembly, among other
efforts by launching environmentalist candidates in various party conventions in the South
and the Southeast. The outcome of these organisational efforts, was the establishment of the
mentioned «Green Congressional Front» of congressmen working in favour of putting
environmental clauses into the 1988 Constitution during the Constitutional Assembly this
year (Viola 1988).364
        The introduction of specific constitutional articles on Amazonia was facilitated by
weak Amazonian regional representation in the constitutional sub-commission that
addressed Health, Security and the Environment.365 Important sections of the original
NGO-inspired constitutional proposals survived the political bargaining in the Constituent
Assembly. Amazonia was, as previously mentioned, pointed out as a «national patrimony»
in Article 225. This article also demands the development of a policy for all the national
patrimonies that involves both protection and sustainable resource management.
        However, was the constitutional process important as a background for the
initiatives under the «Nossa Natureza»? On the one hand, the constitutional demand was a


363«Meio ambiente reduz a divida externa», O Estado de São Paulo, 19 August 1988:10.
364Bernardo and Bastos (1993:7) point to the following strategies used by NGOs to influence the
constitutional process. First, formation of the National Front for Ecological Action, unifying famous
environmentalists and scientists with a reputation both inside and outside Brazil. Second, establishment of a
«Green Congressional Front» unifying deputies from several parties. Third, arrangement of special tours for
deputies to places suffering from especially dramatic environmental degradation. Fourth, attention towards the
«environmental issue» was maintained through public events covered by media.
365According to Bernardo and Bastos (1993:7), there were only seven deputies from Legal Amazonia among
the 43 members of this sub-commission.



                                                    316
centrepiece of the official justification for the launching of this policy.366 On the other hand,
one of the key environmental decision-makers in the Sarney government, Fernando
Mesquita, explicitly denounced any allegations that adjustment to domestic NGO pressure
was an important motive behind the launching of the «Nossa Natureza» plan. According to
him, international pressure was the dominating motive of policy change.367
        Thus, it is clear that environmental NGOs were important in defining the sections on
the environment in the Constitution. However, the constitutional demands were not
important as motives for the mentioned policy changes, which preparation was in the hands
of central actors in the military and civilian bureaucracy. Thus, the changes in focus here
remain unexplained by pointing to any the effects of increasing domestic pro-environmental
mobilisation.
        To understand the modest influence of the relatively numerous «green congressional
block», it is important to note the strong position of the President in the Brazilian
constitution. By ruling by decree, the President is largely able to ignore congressional
dissatisfaction or protests. Thus, success in congressional elections and law making does
not always imply a corresponding increase of influence on the decisions of the President
(Lamounier 1994). The President’s ability to implement his programme is certainly
enhanced if he controls a majority in Congress, but his wide powers imply that he may
ignore congressional dissatisfaction to a large extent. Thus, it was relatively easy for Sarney
to ignore the «green congressional block».
        In addition, President Sarney was leader of the party PFL, a conservative party with
strong electoral support from the North region and Maranhão (Fleischer 1991). Given the
strong position of the president, it is likely that members of his party may exert a degree of
influence on presidential decisions out of proportion with their representation in the
Congress.


366A paper issued by the government in 1989 informing the international opinion states the following about
the links between the Constitution and the Nossa Natureza plan: «That initiative of the government coincided
with the promulgation of the new Constitution, on October 5, 1988, which devoted a whole chapter to the
issue. (...) Advancing Congressional deliberations (...), the José Sarney administration reinforced the priority
placed on the sector by starting studies aimed at the creation of the “Our Nature” programme five exact days
after the promulgation of the Constitution».
367Interview with Mesquita in November 1993. See also Goldstein (1992:182) for a similar evaluation.



                                                     317
       Then, what about Collor’s presidential period (1990-92), when some reforms gained
stronger momentum? However, neither in this case can the choice to speed up reforms be
ascribed to NGO participation in government decision-making. True enough, the basic
document related to the environmental policies of the Collor government is a short (70
pages) report written by Helio Setti, an environmental activist with a background from the
movement to save Brazil’s Atlantic forest (Collor, undated). This document was published
between the first and the second round of the 1989 presidential elections, and signed by
Collor. Increased participation of environmental NGOs and private enterprise was targeted
as one of five important objectives of the environmental policies of Collor (Collor
undated:5). However, though a NGO representative wrote this document, the decision to
improve Brazil’s environmental record was not made in communication with Brazilian
environmental NGOs, according to two of the most important Brazilian NGOs.368 This is
not unexpected. Collor was a political outsider from the tiny Northeastern state of Alagoas
with few connections to the wider Brazilian society (Flynn 1993). Moreover, the
justification of environmental reforms given in the 1989 environmental document does not
mention national NGOs, but is almost exclusively focused on Brazil’s position in the
international economic system. More specifically, the change of positions on the
environment is explicitly linked to an improvement of Brazil’s connections with the
industrialised world and the economic reform programme.369
       However, the reforms that were implemented after this change of strategy
undoubtedly implied a certain increase of NGO influence on policies. Connections between
the NGO movement and the Collor government were clearly closer than the connections
between NGOs and the Sarney government. People like Lutzenberger, Martins, Pádua and
Possuelo were parts of or closely connected to the Brazilian environmental movement.
However, it is important to notice that this increase of government-NGO connections
mostly was of a personal, and not an institutionalised character. The increased government-
NGO connections were the outcome of the inclusion of some NGO members or associates

368Own interview with top level staff at FUNATURA and FBCN in November 1992 and December 1993.
369Collor 1989:4, my translation from Portuguese): «I am conscious that if Brazil does not confront the
environmental question internally and externally, this will make our programmes for economic development
and international financing difficult.»



                                                 318
in the bureaucracy and the government, and not increased representation of NGOs in
important government forums. This lack of institutionalisation made contacts between the
NGO community and the government vulnerable to political change and personal
idiosyncrasies.370
        Though the «Operation Amazonia» monitoring programme was in line with the
demands of most Brazilian environmental NGOs, it is difficult to find any evidence of co-
operation between the IBAMA president (1990-91) Tania Munhoz and NGOs over the
programme. NGO representatives also complain that Munhoz’ style of leadership was
highly autocratic and implied few consultations with NGOs. This changed when the adjunct
secretary of SEMAM, Eduardo de Souza Martins, took over as president of IBAMA
following the dismissal of Munhoz in 1991. Martins had strong informal ties with the NGO
movement, which continued in his period as IBAMA president. NGOs were actively
brought into the efforts for environmental monitoring and surveillance as participants in
decisions to select areas for monitoring and inspection at IBAMA.371
        During the same period, the so-called Pilot Programme for the preservation of
Amazonia funded by the G-7 countries and administered by the World Bank opened new
opportunities for NGO influence. The project was discussed in four meetings between the
World Bank, The Commission of the European Community (CEC) and the Brazilian
government between July 1990 and December 1991 (Batmanian 1994:4). On the initiative
of the G-7 countries and the CEC, NGOs involved in environmental questions in Amazonia
were also invited to meetings with the Brazilian government to discuss the preliminary
proposal of the government. However, this was against the wishes of the Brazilian



370The Congressman Fabio Feldmann perceives the lack of the establishment of institutionalised and stable
forums for communication between the government and NGOs on environmental issues as one of the main
environmental fiascos of the Collor government. One of the most important reasons for this was the disastrous
administrative skills of the Secretary for the Environment, José Lutzenberger. Lutzenberger’s administrative
style will not be discussed here. However, it should be noticed that several interviewees connected to the NGO
movement complained about Lutzenberger’s isolation from the Brazilian NGO community.
371Interview with Martins in November 1993. Confirmed by Ana Maria Fonseca (FBCN) in interview
December 1993. Later, NGOs have become important as sources of information for regional IBAMA offices.
In 1993, there was a campaign by a group of Amazonian NGOs called Coalition against the Predatory Cutting
of Timber in Amazonia that resulted in legal actions against large timber companies like Maginco, Perachi and
Impar, see Informativo, January/February 1993:1. In September 1993, two timber entrepreneurs were
sentenced to pay the equivalent of USD 240.000 for the reforestation of areas that they had cut on indigenous



                                                    319
government (Batmanian 1994).372 After a period of hesitation, a Working Group on the
Amazon (GTA) was established to co-ordinate NGO inputs to the Pilot Programme.373
Because the Pilot Programme has suffered from extensive delays, it is difficult to assess the
influence of NGOs on the programme itself.374 Though the GTA indeed indicates a shift in
the access of NGOs to government compared to previous governments, it is difficult to
trace any influence from the group on any policies defined at SEMAM apart from the Pilot
Programme under Collor.375
        The increased attention to the demands and rights of Amazonia’s indigenous groups
marks the clearest difference to policies under Sarney. However, though Sidney Possuelo,
who initiated a strong increase of demarcation of indigenous territories in 1991, had
extensive contacts with the NGO movement, again there was little direct domestic NGO
involvement in the decision to change policies.376 Indigenous policies were important
especially because of the international focus on the Yanomani reservation and its relevance
to Collor’s broader political goals, not because Brazilian NGOs participated in decision-


lands in the state of Mato Grosso. These sentences were the first ones distributed for illegal logging on the
indigenous territories of Brazil, see Informativo August/September 1993:4.
372But it was in accordance with the preferences of Eduardo de Souza Martins, Conjunct Secretary of the
Environment. According to Bruno Pagnoccheschi, ex-planning director in SEMAM, Martins was one of the
driving forces behind the establishment of GTA.
373According to Kolk (1996:260), as of July 1991 the GTA included: Conselho Nacional dos Seringueiros
(CNS), Comitê Intertribal-500 Anos de Resistência, Instituto de Estudios Amazônicos (IEA), Centre de
Trabalho Indigenista (CTI), Fundaçâo Mata Virgem (FMV), Associação Brasileira de Antropologia (ABA),
Movimento pela Sobrevivência na Transamazônica (MST), Fundaçâo Vitória Amazônica (FVA), Projeto
Estudos sobre Terras Indígenas no Brasil (PETI), Comissão pela Criação do Parque Yanomami (CCPY),
Instituto de Pré-História, Antropologia e Ecologia (IPHAE), Centro de Estudos Avançados de Promoção
Social-Projeto Saude e Alegria (CEAPS), Fundaçâo Pro-Natureza (FUNATURA), Instituto do Homem e do
Meio Ambiente da Amazônia (IMAZON), and the Fundaçâo SOS-Amazônia. According to Batmanian
(1994:5), the number of Amazonian NGOs involved in the GTA had increased to more than 250 in late 1993.
374However, it is clear that the programme was open to considerable NGO influence as the international
review committee for the programme approved by participating countries in March 1993 included at least two
representatives of important Brazilian NGOs (Maria Helena Allegretti, Institute of Amazon Studies and
Henrique Brandão Cavalcanti, director of the Jari plantation and member of the environmental business NGO
«The Brazilian Foundation for Sustainable Development»), and several researchers with links to the NGO
community. Furthermore, there were three NGOs (two Amazonian, one involved in the protection of the
Atlantic rainforest) among the eleven members of the co-ordinating commission, which represented the
highest level of involvement from the Brazilian side. In addition, it is clear that some of the «demonstration
projects» involved in the Pilot Project might benefit NGOs directly as project executors (Batmanian 1994).
375Information by former adjunct secretary of SEMAM Martins in interview November 1993 and former
director of planning at SEMAM, Bruno Pagnoccesschi, in interview in December 1993.
376Answer to questionnaire from Sidney Possuelo August 1994, own interview with Marcio Santilli, NDI,
December 1993.



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making under Collor. The decision to appoint Possuelo, an official with higher credibility
than former FUNAI presidents, was a move to improve Brazil’s international record, not a
response to domestic NGO demands for reforms.
        What about José Lutzenberger, himself a very important NGO representative with an
important position in the Collor government? 377 Two of Lutzenberger’s conditions for
accepting the position as Secretary of the environment was an improvement of the policies
related to the Yanomani reservation and the abolishment of fiscal incentives, both important
reforms carried out under Collor.378 Lutzenberger apparently also had a special personal
relationship to the president, giving him a «direct line» to the president’s
office.379 However, it should be noted that Collor’s decision to launch a pro-environmental
policy was made before his decision to appoint Lutzenberger to the position as Secretary for
the Environment. Like the appointment of Possuelo, the appointment of Lutzenberger
marked a new willingness to embark upon reformatory policies. This appointment was not a
symptom of increased NGO influence even though a famous environmentalist was included
in the government.
        The same applies to the appointment of the influential NGO FUNATURA’s
president Maria Tereza Jorge Pádua to the position as president of IBAMA in 1992. The
main factor behind this appointment was her outstanding reputation in the field of
environmental conservation380 as well as her close relationship to the Minister for
Education and Interim Secretary of the Environment José Goldemberg, and not any
particular pressure from the domestic NGO movement. Again, the same sequence of events


377Lutzenberger is the pioneer of modern Brazilian environmentalism. In June 1971, he established the
Gaucho Association for the Protection of the Natural Environment (AGAPAN) based in Porto Alegre, the
capital of Rio Grande do Sul. This organisation is perceived as the first modern environmental NGO in Brazil
and Latin America (Viola 1988:214, Goldstein 1992:138-139).
378In the article «Lutzenberger define condicoes para colaborar com novo governo», Gazeta Mercantil, 16.
February 1990:18, Lutzenberger mentions the abolishment of fiscal incentives for ranching in the Amazon, the
scrapping of the construction of the BR-364 road connecting Peru and Brazil, and better treatment of
Amazonia’s indigenous groups as prerequisites for accepting the job as Secretary for the environment.
379See the article «Depois de sete meses, Lutzenberger ainda não se adapta à burocracia», Folha de São
Paulo, 13. October 1990:A-5, where Lutzenberger’s «direct line» to the president is mentioned. Confirmed by
Bruno Pagnoccheschi , director of planning at SEMAM under Lutzenberger, in interview in December 1993.
380Apart from building up the highly professional NGO FUNATURA, Pádua was famous because of her
accomplishment as head of the Department of National Parks and Equivalent Reserves at IBDF during the
1970s and 1980s. See Foresta (1991).



                                                   321
is visible; the basic decision to promote reforms was made before NGO staff was included
in decision-making. This is also in line with NGO characterisations of the Collor
government as difficult to get access to for the environmental movement.381
        A look at the congressional situation under Collor indicates that regional interests
from the Amazon were on the offensive and outnumbered the pro-environmental forces in
Congress. The so-called Green Congressional Front, described in more detail above, was
reduced with more than 50 percent, from 82 to 43 congressmen out of a Congress counting
503 congressmen. Out of nine senators, three were not re-elected. Against this, there were
65 congressmen and 21 senators from the North region. In addition, there were 18
congressmen and three senators from the state of Maranhão, and eight congressmen and
three senators from the state of Mato Grosso. Maranhão includes sections of Legal
Amazonia and has a strong ranching and mining industry.
        Although, as pointed out above, the «Amazon bench» in the federal Congress failed
to agree on a policy for the region, a vast majority of these representatives opposed the
change of policies under Sarney and especially under Collor. I also mentioned that the
Amazon bench was able to effect the firing of officials in the environmental bureaucracy.
The firing of Tania Munhoz as president of IBAMA in 1991 was interpreted by important
politicians and newspapers as a concession to regional interests who were provoked by the
body’s monitoring, inspection and improved licensing efforts in the region. Their influence
was strong at this moment because Collor needed congressional support for various
initiatives.382 Although the main reason for the dismissal of Lutzenberger in 1992 was his
administrative inability and reluctance to accept official Brazilian positions on
environmental co-operation, this move was also a popular concession to the political
representatives from Legal Amazonia and other states of Brazil with an extensive forest
cover.383


381Interviews with top staff at FBCN, FUNATURA and WWF-Brazil.
382Interviews with Fabio Feldmann, José Goldemberg and Tania Munhoz in November 1992. See also the
article «Presidenta do IBAMA pede demissão», Folha de São Paulo, 3. October 1991:A-10. In this article, the
dismissal of Munhoz is interpreted partly as the outcome of Lutzenberger’s dissatisfaction with IBAMA, and
partly as the outcome of Collor’s need for congressional support from the «Amazon bench».
383The immediate background for Lutzenberger’s dismissal was a conflict between him and IBAMA’s
president Martins over forestry policies in Amazonia, and statements from Lutzenberger that external funding



                                                   322
        In general, it is also important to mention that although it had a bearing on the
Constitutional process, the Brazilian environmental movement has very limited impact in
presidential elections.384
        During the 1989 presidential elections, the economic crisis and the general crisis of
the Brazilian political system and society outranked environmental problems in the Amazon
in public opinion. According to polls, environmental problems in general ranked below
issues like security, health, education, inflation and corruption (Hurrell 1992:413).385 This
was partly reflected by the small electoral support for the presidential candidate of the
Green Party («Partido Verde») in the 1989 elections. This party has maintained a strong
focus on Amazonia in addition to a series of other issues related to the environment as well
as alternative lifestyles (Goldstein 1992:168-176). The party’s candidate, Fernando Gabeira,
received only 0,2 percent of the votes (Lamounier 1990:190).386 The party registered a
modest success in 1990, when it managed to elect a Congressman during the congressional
elections this year. However, the party, which had young middle and upper-class voters
from the city of Rio as its main electoral basis, has not been able to depart from these social
roots and become a strong, national environmentalist party (Goldstein 1992:168-176). In
the context of the serious problems of the Brazilian economy and society in these years, this
is not surprising.
        The relatively modest voter attention to environmental issues also reflects the
narrow social base of the environmental movement. The major Brazilian NGOs focused on




for the environment in Brazil was futile due to rampant corruption. Collor’s main motive for dismissing
Lutzenberger is said to have been a fear that he could embarrass the Brazilian government during the UNCED
conference. Cfr. the article: «Collor sacks defender of Amazon rainforest», Financial Times, 23. March
1992:2.
384However, at state level environmental NGOs are able to attract considerable electoral support, especially
in the more developed states like Rio de Janeiro and São Paulo (Guimarães 1991:201-202).
385However, it should be mentioned that environmental issues were entering the agenda rapidly. A survey
carried out in 16 countries by UNEP in 1989 singles out the Brazilian population as one of the most
environmentally concerned in the world. This is also the case for forest-related issues, that 86 percent of
Brazilians considered as very important for the quality of the environment. Brazil’s score on this issue was the
second highest of the survey (Henriksen and Skjåk 1989).
386This low support must also be perceived in the light of the Green Party’s unwise political strategy before
the elections in 1989. The party became strongly divided over the issue of support to the left-wing PT
(Worker’s Party) during the 1989 presidential elections (Goldstein 1992:176).



                                                     323
global environmental problems like biodiversity loss and climate change; FUNATURA,387
SOS Mata Atlantica and the FBCN all have a small membership base mostly restricted to
the urban middle class in Brazil’s most developed regions.388 Furthermore, there are
important differences between their agendas and the agendas pursued by the larger, socio-
environmental NGOs. While the mentioned middle-class based NGOs were addressing
global environmental problems, other socio-environmental NGOs addressed the needs of
the urban and had good connections with left-wing parties. On occasions, these NGOs
supported parts of the anti-imperialist rhetoric of the Sarney government, for example by
denouncing debt-for-nature swaps.389 Such cleavages made it difficult to establish a united
environmental movement (Viola 1988, Goldstein 1992, Hurrell 1992:413).
        NGOs based in the Amazon region itself are even weaker politically than those
based in the South and the Southeast when it comes to their influence at the federal level
(Arnt and Schwartzman 1992). Maybe the most successful Amazonian NGO in terms of
influence, The National Rubber-Tapper Council, was organised with crucial assistance from
the Brasília-based «Institute of Amazon Studies». The rubber-tapper council succeeded in
influencing the Sarney government to establish so-called «extractive reserves» for
Amazonia’s rubber-tappers. The same is the case for the indigenous groups of Amazonia,
who organised themselves with the assistance of the Brasília-based NGO UNI and the São
Paulo-based NGO CEDI. These organisations were important actors behind the claim for
increased demarcation of indigenous reserves; a claim the Collor government responded to
with Possuelo’s demarcation programme. However, though the successes of these
organisations have been considerable, these successes have been crucially dependent on


387Of these organisations, FUNATURA has the most extensive focus on Amazonia as it has done research for
sub-sections of the PMACI (The Plan for the Protection of the Environment and Indigenous Communities) for
the pavement of the Porto Velho-Rio Branco highway financed by the Interamerican Development Bank (Arnt
and Schwartzman 1992:303). FUNATURA also arranged a series of seminars on Amazonia in 1988-1989,
bringing together NGOs and scientists to make suggestions to guidelines for environmental management in the
region (FUNATURA 1990:2).
388According to Arnt and Schwartzman (1992:331-332), FBCN has about 3.500 members from all Brazilian
states, but especially from Minas Gerais, São Paulo and Rio de Janeiro. Of these, 40 percent were persons
with experience from federal or state environmental administration, and 60 percent were students. Interviews
with Maria Tereza Jorge Padúa in October 1992 and Ana Maria Fonseca, December 1993.
389For this conflict, see the interview with FUNATURA’s president Maria Tereza Jorge Pádua: «Sou
favorável à conversão e vou lutar por ela», Jornal do Brasil, 30. March 1992:3.



                                                   324
transnational support.390 The resources they command within the boundaries of the national
political system have not been important reasons for their recent successes.391 Their
successes have been accomplished almost always through transnational networks,
transforming domestic mobilisation to external pressure on the state apparatus.392 These
successes have taken place only after the relationship between Amazonian deforestation and
global environmental problems came to occupy a high-ranking position on the international
agenda. Only after this, considerations for the inhabitants of the forest attracted strong
international attention.
        One factor widely held to be a precondition for NGO power and influence present in
Brazil also seems to have failed to make any big difference. This was the presence of
democratic freedoms that guaranteed the right to discuss sensitive political issues and
organise without state interference. As I have demonstrated, the powerful military perceived
environmental reform in Amazonia as a very sensitive issue in terms of national security. I
have also shown that military spokesmen perceived sections of the environmental
movement as risky for Brazilian security. However, Brazilian NGOs enjoyed full access to
media and launched strongly politicised attacks on the Brazilian government; particularly

under Sarney. Both government officials, the military and important business interests in
the region were attacked and ridiculed by NGOs, academics, researchers and other
critics.393 Grass-root support organisations like CEDI and The Institute of Amazon studies
were allowed to co-operate with local groups without substantial restrictions, even though
such co-operation was perceived as a potential danger to territorial security by the military.

390These organisations (IEA, UNI and CEDI) are prototypes of what Fisher (1993) calls «grassroot-support»
organisations. They link local NGOs to international funding sources and policy agendas, thus bypassing the
national political system.
391The IEA is an elite organisation made up by Brazilian experts with a long experience with co-operation
with Amazonia’s rubber-tappers. Its financial basis is almost exclusively international, see Arnt and
Schwartzman (1992:298). The same is the case with UNI (Arnt and Schwartzman 1992:348). CEDI has a
broader social base due to its connections to the catholic church. Its agenda is also much broader than the
protection of the indigenous populations of the Amazon. In 1995, CEDI and UNI were united in the
organisation «Instituto Socio-Ambiental» (The Socio-Environmental Institute). Though radical wings of the
Catholic Church have worked in favour of a policy favouring Amazonia’s indigenous populations, their
influence on the Brazilian state has been very limited.
392For this point regarding the rubber-tapper movement, see Schwartzman (1992).
393 For a particularly condemning attacks, see the article: «Lutzenberger desconfia do programa “Natureza”»,
O Estado de São Paulo, 16. October 1988:28.



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However, destruction in the Amazon did not reach the dimensions of a major domestic
public scandal attracting very high political attention, and political mobilisation in Brazil on
environmental issues was not strong enough to force the government to change its policies.
Political cleavages within the environmental movement that followed the deep social and
economic cleavages of Brazilian society in general seem to have blocked the development
of an united environmental movement that perhaps could have enjoyed more influence in
congressional and presidential elections.
       Altogether, the lack of systematic participation in decision-making and the modest
electoral base of the Brazilian environmental movement point in the same direction. The
Brazilian environmental movement was not a factor that influenced the change of policies
since 1988. There is no evidence that NGOs were important participants in the decision to
change policies. Moreover, the environmental movement was clearly too weak to exert
decisive pressure on the government by commanding political resources in the form of
electoral support. Though very important as an element in the «awakening» of the Brazilian
civil society in the wake of the breakdown of the military dictatorship, and more
specifically, in putting environmental problems on the national agenda, the changes under
Sarney and Collor may not be ascribed to the activities of these groups.
       The business interests and regional political interests trying to resist change were
more powerful measured by their participation in decision-making and electoral support.
Though suffering from certain cleavages, these networks had stronger allies in important
state agencies than the environmental movement, they commanded stronger electoral
support under Collor, and it is likely that the numerous congressmen from the North and
Maranhão who were party fellows of Sarney enjoyed privileged access to decision-making
when he was president. In addition, the environmental movement suffered from important
cleavages over environmental policy priorities. The layer of NGOs focused on global
environmental problems was relatively small, and had interests that to a certain extent
differed from the broader socio-environmental movements in Brazil.
       Thus, although the sections of the environmental movement that protested against
deforestation in Amazonia had free access to media, and mounted severe criticism against
the government both in the pre-reformatory phase and the period of reforms after 1988, they



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were not able to influence the government to adopt reforms on the basis of their own
domestic power and influence.
       Although there were no formal barriers to environmental NGO activism on
Amazonia in Brazil, the strong position of the president, the limited enthusiasm for issues
related to Amazonia in the electorate during the 1989 presidential elections, as well as
important cleavages in the environmental movement itself constituted important barriers to
a strong political push by domestic groups in favour of environmental reform. Interests
resisting the adoption of environmental reforms outweighed the environmental movement.
       What about the Indonesian environmental movement? I argue that Indonesian NGOs
with an interest in the management of the country’s tropical moist forest land have been
excluded from decision-making on this issue. In addition, properties of the Indonesian
political system have provided strong barriers to mobilisation of popular support.
Furthermore, the repressive character of the political system also thwarted the public airing
of political aspects of forest management by commercial actors in Indonesia.
       Since electoral politics are relatively unimportant for decision-making in Indonesia
due to a highly restricted party system and low importance of the legislature, I will focus on
the ability of Indonesian NGOs to raise the issue of mismanagement of the country’s forests
in public discussions and the media, and participate directly in decision-making. However,
to provide an adequate discussion of the framework of NGO mobilisation in Indonesia,
some important limits to organisational freedom in Indonesia must be mentioned.
       NGOs are, among other laws, regulated by the Law on Social Organisations from
1985 (Billah and Hakim 1989). This law charges NGOs with the adoption of the state
ideology «Pancasila», and gives the government the power to suspend the manager or
managerial board of the central office of a non-governmental organisation when public
safety and security is threatened, when assistance from a foreign party is received without
government approval, and when the NGO has provided foreign parties with assistance
harmful to the interests of Indonesia. The law also provides the government with the power
to disband NGOs (Billah and Hakim 1989:62). In addition to the Law on Social
Organisations, the so-called «hate-sowing» articles introduced by the Dutch colonial
administration are of particular importance. Article 154, 155 and 160 in Indonesia’s



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Criminal Code prohibits the public expression of hostility to the government and inciting
others to disobey government orders or break the law (Amnesty International 1994:39).
        These seemingly very tough restrictions on NGO activity have by no means blocked
the emergence of NGOs focused on the environment. On the contrary, Liddle’s (1987)
claims that the Indonesian civil society outside the most politically sensitive areas is far
more differentiated than implied in the approaches of Crouch (1979) or Robison (1986), are
justified by a brief look at the environmental movement. Throughout the 1980s and early
1990s, there was been a massive growth of all kinds of NGOs, or, as termed by Indonesian
NGOs in 1983, «self-reliant groups» (Eldridge 1989b:4).394
        This is also the case for the environmental sector. Here, the main NGOs are SKEPHI
and WALHI.395 They are umbrella organisations for many active and inactive grass-root
groups. SKEPHI and WALHI do extensive research on some aspects of forest management
in Indonesia; especially logging. Both NGOs perceive forest issues in terms of global
environmental problems, particularly biodiversity. However, as umbrella organisations,
they are also sensitive to local claims for protection against logging companies and
government abuses. SKEPHI is the most militant of the two groups. According to its
leader, Indro Tjajhogo: «Since 1986, SKEPHI has reduced its involvement in the carrying
out of conservation programs. Since that time, SKEPHI has emphasised policy reform and
putting pressure on the government.»396 This is to a certain extent in contrast to WALHI,
which has cultivated strong links with the KLH, particularly the former minister Emil
Salim, on conservation and other environmental efforts (Eldridge 1989a).397
        Both NGOs are not typical representatives of the groups mentioned by Liddle
(1987), as their activity frequently includes also «high politics› issues. This is particularly


394According to Eldridge (1989b:4), this term was chosen instead of NGO, as the last term might be
interpreted as «anti-governmental». Thus, tactical considerations regarding the relationship to the government
are included even in the conceptualisation of non-governmental groups. There is a distinction between the
larger, urban based support groups (LPSMs) by and large corresponding to the term Grass Root Support
Organisations (GRSOs), and local groups or Grass Root Organisations (GROs), consisting of interest groups
at «ground-level».
395SKEPHI is the NGO Network for Forest Conservation in Indonesia established in 1982. WALHI, or the
Indonesian Forum for the Environment, was established in 1980.
396«Interview with Indro Tjajhogo », Multinational Monitor, November 1993.
397See also various issues of WALHI’s English language magazine «Environesia».



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the case with forest policy issues on the Outer Islands, which touch upon sensitive political
issues to the extent that they involve the military, the President’s family and Chinese
business groups. Because of their involvement in these issues, WALHI and SKEPHI have
in periods been exposed to repressive measures. SKEPHI was periodically prohibited in the
early 1990s, and was forced to move from place to place until 1993.398 Especially their
activity on the international arena has exposed SKEPHI members to considerable
government repression. SKEPHI staff, including their leader Indro Tjajhogo, have been
exposed to interrogations by the military and been forced to deliver extensive reports on his
own activities.399
       WALHI has been threatened by the government in cases that involve the
environmental affairs of large forestry companies. This was the case when WALHI,
represented by the Indonesian Legal Aid Foundation (YLBHI), sued the pulp and paper
company PT Inti Indorayon Utama for pollution and irresponsible logging at their forest
concession in the Lake Toba region in 1989. The government tried to discourage WALHI
by threatening to start legal proceedings against WALHI and the Indonesian Legal Aid
Foundation (YLBHI) if they lost the case.400 A local NGO, the Community Initiative Study
and Development Group, that helped local villagers, was banned for 6 months and only
allowed to resume activity later on the condition that it would cancel its legal aid to the
villagers.401 The well-connected ethnic Chinese businessman Sukanto Tanoto (alias Kang
Ho) owns PT Inti Indorayon Utama. He is leader of the very large Raja Garuda Mas Group,
which is involved in a broad range of business activities. Though important enough in the
Indonesian context, it is a symptom of the narrow space for NGO mobilisation that the fact
that the government allowed WALHI to sue the government, even though they lost the case,
was celebrated as a great victory for the environmental movement (Potter 1986).
       At the domestic political arena, both NGOs have been able to establish partnerships
with the Ministry of Environment over forest policy issues. The case at Siberut, where some
forest concessions were revoked and changed to a national park, mentioned previously,


398Personal communication with SKEPHI co-ordinator Bambang Ryadi Soetrisno in December 1995.
399Personal communication with SKEPHI co-ordinator Bambang Ryadi Soetrisno in December 1995.
400«Government backs operations of pulp firm», Jakarta Post, 14. January 1989:1.



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involved a partnership between SKEPHI and the Ministry. In general, WALHI has worked
more closely with the government. The first leader of WALHI, Erna Witular, was the wife
of a member of the People’s Representative Assembly who was also secretary of the
Indonesian government party GOLKAR (Eldridge 1995:136).
        WALHI has also collaborated with the Ministry of Forestry in a mapping project in
East Kalimantan. This project was a pioneering effort to demarcate historical territorial
boundaries of a forest dwelling community. It was directly relevant to concession
management, as it was discovered that the concession and a planned nature reserve would
divide the local community in two separate pieces (World Bank 1994b:200-201). WALHI
also participated in the preparation of the Indonesian Biodiversity Action Plan, led by the
Ministry of Environment. There are strong, historical links between Emil Salim and
WALHI.402 The links of WALHI and SKEPHI to the government do not seem to be strong
enough to justify the term co-optation on any of the two NGOs, given the periodically
strong conflicts with the government (Eldridge 1995:135-136).
        In my interviews with both NGOs, it was concluded that they had negligible impact
on forestry policies and regulation of commercial actors.403 WALHI staff interviewed
emphasised the considerable personal risks involved in direct monitoring of forest
concessions and the performance of individual companies.404 Both NGOs also considered
attacking the strong political network involved in forestry, particularly the Presidential
family, as risky.405 It was also noted that it was almost impossible to launch effective and
critical attacks on the most important Chinese conglomerates and the military in domestic
media.406

401«Ravaging the Lake Toba region», in Environesia, Vol. 6, No. 1-2, April 1992:23.
402 Interview with WALHI staff July 1993. Cfr. also Eldridge (1995:134-137).
403Interviews with WALHI and SKEPHI in Jakarta, June and July 1993.
404Interview with WALHI staff in July 1993.
405Indro Tjajhogo stated the following about the involvement of the presidential family and their closest
interests: «Of course we have to select appropriate sentences or words, some like to describe family
relationship within politic and economic elite. We think all people have already understood about this matter,
even we just talking symbolic language. It is a "public secret". Actually, there is a limitation to overcome the
case relating with President Family Business.» Personal communication with Indro Tjajhogo November 1996.
406I read all the articles I could find about forestry related issues in Jakarta Post between 1989 and 1993. No
articles were found to cover criticism of the military, Chinese businessmen or the presidential family
connections by NGOs. However, some articles, as we have seen, mounted implicit attacks on the military and



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        However, although NGO representatives pointed to severe restrictions on media
coverage of forestry issues, there have been cases of relatively strong criticism in
Indonesian media. Especially the Indonesian magazine TEMPO presented a series of critical
stories on forest management in Indonesia, including criticism of the powerful APKINDO
chairman Bob Hasan, Minister of Forestry Hasjrul Harahap and large concessionaires like
Prajogo Pangestu. These and other critical political stories proved costly for TEMPO. The
magazine was banned along with two other critical magazines in 1994. Criticism also
surfaced in other media. Some of the articles I have cited from Jakarta Post implicitly
criticise the military and the Chinese conglomerates. No articles were found to touch upon
the interests of the presidential family. Thus, also at the level of communicative power, the
Indonesian environmental movement was weak.
        Independent of their social base, which will not be examined here, they have limited
opportunities to campaign against government policies related to Indonesia’s tropical forest
land. Establishing green parties or promoting media campaigns against the companies of
crony businessmen are difficult within the constraints of the Indonesian political system. In
addition, elections have limited bearing on the government’s policies. The parliament has
only consultative functions, and is dominated by GOLKAR, a party strictly loyal to the
government.
        Thus, in Indonesia, domestic environmental NGOs exerted even less influence over
decision-making relevant to the management of tropical moist forest land than in Brazil.
One similarity can be found, namely that both environmental movements were largely
excluded from direct participation in government decision-making. However, the
Indonesian environmental movement focused on the destructive activities of commercial
actors in the country’s tropical moist forests could not exert any power through the very
restrictive party system and the restricted legislature. Moreover, the environmental
movement was unable to mount strong criticism against commercial actors in media due to
the strong limitations on criticism of the army, the Suharto family and their associates.
Having in mind the discussion of the enormous power and influence enjoyed by the wood


the Chinese conglomerates without reference to NGOs. There was also some criticism against corruption in
forest management and environmental management in general, though in a subdued language. No articles were



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industries, I conclude that in the Indonesian case, the domestic anti-reformatory interests
totally outweighed the pro-reformatory societal forces when looking at the domestic
political arena.


Summary
What are the conclusions of the discussion in this section? It seems clear that in both the
Brazilian and Indonesian case, pro-reformatory actors both within the bureaucracy and in
society were relatively weak as compared with anti-reformatory actors. This conclusion is
most pronounced with reference to Indonesia. Here, the environmental movement was
weakened by a very restrictive political system that denied the public airing of political
conflicts associated with deforestation and forest depletion carried out by commercial
actors. The powerful state that upholds this political system favoured anti-reformatory
commercial actors. Thus, in Indonesia, political patterns that produced extremely strong and
enduring client politics were matched by a regime that imposed powerful barriers to the
emergence of entrepreneurial or interest-group politics based on popular protests against the
favouring of the president’s clients and practices that contributed to global environmental
problems.
        In the Brazilian case, the political patterns of client politics were less strong and
enduring. The political networks that resisted reforms in the Amazon region were not as
tightly organised as their Indonesian counterparts, and they were divided over several
issues. This was demonstrated by a look at their response to reforms. In addition, though
they used neopatrimonial strategies, like exchanging electoral support for government
benefits, they did not control political assets of an importance that was comparable to the
neopatrimonial networks in Indonesia.
        At the same time, the barriers to domestic entrepreneurial and interest-group
politics in Brazil were not as absolute as in Indonesia. In Brazil, the environmental
movement organised itself and raised the issue of deforestation and its political aspects on
the agenda in full freedom from intervention from the military and the state. Organisational
efforts among local groups threatened by commercial actors in the Amazon region were not

found to touch upon the interests of the presidential family in forestry in a critical way.



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to a large extent constrained by these actors, and the environmental movement was free to
attack the government’s favouring of commercial interest in the domestic media.
       However, cleavages within the Brazilian environmental movement and a lack of
public attention to their claims that perhaps reflected broader cleavages between a small
middle class focused on global environmental problems and a bigger socio-environmental
movement focused on health and poverty issues among Brazil’s large underprivileged
groups seem to have hampered the emergence of a politically strong environmental
movement. Though NGOs managed to raise the issue of Amazonia and deforestation on the
national agenda and even managed to influence the 1988 Constitution, the political
networks surrounding commercial actors in the Amazon region were largely strong enough
to resist the pressure from these organisations. The environmental movement does not seem
to have had the political resources at the domestic level to motivate neither Sarney’s choice
to initiate reforms, or Collor’s choice to pursue more comprehensive reforms.
       The argument developed until now is the following: Neither explanations inspired
by dependency theory, versions of interdependence theory focused on states as unitary
actors motivated by economic incentives or explanations focused on differences in the
balance of power and influence between domestic groups outside and inside the state
apparatus seem to explain the contrast in reforms between the two cases. Therefore, I
proceed with an examination of the relevance of the two propositions within the
interdependence perspective that focus on the influence of domestic-international
interactions and transnational networks.




5.5. Comparative conclusion: International pressure, domestic structures and
transnational networks
In this last section, I will discuss the following two propositions about explanatory factors
behind the contrast between Brazil and Indonesia.


Proposition 4: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the concentration of



                                            333
domestic costs vs. the diffusion of domestic benefits, differences in domestic
enfranchisement of pro-environmental and anti-environmental groups, and/or differences
in the relevance of the issue of reform to security concerns in confrontation with
international pressure for reform.




Proposition 5: The contrast in environmental reforms between Brazil and Indonesia
between 1988 and 1992/93 may be explained by differences in the densities of transnational
communication and co-operation between environmental NGOs from the local to the global
level, and their ability to link global and local problems and politicise environmental issues
in information channelled to the international community, thereby triggering international
pressure for reform.


In this section, I will focus on how domestic political structures and transnational networks
between NGOs may have contributed to influence the difference in reform between the two
cases. First, I discuss proposition four, which deals with the influence of domestic
structures on the response to external pressure. After finishing this discussion, I go on
discussing proposition five, which deals with the influence of transnational NGO networks
on the strength of external pressure for reforms.


Differences in concentration and enfranchisement of domestic interests
In this perspective, domestic politics changes from being an independent explanatory factor
to become an intermediate political factor that influences the effects of external pressure on
the motivation of governments to choose environmental reforms. In this discussion, I will
draw heavily on the empirical insights from the discussions in section 5.3 and 5.4.
       Section 5.2 finished with a certain reformulation of the nature of the difference
between Brazil and Indonesia. While Brazil was exposed to the strongest external pressure,
which effects were magnified by high economic vulnerability, Indonesia was exposed to
less severe international pressure. However, in Indonesia, a very strong domestic fiscal
motive co-existed with international pressure. Such domestic motives existed, but were not



                                             334
so strong in Brazil. Thus, I argued that the combination of international pressure and a
strong domestic economic incentive for reform made the economic motive for reform for
Indonesian decision-makers comparable with that experienced by Brazilian decision-
makers. Thus, the two cases are still comparable in terms of the economic incentives faced
by the respective governments.
          The discussion of the domestic politics of environmental reform in Brazil and
Indonesia in section 5.3 and 5.4 permits a brief discussion of the two cases at a relatively
abstract level. Above, I concluded that in both cases, the costs related to reform and the
interests that tried to resist environmental reform in both Brazil and Indonesia were
concentrated on a relatively small group of commercial actors.
          However, there was a clear difference in concentration between the two cases. In
Indonesia, the organisational strength and concentration of commercial interests was very
high. There was only one important business organisation, APKINDO, as compared with
the Brazilian case, in which both the AEA and the UDR represented the main commercial
actors.
          This difference also expresses stronger heterogeneity among the constituents of these
organisations. While APKINDO effectively represented a handful of companies that have
monopolised control over Indonesian forest resources, the Brazilian organisations represent
somewhat divided interests. AEA represented some hundred big corporate investors and
very affluent families controlling giant ranches and other businesses in the Amazon region.
UDR represented the interests of several thousand traditional ranchers and landowners,
most of them considerable smaller than the AEA members. Moreover, though exerting
considerable influence in several policy areas, the focus of UDR was to resist land reform
proposals during the mid-1980s. Thus, the organisation was more of a spontaneous
movement focused on a single issue than a well-consolidated lobby representing ranchers’
interests in general.
          Furthermore, commercial actors failed to organise a concentrated and united political
front against reforms. There were important variations in the perceptions of Amazonian
politicians over the issue of environmental reform, and some of these politicians simply




                                               335
ignored the claims of regional commercial actors and adopted various pro-reformatory
positions.
        This is also the case when it comes to co-operation between business interests and
the military. Although co-operation between the military and commercial actors was
galvanised by international pressure as expressed in the debate on the «internationalisation
of Amazonia», an observation that fits well into Elliot (1993) and Førland’s (1993)
arguments on unwanted domestic effects of sanctions, there were still important cleavages
between these groups.407 The military excluded the business organisations from
participation in the design of the «Nossa Natureza» programme. In addition, some of the
reforms in this reform package designed by the military were contrary to ranching and
logging interests and attracted considerable opposition from these. This cleavage was based
on a difference between the military and commercial actors in the perception of the costs of
reforms. While the military resisted reforms that they perceived as costly in terms of
national sovereignty, commercial actors resisted reforms that they perceived as costly in
terms of their personal profits. As personal profits permitted more moderate reforms than
national sovereignty, a modest difference between the interests of the military and
commercial actors emerged. This in contrast to Indonesia, where the military was dependent
on the same profits as the Chinese and Suharto’s family.
        Though big landowners in Amazonia were unable to decelerate some of the reforms
that were to their disfavour, the government push for reforms under Collor met stronger
resistance when it entered the area of national agricultural tax reform. Though agricultural
tax reform could discourage deforestation as well as increase tax income and redirect
resources into more profitable branches, these proposals were thwarted by a Congress
dominated by big rural landowners through a system of disproportional regional
representation. Thus, the disproportionate enfranchisement of rural interests, which is an
important part of the colonial legacy in Brazil, was a decisive barrier to some of the most
progressive and important aspects of environmental reform.



407 Elliot (1993) and Førland (1993) claim that external sanctions may consolidate anti-reformatory groups by
encouraging a feeling of being beleaguered. This was certainly the case for external sanctions in the case of
the Amazon. Interviews with Goldemberg November 1992, Mesquita November 1993.



                                                    336
       However, participants in the regional policy networks surrounding commercial
actors in Amazonia enjoyed a smaller degree of disproportionate enfranchisement than
participants in the well-organised political networks organised through APKINDO in
Indonesia. Strong neopatrimonial networks, characterised as prebendal, that involved a
powerful military and the presidential family as well as Chinese business interests, were
much stronger impediments to a reformatory response to external pressure than the less
powerful and well-organised networks in Brazil. Such neopatrimonial networks produce
high concentration of wealth and a very high level of enfranchisement of these interests in
regulatory decision-making.
       Neopatrimonialism also characterised the political networks of commercial actors in
the region. However, as these neopatrimonial practices were related to electoral support for
the president’s party rather than his own self-enrichment and political survival, it was easier
to limit the distribution of patronage or spoils that worked as incentives to deforestation in
the Brazilian case than in Indonesia when international incentives for reform increased.
       Benefits of adapting to pressure in a co-operative way were relatively diffuse in both
countries. Both countries had relatively weak environmental movements focused on global
environmental problems, although Brazil’s environmental movement was somewhat
stronger measured by electoral support and ability to influence the political agenda and
attack the government. Groups living in areas threatened by commercial actors and
interested in more sustainable use of the forest were also organisationally stronger than in
Indonesia. Nevertheless, even in periods of severe international pressure, these groups
achieved very limited enfranchisement in government decision-making by their own right.
       However, in the case of the Amazonian grass-root groups, it was not simply so that
external pressure and attention to environmental problems in themselves was exploited by
these groups to achieve stronger domestic enfranchisement. To a considerable extent,
external pressure on the Brazilian government was triggered by the links between these
groups and groups in the United States and Europe. Only in this way, these groups were
able to overcome repression from local oligarchies and a government dominated by the
military and hesitant to confront rural elites (Schwartzman 1991, Silva 1994).




                                             337
       This implies that external pressure was not an explanatory factor independent of the
strategies of domestic actors. Rather, constraints at the local and national political levels
were bypassed and a kind of international entrepreneurial politics emerged as the world
opinion was encouraged to understand the diffuse, but global benefits of reforms in Brazil
by participants in some particularly strong transnational alliances. Instead of being
enfranchised domestically, these groups became enfranchised into the US Congress and the
boards of multilateral agencies that made decisions of prime importance for external
financial support for Brazilian development. Thus, disenfranchisement at the local level
was compensated for by direct enfranchisement at the international level. The process that
preceded and facilitated such enfranchisement includes an important characteristic of
entrepreneur politics mentioned by Wilson (1980), namely public scandals. These groups
and their associates particularly in the US and Europe managed to present Brazil’s
reluctance to adopt reforms and the disastrous environmental consequences of some World
Bank supported projects as public scandals of global dimensions.
       In the following, I will argue that such international entrepreneurial politics
confronted severe difficulties in Indonesia both due to organisational problems linked to
organisation of grassroots groups and the severe negative sanctions that hit Indonesian
groups trying to scandalise the Indonesian government internationally.
       However, before I develop these arguments further, I will summarise my findings in
section 5.5 until now briefly. I have demonstrated that there was a difference in
concentration and domestic enfranchisement of Indonesian and Brazilian commercial actors
that contributes to explain different responses to international pressure. Although Brazilian
commercial    actors   in   the   Amazon     region   were   relatively   concentrated   and
disproportionately enfranchised in the decision-making process through the electoral system
and their connections with the military, a small group of Indonesian commercial actors
enjoyed both higher concentration and unconstrained enfranchisement in decision-making
on forest policies and environmental reform. The strong neopatrimonial characteristics of
the Indonesia political system produced a particular enduring and robust form of client
politics not susceptible to international pressure, even when pressure coincided with strong
fiscal motives.



                                            338
         However, on the background of previous historical analyses of the domestic polities
of the two countries, I also argued that concentration of interests and disproportionate
enfranchisement of these groups in domestic decision-making was connected to more
pervasive problems related to the colonial legacy and the problems of the post-colonial
state. Thus, concentration and disproportionate enfranchisement of these groups were
symptoms of more fundamental characteristics of the distribution of power in the two states
and the following problems of producing collective political and economic benefits at the
national level.
         Although pro-reformatory interests were relatively diffuse in both countries, grass-
root groups in Brazil managed to overcome organisational obstacles to a greater extent than
Indonesian grass-root organisations. However, successful organisation at the national level
was not enough to achieve enfranchisement in decision-making on Brazilian Amazonia,
even when external pressure mounted. A disinterested government heavily influenced by
the military and regional commercial actors as well as low attention to issues connected to
deforestation in the Amazon in the Brazilian society were powerful barriers to reforms at
the domestic level. Nevertheless, these groups managed to enfranchise themselves in
decision-making at the international level by creating a kind of entrepreneur politics at the
international level. The main strategies for the creation of international entrepreneur
politics was to enfranchise these grass-root groups in decision-making in international
donor organisations by scandalising some internationally funded projects in the global
media.
         Theoretically, this implies that the strength of external pressure is not independent of
the strategies of domestic actors. The outside world’s perception of events in particular
states may be heavily influenced by these strategies. In the following I will focus more
closely on how differences in the political system influenced the emergence of such
strategies in the two states. However, before starting this discussion, I will shortly discuss
the relevance of the proposition that the contrasts presented in chapter four have been
influenced by differences in the interconnection between reforms and issues related to
national security.




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Considerations for national sovereignty and territorial security – ambiguous obstacles to
reform
Above, I have described how the Brazilian military and the military governments until 1985
perceived the commercial development of Amazonia as an instrument to protect Brazil’s
territorial security. There were no comparable links between security and the management
of forest land in Indonesia.408 In the government’s rhetoric, the exploitation of Indonesia’s
moist forests is perceived only in terms of economic development (GOI/Ministry of Foreign
Affairs 1993). However, in Brazil the interconnection between security issues and reforms
connected to external pressure was perceived as very strong by some very important actors.
The Sarney government shared the military’s perception of the Amazon region as
vulnerable to foreign penetration (Allen 1992). The military body SADEN, was provided
with the responsibility of defining the first reformatory programme for Amazonia.
SADEN’s and the military’s influence is clearly visible in the naming of the programme as
«Our Nature». Several statements from various politicians connected to the Sarney
government were clearly inspired by an outlook which linked responses to external pressure
with Amazonia’s importance for national security. Security considerations had implications
for the military’s perceptions of the whole Amazonian issue, and especially the issues of
international co-operation on Amazonian problems and the demarcation of indigenous
reserves. The following statement from the Minister of the Interior, João Alves and
IBAMA’s first president, Fernando Mesquita, during a visit to Amazonia in February 1989
is typical for the Sarney government’s position (my translation from Portuguese):


«…the Brazilians do not permit the improper interference of strangers in the preservation of the ecology of
Amazonia and consider this as an offence to our sovereignty».409




408It should be noted that also logging operations have security motives admitted by the government. In
statements over the general and sectoral objectives of the Ministry of Forestry during the early 1980s,
«development of isolated and border regions» is placed among the four main short-term objectives of the
ministry’s activities, cfr. IIED (1985:51). Dauvergne (1997:72) notes that a particular military concessionaire,
PT Yamaker, has received its concession due to its location in a sensitive area close to the border with East
Malaysia.
409 Cited from the article: «Exército não permita ingerencia na Amazônia», Correio Braziliense, 10. February
1989:9.



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The Sarney government’s reluctance to demarcate reserves for indigenous groups, and its
reluctance to embark on programmes of co-operation with foreign funding agencies on
conservation in Amazonia, are by and large explained by the military’s security
considerations (Allen 1992, Albert 1992).410
        However, the military’s perception of Amazonia did not block important reforms
carried out to appease international pressure. As mentioned, the changes introduced in the
«Nossa Natureza» environmental programme, which was almost exclusively managed by
SADEN, included both important incentive changes and the introduction of the PEAL
monitoring programme. In addition, reforms like the establishment of rubber-tapper
reserves in areas claimed by large landowners were carried out.
        The perception of Amazonia as an issue of security also varied considerably between
the two governments in charge in the 1988-1992 period. The Collor government perceived
the environmental problems in the Amazon region much less in terms of territorial security,
and much more as a divisible economic asset which management could be exchanged for
increased investments and financial assistance from developed countries. The change of
positions under Collor is illustrated by the following statement by Ambassador Marcos
Castrioto de Azambuja, Secretary-General for foreign policy, in December 1990 (Ministry
of External Affairs 1991:9):


«It is precisely because these are also concerns of the Brazilian society and of Brazil’s Government that we
understand that the international community has a right to be concerned by the violation of human rights and
by the damage done to the environment wherever they may occur. In dealing with these and other issues,
Brazil no longer [my Italic] resorts to allegations of sovereignty to deflect criticism. Instead, it shoulders its
responsibilities, conscious that its actions have repercussions for the whole planet.»


Collor’s core political project was to modernise Brazil through extensive privatisation,
trade liberalisation and increased co-operation with the industrialised countries. Both in
Collor’s inaugural speech (Cleary 1991b), and in the introduction of the environmental
planning document, the change of positions on the environment was explicitly linked to an
improvement of Brazil’s relationship with the industrialised world and the economic reform
programme (Collor, undated:4, my translation from Portuguese):

410 Interview with Fernando Mesquita, November 1993.



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«I am conscious that if Brazil does not confront the environmental question internally and externally, this will
make our programmes for economic development and international financing difficult.»


This political strategy allowed reforms to be broadened to include the demarcation of
indigenous areas, debt-for-nature swaps and other co-operative projects related to the
Amazon.       However, under Collor, the perception of Amazonia in terms of territorial
security continued to prevail among important domestic groups. The military offensive
against the demarcation of indigenous reserves, the emergence of the large co-operative
programmes with the G-7 as well as the turn towards a pro-environmental political rhetoric,
became an important focus for resistance against the environmental policies of the Collor
government that could be exploited also by business interests. These groups, who found
their rhetorical focus in allegations that the Collor government was involved in the selling
out or the «internationalisation» of Amazonia, were able to mount powerful political
obstacles to reforms. Thus, though environmental reforms in Amazonia cannot simply be
labelled as an «issue of security», as various domestic groups both within and outside the
government had widely differing perceptions of the region’s relevance to Brazil’s security,
the fact that the military came to perceive some of the reforms in terms of security, clearly
contributed to galvanise domestic opposition against reforms.
        At another level, the changing perception of reforms in Amazonia from a security
issue under Sarney to an international economic issue under Collor also contributed to the
tendencies towards environmental «tokenism» and insufficient federal attention and funding
for IBAMA. Under Collor, environmental reforms became as much a subsection of foreign
policies and economic policies as a policy in itself. This implied change, but certainly also
continuity in comparison with the Sarney government. Continuity because the environment
was still perceived as an element in a much broader set of policies, and change because it
advanced from being a subfield of security policy to become a precondition for an
economic programme. At the same time, as I have mentioned, this advance was a mixed
blessing, as Collor’s neo-liberal economic stabilisation programme implied a substantial
destabilisation of government agencies both due to reductions of funding and removal of
staff. Partially, this association of environmental policies with other policy areas reflects



                                                     342
the nature of environmental policies, cutting across most sectors of public activities
(Guimarães 1991:175-76). However, it also reflects changes in the global context. The
perception of Amazonia’s vulnerability by the Sarney government was inspired by the
military’s perception of an ever-present danger of communist infiltration and subversion
which increasingly assumed importance as a motive for military involvement in Brazilian
politics since the 1930s (Flynn 1978). Collor’s perception of Amazonia was connected to
considerations for international trade and investments that assume importance in the
unchallenged capitalist global political and economic order following the demise of the cold
war (Evans 1993:425-426). Thus, the military’s continuing perception of some reforms as
threats to Brazil’s security added up to serious international economic problems and
persisting influence from the country’s large landowners as important factors that limited
reforms in Brazil. However, there are no connections between issues of security and the
contrast between Brazil and Indonesia. To provide a more adequate understanding of this
contrast, I now continue with an analysis of the effects of transnational networks.


Transnational networks and the impact of the political regime: Distribution of more
«politicised» environmental information from Brazil than from Indonesia
It is clear that the emergence strong international attention to the forest policies of Brazil
and Indonesian has a common background. This is the decision of a group of NGOs
particularly based in the US to give the tropical forest issue top priority. In the early 1980s,
NGOs from the United States like Greenpeace, Friends of the Earth, Natural Resources
Defense Council, Environmental Defense Fund, the Sierra Club, Environmental Policy
Institute and Cultural Survival started to inform the House of Representatives and the US
Senate about the destructive effects of a series of projects in rainforest areas financed by
Multilateral Development Banks. The campaign was co-ordinated by Bruce Rich (Natural
Resources Defense Council), Barbara Bramble (National Wildlife Federation) and Brent
Blackwelder (Environmental Policy Institute) (Arnt and Schwartzman 1992:112).
       Some 24 Senate hearings in which the policies of the Multilateral Development
Banks were main topics were held in the US Congress from 1983 to 1986 (Rich,
undated:20). The POLONOROESTE project, the Carajás mining project and the Indonesian



                                              343
transmigration project received particular attention in these hearings. Protests against the
World     Bank     related    to    the   POLONOROESTE              project    co-ordinated      by    US
environmentalists were signed by several Brazilian groups, members of the German
Bundestag and indigenous rights groups in Europe411 and Brazil (Rich 1994:122). This
campaign was supported by a strategy of networking between US NGOs and NGOs both in
Western Europe and in developing countries. Networking in Brazil and Indonesia was of
critical importance to the outcome of the campaign, as such co-operation both provided the
campaign with valuable local information and international legitimacy (Rich 1994:122).
        In Brazil, a particularly dense network of activists connected to the US NGOs
emerged as a consequence of this campaign. This network included prominent individuals,
like José Lutzenberger,412 and NGOs organised around Amazonia’s rubber-tappers, like the
Institute of Amazon Studies (EIA),413 a grass-root support NGO (GRSO) which supported
the creation of the National Rubber-Tapper Council.414 Grass-root support NGOs like CEDI
had already assisted the organisation of Amazonia’s indigenous populations, for example in
the Union of Indigenous Nations (UNI).415 A diversity of groups and individuals from the
NGO movement participated both in the direct lobbying of the multilateral banks and by
sending representatives to the US Congress hearings.
        Links between US NGOs and the Brazilian environmental movement, in particular
the sections linked to the Amazonian grass-roots movements, were very intense and
durable, and suit fall into Eccleston’s (1996) category alliances; the strongest type of
transnational co-operation. As I have indicated, in Eccleston’s (1996) view, alliances imply
long term allegiance to common ideals among trusted partners. Northern partners have a
firm and long-standing commitment to empower Southern NGOs. Alliances are


411European  interest in Amazonia was also attracted by the investments of the European Community in the
Carajás mine.
412Lutzenberger’s fame in the US reached new dimensions after he received the environmental prize «Right
livelihood award» in the US in 1988.
413Instituto de Estudos Amazonicos (IEA). Curitíba-based NGO established by the anthropologist Maria
Helena Allegretti in 1986.
414Conselho Nacional de Seringueiros, grass-root NGO organising Amazonia’s rubber-tappers. Based in
Acre, created with the assistance of Allegretti and several researchers and environmentalists in 1985.
415União das Nações Indigenas, national organisation for indigenous groups in Brazil founded in 1978. Based
in Goiânia.



                                                   344
characterised by very regular consultation by fax, information technology and personal
meetings.416
        Contacts and co-operation between Brazilian grassroot-organisations, Brazilian
grassroot support NGOs and activists and US NGOs and anthropologists had been
established in the early 1980s (Schwartzman 1991, Onis 1992:215-216). For the rubber-
tappers, this contact was based on the anthropologist Stephen Schwartzman’s knowledge of
the Amazon region from his fieldwork as a PhD student in anthropology in Mato Grosso in
the 1970s (Onis 1992:216). Schwartzman, a prominent member of the US NGO
Environmental Defense Fund, discovered the rubber-tapper movement and its potentials
through contacts with the Brazilian anthropologist Maria Helena Allegretti in 1985, herself
in the process of establishing the grass-root support NGO Institute of Amazon Studies
(Onis 1992:216). The links between the US and the rubber-tappers in Acre also included
direct links to prominent US politicians. Al Gore paid a personal visit to their famous leader
Chico Mendes in 1988.417 US media published news stories that were highly critical to the
World Bank projects in the Amazon region. On Easter Sunday, 1987, the World Bank and
the POLONOROESTE project was covered by the most widely seen news programme in
the US, «60 Minutes» (Rich 1994:140-141).
        The indigenous rights’ NGO UNI and its support-organisation CEDI also
participated in very dense transnational alliances with Schwartzman’s NGO, Environmental
Defense Fund as well as Survival International in Britain along with several other NGOs in
industrialised countries (Arnt and Schwartzman 1992:351).
        Information was also distributed through networks of NGOs outside the US. In
Holland, the Workgroup of Indigenous Peoples distributed such information. In Austria the
Association for Threatened Peoples («Gesellschaft für Bedrohte Volker») did the same.
Activity was particularly intensive in Western Germany, where entities like Rainforest
Information («Regenwalder Information»), the Association for Social and Ecological

416 Typically, the headline of Arnt and Schwartzman´s (1992:108-117) description of transnational contacts
on Amazonia during the 1980s is «Fax, micro[computer] and modem».
417Al Gore had strong connections to the Brazilian environmental movement. In 1992, immediately after
Clinton’s election victory, Fabio Feldmann went to the US right after the elections to meet Al Gore personally.
Al Gore also paid a personal visit to the rubber-tapper leader Chico Mendes in Acre in 1988. Personal
connection with Feldmann’s congressional office in November 1992.



                                                     345
Research («Gesellschaft für Sozialwissenschaftlich und Okologische Forschung»), and the
Campaign for Amazon Life («Kampagne für das Leben in Amazon») and other
organisations distributed information on the situation in the Amazon (Arnt and
Schwartzman 1992:114).
        In addition to, and facilitated by, these dense transnational links, grassroots issues on
local control and property rights in Amazonia were effectively translated to the language of
global environmental claims. Bruce M. Rich cites the leader of the rubber-tapper movement
in Acre, Chico Mendes to emphasise this point: «We became environmentalists without
even knowing that word» (Rich 1994:127). Both Amazonia’s indigenous populations and
the rubber-tapper movement could magnify their capacity for influence on national
authorities by linking their claims to an emerging global discourse on global ecological
problems like climate change and biodiversity loss.
        A highly interesting example of such links between global and local problems is the
«Climate Alliance of European Cities with Indigenous People of the Rainforest for the
Preservation of the Earth’s Atmosphere» founded in 1990. 217 municipalities in Germany,
Holland, Austria, Italy, and Switzerland wish to curb CO2 emissions by banning the use of
tropical timber and simultaneously provide support for forest dwellers in Brazil (Stuchlik
and Schaeffer 1993, Rich 1994:291-292). The European consortium linked up with
indigenous rights NGOs in Brazil.418 Thus, in this case, the interest in the destiny of
indigenous forest dwellers emerges as a consequence of considerations for a global
environmental problem, the spectre of climate change.419
        However, dense transnational links between the grassroot level and international
NGOs and a high ability to translate local problems of control and property rights into
global environmental problems were also matched by a very high ability to spell out the
political roots and implications of environmental destruction. The information that flowed
out of Brazil in this period did not only address local problems and global change. It also


418Primarily the Brazilian Union of Indigenous Peoples [UNI] through the Lima-based umbrella organisation
COICA: «Coordination of the Indian Organizations of the Amazon Basin». Cfr. Stuchlik and Schaeffer
(1993).
419Brazilian scientists had been aware of a possible interconnection between climate change and deforestation
in Amazonia for a relatively long period, see Salati et al. (1978) and Salati and Ribeiro (1979).



                                                    346
addressed the Brazilian government as a scandalous, corrupt and intransigent culprit of
deforestation, protecting the narrow interests of the military and regional business interests.
       At the international level, one of the first examples of such scandalisation of the
government was Lutzenberger’s testimony against the POLONOROESTE project before a
US congressional subcommittee in September 1984. Invited by US NGOs, Lutzenberger’s
testimony not only implied attacks on the World Bank and the POLONOROESTE project,
but also very fierce criticism of the Brazilian government. Lutzenberger’s testimony was
taped and emerged on the Brazilian evening news the same day (Rich 1994:121).
       Another example of politicised information was the television series «Decade of
Destruction», produced by Channel Four and directed by the British environmental
journalist Adrian Cowell. Besides portraying the World Bank projects in the Amazon in a
negative way and including a series of testimonies from grassroot as well as national
activists, the documentary mounted strong attacks on the policies of the Brazilian
government in the region (Cowell 1990).
       One of the most prominent examples of diffusion of highly politicised information
through dense transnational links occurred in February 1989. Then, the First Encounter of
the Peoples of the Xingu River was arranged in the Brazilian town of Altamira to co-
ordinate protests against a major hydroelectric project on the Xingu River in Eastern
Amazonia which was part of the proposed Power Sector Loan II by the World Bank. Xingu
passes through the land of the Kayapó tribe. This indigenous group mobilised in opposition
to the establishment of large hydroelectric reservoirs on their land. The meeting, which
attracted strong attention from journalists all over the world, was also a very important focal
point for increased co-operation between Brazilian and international NGOs and criticism
against the Sarney government (Colchester 1989, Allen 1989). It included the public
scandalisation of officials from the Brazilian electricity company Eletrobras’ North region
affiliate Eletronorte, and implicitly the Brazilian government, whose position in favour of
water reservoirs on Kayapó land was badly defended on a meeting published to the whole
world (Margolis 1992:106).
       The ability to present the claims of Amazonia’s grassroot movements in terms of
«colourful» individuals like Chico Mendes or representatives of indigenous groups



                                              347
sustained the high level of global focus towards Amazonia, and in some cases also
contributed to visualise the political aspects of the government’s failures and apparent lack
of preoccupation with problems in the Amazon region. This was particularly the case with
the murder of Chico Mendes in late 1988 by some local ranchers in Acre. The global outcry
that followed in the wake of this event could not have taken place without previous high-
profile presentations of Mendes as a protector of the forest and an adversary to the
government’s unwise and predatory policies. According to officials at the Ministry of
External Affairs in Brasília, the murder of Mendes was perhaps the peak of negative
international attention to Brazil’s environmental record.420
        Other examples of condemning reports on the general design of Brazilian policies in
the Amazon region are rife. In September 1989, Amazonia was the front cover story of an
issue of Time Magazine.421 This issue did not only include stories on World Bank projects,
but also stories related to several aspects of the Brazilian government’s policies. The
prestigious US journal National Geographic published a special issue on deforestation in
Rondônia, also criticising the Brazilian government.422 Brazilian policies in the Amazon
region were criticised in the prestigious business journal «The Economist».423 The fiscal
incentives programme for the Amazon region, corruption at FUNAI, the Sarney
government’s hostile foreign policy on the Amazon and the military’s influence on policies
in the region were all issues subject to criticism. There were several diplomatic incidents
where Brazil was scandalised.424
        International criticism resounded strongly within Brazil. José Lutzenberger
humiliated the Sarney government’s environmental initiatives in international forums and
Brazilian newspapers.425 The Sarney government’s attempts to play down the seriousness of


420 Interview with Macedo Soares, Ministry of External Affairs, November 1992.
421Time Magazine, 18. September 1989.
422National Geographic, Vol. 174, No. 6, December 1988.
423The Economist, 15. July 1989:41.
424During  a meeting in Brasília between Latin American political leaders and UNEP in March 1989, President
Sarney was reprimanded in public by an UNEP official, cfr. the article: «Amazônia cria incidente
diplomático», in O Estado de São Paulo, 31. March 1989.39. Criticism from the French President Mitterand
as well as Prince Charles emerged in the same period, interview with Macedo Soares.
425See the article: «Lutzenberger desconfia do programa “Natureza”», O Estado de São Paulo, 16. October
1988:28.



                                                   348
deforestation in the Amazon region in 1989 by presenting deliberately biased deforestation
estimates were criticised by Brazilian and foreign scientists, and contributed to undermine
the political credibility of the government (Anderson 1990b:20),
       Prominent Brazilian scientists well-known also outside Brazil also increased their
attacks on the government in Brazilian media after the Amazonian issue had gained strong
international momentum. José Goldemberg, rector of the prestigious University of São
Paulo, attacked the defensive foreign policy of the Sarney government on Amazonia and
global environmental problems.426 Werner Zulauf, connected to the University of São Paulo
and president of the sophisticated São Paulo state environmental agency CETESB,
criticised the Sarney government for its negligence of the environmental sector after the
introduction of the «Nossa Natureza» plan in October 1988.427 Researchers connected to the
state sponsored «think-tank» IPEA mounted strong criticism against the subsidy programme
for cattle ranching in Amazonia (Yokomizo 1989). Philip M. Fearnside, US ecologist
connected to the Brazilian Amazon research institution INPA in Manaus, was an extremely
ardent opponent to the Amazonian policies of Brazilian governments from the 1970s to the
present.
       Thus, the criticism that was triggered by the transnational networks focused on the
rubber-tappers and indigenous groups and some World Bank sponsored projects broadened
to very strong international criticism against Brazilian policies in the Amazon region in
general. While international attention to burning in the Amazon had existed since the
discovery of enormous fires in Amazonia by Brazilian scientists in 1987 (Setzer et al.
1988), the global scandalisation of Brazil in 1988 and 1989 was undoubtedly increased by
the presentation of politicised claims linking the global and the local level ultimately based
on the activity of dense transnational alliances. These links and the scandalisation of Brazil
also contributed heavily to the pressures on the World Bank and the Inter-American
Development Bank that ultimately led to the cancellation of important loans to Brazil as
well as the numerous threats of trade and financial embargoes that emerged in this period.


426See for example the articles «A Amazônia e os políticos», O Estado de São Paulo, 30. March 1989:2 and
«A Destruição da Amazonia», Folha de São Paulo, 23. April 1989:A-3.
427See the article «Medidas tímidas não evitam queimadas», Folha de São Paulo, 12. October 1988:C-2.



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       While the sanctions on external financing may have been a main achievement of
these groups, the broadening of the international political critique of Brazil that emerged
was equally important for an understanding of the reforms that took place in addition to the
adjustments connected to the POLONOROESTE programme and the loan from the Inter-
American Development Bank. According to Bramble and Porter (1992:352-353) the media
campaign was not deliberately designed by these transnational alliances, and it had several
undesired effects from their point of view. The media campaign was the outcome of a
conjuncture of the dry summer in the US, fears of global warming and the martyrdom of
Chico Mendes. However, the transnational campaign was clearly of enormous importance
for attracting attention to the grass-root movements in Amazonia and politicising the
environmental message from Brazil.
       While I have described these processes in terms of politicised information,
scandalisation and the presentation of environmental claims by colourful and visualised
images, these processes may also be described by what Moravcsik (1995:168) calls
shaming. Shaming is:    «(…)   a mechanism through which international pressures may
influence dramatic developments (…) by creating a domestic and international climate of
opinion critical of national practices (…)» (Moravcsik 1995:168). The relevance of shaming
in the Brazilian case is bolstered by a further description: «Shaming operates by
manipulating information about, and according ideological legitimacy to, certain domestic
practices of states» (Moravcsik 1995:168). Though the referred work on shaming addresses
human rights and institutions in the European Community, Moravcsik (1995:182) also
points to the importance of NGOs in bringing out evidence of violations. According to
Moravcsik (1995:168), shaming is a process ultimately founded upon shared international
norms. It can well be said that the transnational NGO alliances on Amazonia were among
the first to identify an emerging set of global environmental norms. Moreover, reference to
norms is difficult to make without some degree of moral evaluation or condemnation, and it
was this condemnation and undermining of the Brazilian government’s legitimacy that took
place during the international outcry on Amazonia. Macedo Soares from the Ministry of
External Affairs also explained the onset of broader reforms under Sarney not only by
pointing to sanctions, but by pointing to the international isolation and moral condemnation



                                            350
Brazil «suffered under» in 1988.428 Certainly, Soares’ observation also indicates that the
behaviour of states cannot be fully understood in terms of economic gains and losses.
Norms and the need for legitimacy also play important roles. Thus, focusing exclusively on
economic incentives as motives for policy change seems to be insufficient when explaining
reforms in Brazil.
       Then, what happened in Indonesia? In Indonesia, SKEPHI and the larger WALHI in
addition to the Indonesian Legal Aid Foundation (YLBHI), contributed to the campaign
against the Indonesian Transmigration project by participating in NGO requests to the
World Bank in 1986 and 1987 to halt the financing of new sites in pristine forest areas
(Rich 1994:134).
       This was an important victory for the Indonesian environmental movement.
However, Indonesia received much more moderate criticism in international forums and
media than Brazil in the following period. While Brazil was ashamed as the environmental
villain of the emerging global environmental order of the 1970s, Indonesia was exposed to
less severe external economic sanctions and more moderate criticism. Though Indonesia
might have been less vulnerable than Brazil in the period due to a more favourable
economic situation, there was not a lack of bridgeheads for pressure and sanctions into the
country. More embracing sanctions against the country’s wood exports and the country’s
sources of international financing could have been painful for the government.
       Part of the reason for this difference was certainly perceptions of a difference of the
magnitude of environmental damage in Brazil and Indonesia. The belief that Amazonian
deforestation might have demolished 80,000 km2 of native forest in 1987, an area
corresponding to the size of Austria, shocked the world. In turn, these estimates provided
the basis for other reports that concluded that Amazonian deforestation was gaining an
enormous, exponential momentum (Mahar 1989, Myers 1989), and that the country was a
key contributor to global greenhouse gas emissions. The prestigious World Resources
Institute in Washington concluded in their 1990 survey of the global environment that
deforestation in Brazil in 1987 accounted for greenhouse gas emissions larger than the
combined use of fossil energy fuels in the United States, and grossly outpaced emissions

428 Interview with Macedo Soares, November 1992.



                                                   351
from deforestation in Indonesia, which was assumed to be second to Brazil in terms of
deforestation (World Resources Institute 1990:346).
       However, I also argue that there was an important difference in the density and
quality of the transnational networks on deforestation and forest depletion in Indonesia that
led to weaker and qualitatively different pressure in the Indonesian case.
       First, the density of transnational linkages linking the grass-root and with the global
level was lower in the Indonesian case. The almost institutionalised alliances enjoyed by
Brazilian grassroot groups were not enjoyed to the same extent by Indonesian grassroot
groups. It was difficult for foreign NGOs to establish links with and empower groups at the
ground level directly. NGO links to foreign partners are constrained by the Law on Social
Organisations, as the government must approve foreign funding for Indonesian NGOs.
Moreover, the provision of assistance to a foreign party of a nature that is harmful to the
interests of the state and country gives the government the right to dissolve the Indonesian
party (Billah and Hakim 1989:62). This has implied that most transnational contacts are
channelled through the Jakarta-based NGO networks WALHI and SKEPHI. These
regulations make the government able to control links between foreign parties and grassroot
organisations. According to SKEPHI, the laws that require government recognition of
foreign donations to NGOs, are important impediments to transnational co-operation, in
particular for radical organisations that confronting the government.429
       One important aspect of the emergence on external pressure in Brazil was that all
kinds of foreign groups could go to the Amazon region and monitor the situation. This
certainly led to several serious misunderstandings of the situation in Western public
opinion, and fuelled nationalist sentiment in Brazil. However, it kept the eyes of the world
on the situation. This link between grassroot groups and the global society was most visible
in the case of the Altamira meeting in 1989. Here, the eyes of the world were fixed on the
grassroot groups in a direct political confrontation with Brazilian government agencies on
Brazilian territory. This allowed the grassroot groups to politicise the situation and to add
verbal and visual imagery to the presentation of their claims. The Altamira meeting was
instrumental for the grassroot groups in several ways. It implied the death sentence of the




                                             352
proposed Power Sector Loan II, it increased international attention to the claims of the
Indians, and it fuelled the outside world’s moral indignation over Brazilian policies in the
Amazon region. The last point implied that external pressure broadened from focusing on
the World Bank loan and Indian rights to include demands for more pervasive Brazilian
reforms.
        Arranging meetings similar to the Altamira meeting in Indonesia is impossible, as
any big meeting would be dependent on the approval of Indonesian authorities. The
Indonesian State would certainly not allow meetings on its own territory in which the
members challenged the government directly, and it has all the power it needs to block such
opportunities.430
        In spite of these barriers, Indonesian NGOs have not avoided transnational linkage
building. WALHI became the Indonesian affiliate of Friends of the Earth in 1989
(Zulkarnen 1996:224), and SKEPHI co-operates extensively with the US-based Rainforest
Action Network (RAN).431 These contacts are so frequent, intensive and have a form that
make them close to Eccleston’s concept of alliances (1996).432 Moreover, both these NGOs
have provided the international community with much important information on
environmental issues related to tropical forests in Indonesia.433 They have also been
relatively skilful in linking local events with global problems. Many of their publications
pay strong attention to the effects of government policies and corporate strategies at the
local level on global problems like climate change and biodiversity loss.
        As I have shown above, on some occasions SKEPHI and WALHI have been able to
induce external pressure and following internal policy change by employing strategies
similar to Brazilian grass-root groups and their grass-root support organisations. Besides the
downscaling of the Transmigration programme after lobbying the World Bank, I have


429Answers to questionnaire from Indro Tjajhogo in December 1996.
430Interview with Indro Tjajhogo, June 1993.
431Interview with Indro Tjajhogo, June 1993.
432 Eccleston (1996:76) is somewhat doubtful whether the contacts between Friends of the Earth and WALHI
are so intensive and reflect shared values to the extent that they may be called alliances.
433 For example by distributing the English language magazines Environesia (WALHI) and Setiakawan
(SKEPHI) internationally. Setiakawan has not been published since 1993 due to financial problems, answer to
questionnaire from Indro Tjajhogo in December 1996.



                                                   353
mentioned the cases of cancelled logging concessions at Siberut and Scott Paper’s
withdrawal from the eucalyptus project as important victories involving at least some
restrictions on commercial actors in these cases. However, none of these cases were
followed by a broadening of international and domestic criticism that could have led to
further increases of sanctions and international moral condemnation. The outcome is a
profound contrast to the case of Brazil, where moral condemnation and international
shaming of the government ultimately pushed a reluctant government towards more
pervasive reforms.
       The barriers to the construction of dense transnational links that could initiate
transfers of politicised information, international shaming and moral condemnation become
particularly visible when looking at the most important channel for broad transnational co-
operation between Indonesia and the outside world. This is INGI, the International NGO
Forum on Indonesia.
       Formed in 1985, INGI grew to include 25 NGOs from Indonesia and 38 non-
Indonesian groups from 13 countries in 1992 (Levy 1993:17). INGI was formed to
influence the important International Governing Group on Indonesia (IGGI) with two
objectives in mind (Rumansara 1996:136). The first was to work in favour of a more even
social distribution of aid money. The second was to increase the voluntary participation of
the Indonesian society in development efforts.434 INGI had annual meetings between 1985
and 1992.435 After the dissolution of IGGI in 1992 and its replacement by CGI, INGI was
reorganised as INFID; The International NGO Forum on Indonesian Development.436
       INGI involved several environmental NGOs who participated on the annual
conferences of the forum. In 1986, the US Environmental Defense Fund, one of the most
important organisations behind the campaign on Amazonia, participated for the first time
(INFID 1993:25). The most important Indonesian environmental NGO WALHI participated
for the first time at the annual meeting in 1987 (INFID 1993:29). In 1988, another two


434See also INFID’s homepage: http://www.fairtrade.org/users/infid.html.
435Between 1985 and 1988, INGI was the «Inter-NGO conference on IGGI matters». In 1988, by the fourth
conference in Zeewolde in the Netherlands, it became «The International NGO Forum on Indonesia»( Levy
1993:16).
436See INFID’s homepage: http://www.fairtrade.org/users/infid.html.



                                                354
major US environmental NGOs (Natural Resources Defense Council and Environmental
Policy Institute) joined the INGI, followed by a Japanese (Japanese Tropical Forest Action
Network=JATAN) in 1989, one German and one Italian in 1990 (INFID 1993:48-49) and
one more Japanese and two country branches of the transnational NGO Friends of the Earth
(Japan, USA) in 1992 (INFID 1993:69-70).
        All the «Aide Memoires» of INGI include environmental claims among a high
number of other claims. In the «Aide Memoires» between 1985 and 1988, transmigration
received most attention among forest-related environmental issues. There were also
repeated calls for implementing effective routines for environmental impact assessments.
Reckless logging on the Outer Islands was frequently mentioned in the context of this
demand. In the «Aide Memoire» from the 1991 INGI conference, the Indonesian
government’s National Forestry Action Plan was heavily criticised (INFID 1993:58).
During the 1992 conference, criticism of Indonesian forestry was even stronger. Though
presented only in technical terms, the forestry-related sections of the «Aide Memoire»
pinpointed many of the problems of the Indonesian logging sector, including the absence of
adequate inspection and the tax and log price regime.
        In the early 1990s, INGI managed to establish regular contacts with both
international organisations and governments. By 1991, at the INGI conference in
Washington, the World Bank met INGI representatives and agreed to make
communications regular. In 1992, the Japanese government granted the INGI conference an
official contact (Levy 1993:19).
        In spite of these remarkable landmarks in transnational alliance-building on the
environment, it is important to emphasise that Indonesian NGOs faced important barriers to
their activity in INGI/INFID. In 1989, Indonesian NGOs were threatened with prosecution
and prohibition by the Indonesian Minister for Home Affairs after criticising Indonesian
policies on human rights related to the expulsion of displaced people in connection with the
construction of the Kedung Ombo dam at Java.437 Indonesian NGOs were warned against
«excessive criticism» by the government before later INGI meetings.438 The language of the


437See the article: «NGOs warned not to smear on Indonesia», Jakarta Post, 14. August 1989:1.
438See the article: «Speak well of RI at INGI forum, NGO leaders told», Jakarta Post, 31. March 1990:1.



                                                   355
«Aide Memoires», which was INGI’s main public statements, is very subdued when it
comes to attacking specific sectors of the state. Main players in forestry and other affairs,
like the President’s family and the military were never explicitly mentioned or condemned
(INGI 1993:21-70). According to Marijke Jonkers in INFID, this was an explicit policy to
avoid provoking Indonesian authorities.439
         In 1992, INGI faced a very difficult situation as President Suharto closed down its
main target institution, IGGI. Both Masoed (1993:10) and Levy (1993:20) claim that the
curbing of further expansion of INGI influence on the international arena was an important
motive behind this act although it was marketed as an official protest against Dutch human
rights claims. Thus, the Indonesian government was able both to launch a popular attack
against the perceived arrogance of the Dutch in IGGI and to curb the influence of INGI
without using direct coercion. Moreover, this could be done without protests from INGI,
which felt obliged to (Eldridge 1995:200): «…accept the government’s nationalist rhetoric
without demur.» Fear of retaliation was, according to Eldridge (1995:200), the main motive
for such prudence.
        INFID has faced continuously harsh conditions of repression. Partially to counter
repressive measures from the Indonesian government, the Indonesian participants of INFID
are grouped together in the Indonesian NGO Forum.440 The list of external participants is
kept secret to make their operation easier and to avoid repressive measures from the
government.441 Levy (1993:20) concludes the following about INGI: «Power listened to




439Letter from Marije Jonkers, INFID-Netherlands, 13. February 1997.
440Marijke Jonkers from INFID stated the following about the purpose of the Indonesian counterpart (E-mail
communication with Jonkers, 13. March 1997: «NGOs in Indonesia are under the continuous scrutiny by the
Indonesian authorities, civil officers and military at the different levels (local, regional, national). NGOs (Non-
Governmental org.) are often seen as Anti-Governmental. The Government of Indonesia sees criticism more
or less as actions against the state. When an NGO expresses criticism of certain projects or laws it may be
targeted by local authorities or military. Therefore, bundled into a nation-wide forum they are less
vulnerable.»
441E-mail communication with Marijke Jonkers, INFID Netherlands, 13. March 1997. Jonkers says the
following about INFID’s external participants: «Externally, INFID is quite a loose network. NGOs we find
interesting are approached by INFID or an organisation which is interested to participate can approach the
Secretariat. There are probably organisations which we see as participants but which are not really so very
much aware of it. That may seem strange but so far we did not find that so very important. We were focussed
on the results. We may change our participation policy in the time to come.»



                                                       356
INGI but hardly caved in - not in Indonesia and not in any of the IGGI capitals and only
slightly in the World Bank».
       Thus, in spite of the existence of transnational alliances and target institutions for
pressure, there have been important impediments to the emergence of effective international
pressure based on these linkages. I argue that the most pervasive barrier has been the
impediments to transfers of politicised information that could provide a basis for
scandalisation, shaming and international moral condemnation of the Indonesian
government. For the forest sector, this implied a narrowing of the opportunities of
Indonesian NGOs to publish critical stories on the political dimensions of Indonesian
forestry abroad. When INGI presented their protests against the Kedung Ombo dam at Java
for the US Congressional Human Rights Caucus as an example of forced resettlement
supported by World Bank lending, a non-Indonesian representative presented the case on
behalf of INGI due to the high sensitivity of the matter (Eldridge 1995:199). The contrast
with the testimonies of prominent Brazilian activists is clearly visible. As the Brazilian
government had fewer opportunities to take retaliatory steps against Brazilian
environmentalists and grass-root activists from the Amazon, they could make their highly
critical testimonies in own person in front of US congressional committees and, in the
course, become international symbols to society resistance against the Brazilian
government. This turned out to be a great advantage, as the colourful appearance of
representatives of various grass-root representatives attracted strong media attention and
lent strong credibility to their claims. There is no accident that the Indonesian
environmental movement has failed to produce a Lutzenberger or a Chico Mendes.
       Even SKEPHI, which has gone so far in criticism at the international level that the
organisation has been constantly threatened by government bans, works hard to design its
international reports in a way that avoids insulting the army and other sensitive interests.442
Criticism of the connections between the President’s family and forest management is out
of the question, even at the international arena.443 Both the army and individual companies
provide the police with reports when they are dissatisfied with presentations of their


442Answers to questionnaire by SKEPHI-leader Indro Tjajhogo in December 1996.
443Answers to questionnaire by SKEPHI-leader Indro Tjajhogo in December 1996.



                                                357
environmental record made by Indonesian NGOs.444 SKEPHI members have repeatedly
been investigated and intimidated by military staff.445 The clauses in the Law on Social
Organisations also works in such a way that NGOs may lose access to foreign financing if
their criticism exceeds what is acceptable for the government. Thus, the law encourages a
strong self-justice among NGOs if financial links are to be preserved. According to Potter
(1996), WALHI has on occasions preferred to dampen their transnational exchange of
information, or even hold back information, to avoid provoking Indonesian authorities.
        This culture of self-censorship has induced self-criticism from some Indonesian
NGO representatives. Juliantara (1996) argues that the barriers to direct criticism and the
incentives to work on the premises of the government have produced a compromise-
oriented NGO movement without the ability to challenge the New Order in ways that are
more fundamental. Though important gains have been achieved by this strategy, it has
produced important limitations to the force of the movement, as they have become
(Juliantara 1996:279): «…the product of the people’s compromise with their society».
Arguing on the basis of a generally positive perception of the Indonesian environmental
movement and its achievements in relation to tropical forests and the environmental
movement, Mayer (1996:21-213) frames an argument that is very close to Juliantara’s:
«Criticism of Indonesia’s political economy has brought state power down on the heads of
activists in many groups in civil society, and has threatened their abilities to organize at all.
Prudence dictates avoiding direct attacks on the government and instead appropriating the
regime’s own symbols and ideologies for critical purposes». Though such prudence and
appropriation of the government’s symbols has been useful in gaining limited government
concessions, it has also been an important barrier to the evolution of international political
opposition to the Indonesian government leading to processes of moral condemnation and
shaming. Eldridge (1995:224) also emphasises the limitations on politicisation originating
from the environmental movement’s vulnerability to counter-attack from the government,
and recommends more inward-looking strategies in the future.



444Answers to questionnaire by SKEPHI-leader Indro Tjajhogo in December 1996.
445Answers to questionnaire by SKEPHI-leader Indro Tjajhogo in December 1996.



                                                358
       Similar interests to those who dominate Indonesian forest policies were also active
in a campaign against national and international NGOs in Brazil. The military, represented
by the Secretariat for Assessments on the National Defence (SADEN), warned against
foreign NGO influences on Brazil just at the same time as the important Altamira meeting
was held.446 Though mostly focussed on foreign influences, the classical army «think-tank»,
the Superior War College (ESG) also identified Brazilian artists, intellectuals, the church
and local offices of transnational companies as domestic counterparts in the international
NGO campaign.447 However, neither the Brazilian army nor the Sarney government were
able to restrain the political debate or limit transnational co-operation between Brazilian
and international environmentalists and NGOs to the same extent as the army and the
government did in Indonesia.
       These differences may be ascribed to differences in democratic freedoms between
the two cases; more specifically the freedom of association and the freedom to speak freely.
Though the Indonesian environmental movement has developed a high level of skills in
working within a repressive framework, the advantages of the liberal framework of the
Brazilian environmental movement are striking. Backed by freedom of association and
freedom of speech, the successful Brazilian groups could focus all their energy on the
construction of very dense transnational networks open to the distribution of politicised
information, shaming and scandalisation of the Brazilian government.
       In terms of Wilson’s (1980) essay on the politics of regulation, it could be said that
the difference between Brazil and Indonesia not only emerged because of a difference in the
strength and endurance of client politics, but also because of a difference in the barriers to
the development of international entrepreneurial politics, which main characteristic is the
construction and evolution of public scandals. In terms of my introductory notes on power
and influence, it can be said that the transnational alliances between Brazilian and Northern
NGOs commanded communicative power at the international level by being able to
influence the international agenda.



446«Ambientalista sob suspeita», O Estado de São Paulo, 9. February 1989:13.
447«ESG admite “recurso da guerra” na Amazônia», Folha de São Paulo, 29. May 1990:A-4.



                                                359
       This analysis of transnational linkages on environmental reform in the cases of
Brazil and Indonesia has also implications for the debate on the possible emergence of a
«global civil society» in the field of the environment (Princen et al. 1994, Lipschutz 1996).
Rather than supporting the picture of a generalised global civil society where national
borders are irrelevant, the differences between transnationalisation in Brazil and Indonesia
support the claim of Gourevitch (1978) that transnationalisation is a variable influenced as
much by state characteristics as by the emergence of new information technology and
globalisation of media. This contrast also echoes Krasner’s (1995:279) and Risse-Kappen's
(1995) claims that transnational actors are decisively shaped by the states they operate
within, suggesting that a state-centred image of transnational dynamics in the field of
international environmental politics is still closer to realities than the image of a global
society without borders.
       However, it should be noted that this thesis in no way supports the assumption that
democratic freedoms are sufficient preconditions for environmental reform. The spectacular
successes of the Brazilian grassroot-organisations were preconditioned by a very rapid
upsurge of considerations for global environmental problems in industrialised countries.
The hot summer of 1988 produced particular worries related to climate change (Ungar
1992). A coalition of skilful US NGOs managed to exploit these worries and had
unprecedented success in persuading international institutions and the international public
to condemn Brazilian forest policies. Politicised language, scandalisation and shaming are
different names on the same strategy, namely an international appeal to an emerging agenda
of shared norms and fears related to global environmental problems. However, this agenda
may be criticised for its instability, its unequal nature, and its excessive emphasis on
symbolism and moralism.
       First, as early as 1991, international attention to environmental problems related to
tropical forests started to wane. For Brazil, this was demonstrated by the waning G-7
interest in the Pilot Project on the Amazon forest. Though the demise of this programme
certainly was influenced by obstacles within Brazil, there is no doubt that the darker
economic situation that confronted the industrialised world as well as changes in




                                            360
international trends led to a collapse of international attention. This had important effects
for policies related to tropical forests in Brazil.
        At the political level, the decline of international attention and pressure weakened
political forces in favour of further reforms. In the following period, several of the reforms
adopted under intensive external pressure, like the demarcation of Indian reserves or
environmental monitoring and inspection efforts in Amazonia were almost halted. In
addition, at the level of implementation, political forces resisting reforms to have gained
momentum. Though not confirmed by independent sources, reports from IBAMA staff in
1993, which indicated that loyal clients of state politicians quietly substituted IBAMA
superintendents in Amazonia, were symptoms of the effects of waning international
attention and a return to business-as-usual in Brazilian environmental politics.448
        At the level of policies and development of policy instruments, the instability of
external pressure turned out to be highly problematic. Successful environmental reforms of
the use of tropical forests need firm government backing and a long perspective to become
effective. As deforestation and forest depletion are causally complex phenomena,
particularly in frontier settings like Amazonia, long periods are also needed to facilitate
learning and the development of solutions at the levels of politics and policy instruments
(Bramble and Porter 1992:351). Typically, further investigations in the 1990s concluded
that the outcries against big ranchers in the Amazon region in the late 1980s partially
missed the target (World Bank 1992, Schneider 1995). The dynamic of deforestation in
Brazil turned out to be driven much more by ranching in smaller herds than what was
believed in the late 1980s. However, these discoveries were not translated into policies, as
international attention to tropical forests and the environment waned rapidly after UNCED.
        North-South inequalities inherent in the environmental agenda of the late 1980s also
contributed to decrease the legitimacy of international claims both within Brazil and
internationally. Promoting an agenda consisting exclusively of problems like biodiversity
loss and climate change implies ignoring other basic environmental problems in developing
countries of a non-global character (Beckerman 1992). For people in Brazil, local pollution
problems are much more of an immediate threat than global warming, perhaps with the lack




                                                361
of basic sanitation for the majority of the population as the most important problem (Viola
1992:2). This point is also relevant to the popular images of development in the Amazon
region that prevailed during the late 1980s. Amazonia was the front cover story of the 18.
September 1989 issue of the prestigious Time Magazine. The front cover, showing a skull
of flames devouring a forest of innocent birds, jaguars and beautiful snakes, supports the
popular image of Amazonia as an unpopulated tropical paradise threatened by civilisation.
The poor urban populations of large cities like Belém and Manaus as well as the rural poor
at the agricultural frontier are not included in this image.
        Furthermore, the focus on Brazil as a culprit of global warming and biodiversity loss
drew attention away from the fact that countries in the North emit the bulk of greenhouse
gases. Pressure from the North could easily be interpreted as a plot to draw the focus away
from the North’s huge contributions to greenhouse gas emissions (Agarwal and Narain
1991). In Brazil, there was also strong resentment against environmental pressure, as there
was a feeling that the Amazonian issue was a plot to obstruct the exploitation of a region
very rich on natural resources and further development of the Brazilian economy (Hurrell
1992). Thus, at an ideological level of power, it could be claimed that the new global
environmental agenda was forced on developing countries by the North.
        All these factors decreased the legitimacy of international claims and contributed to
the hardening of resistance from actors like the military, the Ministry of External Affairs as
well as socio-environmental sections of the environmental movement.
        Excessive moralism also contributed to produce some of the symbolism and
tokenism of environmental reform in Amazonia. Some of the most visible examples of this
emerged under Collor (Arnt 1992). Collor was much more perceptive to international trends
and Brazil’s international reputation than Sarney, and many of his policies reflected this.
Admitting previous Brazilian mistakes, choosing the ardent environmentalist (but
bureaucratic disaster) José Lutzenberger as Secretary for the Environment,449 backing
Brazil as host of UNCED and carefully preparing media coverage on the government’s
environmental policies produced rapid international success and appeasement. These



448 Interview with Marilia Cergueira, international adviser at IBAMA, December 1993.



                                                  362
choices made international pressure, in the words of Macedo Soares, almost «...cease to
exist» from the middle of 1990.450 It was easy to get the impression that the campaign
against Brazil was more of a moral crusade to produce some kind of apology and signs of
repentance rather than being focused on substantial forest policy matters. Little attention
was paid to the fact that IBAMA lost both funding and presidential backing under Collor,
and languished under severe organisational problems.451 These weaknesses make some of
the policy changes under Collor resemble Edelman’s (1971) image of «politics as symbolic
action» directed to appease emotions and produce an impression that «something is done»
rather than to address difficult problems.
        Nevertheless, the contrast between Brazil and Indonesia in the mentioned period
seems to be explained relatively well by the combination of somewhat more dispersed
costs, less well-organised commercial interests and less disproportional enfranchisement of
anti-environmental interests in the Brazilian than in the Indonesian case. In combination
with denser transnational alliances and, most importantly, a higher ability to politicise the
pro-environmental message by these alliances, this factor led to a contrast in reforms.
Considerations for territorial security in the Amazon region undoubtedly decelerated
reforms under Sarney and galvanised domestic resistance to reform. However, such
considerations did not block reforms, as there were quite substantial differences between
the willingness of Brazilian politicians to accept this perception of the Amazon. I
summarise these findings more extensively in the following conclusion.




449 Jarbas Passarinho, Senator from Pará and Minister of Justice under Collor, claimed that Collor «used
Lutzenberger as a tool to appease foreign pressure» in interview November 1992.
450 Interview with Macedo Soares, November 1992.
451 Meeting with IBAMA directors in October 1992, answer to questionnaire from José Carlos Carvalho in
February 1993, interview with Maria Tereza Jorge Pádua in October 1992.



                                                 363
    CHAPTER SIX: SUMMARY AND CONCLUSION
I have discussed several factors that may influence the policy response of developing
countries to increasingly global demands for environmental reforms of exploitation of
tropical moist forest areas. In this chapter, I will summarise the five preceding chapters and
discuss my findings. In chapter one, I started out by stating the research problem. I claimed
that environmental reforms related to tropical moist forests were broader and that they were
implemented with more rigour in Brazil than in Indonesia during the 1988-1992/93 period.
This was the main contrast that I wanted to explore and explain. However, I also noted that
there were important limitations to reforms in Brazil, and that I had ambitions to specify
and explain these limitations.
       In chapter two, I discussed the aim of this comparison. Here, I defended my
understanding of the comparative method both against challenges from experimental and
statistical ideals. In this dissertation, I have tried to stick to the ideal of discussing how
various social mechanisms have interacted in producing the outcomes. I wanted to analyse
the complex interactions between explanatory factors rather than to work towards higher
level generalisations. This focus brings out that the kinds of outcomes I study are produced
by conjunctures of causes that shape the context of political action in the two cases.
       The first part of my explanation deals with the conjuncture between domestic
politics and international pressure. Neopatrimonial political relations in Indonesia produced
more enduring and persisting political obstacles to environmental reform than the policy
networks found in Brazil, as they made Indonesian commercial exploiters of forest land
more powerful than commercial exploiters of forest land in Brazil. The difference in
reforms is here explained by a difference of conjunctures between international pressure
and domestic politics in the two states.
       The second part of my explanation deals with how democratic rights may facilitate
politicisation of information channelled to the international opinion and global media
through transnational alliances. Weak democratic rights and serious restrictions on
organisational freedom weakened the ability of the Indonesian environmental movement to
present their claims effectively to the global media. This in contrast to Brazil, where
democratic freedoms allowed unrestricted flows of politicised information to be distributed


                                             364
internationally by very dense transnational alliances. In turn, this information triggered a
massive global media response that led to international moral condemnation of Brazilian
policies and politicians. Presence of democratic freedoms in the Brazilian case was then a
factor that facilitated politicisation of information, which again facilitated a massive global
media response focused on Brazil. Scandalisation and international moral condemnation
implied that a broad range of Brazilian foreign policy ambitions became more difficult to
fulfil. However, moral condemnation also implied that the international legitimacy of the
Brazilian government decreased rapidly; and this seemed difficult to cope with for the
Brazilian government. Thus, I argue in favour of understanding shaming and moral
condemnation as a form of effective international pressure qualitatively different from
economic sanctions.
       Thus, the second part of my explanation is that variation in the degree to which
democratic freedoms were realised influenced the ease with which transnational alliances
could be used as a vehicle to create international pressure, particularly of the kind that
involves moral condemnation. This is a conjunctural explanation as it is dependent on a
wider context. Only in the presence of (1) strong international attention to the «tropical
forest issue» and (2) skilful alliance-building connecting grass-root groups and their claims
with the global environmental agenda and with Northern groups, did the presence of
democratic freedoms have a positive effect on the chances for gaining international
attention.
       These two explanatory factors are to a certain extent additive rather than
conjunctural. Neopatrimonial relations or other political relations that facilitate access to
government decisions may co-exist with stronger democratic rights than those prevailing in
Indonesia. Lower levels of power, concentration and influence by various economic sectors
may also be found in totalitarian regimes. However, in both cases, there are also
conjunctural elements linking the effects of the two factors on the outcome in focus.
Absence of politicised criticism undoubtedly contributed to the persistence of
neopatrimonial practices in Indonesia, while the presence of politicised criticism
contributed to reduce similar practices in the environmental sector in Brazil.




                                             365
       In chapter three, I identified four broad approaches to explaining variations in
environmental reform. These were the dependency approach, the interdependence approach,
the bureaucracy-centred approach, and the society-centred approach. These approaches are
widely used in the analysis of public policies in developing countries. They are also crucial
in the international scholarly debate. In addition, the factors covered by these four
approaches, North-South inequalities, environmental conditionality and sanctions,
transnational environmentalism as well as domestic environmental agencies, companies and
NGOs, are all main factors and actors in focus in the current debate on environmental
policy reform.
       In chapter four, I stated the difference between Brazil and Indonesia in more detail.
Here, I defined the concept of environmental reform. Drawing on the scholarly literature on
forest policies, regulation theory and public choice theory, I identified a set of indicators
and operationalisations that could be used as tools for evaluating and comparing reforms.
Environmental reforms of commercial exploitation of forest land may take place by
reducing the size of the exploitable area or by introducing more benign exploitation
methods, or by combining these two approaches. These policy goals may be reached by
applying directives, incentives, or a combination of these. Thus, I evaluated reforms by
looking at to what extent the states in question (1) decided to increase protected areas
desired by commercial actors and decided to introduce more benign exploitation methods,
and (2) to what extent these decisions were implemented by manipulating economic
incentives and enforcing legal directives. I added two operational indicators of reforms to
open up for the possibility that regulatory goals and instruments may benefit the very same
groups that they are intended to regulate. These are (1) protests by the regulated commercial
actors, and (2) analyses of the distribution of economic gains produced by reforms. If there
were no protests and reforms marketed as pro-environmental by the government benefited
groups in focus of the regulatory effort, while at the same time it was likely that this benefit
was not connected to improved environmental performance by the private party, these
reforms could not be called real or substantial reforms.
       On the background of these indicators and operationalisations, I compared
environmental reforms in Indonesia and Brazil during the 1988-1992/93 period. My



                                              366
conclusion was that while Brazil made some limited, but real and substantial, attempts to
curb the expansion of ranching and other commercial activities in the Amazon region in
this period, Indonesian environmental regulations on loggers on the Outer Islands were to a
large extent «window-dressing» for a series of decisions that favoured some big and
powerful logging and plywood groups without leading to environmental improvements.
However, I also remarked that the particular evolution of reforms in Indonesia could be
explained by several factors. There is no necessary link between unsuccessful regulations
that in reality benefit the group targeted by the regulators, and a high level of power and
lobbying by this group. Such links have to be demonstrated empirically, and there are
several alternative explanations of such regulatory outcomes even if it can be shown that
these groups actually influenced policies.
          In chapter five, I discussed the contrast between the two states in the light of the
theoretical approaches outlined in section three. First, I found that various explanations
inspired by the dependency approach had little explanatory power. International pressures
for export expansion did not produce important obstacles to reform in any of the cases.
Neither was the contrast in question adequately explained by fiscal constraints. Such
constraints were in fact more visible in the most reformatory state, Brazil, than in Indonesia.
The Brazilian debt-crisis and a following strong pressure for fiscal austerity seems to have
had negative effects on the financing of environmental agencies. In addition, one instrument
of reform poorly developed by both states,
namely the establishment of protected areas, seemed to involve prohibitive costs for both
states. These costs were partly connected to the expenses necessary to establish and
maintain these areas, and partly to the revenue foregone by setting aside lowland forest
areas. The presence and political influence of transnational corporations in activities that
destroy tropical moist forests was not an important factor in either of the cases.
Transnational companies had withdrawn from the most important economic sectors related
to deforestation and forest depletion in both countries. There was a lobby of transnational
companies in Amazonian mining, but the Collor government ignored the demands of these
actors.




                                              367
       Second, turning to the variety of the interdependence approach that analyses the
state as a rational and unitary actor basing policies on calculations of international and
domestic economic incentives, I found that this approach too failed to explain the contrast
between Brazil and Indonesia. On the one hand, it is clear that Brazil both was exposed to
and highly vulnerable to the sanctions against a series of multilateral bank loans imposed
during the late 1980s. On the other hand, Indonesia was exposed to a moderate threat
against its plywood exports. This threat was less serious as an external incentive to policy
change than the financial embargoes against Brazil largely because it failed to impede
expansion of Indonesian plywood exports. Nevertheless, when analysing the effects of
international economic pressures in the light of domestic costs and benefits associated with
reform, the picture changes. While both economic costs and benefits of reform in Brazil
were moderate, the domestic economic benefits of reform for the Indonesian state were very
large and exceeded the costs. In addition, I pointed to the fact that particularly Indonesia
could increase regulations substantially at very low cost by starting to act on previously
ignored field reports. Thus, an assessment of both international and domestic costs and
benefits associated with reforms indicated that also Indonesia had strong economic
incentives for reforms.
       Third,    before   turning    to   socio-political   versions   of   the   environmental
interdependence approach, I investigated whether domestic political contrasts between the
two countries could explain the contrast in reforms. However, also these factors failed to
explain the contrast in focus. Both countries had strong and powerful military bureaucracies
working against reforms and relatively weak pro-reformatory agencies. However, there was
a contrast between the interests of the two military bureaucracies. As the Indonesian
military was dependent on forestry for substantial parts of their funding, military staff
seems to have resisted most attempts to introduce reforms that could imply economic
losses. However, the Brazilian military was primarily worried about the losses of territorial
sovereignty represented by reforms. Thus, this group did not strongly oppose reforms
perceived as less risky in terms of territorial sovereignty.
       The weakness of pro-environmental actors in the state also characterised pro-
environmental actors in the Indonesian and Brazilian societies. While commercial actors



                                              368
controlled important political assets and enjoyed privileged access to decision-makers, pro-
environmental groups were less powerful measured by these indicators. However, while
commercial actors in Indonesia were very powerful due to neopatrimonial political links,
commercial actors in Brazil were less powerful, well-organised and homogeneous. Though
commercial actors in Brazilian Amazonia were integrated in political networks that had
clear neopatrimonial characteristics, the political goods exchanged in these networks were
less important than in Brazil. Under pressure for reform, these networks disintegrated to the
extent that the label policy networks seemed to be the most appropriate way to characterise
their political representation. However, in both countries, the power of commercial actors
may be understood in the context of the colonial legacy and the problems this legacy
created for the establishment of collective benefits by the state. Thus, these historical
foundations for the present domestic polities of the two states may support an indirect and
more sophisticated variety of dependency approaches.
       In Brazil, the powerful landowner lobby is disproportionately represented in
Congress and government circles both due to disproportionate representation of rural areas
and their organisational strength. These arrangements can easily be interpreted as the
heritage of Portuguese colonialism, which encouraged land concentration and political
dominance by landowners.
       In Indonesia, the power of the military and some client businessmen can be
interpreted as the outcome of Dutch colonial structures that prevented the emergence of any
powerful rural or urban Indonesian economic elites able to constrain the state and lead the
economic development process. Thus, some of the roots of Indonesian neopatrimonialism
may be found in Dutch colonial policies that aimed to maximise colonial profits at the
expense of broader economic development.
       At the same time, though less influential than commercial interests and the military
bureaucracy, the Brazilian environmental movement was more powerful than its Indonesian
counterpart. Partly, this was due to the movement's control over votes and congressmen.
The high number of «green congressmen» in the 1988 Constitutional Assembly made the
movement able to influence the new Constitution. However, the environmental movement
certainly also exerted some power by being able to raise environmental issues related to



                                            369
Amazonia on the national agenda and to link up with and assist the organisation of Indians
and rubber-tappers; both groups interested in sustainable use of the Amazon region.
However, internal cleavages and inability to dominate the political agenda in spite of a free
press clearly made the movement less powerful than the policy networks surrounding
commercial actors in the Amazon region. The Indonesian environmental movement was
constrained by lack of a government accountable to the parliament and limited access to
media in order to voice criticism of the political aspects of environmental damage in forest
regions. Thus, commercial actors even more clearly outmatched the environmental
movement in Indonesia than in Brazil. However, in none of the countries environmental
movements were strong enough to make the state act.
         Finally, I examined the explanatory power of some socio-political factors proposed
by several scholars inspired by environmental interdependence approaches. Of the factors
examined, two of these seemed to provide the most adequate explanation of the contrast in
focus.
         The first explanatory factor under the interdependence approach was to analyse the
crossroads between international pressure and domestic politics. The policy networks
surrounding commercial actors in the Amazon provided these actors with less power than
the neopatrimonial networks surrounding commercial actors operating on the Outer Islands
of Indonesia. The extremely strong Indonesian networks hindered the adoption of reforms
that both could have benefited both the global environment and the fiscal situation of the
Indonesian government, as well as long-term productivity of forestry. In Brazil, the policy
networks surrounding commercial actors in the Amazon region were too weak to resist the
international challenge. In both countries, the international demand for reforms confronted
business interests who derived their power from a privileged position in the domestic
political and economic system rather than from superior organisational and economic skills.
Thus, interests were concentrated and well-organised because the domestic political system
enfranchised them disproportionately, and not so much because of the incentives for
organising created by market-driven processes of concentration and organisation. These
power relations, which may be interpreted as part of the colonial legacy, made it difficult
for the governments to choose policies that could have produced broad benefits both for the



                                            370
economy and the local and global environment in both countries. However, these actors
were weaker in Brazil than in Indonesia. These weaknesses may be ascribed to historical
differences. A long history of economic growth and social and political mobilisation has
slowly produced a society with stronger political pluralism and constraints on the benefits
of traditional elites than the still heavily repressed Indonesian society.
       The second important explanatory factor under the interdependence approach had to
do with transnational networks. Transnational links between the Brazilian environmental
movement and the international community were perhaps denser, but more importantly of
another character than transnational links in the Indonesian case. Democratic freedoms in
the Brazilian case gave the organisations and individuals that participated in transnational
linkage-building more freedom to attack the Brazilian State in a politicised language
internationally, condemning state actions and challenging values promoted by the state.
Indonesian NGOs always had to weigh the benefits of such strategies against the costs of
domestic retaliation. I have documented that WALHI, SKEPHI and INGI/INFID, three
important actors with transnational links, chose to shape their language and transnational
strategies to avoid domestic repression. I argue that by doing this, they were less successful
in attracting global media attention to and criticism of the Indonesian government's very lax
regulation of the forest concessionaires.
       This exposes that there is still considerable room for manoeuvre for powerful states
unconstrained by the existence of democratic rights to decelerate transnational processes of
information exchange. The «democratic advantage» of transnational links from Brazil
implied that Brazil became exposed to more external economic sanctions and threats of
sanctions than Indonesia. However, it also implied that Brazilian politicians found
themselves in a morally defensive position, deprived of international legitimacy by a wave
of international moral condemnation. Although international condemnation undoubtedly
made it more difficult to pursue several foreign policy goals and may be interpreted as a
more general economic threat, interviews with Brazilian foreign policy makers also suggest
that international moral legitimacy played a certain role. Thus, when analysing the effects of
international pressure on states, I argue in favour of analysing both economic and moral or
normative aspects of pressure.



                                              371
       However, I end my discussion with some remarks about the limits to international
pressure as an instrument for environmental policy change in the third world that emerge
from the study of the case of Brazil. The instability of the international environmental
agenda focused on tropical forests, its disputed legitimacy when seen in the context of
broader North-South conflicts over economic and environmental issues and its excessive
moralism were all factors that limited reforms in Brazil. Together with the persisting
representation of landowners in the Brazilian political system, the limits to policy change
produced by a hostile economic environment and a military still perceiving Amazonia as
vulnerable in terms of national sovereignty, these factors constrained reforms under Sarney
and Collor.
       Studying variations in domestic environmental reform, I have found that
economically oriented hypotheses have low explanatory power alone. The emergence and
effects of economic incentives are strongly influenced by particular characteristics of elite
networks and pro-environmental social mobilisation, and there are other factors than
economic incentives that may motivate environmental policy change. As for research
priorities, my findings favour increasing attention to these factors in future studies, both
quantitative and case-oriented ones. Most of the debate on environmental reform in
developing countries in the 1980s and the 1990s has focused on international economic
incentives and international distributional conflicts. Less attention has been paid to the
interactions between these factors and political aspects of international mobilisation on the
environment as well as variations in elite representation in domestic political systems. Such
interactions and political patterns need to be explored further to understand the political
outcomes that will influence the global environment in the next century.
       More specifically, my findings justify a closer look at the particular distributions of
power and the processes that influence political outcomes in developing countries.
Certainly, the effects of these power distributions and political processes on domestic
policies and participation in international environmental agreements deserve systematic
attention. The literature on neopatrimonialism could be a conceptual point of departure for
such studies. Another interesting topic will be the effects of international environmental
pressure on domestic political outcomes. In the Indonesian case, I discovered a number of



                                            372
unexpected effects of international environmental pressure on domestic political outcomes.
Further studies of political systems with similar characteristics are necessary to find out if
the exploitation of international environmental pressure by powerful domestic groups to
further their own economic interests is a common phenomenon.
       Moreover, the international and domestic processes and factors that influence the
emergence of transnational alliances and their effects on domestic policies need more
attention. As my analysis has demonstrated, in different domestic contexts, these alliances
may have strongly varying effects both on the level and on the properties of international
attention to certain issues, as well as the ability of pressure to produce policy change.
Comparing interactions between the emergence of influential transnational alliances, NGO
strategies, and domestic and international structures may be a fruitful strategy to increase
our understanding of these topics.




                                             373
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