VZCZCXRO6728
PP RUEHCHI RUEHDT RUEHHM
DE RUEHJA #1768/01 1780614
ZNR UUUUU ZZH
P 270614Z JUN 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 5247
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBY/AMEMBASSY CANBERRA 0855
RUEHWL/AMEMBASSY WELLINGTON 1559
RHHMUNA/HQ USPACOM HONOLULU HI
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
ZEN/AMCONSUL SURABAYA
UNCLAS SECTION 01 OF 02 JAKARTA 001768
SIPDIS
DEPT FOR EAP/MTS AND EB/ESC/IEC
DEPT FOR DS/IP/EAP
DOE FOR CUTLER/PI-32 AND NAKANO/PI-42
COMMERCE FOR USDOC 4430
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EPET ELAB ENRG PGOV ASEC ID
SUBJECT: East Java: Lapindo Mudflow Devastation Continues
Ref. A: Jakarta 1038 (notal), Ref. B: Jakarta 1629
1. (SBU) SUMMARY: ConGen Surabaya and Embassy Jakarta officers
accompanied EAP Assistant Secretary Christopher Hill to the Lapindo
mudflow disaster (reftel A) and surrounding areas on May 28, the day
before the one year mark of the disaster. The mudflow continues at
approximately 150,000 cubic meters per day and the mouth of the flow
has grown to 150 meters in diameter. The Porong Road and
Surabaya-Malang rail line reopened May 20 after being closed for
seven weeks. 8-10,000 displaced Porong residents still live in the
open-air Porong Market and 40-60,000 Porong residents are displaced
from 12-13,000 homes already destroyed. The Indonesian Supreme
Audit Agency (BPK) estimates economic damages now exceed $3.7
billion and the National Development Planning Agency (Bappenas)
projects Indonesian national GDP will be reduced significantly in
2007 due to effects of the mudflow disaster. National
parliamentarians' recent call for an interpellation, demanding the
President appear to explain central government's handling of the
mudflow (reftel B), is a symptom of growing frustration at a
national level over failure to solve the problem or compensate the
victims. END SUMMARY
Mudflow Disaster Update
-----------------------
2. (SBU) Sofian Hadi, Director of Operations for the Mudflow
Disaster Management Board (BPLS), showed EAP Assistant Secretary
Hill, Embassy Jakarta and ConGen Surabaya officers the extent of the
mudflow disaster on May 28, the day before the one year mark of the
PT. Lapindo Brantas (Lapindo) gas well drilling accident that
started the eruption. Hadi showed us weakening dam walls that are
ready to fail again, potentially causing additional flooding. He
told us the mud continues to flow at approximately 150,000 cubic
meters per day (roughly 1 million barrels) but has recently
increased its flow rate. The mud is also changing from primarily
fine particles to nearly 40% gravel, dampening BPLS plans to divert
the mudflow to a series of irrigation channels and eventually to the
sea. Hadi demonstrated BPLS's newest effort to pump muddy water in
to the Porong River. The BPLS is currently able to pump 10-20,000
cubic meters per day; however the pump motors frequently seize due
to the water's high temperature. Hadi also admitted that there has
been little progress on a permanent solution to stopping or managing
the mudflow. In addition, the Porong Market internally displace
persons (IDP) camp is still housing 8-10,000 people. Lapindo
continues to provide food, water and basic sanitation to the
residents. Many of the IDPs stay in the camp rather than accepting
rental assistance from Lapindo and scattering their village members
to away from one another. There remain an estimated 40-60,000
people displaced by the mud.
3. (SBU) On June 16, a new 20-foot fountain of water erupted
adjacent to the Porong Road, in the Porong Fruit Market. Local
newspapers report the "water" is flammable, containing elements of
methane gas. BPLS leaders anticipate more flammable geyser
eruptions as the newest threat to the sensitive infrastructure at or
under the Porong Road.
Economic Impacts Mount - Investors Preparing to Leave
--------------------------------------------- --------
4. (SBU) The economic impact of the mudflow disaster continues to
mount, now exceeding $3.7 billion, according to the BPK. In April
2007, Bappenas released an estimate that mud damage will reduce the
Indonesian national 2007 GDP by 1.03%, although this figure is seen
as overstated by some outside economic experts. According to BPLS
contacts, little progress has been made on moving critical
infrastructure, as no GOI funds have been appropriated for the
project. New foreign direct investment (FDI) in East Java has
slowed to a trickle, with hundreds of millions of approved
investments canceled by mainly Asian investors. Several Japanese
managers of factories assembling products for export south of the
mud told us that their companies are looking to relocate their
factories. The transportation difficulties, unreliable gas, water
and electricity supplies and the indefinite nature and growing
impacts of the mudflow have dimmed business prospects to the point
that closing operations and moving their plants to neighboring
countries may be their best option. To date, 20-25,000 East Java
jobs have been lost due to the mudflow.
GOI Rhetoric Pressuring President to Act
JAKARTA 00001768 002 OF 002
----------------------------------------
5. (SBU) Rhetoric coming from various parts of the GOI is changing
from conciliatory and accepting of the government's actions, to
frustrated and confrontational. The DPR's recent call for an
interpellation of President SBY to appear before parliament and
explain the government's response to the mud disaster, led by Djoko
Susilo East Java representative from the National Mandate Party,
expresses the frustration many lawmakers and citizens feel about the
deteriorating situation on the ground and the lack of progress in
Lapindo paying victims' compensation. Support for the
interpellation seems to be faltering as various ministers have
privately explained GOI actions to the disgruntled parliamentarians.
Another example is the recent statement by Paskah Suzetta, Chairman
of Bappenas, that the GOI is developing evacuation plans for the 1.1
million residents of Sidoarjo due to the mud. Local East Java
political leaders and the head of the BPLS retired Gen. Sunarso
condemned the comment as an overreaction and inflammatory.
6. (SBU) Pol/Econoff heard (via cellphone courtesy of a contact)
part of a recent DPR Commission V debate over whether the mud
volcano should be classified as a natural disaster or an industrial
accident. This highly sensitive issue will have direct impact on
possible criminal charges against Lapindo executives, victim
compensation levels and sources and financial liability for damages
and efforts to combat the mud. The debate was heated, but everyone
acknowledged that the impasse on this issue hinders an effective GOI
response to the disaster.
Comment
-------
7. (SBU) The May 29 one year anniversary marked a turning point in
East Java residents' patience with the GOI's efforts to handle the
mudflow. The GOI had been fairly successful in pressuring local
authorities to keep a tight lid on criticism of the central
government's response to the disaster. However, local authorities
have seen little reward for their cooperation and now local and
national parliamentarians are much more willing to criticize the
central government's lack of progress in managing the ongoing
mudflow disaster. GOI inaction combined with Lapindo's failure to
pay already-agreed compensation has frustrated the victims and has
left the GOI wide open to political attacks. Even SBY's emotional
visit June 24 with mudflow victims at the Presidential Palace
brought accusations that this was merely for political purposes in
advance of the interpellation.