The Multinational Monitor


T H E   F R O N T

Deforesting Malaysia

Kuala Lumpur, Malaysia --Malaysian Prime Minister Mahathir Mohamad is threatening that this fast-developing nation will forego participation in the June 1992 United Nations Conference on the Environment and Development (UNCED) in Brazil because of what he sees as "abuse" from First World environmentalists.

The prime minister, leader of this Southeast Asian nation for more than a decade, says he fears the UNCED will simply be used by European, U.S. and Australian environmentalists to pressure "weak" countries of the Third World.

He suggests that Third World nations could hold their own summit, and says, "If we go there [to Brazil] to hear them [the First World] abuse us, then it's no use."

Many environmental non-governmental organizations and Third World governments have voiced concerns about Northern countries controlling the UNCED. Mahathir's threat, however, reflects a struggle over the fate of Malaysia's rainforests, and may have more to do with protecting logging interests than with protecting Third World countries from Northern imperialism. Rainforests have already been largely destroyed in the 11 West Malaysian states between Thailand and Singapore, and those in the two big East Malaysian states of Sarawak and Sabah, which comprise just over half Malaysia's territory, are now disappearing fast.

The event that precipitated Mahathir's threat was a "terrorist" attack last July 5 on several logging cranes and barges in Sarawak, about 400 miles east of the capital, Kuching. Eight environmentalists from the United Kingdom, Germany, the United States, Sweden and Australia chained themselves to the logging cranes and barges in the early morning to protest the harvesting of timber. After eight-and-a-half hours, police arrested the "Sarawak 8," all of whom later pleaded guilty to charges of interfering with business and were sentenced to 60-day jail terms.

The eight were part of a team of 20 people from the Rainforest Information Center in Australia and two other militant environmental organizations, Earth First! and Robin Wood.

The protesters' rationale is that timber concessionaires, including Weyerhauser of the United States, are devastating the tropical forests, leading to soil erosion, destruction of wildlife and uprooting of the native Dayak population, and contributing to global warming.

A visitor to Kuching, a modern city of nearly 400,000 people at the western edge of Sarawak, would hardly guess that this struggle is taking place. But 140 miles east, in Sarawak's rainforest heartland, clear-cut areas can be seen on the hillsides, as well as giant clouds of smoke where the forest is being burned--either by accident or on purpose. The first sound heard at sunrise is the relentless buzz of chainsaws gouging into ancient trees.

The annual cut of timber in Sarawak has quintupled since 1973, according to charts on display at the Timber Museum outside of Kuching. Sahabat Alam Malaysia (Friends of the Earth, Malaysia) claims, "No where in the world are the forests being chopped with such ferocity and speed as in Sarawak." Today, timber represents about 30 percent of Sarawak's exports, bringing in around $600 million yearly. Only oil--representing about 40 percent of Sarawak's exports--is more profitable for the region.

Evelyne Hong of the Institut Masyarakat in West Malaysia estimates that 10,500 square miles of Sarawak have been logged since the early 1960s. In Sabah, half the size of Sarawak, 660 square miles of timber were logged annually in the 1980s, according to Philip Hurst, a British ecologist.

Though there are laws mandating reforestation and national parks on the books, these laws tend to be ignored. Hurst notes in his recent book, Rainforest Politics: Ecological Destruction in Southeast Asia: "It is an open secret that timber concessions are handed out in East Malaysia as a means of strengthening political allegiances or as rewards for favors."

Exploitation of Malaysian timber resources, urged by the World Bank and International Monetary Fund as a means to accumulate foreign exchange, has contributed to the nation's fast economic growth. Since 1985, Malaysia's per capita income has risen from $1,500 to $2,400.

Mahathir attacks environmentalists working to protect these resources as colonists, saying they "still want to dominate us. They are descended from a colonial and imperial race. Now that they cannot colonize us politically, they will try to colonize us indirectly."

Mahathir has sent a delegation to other Islamic nations--Saudi Arabia, the United Arab Emirates, Iran and Turkey--to rally support against the environmentalists who he says are trying to "sabotage" Malaysia's timber trade. Those countries also happen to be very good customers, having purchased $223 million worth of Malaysian wood last year.

Mahathir believes that the environmentalists want Sarawak's Penans- -a branch of the native Dayak population--"to remain 'forest people' ... They want the Penans to be a 'museum piece' so that they can come and look at the last of the cavemen.' The Penans are a discovery for them to use as an excuse to pressure a small country."

He adds, "We all know that the environment has been polluted by advanced countries, not Malaysia."

Not all Malaysians agree with Mahathir's views on the environment and the UNCED, however. Josie Zaini, president of the Malaysian branch of the International Organization of Consumers Unions, for example, says her country should not only take part in the UNCED, but should also play a leading role, "building alliances with governments and non-governmental organizations." She says that by getting actively involved in international environmental efforts, Third World nations may be able to change the First World's attitude that it "knows best" about environmental matters.

Manjeet Singh, a lawyer who is president of the Malaysian Bar Council, takes an even harder line. He says, "all environmental groups in Malaysia are too timid to speak out" against the prime minister, and adds "the newspapers are also scared to speak out. We are not a dictatorship, but we're also not totally open."

Singh says "much more attention should be paid to our timber destruction, especially in Sarawak."

And, while Mahathir's criticism of Northern countries may resonate with Malaysians, it appears his tolerance for rainforest destruction is out of step with the country's citizenry. A recent poll of Malaysians indicated a widespread belief that "the threat to the environment is real." Sixty-four percent agreed, 14 percent said there was "too much fuss" about the environment, while 22 percent said "don't know." And deforestation was considered one of the three biggest problems, along with chemical emissions and river pollution. Younger, better- educated Malaysians were most concerned--and education standards in the country are rising.

With this high level of domestic concern about the rainforests, and the international pressure being brought to bear, there may be enough opposition to logging to preserve parts of Malaysia's rainforests. If not, Mahathir and the timber companies appear ready to oversee their complete destruction.

- William Steiff

Oil Squeeze

A handful of large, vertically integrated multinational oil companies have launched a full-scale campaign to force smaller competitors out of business, boost their own profits and overcharge consumers, according to small business owners and consumer groups who testified at a September congressional hearing. The critics charged that the oil companies are executing a full-fledged "game plan" to eliminate competition in the refining, distribution and sale of gasoline.

The oversight hearing of the House Subcommittee on Regulation and Energy of the Small Business Committee was held "because new evidence indicated that the large oil companies are siphoning the competitive juices from the energy sector," according to subcommittee chair Representative Ron Wyden, D-Oregon.

According to the witnesses who testified at the hearing, the large oil companies' plan to eliminate competition includes the following elements:

  • Price Manipulation. By dropping retail prices at company-owned gas stations, the big companies are able to undercut competition from independent retailers.
  • Anti-competitive Contracting. The large oil companies pressure retailers to buy from them even when independent distributors offer lower prices.
  • Targeted competition. Big Oil forces independent retailers out of business by opening company-owned stations nearby.
  • Federal Deregulation. The Reagan and Bush administrations have abandoned anti-trust actions and have allowed mergers and consolidation within the industry.

"The past decade has witnessed the systematic destruction of competing refiners and marketers by Big Oil," asserted Edwin S. Rothschild of the consumer group Citizen Action at the hearing. "With their increased control over gasoline supplies," said Rothschild, "the major oil companies have been able to manipulate prices to wreck competitors and overcharge consumers." Rothschild includes Amoco, Arco, Chevron, Conoco, Exxon, Marathon, Mobil, Phillips, Shell, Sun, Texaco and Unocal in the definition of "Big Oil."

Representatives of small businesses and independent gasoline retailers testified that the major oil companies have used a wide range of methods to force them out of business. Lynn Bearer, executive director of the Northern Ohio Petroleum Retailers Association, said her organization's membership is declining because "independent retail dealers [are being] driven from the marketplace by the unfair and anticompetitive practices of the major oil companies."

Rothschild says the oil companies' tactics--"legal and otherwise"--have put them in the position "to dictate gasoline and other petroleum product prices. Such control negates the free market, hurts consumers, and costs the rest of the economy billions of dollars every year." Consumers pay between five and ten cents more per gallon of gas in areas where the major oil companies have successfully gained market control compared with areas where there is still competition, according to a Citizen Action report released at the September hearing.

Citizen Action found that the major oil companies each control particular areas of the country. In Washington, D.C., for example, four oil companies--Amoco, Exxon, Chevron and Shell-- control over 85 percent of retail gas sales. In California, four companies--Arco, Chevron, Shell and Unocal--control almost 62 percent of retail gas sales. Rothschild specifically accused Arco of using "Mafia-like tactics" to become the number one gasoline retailer on the West Coast.

The hearing was called in connection with two bills that have been introduced in Congress to encourage greater competition at the wholesale and retail levels. One bill, introduced by Wyden, would free dealers to buy gasoline from any outlet offering their brand. The second bill, introduced by Mike Synar, D-Oklahoma, would prohibit refiners from charging wholesalers more than they charge retail customers at company-owned stations, thereby prohibiting refiners from coercing dealers into joining price-fixing schemes.

Officials of the oil industry disputed the findings of the Citizen Action report and voiced opposition to the legislation at the hearing. Stu L. McDonald, testifying on behalf of the American Petroleum Institute (API), said that U.S. motorists fared better than gasoline consumers in other industrialized nations during the Persian Gulf oil crisis. "In sum, consumers are as well-off--and perhaps better off--today as they have been in 50 or more years," he stated. "When it comes to gasoline prices, the good old days are now." McDonald said motorists can now choose between about 200,000 retail outlets operated by thousands of different businesses.

McDonald cited a study recently released by the API that contradicts the findings of the Citizen Action report. The API study determined that most wholesale gasoline markets are not concentrated and that there is "considerable" entry/exit in the industry, indicating competition. "Fears of rising concentration and excessive prices/profits in regional markets, following de- control of gasoline prices in 1981, were unfounded. Gasoline manufacturing and marketing exhibit competitive structure and performance, and progress," the report concluded.

But, according to D.G. Daskal, general counsel for the Service Station Dealers of America, an association of independent gas retailers, approximately 8,000 independently operated stations either closed down or changed hands in the last year. And, as competition is eliminated and market power consolidated, profits rise. Citizen Action found that the annual refining and marketing profits of 15 major oil companies during the second half of the 1980s were nearly double their level during the first half of the decade--$4.5 billion a year versus $2.4 billion.

- David Lapp

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