The Multinational Monitor

MAY 1980 - VOLUME 1 - NUMBER 4


Ludwig's Castle: Built on Sand?

A noted anthropologist takes a hard look at the controversial Amazonian forestry project of D. K. Ludwig and judges it a dangerous model for Brazilian development.

by Shelton Davis

For more than a decade, Daniel Keith Ludwig's Jari Forestry and Ranching project in the Amazon region of Brazil has tantalized and frustrated both journalists and scientists. When the American shipping tycoon purchased the 3.5-million-acre Jari estate in 1967, he was not only one of the world's richest men, but he also had a reputation for successfully pulling off projects in areas where other capitalists feared to tread. -

The original plans for Jari were on a spectacular scale even by Ludwig's standards. After a world-wide search, Ludwig discovered a fast-growing hardwood, melina, which he intended to plant on one quarter of a million acres cleared from the dense Amazon jungle. His engineers would construct more than 100 miles of all weather roads to service plantations scattered within an area larger than Connecticut. The lumber would be processed on the estate by a modern sawmill and pulp factory driven by a wood burning power plant. As Business Week wrote in 1971, "D.K. Ludwig plans to harvest a jungle."

From the beginning, rumors spread about the supposed horrors of the Jari project. The Brazilian press reported that a private army of Green Berets was being trained in the region. Stories described large deposits of gold, uranium and other precious minerals being flown out of Jari through a network of clandestine jungle airstrips. Most seriously, Ludwig was accused of deforesting over 6,000 square miles of jungle and turning the delicate ecology of the Amazon :rain forest into a worthless desert.

When Brazilian President Emilio Garrastazau Medici visited Jari in 1973, he was greeted by a group of angry workers carrying crude banners that read, "We Want Our Freedom." According to Brazilian press reports, there were more than 1200 permanent and 4000 seasonal laborers on the estate working for a miserable wage of 10 croziers (US $1.60) daily. These reports claimed Ludwig's private security guards were maintaining the workers in the jungle under duress.

In recent months, the curtain of secrecy over Jari has been lifted. Scores of journalists and Brazilian officials have visited the estate to view the pulp mill and power plant towed 17,000 miles from Japan to a berth along the Jari River. They toured some of the 250,000 acres cultivated with melina and Honduran pine. They inspected the kaolin processing plant and the planned city of Monte Dourado.

The spectacle of a modern city transplanted into the heart of the Amazon had a transforming affect on some of Ludwig's skeptical guests. According to the New York Times, Ludwig once held a "prominent niche in the demonology of conservationists and Third World nationalists." Now, he was being hailed for the "foresight and verve" of his project. Far from being a harbinger of economic imperialism and environmental destruction, Jari was "emerging as an example of more thoughtful development." One North American scientist, who visited the project and who initially was critical of its environmental consequences, concluded that Brazil would benefit from the establishment of 50 more Jaris.

If Jari is actually fulfilling a Brazilian dream, how are we to explain the vast amount of criticism directed at the project by knowledgeable people within Brazil? In March, the Brazilian government appointed an. executive group for the lower Amazon to monitor the Jari estate. In the chambers of the recently "democratized" Brazilian Congress, several opposition-party senators have labeled the project a "state within a state" posing a "danger to national sovereignty." Obviously, there is something more to Mr. Ludwig's Amazon adventure than what has been reported in the North American press.

To understand the Brazilian reaction to Jari, one must go back to 1967 when Ludwig obtained his 3.5-million-acre estate. At the time, the new military government was urging foreign corporations to invest in the Amazon. Although he was then 70 years old, Ludwig was a perfect candidate for a large investment. He had the backing of an immense personal fortune and was searching for a Third World site to capitalize on the expanding market for tropical hardwoods. He was also friendly with two powerful Brazilians: Augusto Azevedo Antunes, the owner of one of Brazil's major holding companies, and Roberto Campos, a former Ambassador to the United States and the first Minister of Planning under the military regime. With their encouragement and assistance, Ludwig purchased the Jari estate from a Brazilian rubber trader for the reported price of only $3 million.

Many investors apparently shared Ludwig's evaluation of the potential profitability of the Amazon. A study commissioned by the Brazilian Congress in 1967 found-to the surprise of many senators and the general public-that over 50 million acres of land in five states and one territory in the northern part of the country had come under foreign control. Today, Dr. Warwick Kerr, the former director of the National Institute for Amazon Research (INPA) in Brazil, estimates that 60 percent of the region's development projects are controlled by foreign corporations; when viewed in terms of proportion of land held or capital invested, the foreign stake is even higher.

Cheap land was not the only carrot the Brazilian military dangled at multinationals. In October 1966, the Superintendency for the Development of the Amazon (SUDAM) unveiled a far-reaching fiscal incentives program to promote more corporate investments in the jungle. One part of this legislation exempted companies established in the Amazon before the end of 1974 considered to provide regional economic benefits by SU DAM, from all taxes for ten years. A second provision granted companies a 50 percent reduction in income taxes on earnings from other parts of Brazil if they reinvested taxable monies in the Amazon. Finally, the legislation exempted all farm machinery from import taxes and duties.

Ludwig was one of the first to take advantage of the military government's incentives. In 1967, the first of what was to become a fleet of over 600 industrial vehicles arrived at Jari. At the same time, $60,000 monthly flowed in to pay for, growing numbers of men and machines to clear the primary forest. Just how many trees were cut down in the early years is impossible to tell, because Ludwig's foresters made no systematic biological inventory of the estate. Recently, workers at Jari have deforested an average of 12,500 acres of land each year. And since 1967, Ludwig has pumped into Jari an average of $180,000 a day. "

The military government's promotion of capital-intensive investment in agriculture and forestry using untested techniques raises serious questions about the long-term prospects for the development of the region. Scientists around the globe have warned that the deforestation of tens of thousands of acres of tropical rain forest could have devastating 'effects upon the region's potentially renewable resource base. When set in the broader context of Brazil's general development strategy, the uncertainties about Ludwig's Jari project become all the more critical. While much has been made of the jobs created at Jari-up to 13,000 jobs at the height of construction-much of the employment has been of a temporary nature: tree farming on the Ludwig estate now proceeds with airplanes, bulldozers, and a fully automated lumber mill as primary production inputs. Brazil's share of the profits Jari will now begin to generate has never been disclosed. However, given the military government's penchant for trickle-down development, there is little hope that Jari will offer many economic benefits to Brazil's impoverished masses.

Large-scale deforestation of the type currently taking place on Jari poses the risk that the natural wealth of the rain forest will be forever lost. Dr. Betty J. Meggers of the Smithsonian Institution has termed the Amazon a "counterfeit paradise," an area whose fantastic complexity and infinite diversity obscure what is essentially "a castle built on sand." The soil properties of the Amazon, she writes, "contribute nothing to the strength of the structure, and if enough components are removed or the bond between them sufficiently weakened, the entire configuration will collapse and disappear."

Only in recent years have scientists begun to unravel the dynamics of the rainforest ecosystem. The key factor to the natural richness of the Amazon lies `in its dense forest cover. In 'essence, the tropical rain forest is a huge canopy of evergreen foliage that fights off the detrimental effects of poor climatic and soil conditions and serves the multiple functions of nutrient capture, nutrient storage, and the protection of soil from erosion and solar radiation.

When the forest canopy is removed, the soil is deprived of nutrients provided by rain water dripping from the tops of the trees and organic matter that dies and falls to the forest floor. The leaves of the large trees also shield the soil from the powerful Amazon rain. Studies indicate that on the average, 25 percent of the daily rainfall on -the Amazon is withheld by these leaves; the remainder of the rain reaches the ground in the form of a fine warm spray. Without the forest cover, the entire forest area of the Amazon would become leeched, and the soil rapidly washed away.

Introducing a single species of trees can have a devastating impact on the ecosystem of the rain forest. Under undisturbed conditions, the rain forest possesses effective natural mechanisms for defense from deprivation by insects, pests, and disease. The extremely low population density and, wide geographical dispersion of individual tropical species insure that pests or disease will not cause major damage to the components of the ecosystem. A dense growth of a single species enables pests or disease to spread quickly and destroy an entire plantation.

Ludwig and other corporate entrepreneurs have responded to the problems of pests, nutrient loss, and erosion in a typically western fashion: namely, by increasing the intensity of chemical pesticides, herbicides, and fertilizers. The extensive use of agricultural chemicals poses one of the greatest environmental and public health risks in the Amazon. Studies done in other countries indicate that the introduction of these chemicals into the environment can upset natural predator control systems, pollute water sources, damage fish and wildlife populations, increase the incidences of diseases such as malaria, and eventually enter the animal and human food chains.

Spokesmen for the Jari project have countered the environmental criticisms by arguing that the rain forest is a renewable resource which, through scientific forestry management, can be cleared for commercial timber and then successfully replanted with exotic species of trees. Many Brazilian forestry experts, however, worry about the longer-term effects of the Jari reforestation effort since so little scientific knowledge exists about the dynamics of forest regeneration. Dr. Warwick Kerr estimates that at a minimum 1500 scientists would be needed to solve the problems of economically developing the forest without destroying it. Currently, the National-Institute for Amazon Research employs only 43 persons; as for Jari, it has 12 research professionals, six of whom only hold bachelor degrees or their equivalents.

Even if the scientific knowledge did exist, it is doubtful whether the Brazilian government would be capable of monitoring the environmental consequences of o a project as large as Jari. Some years ago, the Brazilian Congress passed a promising forestry code that ,outlawed the clearing of more than 50 percent of forest concessions. Orlando Valverde of the Brazilian Institute of Geography and Statistics estimates that Brazil would need 80,000 guards to protect its forest patrimony, but currently employs only 3,000. In Para, where part of Ludwig's estate is located, there are only 20 guards. Valverde reports that three forest guards were assassinated recently in Para for denouncing companies that were devastating the forest.

If Jari represents the future for the Amazon, successful development of the region will mean extreme dependence upon foreign technology and capital. If the optimistic projections of Ludwig's scientists on the effectiveness of their ministrations over Jari prove wrong, the chosen remedy will no doubt be yet further inputs of fertilizers, pesticides, and high technology. Similarly, if the government is dissatisfied with the returns from projects such as Jari, history suggests it will respond with yet further incentives for even more capital-intensive projects by foreign firms. There can be no doubt that if such further applications of capital prove uneconomical, the Jari estate will be abandoned by Ludwig, leaving a wasteland to the Brazilian people.

The costs of the government's support of the Jari model must be measured not only in terms of the potentially irrevocable loss of parts of a great renewable resource, but in terms of the loss of valuable time in the effort to develop less risky and more labor intensive means of overcoming Brazil's developmental problems. Many scientists have called for experimentation with selective extraction of species that naturally occur in the Amazon and careful management of the areas to promote a sustained yield of forest products. Some forestry experts advocate encouragement of small tract farming with rotation of crops and regeneration of rain forest undergrowth. Still others have called for a moratorium on all Amazon development while an intensive period of scientific investigation proceeds. Recent reports suggest that farming other regions cerrado could provide agricultureal products for domestic consumption and export during such a moratorium.

Ironically, perhaps the most promising sources of technology for the rational exploitation of the Amazon faces destruction as a result of the large scale, capital-intensive projects now dominating Amazonian development. During the past two decades, many studies have been conducted on the adaptation of Amazon Indians and peasant farmers to the tropical rain forest environment. These studies indicate that the Indians and peasants utilize a sophisticated agrarian technology that is efficient and successfully integrated with the tropical 'rain, ecology. What these people have achieved on a local basis may hold the key to the exploitation of the entire region as a renewable resource.

For many Brazilians, Ludwig's Jari project has become a symbol of everything that is wrong with the military government's- program to open up and develop the Amazon. Last summer, for example, a panel discussion on the "Agricultural Uses of the Amazon" was held at the 31st annual meeting of the Brazilian -Society for the Progress -of Science (SBPC). Although one of Ludwig's foresters attended and tried to convince the panel of the worth of the Jari project, most of the scientists were critical of the development model Jari represents: At the end of the meeting, a motion was passed by the 10,000-member scientific association, condemning the military government's support of large corporations as the driving force behind the occupation of the Amazon. These corporations, the SBCP motion read, were deliberately destroying the fragile ecosystems of the humid tropics, causing social problems for local peasants and Indian communities, and depriving the vast majority of the Brazilian people of the benefits of national development.

For anyone who has watched the unfolding of the Amazon development program over the past few years, the truth of the SBCP statement. seems obvious. During the past decade the Amazon has been carved up into a series of fiefdoms for large domestic and multinational corporations. In a mad rush to cash in on world markets, these corporations have introduced an alien technology that may lay waste to the delicate social fabric and ecology of the region. Unfortunately, many foreign observers have failed to understand the depths of the Brazilian public's concern for the political, social, and environmental consequences of projects such as Jari. Rather they have been mesmerized by the technological, scale of Ludwig's effort and continue to accept uncritically the Brazilian government's claim that it is now interested in protecting the natural resources of the region. In the end, the primary losers in what National Geographic recently headlined as "Mr. Ludwig's Billion Dollar Gamble" may turn out to be the future generations of Brazilians.

Shelton Davis is director of the Anthropology Resource Center in Boston, Mass. He is the author of Victims of the Miracle: Development and the Indians of Brazil (Cambridge University Press, 1977).

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