Oslo urges more forest aid despite corruption risk

(Reuters) - Norway urged rich nations on Thursday to take risks and pay to slow deforestation in poor countries, saying there would hardly be a tree left in Congo if donors first wait for corruption to be eradicated.

Environment Minister Erik Solheim also reiterated calls for Jakarta to impose a strict two-year moratorium on new forest clearing to help implement a delayed $1 billion deal to slow deforestation agreed with Oslo in 2010.

Rich from offshore oil, Norway has dominated projects to safeguard rainforests as part of a U.N.-led goal of slowing climate change. Trees soak up greenhouse gases as they grow and release them when they are burned or rot.

"Norway does not want to do this alone. If it ends up that we are the only -- or by far the biggest -- financial contributor, it will be a failure," he told a seminar.

Solheim said donors had to accept risks in hard-to-monitor projects, such as losses due to corruption in developing nations or that U.N. negotiations will fail to agree a pact to combat global warming that would create a forest carbon market.

"If we wait until Congo is like Switzerland -- there is also corruption in Switzerland but much less -- there will hardly be a tree left," he said.

"Many other donors must be partners," he said. Unlike other developed nations struggling with budget deficits, Norway has a fund of $585 billion built from oil revenues for its 4.8 million people -- more than $100,000 each.

RISKS

"If we are not able to accept risks we should close down this program today," he said. Still, he also said: "If wide-scale corruption is detected in some of these projects it will bring down the entire system."

In 2007, Oslo promised up to 3 billion crowns ($570.5 million) a year to help slow deforestation and has set up major projects in Tanzania, Brazil, Indonesia, Democratic Republic of Congo and Guyana.

At a 2009 summit in Copenhagen, the United States, Australia, Britain, France, Japan and Norway agreed to give a combined $3.5 billion from 2010-12 to protect forests. Much of the cash has yet to appear.

Illustrating Norway's dominance, a U.N. program for protecting tropical forests lists total deposits of about $100 million, of which more than $80 million come from Norway.

An independent experts' report commissioned by Norway's Agency for Development Cooperation said it was too early to judge whether Norway's forest protection projects were a success. Pat Hardcastle, who led the study said initial results were that it "it comes out very well."

Among hurdles, Indonesia has missed a planned January 1 start to a plan for protecting its forests because of disagreements about the strictness of a two-year moratorium agreed with Norway on new forest clearance.

The report said that Norway should encourage Indonesia "to extend the moratorium to prohibit conversion of all natural forests or an agreed ecological status, and all peatlands."

"We are of course in our dialogue with Indonesia clearly appealing for a strict, wide encompassing moratorium," Solheim said. The delay has meant uncertainty for palm oil, pulp and paper and mining firms which hope to expand.