07/25/00 -- Russia's Forests in Disarray

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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

Russia's Forests in Disarray

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Forest Networking a Project of Forests.org

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07/25/00

OVERVIEW & COMMENTARY

Russian forests (some one-fifth of the world's total), and forest

policy development and implementation, are in a state of turmoil.

Eastern Russia's pristine forests are being illegally logged for

export to satisfy rising demand in China, Japan, and South Korea.

Russia recently abolished its State Committee for Environmental

Protection and the Federal Forest Service. The new agency that is

to handle environmental matters "has a historical and

irreconcilable conflict with environmental protection." Less than

a week later, the World Bank granted a forest loan to Russia's

Federal Forest Service to improve its forest regulations, fire and

pest protection and provide training for companies in forest use.

This is the first Bank loan to the new Putin government, coming in

addition to $11 billion for 45 projects since 1992. Russian

ecologists are astounded that the $60 million project was approved

given the fact that the recipient, the forest service, was known

to have been dissolved. It is not acceptable that the World Bank

continues in its efforts to give a loan to an abolished agency,

and even more troubling that it fails to identify project

interventions that go beyond cosmetic remedies. If a large

commercial timber industry is allowed to capitalize itself and

grow through multi-lateral subsidies, it is assured that the

World's largest forest wilderness will effectively be lost.

g.b.

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ITEM #1

Title: Illegal Logging, Rising Consumption Threaten Russian

Forests

Date: July 24, 2000

TOKYO -- Tokyo - Pristine forests in eastern Russia are being

illegally logged at an alarming rate, and the timber is being

exported to satisfy rising demand in China, Japan, and South

Korea, according to a report released today. The report documents

the global importance of these forests as habitat for endangered

species such as the Siberian Tiger, as a carbon sink to help

mitigate global warming, and as the web of life for many

indigenous and forest communities.

The report found that "lack of regulation is apparent on all

levels" and documents in detail a lawless timber trading regime

where weak federal legislation and infighting among federal and

regional government agencies have led to widespread unregulated

logging. The report also documents instances where Russian firms

conceal profit through clever, complex methods of frauds and

bribes.

The 50-page report, a culmination of years of research, is a co-

publication of three environmental organizations (NGOs):

California-based Pacific Environment and Resources Center (PERC),

The Tokyo branch of Friends of the Earth, and the Bureau for

Public Oriental Campaigns in Vladivostok, Russia. It is available

in Russian and English.

Illegal logging practices prevalent in Siberia and the Russian Far

East include:

*Logging without a license

*Logging in protected forest zones, including along river systems

*Logging protected tree species

*Logging outside of concession boundaries

"There really is an irony here," said David Gordon, Director of

Programs at PERC and co-author of the report. "President Putin is

on a crusade against corruption, yet nothing is being done about

the illegal timber trade that is rampant throughout Russia's vast

forests."

"Logging companies are forging documents and bribing officials to

send our forests out of the country and pocket the quick cash,"

said Anatoly Lebedev, a report co-author and the director of

Vladivostok's Bureau for Public Oriental Campaigns. "Russia's

economy will never improve until we stop corruption in our natural

resources sector."

Much of the illegally logged timber is making its way into the

marketplace as Japanese and Chinese timber importers turn a blind

eye to the problem. Globally, illegal logging is recognized as a

growing problem. This is evidenced by a resolution at the 1998 G-8

meeting to create the Forest Action Programme, which commits all

G-8 countries to tackle illegal logging.

"Two years have passed since the adoption of the Action Program,"

claims Josh Newell, a report co-author and coordinator of Siberia

programs at Friends of the Earth-Japan, "and no concrete steps

have been made to address the critical global issue of illegal

logging. How can we develop timber certification programs and

sustainable forest management when illegal logging is rampant in

Russia, which has 20 percent of the world's forests? The G-8

countries and international trade agencies like the World Bank

need to get it in gear and fulfill their pledge to stop illegal

logging and trade."

Almost all of the timber is destined for markets in China, Japan,

and South Korea. Demand is especially booming in China, due to

domestic logging restrictions. According to the Center for

International Trade in Forest Products, a think tank at the

University of Washington, by 2025 China could face a deficit of

200 million cubic meters of wood per year. China, which already

gets about 42% of its log imports from Russia, is looking across

the porous China/Russia border to satisfy this timber deficit.

While the cutting continues to increase, Russia's forest

communities are economically languishing. Logging villages

throughout the region continue to live in poverty, and local

people are worried about their very survival.

The report concludes by suggesting a number of concrete actions

that can be implemented now both by the Russian government and the

international community to crack down on bribery and corruption,

and to curb the growing consumption of timber in Northeast Asia.

For more information, contact:

Rory Cox

Communications Director

Pacific Environment and Resources Center

510/251-8800

rcox@igc.org

Web site: http://www.pacificenvironment.org

ITEM #2

Title: World Bank Russia Loan Halt Sought

Date: July 11, 2000

Byline: HARRY DUNPHY, Associated Press Writer

WASHINGTON (AP) - Russian and international environment

organizations urged the World Bank Tuesday to halt all loans to

Russia until President Vladimir Putin re-establishes the State

Committee for Environmental Protection and the Federal Forest

Service.

In a letter to bank President James Wolfensohn, the groups also

questioned continuing a $60 million bank loan to the forest

service that was made five days after the agency was dissolved.

Putin dissolved the environment committee and forest service May

17. The committee was responsible for monitoring all aspects of

the environment except for nuclear safety.

In an apparent cost-cutting move, environmental protection was

placed under the Ministry of Natural Resources, which helps

enterprises make the most of Russia's mining, oil and timber

resources.

``As president of the world's largest public development financial

institution, the capricious abolishment of these vital agencies

must be of concern to you,'' the letter said.

It was signed by 67 mainly Russian organizations but also included

international groups such as Friends of the Earth and the Sierra

Club of San Francisco.

Among those signing were Alexei Yablokov, an environmental adviser

to former President Boris Yeltsin and Aleksandr Nikitin, a former

Navy officer who was imprisoned and later released after speaking

out about the Russian fleet's handling of nuclear waste.

``We urge you to issue an immediate moratorium on all new World

Bank approvals for projects in Russia and suspend disbursements

for all current Russian projects that impact the environment until

the ramifications of these agencies' abolishment is fully known

and until these agencies are fully restored,'' the letter said.

It said representatives of the organizations that signed wanted to

meet Wolfensohn soon to discuss these issues.

Environment problems in Russia include oil spills, contaminated

drinking water, over-logging and huge, poorly stashed repositories

of nuclear and chemical waste, much left over from the Cold War

military buildup.

Bank spokesmen had no immediate comment on the letter which was

dated Tuesday.

Last week the bank's board of directors canceled a $40 million

loan to China, in part because of concerns over the effect it

would have on the environment.

ITEM #3

Title: World Bank Stands By Russian Forest Loan as Activists

Oppose It

Date: July 19, 2000

Washington, July 19 (Bloomberg) -- The World Bank defended its

approval of a $60 million forest management loan to Russia,

although it said the money will be withheld until ``environmental

safeguard policies'' are met.

World Bank vice president Johannes Linn described the global

lender's position in a letter to the Russian and U.S.

environmentalists who a week ago called on the World Bank to

freeze the loan. The bank's executive board approved the

transaction after the world's most heavily forested nation

eliminated its forest protection agency.

``I am confident that it was the right decision,'' Linn wrote.

Still, the bank is awaiting clarification from the Russian

government regarding ``loan implementation arrangements that are

consistent with out environmental safeguards'' before providing

the money.

The loan was approved in May by the bank's executive board less

than a week after Russia abolished its national forest service and

its state committee on ecology. It is the first loan for Russia

from an international lender since Vladimir Putin was elected

president in March.

The 68 environmentalists, most of whom are Russian, asked World

Bank President James Wolfensohn and members of the World Bank's

board to halt the forestry loan and refrain from lending the

country any money for environmental projects until the government

restores its ecology protection agency or establishes a new one.

The Russian government appears to be leaving environmental

oversight to the natural resources ministry, an agency that

licenses mining and oil drilling, according to the

environmentalists who sent the letter. Without an agency to

protect forest ecology ``we do not believe World Bank Group

projects that impact the environment in Russia can proceed in an

environmentally, financially or legally sound way,'' the

environmentalists wrote.

`Improve Management'

In his response, Linn downplayed that concern. Reorganizing

environmental protection activities in Russia, which he said have

been inadequately handled in the past, ``can be seen as an

opportunity to improve natural resource management in Russia.''

At the same time, Linn wrote that Michael Carter, the bank's

country director for Russia, ``will be happy to meet'' with the

environmentalists who criticized the loan. ``We will also be

interested in your views more generally on how to address the

enormous ecological challenges your country faces.''

Linn's letter doesn't solve the problem, said Doug Norlen, an

environmentalist opposed to the loan.

``The response shows a fundamental lack of understanding of the

Russian government's changes and the fact that the agency that

will take control has a historical and irreconcilable conflict

with environmental protection,'' he said.

Norlen, policy director the Pacific Environment and Resources

Center in Washington, an environmental group that monitors

forestry, oil and gas production and mining in Asia, said

Linn's letter indicated the bank is concerned about the project.

``I have never seen the World Bank give a loan to an abolished

agency,'' he said. ``I think they realize they have serious

problems.''

Both the IMF and World Bank have said that Putin is in the best

position of any leader since the collapse of the Soviet Union to

push free-market reforms. The forestry loan was the first tangible

sign that the lenders will back their verbal support with new

money.

Berries and Mushrooms

Russia has more acres of forests than any other country, amounting

to more than one-fifth of the world's forest cover. The project

will concentrate on three forests: one near St. Petersburg,

another in central Siberia and a third in the country's east.

With the money from the loan, Russia is supposed to improve its

forest regulations, including clarifying whether companies can

lease forest lands; improve its fire and pest protection; and

increase training for companies in how best to use the forest.

Training will focus on how to tap forest products, including the

processing of berries, mushrooms, honey, cedar nuts and pine

resin, according to bank documents.

Since Russia joined the bank in 1992, following the collapse of

the Soviet Union, loan commitments to the country have reached

about $11 billion for 45 projects.

In 1998, the bank agreed to lend Russia $1.5 billion to improve

tax collection and improve the efficiency of state-owned

monopolies in power, railways and other businesses. The project

was part of a larger $22 billion bailout of the country by

international lenders, and was the largest single loan ever made

to Russia.

Lending under that program has been stalled since last year,

largely because the IMF suspended new loans for Russia. The World

Bank follows the IMF lead in lending to support government

finances.

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