TED Case Studies

Deforestation in the Russian Far East-The Sukpai Case



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I. Identification

1. The Issue

In December of 1997, the Administration of the Russian Far East Region of Khabarovsk approved a long-term lease to the Rimbunan Hijau Company of Malaysia. The lease granted control of 305,000 hectares of forest in the upper Sukpai watershed. The 48 year lease allows 550,000 cubic meters to be cut annually. Located in the southern part of Khabarovsky Krai, the largely isolated spruce-fir, larch, pine and birch forests are home to a wide range of fauna, including the Amur Tiger. In addition, the forests are the traditional territory for the indigenous Udege people. Rimbunan Hijau, in an attempt to head off any controversy, announced that it had met with the Udege and that the two sides had reached a "common ground". The Udege claim no such meeting took place. In 1994, scientists from Khaborovsk's Institute of Water and Ecology suggested the area be declared a regional nature preserve. The regional administration of Khabarovsky Krai approved and in 1995, Sukapai was on the list of Russia's state nature preserves. President Yeltsin issued a decree on October 15, 1995 reinforcing Khabarovsk's recommendation in national law. The administration of Khabarovsky Krai was able to circumvent the law, however, by declaring that the forests had been damaged by fire since the presidential decree, and therefore did not warrant protection. The lease to Rimbunan Hijau was justified while the legal, native rights, and habitat issues were improperly addressed.

2. Description

The Russian Far East is home to some of the largest remaining old growth forest on earth. The forest, or taiga as it is known in Russian, is crucial to the existence of numerous plant and animal species. These natural wonders have been threatened in recent times by expansive logging operations. In the turmoil of the post-Soviet era, many impoverished Russians see the taiga's resources as a way to financial security. The end of the Communist Party's monopoly on power has created a vacuum into which gangster opportunists have gone. est." This is largely regarded as just the sort of loophole necessary for increasing exploitation of the forest. Though Russia is a party to several environmental treaties that would see its taiga preserved and restrict illegal clear cutting (e.g., Endangered Species, Tropical Timber '83, etc.), such loopholes tend to weaken the force of legislation. Timber exporting nations have the option of registering their forests which are managed responsibly with the Forest Stewardship Council (FSC). Wood products from these forests are allowed to bear the FSC logo, so that environmentally aware consumers may support their efforts. At present, only one forest in Russia has been certified by the FSC. The WTO also acknowledged in the GATT/WTO BISD that the forestry industry worldwide is unique in that it requires long planning periods, therefore policy decisions should be more resistant to the short term fluctuations of the economic cycle.

In examining trade in timber in the Russian Far East, it is apparent that several factors converge quickly after the collapse of the USSR in late 1991. Prior to this, exported timber accounted for only about 25% of all logs felled. Also, the inefficiencies of the Communist system limited the technology and infrastructure necessary for large-scale exploitation of the taiga. Thus logging proceeded, though not at alarming levels. The fall of the Soviet Union unleashed forces detrimental to the taiga, which directly impacted other areas such as biodiversity, habitat loss etc. Relaxed business regulations, namely the issuing of logging permits to foreign companies allowed for technologically efficient methods of logging. The closing of many state enterprises left many Russians in desperate financial straits, particularly in Primorsky and Khabarovsky Krais. A weakened government apparatus meant enforcement of existing forestry protection laws was not only insufficient, but those charged with the responsibility of protecting the taiga were rendered vulnerable to corruption by criminal conglomerates and foreign enterprises. These factors, coupled with high demand from the Asian neighbors of South Korea, Japan, and China, resulted in the clear-cutting of vast tracts of Russian old growth forest. The loss of forest has also negatively impacted certain endangered species (e.g., the Amur Tiger), and has raised the specter of the deterioration of native ancestral lands.

Russia is home to 22% of the world's forest and Russian forests occupy an area greater than the continental United States. In the Russian Far East, 75% of the forest is permafrost which means a slower growth rate and longer time necessary for disturbed areas to regenerate trees. Tree species include pine, ash, and oak. For years, the forests remained relatively intact due to their remoteness, poor infrastructure (precluding large scale exploitation), and legislation that restricted timber exports abroad.

The issue of deforestation has implications in various areas and therefore obligates the Russian Federation to conform to various international treaties and conventions. Deforestation's impact can be felt in the areas of trade, biodiversity, habitat loss, endangered species, environmental modification, as well as culture and heritage. Russia's challenge is to prove itself a worthy player on the world stage and, despite her present economic hardships, honor international obligations for her benefit as well as that of the earth.

3. Related Cases

(1): BAIKAL Case

(2): TUMEN Case

(3): TAIGA Case

(4): MEXDEFOR Case

(5): SIBERIA Case

(6): URAL Case

(7): MALAY Case

(8): SURINAMEWOOD Case

(9): NICARAG Case

(1O): KOMI Case

(11): TIGER Case

4. Draft Author: James Griffin

November 15, 2000

II. Legal Clusters

UNESCO WORLD HERITAGE LIST

The General Conference of UNESCO adopted the Convention Concerning the Protection of the World Cultural and Natural Heritage in 1972. The aim of the convention was for nations to preserve their unique natural and cultural heritage. The Russian Federation has thirteen sites listed on the World Heritage List, providing a legal, internationally recognized instrument for their preservation and maintenance. The Komi Forests of the Urals enjoy such listing, however no forests of the Russian Far East's taiga do. Such recognition is warranted since the area is home to rare animal and plant species including the Amur tiger. Support for World Heritage (WH) listing of this area of Russia's forest could result in UNESCO funding for the study and preservation of the area. Enforcement is difficult since it relies on the signatory nation to honor its commitment and contribute annual dues to the project. Yet it would bring an element of transparency since WH issues reports on the state of the site and international recognition if administered properly.

CONVENTION ON BIOLOGICAL DIVERSITY

The United Nations Environmental Program convened the ad hoc working group of experts on Biological Diversity in 1988 which by 1991 became known as the Intergovernmental Negotiating Committee. The aim of the group was to explore the need for an international convention on biological diversity. In 1992 at the Rio Summit, the convention was open for signature. The Russian Federation signed on and in 1995, ratified the convention. By signing the convention, Russia recognized the trend of diminishing biodiversity and its commitment to reversing the trend, as well as undertaking its role in the exchange of technical assistance to promote sustainable development. At issue of course is Russia's ability to enforce the convention on its vast territory in the currently depressed economic state. Five years after the convention its members recognized the contribution of forests to biodiversity namely as watershed managers and not merely lumber sources. More recently, in January 2000 in Montreal, participants including Russia, convened to strengthen the provisions on the Convention. The major consideration is the "ecosystem approach," which considers a species as an intrinsic part of the ecosystem rather than separate from it. This approach, if effectively implemented in the Russian Far East would bode well for the efforts to preserve such endangered species as the Amur Tiger and the Snow Leopard.

CONVENTION ON CLIMATE CHANGE

This convention has been the international community's primary tool for addressing global warming and encouraging sustainable development. The convention was signed in 1992 and the Russian Federation signed on in 1994. With more than 22% of the world's forests, Russia's participation in the convention is essential. Under the convention, Russia is encouraged (though not bound) to reduce greenhouse emissions to 1990 levels, report these emissions to the UN, and develop and report strategies for the reduction of such emissions. Thus far Russia has been able to keep emissions in check (due more to its economic ineptitude than genuine commitment to the Convention). Signing these and other such conventions are a step toward preserving Russia's forest, a vital component of the entire planet's ecosystem. However a law is only as good as its enforcement, which has been significantly hamstrung by pervasive corruption in present day Russia. President Vladimir Putin's recent abolishment of Russia's State Committee on Ecology and the Russian Forest Service is widely regarded as a move that will leave the taiga vulnerable still. This places the onus on the other members of these conventions to redouble their efforts and pressure Russia to place its legal apparatus in order so that its forests may survive.

INTERNATIONAL TROPICAL TIMBER AGREEMENT (ITTA)

The treaty was originally adopted in 1983 by the United Nations, and the Soviet Union accepted the ITTA in 1985. The treaty seeks to achieve four goals: establish a framework for timber producers and consumers to trade and consult, improve forest management and wood use, expand and diversify the timber market, and encourage the development of national laws that promote conservation of the earth's forests. ITTA established the International Tropical Timber Organization (ITTO) as a mechanism to supervise the operation of the agreement. In practice, the treaty has little teeth in the Russian Federation today. Russia is not a member of the ITTO and has not signed the 1994 successor to ITTA '83. Russian politicians have little interest in signing on to yet another international convention, particularly one requiring consultation (interpreted as oversight, i.e. meddling in Russia's internal affairs) with a board based in Japan. However, Russian participation in the ITTO, and ratification of the ITTA '94 is just the transparency necessary to bring management to the taiga and expose the corruption of Russia's timber industry. Still, this might be several years in the future before we see this, if ever.

5. Discourse and Status:

AGReement and COMplete

6. Forum and Scope:

Russia and Unilateral

7. Decision Breadth:

number of parties affected: 1

8. Legal Standing:

LAW

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Asia

b. Geographic Site: East Asia

c. Geographic Impact: Russia

10. Sub-National Factors:

SUB-STATE :YES

Local governments and states

11. Type of Habitat: cool

IV. Trade Clusters

12. Type of Measure:

LICENsing

13. Direct v. Indirect Impacts:

INDirect Impact

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES

Wood

b. Indirectly Related to Product: NO

Deforestation

15. Trade Product Identification:

Product Type : WOOD

16. Economic Data

As mentioned above, in the Soviet era, foreign exports of Russian timber never exceeded 25%. Presently, about half of the timber felled is bound for international markets, the majority of which go to China, Korea, and Japan. Soviet trade practice, which restricted the export of Russian wood, along with its inferior technology, insured that exploitation of the taiga was relatively slight. However since the demise of the USSR and the subsequent changes in attitude toward trade, Russian exports of wood began to increase. One of the factors was the increase in Joint Ventures (JVs). By 1995, 108 JVs specializing in logging were registered in the Russian Far East (Gatulina, 1999).

17. Impact of Trade Restriction: Medium

18. Industry Sector:

Categories in the Standard Industrial Code (SIC)

Lumber and Products [WOOD] Unprocessed

Non-Durable Manufacturing (N) Paper

Paper production is virtually nil. In the Russian Far East it is generally cheaper to export raw logs for processing abroad (Gataulina, 1998).

19. Exporters and Importers:

Case Exporter : Russia

Case Importer : Japan

V. Environment Clusters

20. Environmental Problem Type: Deforestation

SOURCE PROBLEMS

DEFORestation

HABITat

BIODIVersity loss

SPECIES LOSS

SPLL

GLOBAL PROBLEMS

GWARMarming

21. Name, Type, and Diversity of Species

22. Resource Impact and Effect:

Impact:LOW (from deforestation) and STRUCTURAL

23. Urgency and Lifetime:

Low and Hundreds of Years

24. Substitutes:

CONSV

VI. Other Factors

25. Culture: YES

26. Trans-Boundary Issues: Yes

27. Rights:Yes

Threats of Violence

Deforestation of the Russian Far East's taiga has not only had an adverse effect on the environment and animal species dependent on the ecosystem, but has also directly endangered the lives of those charged with its protection. According to the Vladivostok News, last year a bomb exploded at the home of Dmitri Dyakun. Mr. Dyakun is the director of the Kirovsky Timber Company and is believed to have incurred the wrath of organized crime groups for simply abiding by conservation legislation on the areas of forest he controls. Timber poaching has become a lucrative business for Russian criminal cartels (Greenpeace estimates $24 million per year).

Corruption

In 1999 police seized more than $1 million in poached timber in Primorsky Krai alone. Weak and contradictory legislation hinders the taiga's protection. According to Vitaly Solodun, chief of the Primorye Forestry Department, poachers may log up to 40 cubic meters and receive only a fine while avoiding jail time. The highest fine is about $300 and is considered a "business expense" to the poachers. Today, greater opportunities to trade, a much weaker enforcement apparatus, and governmental control has led to a surge in logging and exports. For example, according to official statistics, 300,000 cubic meters of illegal logged timber were exported from Primorsky Krai. Some estimates place the percentage of illegally logged timber at nearly 20% of the total. This happens through poaching or forged permits.

Infiltration by Organized Crime

Moreover, organized crime groups have infiltrated many logging companies in the Russian Far East. These groups use violence and intimidation to discourage compliance with law enforcement and tax collection. Despite sophisticated forest legislation, loopholes are easily exploited. Perhaps the greatest incentive for logging is simply the desperate economic situation of the Russian Far East. The closing of state enterprises and frustrating business legislation that has scared off investment capital have left many Russians out of work in a depressed economic climate. Ecological concerns must take a back seat to the immediate needs of their families.

28. Relevant Literature

Gataulina, Ekaterina and Waggener, Thomas. The Forest Sector in the Russian Far East: Status and Near Term Development. 1998. Working Paper Abstract. 77pp.

International Tropical Timber Agreement 1994 CIA World Fact Book

http://www.bxa.doc.gov/press/Publications/Ann99pdfs/AllGrains.html

UNFAO; World Trade Atlas, various countries; US Trade for U.S. export and import data; and Wood Products: International Trade and Foreign Markets, "Annual Production, Consumption and Trade Edition", Foreign Agricultural Service, Circular Series WP 1-99, March 1999.

http://www.greenpeace.org/search.shtml

Forest Club www.forest.ru

Pacific Environment Resources Center:http://www.pacenv.org/ttrpr.htm

Vladivostok News: http://vn.vladnews.ru/2000/iss221/text/upd28-2.html