VZCZCXRO7682
RR RUEHAG RUEHAST RUEHCHI RUEHDA RUEHDF RUEHDT RUEHFL RUEHHM RUEHIK
RUEHKW RUEHLA RUEHLN RUEHLZ RUEHNH RUEHNP RUEHPOD RUEHROV RUEHSK
RUEHSR RUEHYG
DE RUEHVK #0005/01 0290834
ZNR UUUUU ZZH
R 290834Z JAN 09
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1066
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHVK/AMCONSUL VLADIVOSTOK 1165

UNCLAS SECTION 01 OF 03 VLADIVOSTOK 000005

SIPDIS

E.O. 12958: N/A
TAGS: ETRD PREL ECON EAGR RS
SUBJECT: FOREST MAFIA ADAPTS TO THE ECONOMIC CRISIS

VLADIVOSTO 00000005 001.2 OF 003 


Introduction
------------

¶1. Despite lower demand for wood products due to the global
economic crisis and implementation of the Lacey Act Amendment,
illegal logging in Russia continues at critical levels.
Approximately 70 percent of Russia's forests are concentrated in
the Russian Far East and Siberia in close proximity to China and
other main timber markets in the Asia Pacific Region. Logging
activity and exports increased significantly in 1990s due to the
high demand for timber in those countries. According to the
World Wildlife Fund, official customs documents show that the
volume of timber officially declared and exported from Russia to
China and Japan is at least 20 percent lower than the volume
officially imported by those countries. That difference
accounts for just some of the illegal timber leaving Russia.
Enormous illegal harvests of cedar and other valuable or rare
species have been occurring throughout the region, including
within supposedly protected nature preserves with far reaching
ecological and social impacts.

Increased Tariffs Lead to Greater Illegal Exports
--------------------------------------------- ----

¶2. Legal exports remained high until 2007, when, in order to
encourage domestic reprocessing of Russian timber, the Kremlin
increased export tariffs for round wood to 20 per cent of its
delivery price. The tariff was again increased by 25 per cent
in April 2008. China and Japan remained the main consumers of
wood, though volumes of timber export decreased slightly. As a
result, wood export via Grodekovo, the main railroad customs
point in Primorye, decreased from 7.3 million tons in 2007 to
6.2 million tons of timber in 2008. Moscow had planned to
further increase the tariff to 80 per cent in January 2009 -- a
level that in effect serves as a timber export ban -- but has
postponed its implementation for a year. An environmental
contact of the Consulate stated that though the current
financial crisis has lowered overall demand for wood products,
the proportion of illegally-harvested wood will increase because
of increased export tariffs and declining profitability for
larger, legal logging firms. Demand for hard wood is down, but
demand for soft wood, like pine, is up. Pine nuts are a source
of sustenance for wild boar, which are in turn a food source for
predators like leopards and tigers.

Poaching Occurs Throughout the Russian Far East
--------------------------------------------- --

¶3. Illegal logging is generally concentrated in border areas,
where it is less expensive to ship wood to processing facilities
in China. The largest illegal cutting operations in Russia are
located in the areas of the Russian Far East and Siberia
neighboring China. Primorye is a leading area for illicit
cutting, but numerous illegal operations have been discovered in
Khabarovsk Krai, and Amur and Jewish Autonomous Oblasts in 2008.
In summer 2008 authorities discovered a poaching operation in
the Dalnerechensk district north of Vladivostok that had
illegally clear cut over 2,300 cubic meters of timber including
1,500 cubic meters of Korean Cedar. That endangered species is
very popular in China for furniture and the pine nuts provide
important sustenance for regional fauna.

¶4. In 2008, Oleg Mitvol, former Director of Rosprirodnadzor
(Russia's Federal Service for Supervision of Natural Resources)
reported numerous timber industry violations in Amur Oblast.
Investigators found documentation stating that 6,000 cubic
meters of timber was officially harvested in the oblast's
Shimanovsk district, but railroad documents recorded 56,000
cubic meters of timber shipped from the district over the same
period.

How It's Done
-------------

¶5. Smugglers use various ways to illicitly export illegal
timber, most of which are able to pass through customs
inspections and established border crossings using fake
documents and fraudulent declarations. Often companies mix
illegally harvested wood into shipments of legally procured
product. They also make customs declarations passing off
valuable and prohibited species as low-value, legal timber.
Smugglers of course also resort to clandestine export without
documents and through unguarded areas of the border. In early
January, authorities caught a Chinese company attempting to
export 4,000 cubic meters of oak and ash valued at 2 million
dollars from Primorye using fake export documents.

¶6. Illegal export often involves corruption and complicity by
the authorities. Two officers from the Khabarovsk Regional
Service for Economic Crimes who were detained in spring 2007
were eventually found guilty of abuse of office while aiding
Chinese and Russian logging companies in illegally harvesting

Vladivosto 00000005 002.2 of 003


and exporting Russian timber. Though it is a positive sign that
officials were found guilty of corruption, their penalty was
light -- in early 2008, their sentences were suspended and they
were released, though guidelines allowed for prison terms of up
to ten years.

Rangers and Citizens Demand Help to Fight Poachers
--------------------------------------------- -----

¶7. Last year, a group of 38 Primorye park rangers and
environmentalists sent a petition to Prime Minister Vladimir
Putin asking him to transfer management the region's forests
from Primorye authorities to the Federal Forestry Agency. The
signatories asserted that the regional government is
consistently failing to fulfill its responsibility to prevent
illegal logging. Although a new Federal Forest Code came into
effect in January 2007 requiring regional authorities to protect
woodlands, Primorye officials have yet to create and adequately
fund an effective forest management system. Residents
frustrated by inaction have staged protests to attract attention
to illegal logging and have even tried to take forest protection
into their own hands. The World Wildlife Fund's (WWF) Russian
Far East branch and other environmental organizations often lend
support.

¶8. In summer 2008, residents of a village north of Vladivostok
staged a protest against officially-approved "sanitary cutting,"
when logging companies harvest dead trees and clean woodlands
after wildfires. According to villagers, loggers instead clear
cut everything, including healthy trees and left behind
wastelands in place of viable forests. Loggers have taken
advantage of the fact that forest rangers, suffering from a lack
of regional funding, have drastically reduced staff and
curtailed patrols.

¶9. Loggers are reportedly now setting their sights on 22,000
hectares of premium restricted forest in Pozharskiy Rayon.
Setting a dangerous precedent, authorities issued three permits
in 2007 to cut 5,600 cubic meters of timber after a seasonal
wildfire had occurred. In the wake of this year's spring
wildfires authorities increased the quota to 20,000 cubic meters
in order to "clean up" the area. Local villagers suspect that
most of that quota will come from perfectly healthy trees
unaffected by fire. xxxxx, told the Consulate
Econ section that he suspected loggers may set fire to woodlands
in order to obtain permission to log the areas afterward. He
affirmed that environmentalists are ready to support villagers
in protecting the forests.

Retribution Against Environmentalists
-------------------------------------

¶10. This past winter, unknown perpetrators set ablaze the house
of Yuriy Bersenev, a WWF project coordinator who works to
safeguard protected nature reserves. Two earlier attempts to
threaten or endanger WWF staff, including another case of arson,
occurred last month in the village of Novaya Moskva in
southeastern Primorye. According to WWF and nature preserve
workers, the local "Forest Mafia" -- a band of people engaged in
illegal timber cutting -- has openly declared war on those
working to preserve forests and enforce environmental laws.
Bersenev said the escalation is a result of the weakness of
national forest legislation and rampant corruption in the
Russian Far East. The perpetrators of both cases remain
unknown.

Villagers Suffer in More Ways than One
--------------------------------------

¶11. Along with dealing with the effects of illegal logging,
honest villagers also face trouble following local laws
themselves. For example, when large logging companies own the
rights to forests nearby, villagers are often forced to travel
twenty kilometers or more to legally gather firewood for their
own subsistence. Such a story was confirmed by the Consul
General during his visit to the remote town of Krasny Yar, an
eleven hour drive from Vladivostok. The town is surrounded by
birch, cedar, and pine forest, but residents are prohibited from
gathering wood nearby.

Lack of Jobs Leads to Poaching
------------------------------

¶12. Many villages throughout the region were originally
established as logging towns during the Soviet era. Legitimate
job opportunities have dwindled since then, and the current
global financial crisis has made life there even more difficult.
Many of the jobless former-loggers have resorted to
smaller-scale, ad-hoc -- and illegal -- harvesting of wood.
Providing their services to the "Forest Mafia" is often their
only source of income. With the drop in industrial production

Vladivosto 00000005 003.2 of 003


over the border in China, the price of a cubic meter of spruce
has dropped from 120 USD to 60. Established companies are often
finding it more profitable to use the services of these
out-of-work villagers cutting down trees in unauthorized areas
than to use legal, established channels.

Conclusion
----------

¶13. According to xxxxx expert xxxxx 50 percent of soft wood
and 90 percent of hardwood harvested in the Russian Far East and
Siberia eventually ends up in the US as finished goods after
being processed in China. The Lacey Act Amendment, which
requires documentation that wood products sold in the U.S. were
obtained legally and sustainably, may help stem the flow of
illegal timber coming from the Russian Far East. Post would
welcome and be happy to assist NGO's or USG experts who could
provide timber companies with briefings on the Lacey Act
Amendment and the implications for wood products originating in
Russia.
Armbruster