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Toni Schönfelder
A lifetime of innovation

Illegal Logging Costs $1.5 Billion  
St. Petersburg Times, 25 November 2005  
Russia’s Forestry Industry is perceived as one of the most corrupt in the world according to an index released by environmentalists. Only other former soviet states — Kyrgistan, Uzbekistan, Azerbaijan, and Tajikistan — were deemed even more corrupt.  
The 2005 Transparency International Corruption Perception Index (CPI) which surveyed 53 countries gave Russia only 2.4 points, 4.6 points below the accepted standard of 7. Leading the index, compiled by the Socio-Ecological Union, were Finland, leading with 9.6 points, followed by Denmark and Sweden with 9.5 and 9.2 points respectively.  
According to the World Wildlife Fund (WWF) about 17 million cubic meters of timber, sawwood, pulp, paper and paperboard were illegally logged and traded in Russia last year, with regions bordering China holding the lion’s share.  
Anatoly Kotlobai, the WWF’s expert in illegal logging, attributed Russia’s forestry corruption to a lack of clearly defined laws and regulations surrounding the industry, leading to disruptions in global forestry’s industrial trade balance.  
He said that “increasing demand for Russia’s timber and its derivatives in neighboring China and Japan has also exacerbated corruption in regions bordering on China.“  
Exports to China jumped up to 17 million cubic meters last year from 529,000 cubic meters eight years ago, with the border regions of Primorye, Khabarovsky Krai and Chitinskaya reporting between 34 percent and 53 percent of illegal timber exports, according to Kotlobay.  
But the head of Russia’s Federal Forestry Agency, Valery Rochshupkin said that about 10 percent of Russia’s annual timber exports are a by-product of grave violations of logging and trade norms. According to the WWF this is causing the nation an annual loss of about $1.5 billion against a worldwide loss of about $15 billion.  
A report by the national Forestry Research Institute, Nipielesprom, said that Russia earned $7.3 billion from forestry exports last year, the most since 1995 and more than twice as much as each of the previous four years.  
However, Russia’s World Bank representative, Andrei Kushlin, believes that both Russia and overseas dealers are to blame for their share in disrupting the global market and ecological balance, citing lack of a strict interstate and inter-corporate governance charter.  
Between them Russia, Brazil, Canada, and the United States possess 51 percent of the world’s forest and Russia alone possesses more than a fifth of the world’s 3.5 billion hectares.  
The problem of illegal logging is also acute in Russia’s North Western region, with its 10 billion cubic meters accounting for 12 percent of the nation’s total forest area. According to the executive director of the North West Forest Industrial Confederation, Denis Sokolov, illegal exports to Finland are of particular concern.  
Though Russians and Finns give contradicting figures of last year’s timber exports to Finland — 12 million cubic meters and 14 million cubic meters respectively — they both agree that at least 2 million cubic meters were of dubious origin.  
But Vladimir Dmitriyev, WWF’s Russian coordinator of Forestry Policy, suggests a remedy for the malpractice. “We should create a mechanism to oversee forest products right through from logging to the consumer, both nationally and internationally,” he said.  
The mechanism should involve units monitoring logging and others monitoring transportation to mills and to end consumers. Other inspectors would assess quality.  
“If efficiently carried out, it’s a system that may give the consumer enough room to check the quality and investigate the legal origin of the product where necessary,” says Dmitriyev.  
But Russian Energy and Industry Minister Ivan Materov is skeptical about Dmitriyev’s idea, despite the backing of some major players in the local timber industry, saying it is too costly and complicated to be realistic.  
Materov called for export duty to be replaced by auctions of forest consignments to local exporters. In this way the auctions will repalce lost export duties, and the market itself will take the exporters to task over the quality and legal credibility of the commodity in question, he said.  
Dmitry Chuiko, director for the development of industrial business at Russia’s largest pulp mill, Ilim Pulp, dismissed the ideas as “ leading nowhere.”  
© Copyright The St. Petersburg Times 1993 - 2005  

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