Russian Federation: Bringing Logging Under Control

Russian Federation: Bringing Logging Under Control

Source: Kommersant, 19 June 2002, p. 2.

Published by the Current Digest of the Post-Soviet Press, 17 July 2002
By Konstantin Smirnov

A meeting of the government yesterday decided the fate of Russia’s forests and timber industry. It was judged inadvisable to re?create a separate forestry ministry as the only means of rescuing the industry. The White House intends to use private – including foreign – investors to revive our forests and promote the dynamic growth of the entire timber and paper industry.

A day earlier, the president chaired a meeting of the State Council presidium devoted to this same topic. In the governors’ opinion, Vladimir Putin was clearly upset by the fact that the government was doing practically nothing to reorganize the timber industry, which is relatively inefficient at present. He instructed the government to review the timber industry’s problems at once and report back to him immediately. Which it did yesterday. However, the president did not undertake to resolve what a State Council working group sees as the main issue – re-establishing a ministry of the timber industry. Russian Prime Minister Mikhail Kasyanov is decidedly against re-creating any industry-specific ministries. He favours market-based methods of economic management, even with regard to the use of natural resources. Nevertheless, at yesterday’s meeting of the government, governors who had been invited from timber-industry regions argued once again that a separate, industry-specific agency would benefit Russia’s forests.

The “forest” governors are convinced that no reform is possible without a forestry ministry, because there will be no one to draft the Forestry Code, abolish export duties or introduce new methods, including new management techniques.

They were opposed by Industry Minister Ilya Klebanov and Minister of Natural Resources Vitaly Artyukhov. The members of the government mainly discussed the Industry Ministry’s proposals and basically approved them. Detailed proposals for reorganizing the industry are to be presented by 1 September 2002.

Minister Klebanov said that the job of preserving our forests and processing timber will be handled by private investors, including foreign investors, not the officials of a forestry ministry. According to Mr. Kasyanov, these investors, after leasing tracts of forest for periods of 49 to 100 years, being exempted from paying leasing fees for the duration of investment projects, and receiving bank loans secured by their tracts of forest, will invest 795 billion rubles, or $25.5 billion, in the industry by 2015. Exports of forestry products will amount to $14.5 billion, as opposed to the current figure of $4.5 billion. Moreover, these exports will consist solely of highly processed products, not rough logs. To which end, incidentally, export duties on lumber will be completely abolished. In addition, domestic demand for paper and cardboard will be met entirely by our own production. The White House concluded that it had met the president’s objective and that Russia’s forests would be placed in the trustworthy hands of Finnish, Swedish and Canadian timber investors.


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