red files

NewForest Code Approved by the Federal Government 

(compilationof various news published between March and April 2004, including the full text of the new RussianForest Code)

PutinUrges to Analyse Forestry Code More Carefully
ITAR-TASSNews Agency, 12 April 2004

ByViktoria Sokolova
PresidentVladimir Putin has suggested to Minister of Natural Resources Yuri Trutnev thathe should report to him about the work on the Forestry Code.
“Youfinished administrative transformations, and now you can pass over to concretework, including on the codes, specifically on the Forestry Code,” thePresident said at a meeting with members of the cabinet on Monday.
Putinurged “to pay special attention to fundamental problems, to analyse allcontroversial issues once again together with the Ministry of EconomicDevelopment and the State Duma.”
Thedraft Forestry Code triggered heated arguments. Early in April legislativeassemblies of ten regions of the Russian Far East described it as unacceptable.They suggested the holding of a nationwide referendum on the problem of privateproperty on forests.
TheCouncil of Legislators under the Federation Council also recommended to thegovernment to preserve state property on forests “as the dominating form ofproperty.” The Russian Auditing Chamber also expressed a negative opinionof the draft document.
PrimeMinister Mikhail Fradkov also opposed the introduction of private property onforests last week. “I do not see any reason for introducing privateproperty on forests, since we may grant them on lease for as long as 15 years.This step would be counterproductive,” he said.


Russian Regions Protest over Proposed Forestry Code
BBC Monitoring International Reports, April 2, 2004

Khabarovsk — The introduction of private property on forests in Russia “is possible only through a national referendum”, a resolution adopted today by the Far East and Trans-Baykal Parliamentary Association states.

Far Eastern legislators consider the concept of the new Forestry Code unacceptable and believe that the law (bringing the code into force) in the reading proposed by the Economic Development (and Trade) Ministry “inadmissible because it does not take regions’ interests into account”. Representatives of the 10 eastern regions, who took part in the association’s session, decided not to support the bill.

Summing up the discussion, the chairman of the association, the speaker of the Khabarovsk Territory Legislative Assembly, Yuriy Oniprienko, said that “the draft Forestry Code does not comply with the Russian constitution”. He supported the idea of asking the federal government and the Russian president to revise the bill to grant more authority to the regions.

The association’s conceptual additions and suggestions (on the bill) are being sent to the head of the government, the State Duma and the Federation Council

RegionsAre Sawing the Branch They’re Sitting on
TheCurrent Digest of the Post-Soviet Press, 28 April 2004
Source:By Alyona Kornysheva. Kommersant, 01 April 2004, p. 15

Aregular meeting of the council on cooperation between the Federation Council andregional legislative bodies was held in the upper chamber yesterday. Theparticipants discussed the new version of the Forestry Code, but they wereunable to reach a consensus: The regional representatives were frightened by theprovision of the new code that would allow private ownership of forests. But theMinistry of Economic Development and Trade has no intention of striking theright of private ownership from the code.

DeputyMinister of Economic Development and Trade Mukhamed Tsikanov did his best toexplain the government’s view of the matter. It may be recalled that the Cabinetof Ministers has already endorsed the draft Forestry Code, which was drawn up bythe Economic Development Ministry. Mr. Tsikanov reiterated that the predominanttype of forest use would be long-term leasing of forest tracts. The right toobtain a 99-year lease on a tract of forest would be available only throughpublic auction. A lessee would be able to acquire private ownership of a foresttract only after it could demonstrate a 15-year record as a conscientious lessee.Moreover, ownership rights would be tightly restricted: An owner would not beable to prohibit people from walking in the woods or hunting mushrooms there, orto surround forest land with a fence. Mr. Tsikanov predicted that, after the newcode takes effect, long-term leases will be purchased for at most the 20% to 30%of forest land that is highly profitable.

But theregional lawmakers were still unwilling to accept private ownership. “Thisstep is premature, especially for foreigners, whom the code treats the same asRussian citizens,” said Nikolai Levin, head of the legislative assembly ofKarelia. In his view, the effective exploitation of Russia’s forests calls forzero-percent customs duties on exports of processed timber products and,conversely, higher duties on timber in the round. It should be pointed out that,whereas in “forest” countries such as Finland, Sweden and Canada,timber in the round accounts for just 2.5% of total exports, in Russia itcurrently accounts for 72% of forest-product exports, although even in Soviettimes it accounted for only 40%. Mr. Levin also believes that the timberindustry could be given a boost by exempting enterprises from customs duties onimports of production equipment; otherwise the present situation, in which not asingle new pulp-and-paper plant has been built in Russia in the past 10 or 15years, will remain unchanged.

[Mukhamed Tsikanov] summarized the outcome of the discussion for Kommersant as follows:”The issue of private ownership will probably always raise such disputes inRussia; our recent traditions are just too strongly ingrained. Nevertheless, itseems to me that the arguments in this unceasing discussion have been exhausted:World practice knows no mechanisms more efficient than private ownership.”


Private Ownership of Forests May Anger Millions – FC Speaker
ITAR-TASS News Agency, March 31, 2004

Introducing the private ownership of forests in Russia now will be impossible, Federation Council (upper house) speaker Sergei Mironov has said. He was speaking at a meeting of the Council of Legislators incorporating the heads of regional legislatures and Federation Council members.

The theme of today’s meeting was the development of the forest and timber complex as described in a new draft of the Forest Code.

The Cabinet approved of the code earlier this month. When finalized, the draft will be submitted to the State Duma for consideration. Legislators from Russian regions have made a decision to express their attitude to the code before it is submitted to parliament.

“If urgent measures fail to be taken promptly to protect, rehabilitate and rationally manage forest resources, Russia will soon be faced with gradual degradation of its forest resources and eventually will be phased out from world markets,” Mironov said.

Russia’s export of timber earns it five billion dollars a year, at a time when Finland, having approximately the same territory as Russia’s constituent republic of Karelia, earns over 11 billion dollars.

Before Russian forest resources may go private all effects of such a move must be scrutinized.

“Private ownership is not the sole way of dealing with this problem,” Mironov said. “The possibility of Russian forests going private will trigger a tide of angry protests from millions of citizens. Reports arriving from regions indicate this quite clearly,” he said.

Mironov believes that the draft forest code must be reworked fundamentally and three aspects of forest management considered thoroughly – ecological, economic and social.

The risk of social tensions private ownership of forests may cause is very high, Mironov said.

A number of clauses of the Forest Code came under heavy fire during the parliamentary hearings in the State Duma last Monday. Speakers were calling for a clearer definition of the rights and duties of forest owners, specifically, the freedom of each Russian citizen to visit privately owned forest areas for rest and leisure and for picking berries and mushrooms.

“As we try to introduce the private ownership of forests, we must not stop seeing the wood for the trees,” Deputy Speaker Lyubov Sliska said.

Other speakers pointed out that even after a fifteen-year-long period of diligent management of forest areas on lease-hold terms private owners will not be allowed to own exclusion zones along rivers, around lakes, forests having scientific and historical importance, wild-life preserves and national parks.

Russian President Vladimir Putin emphasized the importance of the Forest Code at his recent working meeting with the Natural Resources Minister Yuri Trutnev in the Kremlin. He urged a well-founded solution to be adopted as a result of extensive discussion with the science community and the general public.

Russia’s current Forest Code was adopted in 1997. All forest resources in it are declared federal property.

Nearly two thirds of Russia’s territory (69 percent of land) is taken up by forests. The country’s timber reserves total 82 billion cubic meters (over a quarter of the world reserves). Russia is the world’s second biggest exporter of round timber.

ForestsGet a New Old Boss
TheCurrent Digest of the Post-Soviet Press, 28 April
By YuryAlekseyev. Nezavisimaya gazeta, 30 March 2004, p. 3.

Russianofficials spent yesterday “under the forest canopy.” In the Duma,deputies actively discussed the draft Forestry Code, while Prime MinisterMikhail Fradkov, after a lengthy pause, finally named the person who will headthe Federal Forestry Agency. . . . The forestry sector will be supervised byValery Roshchupkin, a former deputy to Minister of Natural Resources VitalyArtyukhov and hitherto director of the State Forestry Service.

In hisnew capacity, Roshchupkin will have to move quickly to address the problems ofour forests. There are quite a few complaints about the Forestry Code (which isdue to be sent to the Duma very soon) even within the Natural Resources Ministryitself, which has overall responsibility for our forests. As Deputy Minister ofNatural Resources Yury Shuvayev put it in the Duma yesterday, the draft code”does not regulate matters of forest ownership with sufficient clarity.”Specifically, it fails to establish procedures and criteria for dividingownership of forests among the federal government, the members of the RussianFederation and municipal entities. Furthermore, the document establishes theright to transfer forest tracts to the ownership of a lessee after a 15-yearperiod, but the proposed buyout price for a tract, set at 10 times the leasingcost, is at least 50% lower than it should be.

Thedeputy minister said that the draft code does not define any criteria forsetting economically sound minimum leasing bids, and thus fails to give auctionorganizers any incentive to increase the fees charged for forest-use rightsthrough the bidding process.

TheGreens have had much harsher criticism for the draft Forestry Code. AlekseiYaroshenko, the coordinator of the Russian Greenpeace organization’s forestryprogram, told NG that “the new draft Forestry Code creates serious problemsfor the operation of the legal timber business. And at the same time, it opensup a multitude of loopholes that would make things substantially easier forillegal and quasi-legal timber cutters. For example, the code would totallydismantle the permit system for leases for a term of less than one year — andthere are plenty of other examples. So it would definitely open the door topredatory and poorly regulated exploitation of our forests. Virtually allforestry specialists agree that the code cannot be adopted in this form;considerably more time will be needed to rework it, and its drafters have to bewilling to pay attention to criticism. This view is shared not only byenvironmental organizations, but also by many timber industry executives,forestry inspectors, specialists working for regional administrations,scientists and many others,” Yaroshenko added.

RussianGreenpeace has some hope that the situation will improve now that ValeryRoshchupkin is in charge of managing the nation’s forests.

New Forestry Code to Allow Russia to Sell More Processed Timber – Auditor
BBC Monitoring International Reports, March 25, 2004
Source: Ekho Moskvy radio, Moscow, in Russian 0925 gmt 25 Mar 04

“The Russian budget for 2005 will be based on oil prices amounting to 27.5 dollars per barrel,” Vladimir Nazarov, an auditor with the Russian Audit Chamber, told Russian Ekho Moskvy radio on 25 Mar 04.

As for the government’s task of doubling Gross Domestic Product, set by Russian President Vladimir Putin, GDP will be raised by 6.5-7 per cent, Nazarov added, quoting remarks by Russian Prime Minister Mikhail Fradkov at the 25 March government session. Nazarov also quoted Fradkov as saying that economic growth in agriculture should amount to at least 30 per cent. “If we want to feed the country, domestic output should become competitive in the world market, especially after Russia joins the WTO”, Nazarov added.

Commenting on the new Russian Forestry Code considered by the government at the first reading, Nazarov said: “Russia loses R5m every year due to poor management of the country’s woods and forests”. The main problem is that Russia sells mostly unprocessed timber.

Russia should increase exports of processed timber, Nazarov said. The new code will allow domestic producers to process timber inside the country, he added.


Code Seeks Forest Investors
The St. Petersburg Times, March 19, 2004
By Sophia Kornienko

Environmentalists fear the new Forestry Code approved by the federal government Thursday could lead to mass cutting of high-quality forests around cities, on riverbanks and lakeshores. The Northwest region, they warn, is likely to be affected most by the new legislation, which – in their view – gives a green light to indiscriminate privatization of forests.

Many regional governors are also against the new code.

Sergei Katanandov, head of the Republic of Karelia, spoke against the code’s forest leasing procedure.

“We are very much concerned about using only auctions to select tenants. It is a dangerous initiative, making money the only winning factor,” Katanandov said in St. Petersburg on Tuesday.

It is essential to either preserve the competition-based selection of tenants or require that auction participants present detailed business plans, Katanandov said.

Vyacheslav Pozgalyov, head of the Vologda region, was quoted by Vedomosti on Thursday as saying that the code “totally contradicts the concept of distribution of authority.” The code does not expand regional mandates, but limits them even further, he said.

Greenpeace is concerned that the code has been devised by a narrow circle of executives with almost no public discussion, the environmental watchdog’s press service reported Wednesday. No practicing forestry experts from the regions or representatives of public organizations were invited to help create the code, the Greenpeace statement said.

According to the new code, tenant scan purchase a lease for only ten times the annual rental price after 15 years of renting forested land. Short-term (less than one year) and long-term (from 10 to 99 years) leases will be available only at auction. At present, use of forested land is granted on the basis of competition or permission from a local administration.

Both legal entities and individuals, Russian and foreign, can become tenants. Foreign tenants are not permitted to rent forested land near the country’s borders.

Federal authorities have had difficulty supervising the country’s forests and protecting them from illegal cutting, Natural Resources Minister Yury Trutnev said Thursday. “State officers have been responsible for 54,000 square meters of forest each,” Trutnev said. “Now the forest will have a master,” he said.

Trutnev said the code aims to attract investments, which will lead to construction of new roads, pulp and paper mills and wood processing plants.

Forest privatization should be introduced, but gradually and discriminatingly, said Viktor Teryoshkin, deputy editor in chief of Ecology and Law magazine. The new code allows for rapid acquisition of property without distinction, “just as with other lucrative resources, such as oil,” he said. No exception is made for so-called first-category forests – the concept of especially protected forests introduced under Joseph Stalin during World War II, Teryoshkin noted.

Old-growth forests could now be logged, Teryoshkin said.

Economic Development and Trade Minister German Gref, whose ministry drafted the code, maintains it is environmentally sound and protects forests, including first-category forests, with a few exceptions, Interfax quoted Gref as saying Thursday.

The code is expected to come into effect soon, leaving environmentalists with little choice in the matter. “It is as if we were being run over by a steamroller,” Teryoshkin said.


Russian Government Approves Private Ownership of Forests
BBC Monitoring International Reports, March 18, 2004

Moscow — The Russian government today approved the draft Forestry Code, Natural Resources Minister Yuriy Trutnev told reporters after today’s cabinet meeting. Trutnev also noted that, thanks to the adoption of this document, “forests will finally have a manager who will ensure that forests are accessible”.

Trutnev went on to say that the Forestry Code is primarily aimed at resolving ownership issues. We must determine to whom the forests are going to belong, he said. According to him, “70 per cent of forests have no owner”. Trutnev also pointed out that “each person in charge of forested territory is responsible for 54,000 square kilometres”. However, Trutnev continued, the new document fully resolves the issue of public access to forests. We will have no problems “with mushroom and berry picking, or the collection of wood for heating in the private sector”, Trutnev stressed. “People will have every opportunity to visit forests,” he said.

Until now the Forestry Code adopted in 1997 has been in effect. According to that document, all Russian forests have been under federal ownership. Under the new document, the tenant, if there have been no violations of the code’s requirements and once a 10-year lease has expired, has the right to buy his area of forest.

Materials prepared for the cabinet meeting by the Economic Development and Trade Ministry stress that certain categories of forest under so-called “protection regimes” will not be subject to purchase. For example, such areas of forest include forest parks near towns and villages, nature reserves, forests adjacent to tundra, areas of forest running along federal railway lines and federal highways, as well as some other categories.

The right to use forested areas will be determined by lease agreements. The draft Forestry Code proposes that two kinds of lease agreements can be concluded, either for a period of up to one year, when logging cannot be carried out on that area, or for a period from 10 to 99 years. Lease agreements would be concluded through open auctions. Two months before an auction is held, its conditions have to be published in the press.

The Economic Development and Trade Ministry believes that the new Forestry Code will make it possible to attract investment into the forestry sector.

Forests make up almost two-thirds of Russian territory (69 per cent of dry land). The total area of Russia’s forestry stock is 11.7m square kilometres. Timber reserves come to about 82bn cubic metres (over a quarter of world reserves). This makes it possible for Russia not only to fully provide for its domestic requirements, but also to export timber. Russia is second in the world in terms of exporting uncut timber.


Russian PM: New Forestry Code to Clarify Role of Central, Regional Government
BBC Monitoring International Reports, March 18, 2004
Source: Radio Russia, Moscow, in Russian 0900 gmt 18 Mar 04

(Presenter) The Russian government held a session today to discuss the Forestry Code. Our correspondent Yelena Filippova has the details.

(Correspondent) It took three years to draft the new Forestry Code. The old code, just like other similar documents, does not meet new economic requirements and does not correspond to relationships established in the sector. The major difference is that the new code provides for private ownership of forests. The document drafted by the Russian Ministry of Economic Development and Trade stipulates that if leaseholders observe all contractual and environmental norms, 15 years later they can buy a plot of land with forest paying for the 10-year-period lease alone. (Passage omitted)

Russian Prime Minister Mikhail Fradkov has spoken about the main task facing the new Russian Forestry Code at the cabinet meeting.

(Fradkov) The Russian forest has an immense natural resource potential, which should be tapped sparingly and effectively in terms of economic development needs and creation of environmentally friendly conditions in the country. It should also be borne in mind that a law on the division of authorities between different levels of government is currently being drafted. Obviously, a law on the use of mineral resources must be closely coordinated with the division of authorities.

(Correspondent) The division of authorities between regions and the federal government is another new feature (of the code). The ultimate power remains with the federal centre, but more authority is being delegated to the constituent parts of the Russian Federation under relevant agreements. (Passage omitted to end)


First Private Owners of Russian Forests Expected in 2020 – Minister
BBC Monitoring International Reports, March 18, 2004

There will be no private owners of forests before 2020, ITAR-TASS news agency reported on 18 March, quoting German Gref, the Russian economic development and trade minister.

Gref was speaking to the media after a meeting of the government at which the new Forestry Code was approved in principle.

Since a purchaser has to have leased an area of forest for 15 years before buying it, the first private owners will not emerge until 15 years from now, the minister said.

He added that long-term forest management would ensure that trees were replaced after they were cut down.

Gref also said that the new Forestry Code would mean increased budget revenue in years to come, according to another ITAR-TASS report. Gref said that while working on the code the government would try to ensure that the Forestry Code would be “economically effective”.


Russian Natural Resources Minister Briefs President on Forestry Code
BBC Monitoring International Reports, March 18, 2004
Source: Channel One TV, Moscow, in Russian 1200 gmt 18 Mar 04

(Presenter) And here’s some footage that we’ve only just received. The president met Natural Resources Minister Yuriy Trutnev today. They talked about the Forestry Code, the draft of which was endorsed by the government today. (Putin) Good day.

(Trutnev) Good day, Vladimir Vladimirovich.

(Putin) How’s work going? Have you actually started work?

(Trutnev) I’m getting to grips with the structure of the ministry and bringing it into line with your decree. I’m looking at staffing and at how the ministry’s run. It’s serious work.

The government considered issues to do with the Forestry Code today and the systemic problems that need to be brought into the open.

(Putin) You’ve brought up the Forestry Code. When we talk about forests, it’s a problem that affects virtually every citizen of Russia and there has to be a very balanced approach to it. Of course, it mustn’t be dragged out but there shouldn’t be any fuss either.

(Trutnev) Well, Vladimir Vladimirovich, a great many comments were made on the proposed draft. They were all relevant but, when it comes to the overall concept, the Natural Resources Ministry believes it’s fine because, and I can give very precise figures, 70 per cent of the territory of the country, 70 per cent of the forests, are out of bounds. In other words, there can be no timber industry, building work or clearances.

When it comes to supervision, one person is responsible for 54,000 sq. km and it’s evidently not possible to increase the number of employees either. For this reason, we’re working on the basis that it is essential to establish self-regulating mechanisms that enable us to attract investment into forestry and allow people to take responsibility while, naturally, the state retains all rights of control so that when it comes to those functions, for which people are accustomed to using the forests – picking mushrooms or berries or gathering wood for the rural population – people are entirely protected and there are no problems at all.




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