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DE RUEHMO #2366/01 2581150
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P 151150Z SEP 09
FM AMEMBASSY MOSCOW
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INFO RUEHYG/AMCONSUL YEKATERINBURG 3699
RUEHVK/AMCONSUL VLADIVOSTOK 3346
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UNCLAS SECTION 01 OF 04 MOSCOW 002366

AIDAC STATE FOR USAID/E&E
STATE FOR OES/STC, OES/PCI, EUR/ACE, EUR/RUS, EUR/PGI
INTERIOR PLEASE PASS TO USFWS
USDA PLEASE PASS TO U.S. FOREST SERVICE - LARA PETERSON
COPENHAGEN FOR ERIK HALL

SENSITIVE

SIPDIS

E.O. 12958: N/A

TAGS: SENV EAGR KGHG EAID KCRM SOCI PREL RS
SUBJECT: RUSSIAN ILLEGAL LOGGING - AN OPPORTUNITY TO ENGAGE

REF: Vladivostok 5

Moscow 00002366 001.2 of 004


Sensitive but unclassified -- please protect accordingly.

¶1. (SBU) SUMMARY: The USG has an opportunity to work with Russia to
combat illegal logging, and increasing reasons to do so. Russia
contains more of the world's forested area than any other country --
approximately 20 percent -- and between 10 and 30 percent of wood is
harvested illegally. Illegal logging leads to environmental
degradation, exacerbates global climate change, and disrupts trade
and local economies. Russia's illegal logging problem is magnified
by systemic flaws in the forest management system and an inadequate
legal framework, many stemming from the new Forest Code of 2006.
The U.S. Forest Service (USFS) has worked with some Russian regional
governments to combat illegal logging. There are several new
opportunities for cooperation on this issue, including the planned
new Protocol of Intent between the USFS and the Russian Federal
Forestry Agency, as well as the Embassy's proposal for $200,000 in
FY2008 performance funds to address illegal logging. END SUMMARY.

Russia's Forests - World's Largest and Most Degraded
--------------------------------------------- -------

¶2. (U) Russia contains approximately 22 percent of the world's
forested area, more than any other country. (NOTE: Second-place
Brazil has 16 percent. END NOTE.) Russia's boreal forests are the
Earth's largest forested region. Russia has more than 55 percent of
the world's conifers, which comprise over 21 percent of the world's
growing stock, and 11 percent of the world's live forest biomass.
Russia's over 887 million hectares of forest and woodland cover 52
percent of its land area -- equivalent to about 95 percent of the
area of the United States, including Alaska. Boreal forests make up
about one-third of the world's forested area and one-third of the
world's stored carbon. Together, Russia and the United States have
two-thirds of the world's boreal forests. This broad band of mixed
coniferous and deciduous trees stretches across northern North
America, Europe and Asia, with taiga along its northern edge meeting
Arctic tundra.

¶3. (U) Russia's forests are vital economic, biodiversity, cultural,
and climate change assets. And as in many countries, they are under
increasing threat from illegal logging, unsustainable forestry
practices, and forest fires. Illegal logging reduces the forests'
carbon uptake; it is estimated that forest fires and illegal logging
contribute 5-15 percent of Russian greenhouse gas emissions. An
August 25, 2009, ScienceDaily press release characterized Russian
boreal forest as the world's most degraded and least intact and
found that it has suffered the greatest decline in the last few
decades.

A Quarter of Russia's Logging Illegal?
--------------------------------------

¶4. (SBU) Estimates vary as to the amount of illegal logging. In
April 2008, the Environment News Service quoted Ministry of Natural
Resources and Ecology (MNRE) Deputy Head Semyon Levi estimating that
10 percent of Russian timber is illegally harvested. Greenpeace
Russia estimates are between 20 and 30 percent. In some regions, it
is estimated that up to half of the timber is being harvested
illegally. There are three types of illegal logging in Russia:

-- unauthorized commercial logging operations;

-- legitimate commercial operations that illegally augment their
harvest by cutting timber outside of authorized zones; and

-- non-commercial harvesting by locals for fuel, construction, and
other personal uses.

¶5. (U) Powerful organized crime groups are involved in illegal
commercial logging, abetted by local corruption. Poachers and
organized crime groups even set fire to woodlands to facilitate
illegal logging, later securing the contracts to clear the burned
areas.

¶6. (SBU) There are strong economic incentives for illegal logging,
particularly in border regions close to foreign markets. But the

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extent of illegal logging is driven primarily by systemic weaknesses
in Russia's forest management practices. In 2006, Russia introduced
a new forest code intended to encourage sustainable forest use by
large corporations. Instead, forestry experts have told us, the new
code decimated forest protection. It decentralized forest
management by moving forestry administration from federal to
regional authorities, assigned the responsibility for forestry
infrastructure and reforestation to lessee logging companies, and
did away with the federally employed cadre of forest rangers that
once enforced a standardized set of federal regulations. Forestry
management is now subject to the vagaries of regional budgets and
governments.

¶7. (SBU) Illegal logging is also aggravated by the lack of effective
prosecution. Prosecution is hindered by the absence of an effective
timber tracking system to establish a chain of custody for every
tree that is cut. Once trees are cut and loaded onto trucks,
internal customs officials and forestry inspectors have no way of
knowing the exact origin of the timber. Weak enforcement and
monitoring is also a problem, with the number of forest rangers
reduced dramatically by the new forest code. In one region, the
number of rangers was reduced from 200-300 to only three. Some law
enforcement officials claim that another obstacle is the poorly
written, vague body of laws that demand a standard of proof that is
extremely difficult to achieve. A police official in the Ivanovo
region told the English-language daily "Moscow Times" that
prosecuting illegal loggers is nearly impossible because, unless the
loggers are caught in the act, they can show lease documents from
anywhere in Russia and claim that they are simply transporting the
timber. This inadequate legal framework raises concern that persons
caught logging illegally cannot be prosecuted in a timely and
effective manner, which the U.S. Forest Service asserts is critical
to effective forest management.

¶8. (SBU) China is the primary market for illegal Russian timber,
much of which reaches the United States as finished products. A
long investigative report in "The New Yorker" reported in October
2008 that the greatest traffic in illicit wood is thought to be from
Russia to China. Commercial illegal logging for export to China is
concentrated in the Far East border regions. According to a 2007
U.S. Forest Service report, 20-50 percent of timber harvested in the
Krasnoyarsk region is illegal, with most sent to China. In January
2009, 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. Two officers of the
Khabarovsk Regional Service for Economic Crimes detained in 2007
were ultimately found guilty of aiding Chinese and Russian companies
in illegally harvesting and exporting Russian timber. Given the
high percentage of illegally harvested timber, it is particularly
worrisome for the United States that 50 percent of soft wood and 90
percent of hardwood harvested in the Russian Far East and Siberia
ends up in the United States as finished goods after being processed
in China, according to Denis Smirnov, coordinator of the World
Wildlife Fund's forestry program in Primorye (reftel).

Growing Attention to Illegal Logging
------------------------------------

¶9. (SBU) The Russian government and local communities are
increasingly aware of the effects of illegal logging. We are slowly
seeing an increase in activities to promote sustainable forestry and
to stop illegal logging.

-- FLEG Commitments: In the St. Petersburg Ministerial Declaration
at the 2005 Europe and North Asia Forest Law Enforcement and
Governance conference (ENA FLEG), 44 governments, including Russia
and the United States, expressed their intent to take action to
improve forest governance and combat illegal logging and associated
forest crimes. The Declaration includes an Indicative List of
Actions to implement the declaration and calls for a second
Ministerial within 5 years to assess progress made and decide on
further actions needed.

-- Plans for a National Timber Tracking System: In April 2009,
Alexei Savinov, head of the Ministry of Agriculture's Federal
Forestry Agency, announced that by 2011 Russia will have introduced
an integrated system to control timber circulation and decrease

Moscow 00002366 003.2 of 004


illegal logging. With support from the U.S. Forest Service and
USAID, Krasnoyarsk Authorities in 2008 sought funding from the
Ministry of Natural Resources to introduce a timber tracking system.
(NOTE: At that time the Forestry Agency was under the umbrella of
the Ministry of Natural Resources; now it is under the Ministry of
Agriculture. END NOTE.) Krasnoyarsk, in Central Siberia, is
Russia's second largest administrative territory, producing
one-fifth of Russia's total timber output. According to USFS
estimates, 20-50 percent of Krasnoyarsk's timber is harvested
illegally. The lack of federal funding and subsequent personnel
changes in both the Russian Federal Forest Agency and in the
Krasnoyarsk administration have so far stymied introduction of this
pilot chain-of-custody system.

-- Increased Domestic Timber Processing: Both President Medvedev
and Prime Minister Putin have endorsed the development of timber
processing as a national goal. Although their support is driven
mainly by economic concerns -- creating jobs and developing local
industry by exporting finished products instead of raw wood --
creating timber processing facilities in Russia could help reduce
illegal logging. By expanding local processing capacity, Russia
would reduce the incentive to export illegally harvested raw timber
to other countries for processing, though mechanisms will have to be
put in place to ensure any illegally harvested raw timber is not
instead simply processed directly in Russia itself. Officials in
Tomsk informed us that they are facilitating the establishment of
Chinese wood processing facilities in the region, which they noted
might discourage the export of illegal wood. As part of the
government's goal to increase domestic wood processing they have
gradually increased the export tariffs on logs. On April 1, 2008,
the tariff increased to 25 percent, but not less than 15 euros, and
as of January 1, 2010, up to 80 percent, but not less than 50 euros,
making the cost of importing unprocessed logs from Russia
prohibitive.

-- Civil Society Activity: Local residents in Primorye, frustrated
by the inaction of police and local authorities, often stage
protests to attract attention to illegal logging. WWF and other
environmental NGOs support their efforts. Residents of Melnichnoye,
a village north of Vladivostok, staged a summer 2008 protest against
"sanitary cutting," whereby logging companies supposedly harvest
dead trees and clean woodlands after fires (reftel). In fact,
according to villagers, loggers cut down healthy trees and leave
behind wastelands instead of protected forests.

¶10. (SBU) Organized crime is a serious threat to civilian
environmental activists in illegal logging locales. According to
WWF and nature preserve workers in the Russian Far East, the local
"forest mafia," a group engaged in illegal timber operations, has
openly declared war on those working to preserve forests and enforce
environmental laws. The house of Yuriy Bersenev, a WWF project
coordinator who works to safeguard protected nature preserves, was
set on fire by unknown perpetrators in the winter of 2009. This
incident came on the heels of two earlier attempts to intimidate WWF
staff in Primorye in December 2008, including another case of arson
(ref A). Yuriy Bersenev attributes the current drastic situation to
the weakness of national forest legislation and the rampancy of
corruption in the Russian Far East, USFS is beginning work on a
$200,000 performance fund project to create linkages between NGOs,
law enforcement, business, wardens, and regional officials to reduce
illegal logging.

-- Lacey Act: The Lacey Act amendments of 2008 expanded the
statute's anti-trafficking protections for the purpose of combating
illegal logging. The act now covers timber illegally harvested in
the country of origin and brought into the United States, either
directly or through manufactured products. The reinforced Lacey Act
has prompted large timber-product importers such as Wal-Mart to
reexamine their supply chains to ensure compliance. Consequently,
the Lacey Act puts significant pressure on regional governments in
Russia to fight illegal logging at the risk of losing the business
and contacts so valuable to their economies. With the Lacey Act
calling attention to the international trade in illegal timber,
Russian and Chinese businesses are more conscious of the need to
prove legality to American companies, leading them to seek official
logging permits from the Federal Forestry Agency. xxxxx

COMMENT: Potential for Expanded Cooperation
-------------------------------------------

¶11. (SBU) The United States and Russia have a number of
opportunities to work bilaterally and multilaterally in the coming
year to stem illegal logging:

-- A new protocol of intent between USFS and USAID, jointly, and the
Russian Federal Forestry Agency, will be signed in the next few
months. The POI addresses several forestry issues, including illegal
logging. It can help spur policy dialogue and exchange of best
practices on implementing environmental regulations, promoting
sustainable forestry practices, engaging civil society, and
expanding environmental education. It should also assist in reducing
the number and extent of fires through increasing the forest
managers' monitoring capacities. USFS specialists are attending an
October workshop in Khabarovsk, which they see as a valuable
stepping stone in the larger illegal logging project.

-- Russia took the initiative to host the 2005 FLEG conference, and
the U.S. has played a critical role as organizer in the program.
With a planned assessment of progress in 2010, the United States has
an opportunity to become more involved.

-- The U.S. can also cooperate with Russian law enforcement to help
expand its capacity to investigate the causes of illegal logging and
forest fires and their connection to organized criminal groups.

¶12. (SBU) One possible model for cooperation is the May 2008
U.S.-China Memorandum of Understanding on Illegal Logging and
Associated Trade. A similar agreement with Russia, which could even
involve China as a third party, might facilitate cooperation among
the three countries to strengthen forest law enforcement and
governance.

Beyrle