Illegal Logging: A Russia Federation Case Study by Timothy Chandra in THE FACULTY OF FORESTRY Department of Forest Resource Management FRST 497 THE UNIVERSITY OF BRITISH COLUMBIA April 2009 Abstract The purpose of this paper is to examine the issue of illegal logging and how it is defined. The focus is on Russia and the driving forces behind illegal logging in the region. The paper covers the impacts of illegal operations, the different methods of illegal logging, as well as the current actions undertaken by the Russian government to address the issue. Key Words Corruption Forest code Illegal Logging Definition Deforestation Legislation Regulation The purpose of this paper is to analyze the definition of illegal logging and its relation to the situation in Russia. The paper attempts to report on the types of illegal logging, and the resulting outcomes, to provide the reader with a clearer understanding of the situation. Prior to researching this paper, I held a simplistic view of illegal logging and the reasons behind it. I believed that illegal operations were predominantly performed by criminal parties who recognized their actions were against the law. This mindset was quickly altered after examining literature concerning illegal logging throughout the world. The issue of illegal logging is astonishingly wide-ranging, and involves a variety of social, economic, and political factors. While researching, I found numerous articles and reports use the term „illegal logging‟ extensively, however the majority do not provide a clear definition of illegal logging. At a glance, this does not seem to be a pressing issue. However, the lack of an internationally recognized definition for illegal logging is a colossal problem when trying to tackle this issue globally. For example, the British Columbian (BC), Forestry Innovation Investment (FII) provides a definition of illegal logging as “the theft of timber or logs; deliberate harvesting without authority or in unauthorized areas or when government authority has been obtained by corrupt practices; and a deliberate failure to pay stumpage and/or royalties to forest owners” (FII. 2009). When comparing this definition to the World Wildlife Fund‟s definition of illegal logging “when timber is harvested, transported, processed, bought or sold in violation or circumvention of national or sub-national laws” (WWF), BC‟s classification of illegal logging seems to be sound. However, compare BC‟s definition to a definition published by the Center for International Forestry Research (CIFOR) and there is one notable difference. CIFOR‟s description includes an additional clause concerning the, “violations of indigenous peoples‟ rights.” In Canada, the national and provincial governments have had a long standing conflict with the First Nations concerning land rights. This single phrase could theoretically cause a large number of past operations in British Columbia to be labelled illegal. The issue is incredibly complex, and when viewed upon a global scale, it becomes exceedingly difficult to unravel. Between countries, the range of necessary documentation and activities required for a legal venture fluctuate. While distinct levels of standards and legislation can introduce a significant amount of inconsistency. The focus of this paper is on the case of illegal logging in Russia and so the definition being used is by the Supreme Court of the Russian Federation. The Russian definition for illegal logging is the “harvesting of trees, shrubs, lianas without a felling license, order or logging with a felling license, order issued with violation of the standing felling rules as well as logging in other (than allowed) areas or outside their boundaries, over allowed volume, logging of other (than allowed) species or trees, shrubs, and lianas prohibited for harvesting…” According to the World Wildlife Fund, a large percentage of logging in Russia is guilty of these violations, and therefore illegal. However, in regards to the definition above, upon whose order and/or authority can a felling license be issued, is open to discussion. If an operation possesses all the appropriate paperwork and licenses, but the orders/licenses are of dubious origin or if the authorization comes from a questionable source, should these ventures be considered legitimate? For instance, Russian armies have financed their operations and paid their soldiers thanks to harvesting and selling timber. These questions bring a whole new level of complexity to the issue of what is considered illegal logging, and are far beyond the scope of this essay. Nonetheless, it is important to keep these details in mind when trying to analyze the situation behind illegal logging. The Impacts of Illegal Logging Throughout my studies as a forest resources management student, I have learned that no matter what, all logging operations have an impact on the environment. By way of managing and operating efficiently, we seek to lessen these effects on the environment; however degradation still occurs. For instance, recently cleared land can lead to numerous environmental issues that can strongly influence the surrounding landscape. A newly exposed landscape can lead to mass wasting events such as landslides, soil erosion, and the resulting runoff into streams that can choke fish, and even cause floods when there are insufficient trees to aid in water retention. Furthermore, logging has been shown to fragment forests, causing changes in the environment and biodiversity, while new roads allow people entrance to once inaccessible areas. These events have all taken place in British Columbia, Canada, even when foresters try to safeguard against them. In regions where no one is trained, or where people do not care, disasters such as these are even more likely to occur. Every single major issue with timber harvesting is an issue when dealing with the outcomes of illegal logging. We understand that logging influences a broad spectrum of issues, from the loss of biodiversity, to the emission of green house gases, to the loss of natural land base. With respect to illegal logging that is often performed without forethought and care for the environment, the effects can be even more devastating. Illegal logging has a strong impact on the economy, and the nation as a whole can be negatively affected. Illegal operations are capable of avoiding standard licensing fees, logging concessions, taxes, and stumpage for standing timber. These sources of revenue for the government, and when they go unpaid, the Russian government loses revenue. The funds diverted from the government can also become a stimulus for corruption and criminal organizations, in the case of large scale illegal operations. Furthermore, the loss of valuable timber is an opportunity loss to sanctioned operations. While the stolen logs are a manufacturing opportunity loss when shipped across borders to foreign plants that process and sell the timber products. In today‟s global world, the impacts of illegal logging in one region not only impact the nation, but frequently have significant global effects. Illegal operations are able to avoid the normal fees paid by legitimate companies, lowering the overall cost of the operation and enabling timber to be sold at reduced prices. A North American operation is unable to use such a strategy, and thus sells logs at a higher price in the global market. In addition, harvesting and managing sustainably requires knowledge and time, and there is an inherent cost to operating in this manner. Clear-cutting or high-grading a forest and selling the logs does not require a great deal of knowledge or expertise. This method allows for timber to be sold at reduced prices, allowing sellers to undercut others, and therefore harm the production of legitimately produced products. Raw timber prices throughout the world are affected by illegal logging, as lower Russian timber prices are able to drive down global timber market prices. On a side note, the harvesting of illegal logs from Liberia, Africa was financing warring parties. This was due to the United Nations sanctions placed on the sale of diamonds from the region, and so the previous President turned to selling off illegal timber concessions. In the recent past, people have been made aware of the term „blood diamond,‟ it may now be time to alert people to the term „blood timber.‟ As forests are cleared, habitats for endangered species such as the Siberian tiger disappear, pushing species to extinction. While high-grade operations that choose the highest quality timber has led to over-exploitation of select tree species. This method can cause a shift in a forest‟s successional stage, and alter the current habitat. While other forests may be clear cut, destroying the surrounding land without any thought for the future. On top of that, it is well known that logging roads are one of the primary sources for negative long-term environmental effects ranging from soil compaction, to becoming avenues for mass wasting events. On a side note, this increased harvesting has a negative affect on the global storage of carbon and can become a driver for climate change. The Stern Review claims that deforestation is responsible for nearly 20 percent of global carbon emissions. All in all, these negative impacts on the environment and economy have tarnished Russia‟s global image. Types of Illegal Felling Operations In a study carried out by Greenpeace, illegal felling was separated into two broad categories; (a) “Cuttings carried on without permits or with forged permits; (b) Cuttings with official permits (felling tickets, orders for low-amount allocation) which, in and of themselves cannot guarantee that the felling is legal” (Greenpeace Russia. 2000). Under the first category, one form of illegal logging is felling for subsistence, however it should be known that there is no actual data to prove that this is occurring and thus this is an educated assumption. People have depended on nature to survive for as long as time itself, as wood provides material for firewood, housing material, tool implements, etc. In Russia, residents are required to apply and pay for a cutting permit to fell trees. The process can take up to five working days and requires a forester to come out and survey the plot. Furthermore, according to the 2007 CIA World Factbook, the poverty line in Russia was at 15.8%, and people are unlikely to have the funds necessary to pay for a permit. In this case, the assumption is that it is much easier to walk outside, cut the logs needed, and go home. The second form is characterized by groups of people nicknamed „timber gangs‟ or companies that harvest timber illegally for profit. This is a large step up from locals cutting for subsistence as the operation is far more complex. It is noted by Josh Newell, of the University of Southern California Center for Sustainable Cities, that the logs taken by smaller operations are often sold to larger „legal‟ companies. These outfits depend on the corruption of officials, via payoffs and falsified documents, to operate. In the Los Angeles Times, June 29, 2003, it stated that “the Tambov gang, a prominent Russian crime syndicate, is believed to play a significant role in timber exports, which totalled $4.5 billion in 2002. As of 2007, Yury Chaika, the Prosecutor General of Russia, publicized that the Tambov gang had forcefully taken over 13 large enterprises in Saint Petersbury, Russia. Criminal organizations such as these have found the timber industry to be very lucrative and it is in their interest aid loggers. While the operations in question may or may not be illegal, their practices are certainly crude and aggressive. Thirdly, harvesters have found they can increase their wood volume by simply expanding out of their original allotment. In areas of low supervision, this is easily done, and conducted over multiple plots, a large amount of wood can be taken. In some cases, arrangements can be made with local officials and inspectors to facilitate the process. Proper documentation is acquired and secretly stored, and after three years the documents are legally destroyed, thus making it impossible to prove if it was a negligent or criminal act. The second category of illegal is characterized by timber harvesting with official permits. These cases can be either deliberate or unintentional; however the basic theme in many cases is that the permits do not match the type of harvesting occurring. One example is when felling permits are issued for an operation that lies within a protected area or outside of the harvestable forest inventory. The cases range from simple mistakes such as lack of forest inventory information, to an outright disregard of forest regulations. Another common practice is to issue permits that are in violation of current regulations. One example is when a permit is issued based on a specific volume of harvestable timber at a site, and the assessment is inaccurate or fabricated. While in other cases, permits may be issued to „companies‟ that are not legally licensed to harvest timber, or to companies that do not have the capacity to harvest within the regulations. Unhealthy trees may be cut for sanitation purposes to ensure forest healthy, and are not subject to stumpage fees or taxes. Regrettably, many are abusing this regulation by a variety of means. One method is to create official paperwork stating the need for a sanitary cut and then trees can be cut down „legally.‟ Whereas certain resourceful individuals even deliberately start small forest fires, and then apply for a sanitation cut permit to harvest the area. In regions deemed to be harvested by selection cuts, companies merely cut down additional trees to augment their profits. As there is no strong enforcement in outlying areas, they can quite easily escape detection. With this track record in mind, it is safe to deduce that the scope of illegal logging is quite large and limited only by the ingenuity of the individuals who practice it. The Forces behind Russia’s Illegal Timber Harvesting There are many different forms of illegal logging practices. This paper is concerned with large scale operations, involving corruption. The term illegal logging is a broad term encompassing a variety of processes, whether by timber gangs high grading trees, to large companies cutting outside of their tenures, to using destructive methods that violate legislation. These actions are related as they typically depend on the corruption of officials to exist. The European Union – Forest Law, Enforcement, Governance and Trade (EU FLEGT) has acknowledged the fact that illegal logging is often linked hand in hand with corruption, poor governance, and poverty. In a study conducted by the American Forest & Paper Association, they found a very strong correlation between corruption and suspicious timber operations. The trafficking of illegal logs has shown to be a profitable venture and with no real danger of prosecution, it becomes the norm. Russia primarily lacks strong legislation to tackle the issues behind illegal logging. The next section will endeavour to provide an overview of the situation. The crucial factors in Russia‟s socio-economic condition that allow illegal logging to continue can be linked back to poverty, and people‟s desire to improve their standard of living. As the majority of the Russian population lives in forested areas, many turn to forest-dependent trades for income. Companies and organizations have found the timber industry to be very profitable, and with a seemingly inexhaustible supply of logs, the future looks bright. Groups operating illegally have found integrating illegitimate timber with legitimate timber to be quite simple. It is a simple matter of making the right pay offs along the supply chain to ensure the timber reaches its destination. Anatoly Lebedev, of the Bureau for Regional Outreach Campaigns a local Russian NGO, calculated that roughly 30% of the cost per cubic metre of wood sold at the Chinese border goes towards paying off bribes. The bribes, according to Lebedev are not only for local officials to look the other way, but to a multitude of inspectors, customs agents, the military, and local gangs. These bribes cover everything from „protection money‟ to purchasing fraudulent documentation. Inadequate legislation allows illegal logging operations to flourish, and can often hamper efforts against it. Progressive and precise legislation is essential for legal and sustainable forest management. There are several cases whereupon contradictory legislation that has allowed offenders to slip by. According to the Criminal Code of the Russian Federation, Article 260, “Illegal felling of, and also damage to, trees, shrubs, and lianas to the point of cessation of their growth in forests of the first group or in specially protected areas of forests of all groups, and also illegal felling of trees, shrubs, and lianas located outside forests or banned for felling, if these acts have been committed on a large scale shall be punishable…” An offence by single individual is punishable by a “fine in the amount of 50 to 100 minimum wages… or to engage in specified activities for a term of up to three years or by corrective labour for a term of up to three months” (Criminal Code of the Russian Federation, Article 260). If the crime is committed by; a group, repeatedly, or by an official, or on a large scale, the penalty is increased to reflect the situation. While if the illegal felling is conducted by an organized group on a large scale, the criminal code states that the persons involved may be jailed for up to three years. Therefore, numerous individuals and companies should be prosecuted and sentenced according to the criminal code. However, due to conflicting regulations, offenders have been able to avoid criminal convictions. This is due to the Russian Wood Allocation Rules, approved on June 6th, 1998, that states a fine may be paid for illegal felling violations. The individual can chose to pay the fine and thus avoid prosecution under the criminal code. Inefficient legislation and regulation is a serious issue when combating illegal logging, as there are a multitude of loopholes and a large amount ambiguity concerning the implementation of operations. Even for companies that wish to operate legally, they may commit an offence unknowingly, as what constitutes legal is imprecise. Nevertheless, Russia currently lacks the ability to execute and enforce their legislation. After the collapse of the Federal Forest Service in 2001, foresters were laid off and no sizeable force has been established to enforce forest laws since then. While lack of effective legislation and enforcement plays a pivotal role in allowing illegal logging to continue. The Russian Forest ministry is deficient overall in the manner they control and monitor their forests. Their lack of capacity to assess forests and create legitimate forest inventories creates a hindrance. This combined with ineffective forest resources allocation and lack of information allows illegal logging to continue. An Overview of Russian Programs Combating Illegal Logging Russia is in the process of combating illegal logging within the federation. In 2002, “Russia began implementing an interagency plan for combating the illegal logging and timber trade” (Roshchupkin. 2006). The first official meeting of the Interagency Commission for Combating Illegal Logging and Timber Trade was held in Moscow on March 2008, and dealt with a national anti-illegal logging action plan. In November 2005, Russia hosted the Ministerial Conference on Forest Law Enforcement and Governance in Europe and North Asia (ENA-FLEG). The purpose of FLEG is to combat illegal logging via consultations, conferences, and national initiatives over a long term process. FLEG utilizes tools such as bilateral agreements concerning origins and sources of wood. In April 2006, President Vladmir Putin called for the development of a new Forest Code to improve the “(a) legal and regulatory framework; (b) public management systems; (c) workflow organization of forest use; (d) development of social and economic mechanisms; (e) international cooperation; (f) administrative support” (Roshchupkin. 2006). The code states that the forest management system will be “based on a decentralization of forest management, which means delegating to the regional administrations the full set of rights and responsibilities in forest use, regeneration, and protection” (Roshchupkin. 2006). The new code came into effect on January 1st, 2007, and currently Russian legislation and regulation is transitioning to meet the new requirements. In April 2008, Valery Roshchupkin, head of the Russian Ministry of Natural Resource‟s Federal Agency for Forestry, announced plans for a unified information system that will track timber from its origin to export phase to be up and running by 2011. In addition, the ministry is initiating a program that requires timber to be accounted for whenever it enters and leaves a wood processing plant. These are all steps in the right direction; however, the success of all the programs against illegal logging when bribery and corruption is rampant will be challenging. Concerns with the new Russian Forest Code As noted earlier, the ENA-FLEG process is a positive move for Russia towards combating illegal logging. However, most documents found relating to the ENA-FLEG date back to 2006 at earliest. In the past few years there has been no documentation on the effectiveness or how far along the FLEG process the Russian government has come. This lack of information is worrisome at best. In addition, a 2004 ENA-FLEG briefing pointed out several flaws in the then upcoming Russian Forest Code. The briefing pointed out that the new code could “promote the legalization‟ of illicit timber and the spread of illegal logging practices within the country” (Riesco, Iola Leal. 2004). The preliminary code made several significant changes. First, it simplified the current reporting process, increasing the ease of falsifying documents. Second, to decrease government expenses, the management of forests would be passed to timber companies. While, state inspections of forest use would be cancelled. This would likely be a fatal arrangement in the campaign against illegal logging. According to Constance McDermott, program director of the Yale Program on Forest Policy and Governance, the new forest code‟s “only effect has been to confuse the forestry authorities… it‟s not clear what the new law even is, or who‟s in charge or where revenue goes.” The new code seeks to decentralize forest management, essentially passing responsibility to regional offices. However, regional forest management structures are not finalised, and associated by-laws are still being determined. These flaws with the code could lead to a very chaotic system that will be ineffective in combating illegal logging Russian action against illegal logging There are several options for combating illegal logging; prevention, certification, industry codes and guidelines, and asking for general support for improved monitoring and governance within the sector. Russia has tried to utilize some of these strategies, yet they still have difficulty as the existing socio-economic environment presents many challenges. As of 2007, the Russian Federal Agency for Forestry published an attractive presentation outlining their plan of attack against illegal logging. The four main methods listed are: a) Improve and develop legal regulations to prevent illegal logging and trade b) Organize effective communication measures between different departments and levels of state that aid in forest protection c) Improve regulations concerning the export of timber goods; limitations on volume of timber, and list of restricted species d) Enhance international cooperation in the field of prevention of illegal logging and trade; ENA-FLEG These four approaches are logically sound, and it becomes a matter of implementing them correctly. The positive outcomes from improving regulations are quite easily grasped. While by improving and expanding information sharing networks and update between different ministries, industries and regions, cases of illegal logging by simple ignorance or lack of information can be prevented. Stronger controls on the export of timber will increase the difficulty of transportation logistics for illegal methods. Finally, the majority of Russia‟s timber is being exported and increasing global cooperation to seek out the optimum method to combat illegal logging is in Russia‟s interest. Further development of remote sensing and mapping systems is a necessity, so forests can be mapped out yearly using satellite imagery. This allows forest allocation plots to be examined and compared to regional forest management reports. Discrepancies found could lead to the detection of illegal logging operations. However, Russia is approximately 17 million km2, and surveying the nation is time consuming and expensive. To improve the regulation of exported timber, implementing a nationwide timber legality verification system program nationwide would be advantageous. Currently in the Khabarovsk region of Far East Russia, the Societe Generale de Surveillance Company (SGS Russia) company is implementing their Validation of Legal Timber Programme (VLTP). The programs aim is to efficiently monitor timber trade and production activities, while ensuring compliance to the predetermined goals. In 2008, Greenpeace published an article titled, Wood Products Legality Verification Systems: An Assessment of the major legality verification systems. SGS Russia scored a „D-,‟ and was classified inadequate. Although the system may be imperfect, the situation is moving improving, and a nationwide implementation should be the next step. In March 2009, the Russian National Forest Certification System (RNCFC) has been endorsed by the PEFC Council (Programme for the Endorsement of Forest Certification schemes). The purpose behind this is to “provide an assurance mechanism to purchasers of wood and paper products that they are promoting the sustainable management of forests” (PEFC. 2009). “The potential and significance of such an increase of forest certification in Russia, with all the associated environmental, social and economic benefits” (PEFC. 2009) is enormous for improving Russian forest management. While this program does not tackle illegal logging directly, the by-products of improving forest management will address issues with negligent management that allow for illegal logging to persist. Russia has been one of the worlds largest raw log exporters, and in April 2008 Russia implemented a 25% export tax increase on roundwood. The second phase was set for January 2009, whereupon the tax rate would have been increased to 80%. However, the implementation date has been delayed for supposedly nine months to a year, citing the global downturn as a rationale. The purpose of the tax is to reduce Russian exports of rough wood and to encourage wood processing within the nation, thus advancing the nation‟s economy. The tax rate will cause a huge increase in Russian log prices, reducing demand drastically. Large scale illegal logging operations exist due to the financial incentives available, and because of the huge demand for Russian timber. Consequently, the increased tax rate should cause a decrease in the number of illegal logging operations. However, it should be noted that the Russian export tax could instigate an increase in illegal logging in other countries, as importers seek new sources of timber. Russia‟s crisis arises from corruption, and aspects such as illegal logging and criminal activities are all related. Russia as a nation will be far better off if this issue can be solved. However, the issue stems from multiple factors, from lack of legislation, to poverty, to lack of enforcement. For an enforcement program to be successful, it has to guard against bribery. The only option is to pay investigators more, as appealing to their better natures will not feed their families. However, the finances required to pay dedicated employees are not available from the Government. Enhancing enforcement and prosecution of offenders A hard line of action is required to halt illegal activities. I believe that an enforcement program, where investigators are paid on a commission basis per violation, would be very appealing. The concept would be to pay commission fees from fines collected, ensuring all offences are prosecuted. This method would effectively impede activities such as bribery. Companies attempting to payoff officials will find the bribe amounts paid would have to significantly higher to surpass an officer‟s commission pay. This in turn would increase the illegal company‟s operating cost, and possibly causing ventures to become unprofitable. In addition, this program would be a large source of revenue for the Government, and a strong show of commitment by Russia. The concern would be abuse by inspectors out for personal gain, as some may find it profitable to frame companies. This method would be only recommendable for a short period, as the nation corrects itself, and the need for this type of program no longer exists. Conclusion The paper has attempted to layout all the different aspects of illegal logging in Russia, from its definition, to how it‟s performed, to the types of action being taken against it. In conclusion, I found the term „illegal logging‟ to be quite convoluted and confusing. There is no set definition, and it is related to a variety of activities from illegal practices to poor logging practices, and to a disregard for standing rules and regulations. Many sources use the term excessively, and it basically seems like the new catch phrase everyone wants to use. The degree of the amount of illegal logging transpiring is impossible to know, even when using the definition prepared by the Russian Federation. The reason that it is currently impossible to keep track, and only estimates based on assumptions and facts garnered are available. I believe the primary forces behind illegal logging are a lack of adequate legislation, ineffective enforcement, and corruption. These issues have to be sincerely addressed by the Russian government to deal with the issue of illegal harvesting, as such there is a great deal of work to be done. Overall, this has been an eye-opening paper. I never realized the extent corruption played in allowing criminal activities to transpire throughout the world. In the future, I would like to play a part in combating these illegal activities. As noted in the beginning, I held a simplistic view of illegal logging and its causes. Now after completing this paper and numerous hours of research, I have a firmer grasp on the concept of illegal logging, and that the true issue is far more complex than I would have ever believed. References Russian Federation. The Criminal Code of the Russian Federation. 2009. Illegal Logging. 2009. Pye-Smith, Charlie. Logging in the Wild East: China and the Forest Crisis in the Russian Far East. Forest Trends. 2006. Roshchupkin, Valery P.. Tackling Governance in the Forest Sector: Current Challenges in Russia and the Way Forward. World Bank. 2006. Kemper, Steve. Forest Destruction‟s Prime Subject. Yale School of Forestry. Jan 1 2008. Lesniewska, Feja. Comments on the new Russian Forest Code. Taiga Rescue Network. 2007. Greenpeace. Wood products legality verification systems. Greenpeace. 2008. Keenan, Rod. “Illegal Logging.” University of Melbourne. 2008. Greenpeace Russia. Illegal forest felling activities in Russia. Greenpeace Russia. 2000. 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