The Multinational Monitor


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The Fate of
Russian Forests:

Conflict in Washington
and Cutting in Siberia

by David Gordon

IN THE KHOR RIVER WATERSHED -- part of Russia's last habitat for the endangered Siberian tiger -- U.S. government agencies are fighting each other over the fate of the forests. While some U.S. agencies are funding Russian environmental organization programs to implement watershed protection measures, others are funding feasibility studies to pave the way for logging by U.S. companies.

The battle over the Khor River is emblematic of the Clinton administration's contradictory policy goals for the resource-rich regions of Siberia and the Russian Far East. The Clinton administration has pledged to assist the Russian government in cleaning up the environmental destruction created during the Soviet period and improving protection for the biologically diverse forests found in Siberia and the Russian Far East. Various U.S. government agencies are now implementing initiatives intended to protect biodiversity, improve forest protection, create new protected territories and promote environmentally sustainable development.

At the same time, other elements of the Clinton administration are trying to open doors for U.S. businesses to extract natural resources in Russia, especially the Russian Far East. Toward this end, U.S. government agencies are supporting major international investment in logging and mining projects -- without clear environmental guidelines for U.S. financing, and without full public disclosure and public participation by U.S. or Russian citizens.

Siberia and the Russian Far East contain some of the world's most important forests. The taiga, which stretches from the Ural Mountains to the Pacific Ocean, contains 54 percent of the world's coniferous forests and 21 percent of the world's standing forests. Many scientists believe that the Siberian taiga is an important carbon sink, helping to protect the world from global warming. Siberian forests are a treasure trove of biological diversity, especially in the Russian Far East, the habitat of the Siberian tiger.

Whether these forests will be logged quickly for short-sighted unsustainable resource extraction, or sustainably managed to promote diverse, local economies may turn on which of the competing Clinton administration policy factions wins out.

A tale of two memoranda

The contradiction in U.S. policy is evident in two memoranda issued by different U.S. government agencies in 1994. A June 1994 memorandum outlined a series of environmental cleanup and biodiversity protection initiatives by the U.S. Environmental Protection Agency, the U.S. Fish and Wildlife Service and other government agencies. The U.S.-Russian commitment to environmental protection was reiterated the next year; a June 30, 1995 joint statement issued by U.S. Vice President Al Gore and Russian Prime Minister Viktor Chernomyrdin declared, "Both sides recognize the necessity of conservation and sustainable management of natural resources."

The other, resource-ravaging strand in U.S. policy was manifested in a June 23, 1994 memorandum signed by U.S. Secretary of Commerce Ron Brown and Russian Minister of Foreign Economic Relations Oleg Davydov. The "Wood and Pulp and Paper Memorandum of Understanding" (MOU) calls for millions of dollars in increased U.S.-Russian trade of wood, pulp and paper products. This MOU is being implemented on the Russian side by Miron Tatzun, director of the firm ROSLESPROM, the Russian State Industrial Forest Company.

Lacking strict, clear environmental guidelines, the wood and pulp and paper MOU could undermine all the forest protection initiatives currently underway in Siberia and the Russian Far East. For example, the U.S. government's Export-Import Bank is now developing a related MOU that is expected to call for the export of logging equipment from the U.S. to Russia. This logging equipment would allow the Russian timber industry to clearcut large areas in very short periods of time, greatly increasing the rate of deforestation in Russia. Russian environmentalists such as Andrei Laletin, who represents the environmental group Friends of the Siberian Forests, fear that this logging equipment will allow the Russian timber industry to clearcut forests in environmentally sensitive and previously inaccessible areas, such as steep slopes and roadless areas.

Conflict in the Khor River watershed

The striking contradiction in U.S. policy is perhaps most evident in the Khor River watershed, an area of several million hectares which covers much of the southern portion of Khabarovsk Region in the Russian Far East. It is rich in biological diversity, and represents the northernmost range of the endangered Siberian tiger. The Khor watershed is home to dozens of rare plant species, including Chinese ginseng, golden root and Japanese yew.

Part of the Khor watershed is home to the indigenous Udege people, based in the village of Gvasiugi. The watershed also contains several small Russian logging villages, now struggling to find a sustainable source of income since the break-up of the state-run timber industry.

The Khor watershed has been the focal point of several initiatives to map, study and conserve the unique forests found in the Russian Far East. The Wildlife Foundation, a Russian environmental organization based in the city of Khabarovsk, has been mapping the lower part of the watershed for two years to create a network of protected territories. This network would provide landscape-level protection for rare plants and animals in the watershed, including a large, 750,000-acre wildlife refuge to protect a north-south corridor vital to the survival of the Siberian tiger. In spring 1995, with support from World Wildlife Fund (WWF) and the U.S. Agency for International Development (U.S. AID), the Wildlife Foundation initiated a project to conduct a wildlife census on the Udege's traditional lands and develop a wildlife management plan that will support the Udege's traditional hunting activities while still protecting wildlife populations. Also with support from WWF and U.S. AID, the Wildlife Foundation is working with the Sausalito, California-based Pacific Environment and Resources Center to promote sustainable community development. This program aims to lessen the economic pressures that lead to over-cutting in the Khor watershed and to help build an economy based on alternatives such as non-timber forest products and medicinal plants.

In a move that could undermine all of these important efforts to save the Khor, in April 1995, the U.S. government Trade and Development Agency (TDA) awarded $500,000 to the Global Forestry Management Group (GFMG) to conduct a feasibility study of logging in Khabarovsk Region, particularly within the Khor watershed. GFMG is a coalition of Pacific Northwest sawmills that is hoping to log Siberian forests and possibly import the raw logs to feed their own U.S. mills. According to Jeff Fantazia, GFMG's president, the feasibility study will help GFMG determine how the company can most effectively log up to 1.5 million cubic meters of forests annually. Such a volume of wood is equivalent to approximately 6,000 hectares (15,000 acres) of clearcuts each year. Logging on this scale would quickly lead to fragmentation of the ecosystem, destroying the watershed's viability as habitat for the Siberian tiger.

GFMG hopes to use the TDA-sponsored feasibility study to leverage insurance and potentially financing from other U.S. agencies, such as the Overseas Private Investment Corporation (OPIC), to log forests in the Khor River watershed. OPIC has already provided political risk insurance support to GFMG to log virgin spruce and fir forests along the coast of Khabarovsk Region.

U.S. funding and government secrecy

Although OPIC is funded by U.S. taxpayers, its actions are shrouded in secrecy. OPIC, which insures U.S. companies operating abroad from political risks such as expropriation, hides behind the cover of business confidentiality to keep its financing of destructive logging and mining ventures in Russia from public scrutiny. Since February 1995, OPIC's Washington and Moscow offices have repeatedly refused to respond to Freedom of Information Act requests for full documentation on the environmental impact of logging and mining ventures in the Russian Far East that are currently under consideration for OPIC insurance. OPIC claims that documents related to industry-sponsored and OPIC-sponsored environmental impact assessments are proprietary and not open to the public, although U.S. taxpayer money has supported these assessments. Neither U.S. nor Russian citizens have been able to submit public comment to these assessments.

Even more secretive than OPIC are shadowy U.S. government-sponsored enterprise funds that could potentially finance a number of large-scale, destructive resource extraction projects in Siberia and the Russian Far East. Despite their public financing, these enterprise funds are established as privately managed non-profit corporations. They function as a sort of non-profit venture capital fund, working to promote, and taking ownership stakes in, start-up businesses. As a result of their private corporate status, it is extremely difficult for the U.S. and Russian public to obtain access to their documents and proposals. These enterprise funds have not released any environmental guidelines for their investments, nor have they disclosed names of the Russian and U.S. companies with which they are negotiating.

Three enterprise funds are of special concern. The Fund for Large Enterprises in Russia (FLER) is co-sponsored by U.S. AID and OPIC, although it is a private corporation. FLER is looking to invest up to $20 million per enterprise, and has already invested $13.5 million in a joint venture that will produce machinery for oil and gas drilling. Meanwhile, the Russian-American Enterprise Fund (RAEF) has already supported a wood processing plant in Arkhangelsk Region that could raise the logging pressures on these extremely fragile northern forests. The RAEF has established a Russian Far East office in Khabarovsk, where it hopes to invest $40 million in local enterprises and joint U.S.-Russian ventures. Environmentalists are concerned that the RAEF will support the corrupt Russian Far East timber industry or destructive U.S.-Russian joint logging ventures, and, based on initial experience with the enterprise funds, they fear that there will be no opportunity for public input or control.

Finally, the Defense Enterprise Fund -- a private non-profit fund capitalized with $30 million from the Department of Defense -- recently invested $1 million in an extremely controversial venture, Russian-American Ionized Energy Services (RAIES). This venture would use Russian nuclear technology to irradiate Siberian raw logs, sterilizing them for import into the United States. Sterilization is necessary to kill any pests and pathogens which might accidentally be introduced to the U.S. forests. Russian partners in the venture include MINATOM, the Russian Ministry of Atomic Energy, and ROSLESPROM, the Russian State Industrial Forest Company, both notorious for their environmental neglect. The plans for RAIES call for the construction of 11 nuclear irradiation plants, primarily along the coast of the Russian Far East. According to Michael Lehner, vice president and chief investment officer of the Defense Enterprise Fund, the $1 million investment will fund the design of irradiation facilities and legal work to obtain permits in Russia. Lehner claims that U.S. environmental regulations do not apply to the Fund's investment, despite the capitalization it received from the Department of Defense.

Although the U.S. government is supporting the plan, the U.S. Department of Agriculture has not approved irradiation as a viable and safe method for protecting U.S. forests from exotic pests and pathogens. Even Fantazia of GFMG, which wants to import Siberian raw logs into the United States, acknowledges that irradiation is unlikely to be either commercially or technically feasible. Still, if it goes forward, the RAIES scheme poses significant health and ecological threats; in addition to the nuclear danger posed by the plants, the enlarged access to U.S. markets would stimulate greatly increased rates of irresponsible logging by the Russian timber industry.

These federally-backed plans could transform Siberia and the Russian Far East into a massive whole-log export colony. Taken together, they make a mockery of the conservation goal contained in Gore and Chernomyrdin's June joint statement, and they threaten to completely undermine the efforts of Russian and U.S. environmentalists -- and some U.S. government agencies -- to help build diverse, ecologically sustainable, local economies in Russia.

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