Caterpillar bunching sawRussian Government to Prevent Forest Contraband to U.S.

By Eugene Gerden

The Russian government plans to design a package of measures aimed at fighting the ever-growing volumes of illegal forest exports to the U.S., which have significantly increased in recent years. This is according to recent statements by an official spokesman of Sergey Donskoey, Russia’s Minister of Natural Resources and Ecology.

Hardwood

Official statistics of the Russian Ministry of Internal Affairs show that up to 50 percent of hardwood trees exported out of Russia are cut down illegally, and 30 percent of that illegal timber is imported to the U.S.

According to a recent Russian Federal Security Service report, illegal exporting of Russian timber to the U.S. is carried out with the participation of Chinese companies. These companies harvest Russian forests with the aim of processing and re-exporting the lumber to the U.S. and Canada in the form of furniture, flooring, and other products.

The biggest demand is for the most expensive wood species—oak, ash, elm, and linden—which are actively supplied to the North American market by Chinese intermediaries.

Softwood

The latest Russian Federal Security Service data also reports that there is an ever-growing demand for Russian softwood in the North American market, which leads to increased illegal cutting.

The majority of softwood in Russia is located in the country’s taiga (boreal forest) in Siberia, close to China. This allows Russian forest mafia, covered by corrupt local officials, to conduct large-scale illegal cuts of softwood species with further resale to Chinese intermediaries, which, in turn, resell it to the U.S. and other Western markets.

Thanks to its high quality—the same quality as Canadian softwood—and lower price, Russian softwood currently remains very competitive in the U.S. market, creating millions in profits for corrupt officials.

Bad Policy

The situation is aggravated by the current state policy implemented by the Russian government, which creates conditions attractive to Chinese banks and corporations that provide loans in exchange for thousands of hectares of forest and agricultural land. Western loans continue to be inaccessible to Russian companies due to sanctions.

According to Russian Ministry of Agriculture stats, the annual wood volume from Russia to the U.S is approximately10 million cubic meters; however, the Russian Ministry of Internal Affairs reports that the number for illegal wood is closer to 15 million cubic meters per year.

The Russian Ministry of Internal Affairs, reports that the Primorye region remains the most problematic region of Russia. With the largest economy in the Russian Far East, Primorye ranks first in Russia in terms of forest area (273.7 million hectares) and second, after Eastern Siberia, in terms of timber reserves of 20.4 billion cubic meters In terms of the volume of illegal logging, it compares with the African Cameroon.

Mafia Influence

In short, due to an access to cheap Russian forest, forest mafia has an opportunity to use the policy of dumping on the U.S. and Canadian wood markets.

Vitaly Nomokonov, director of the Vladivostok research center of the fight against organized crime, illegal forest management in Russia has become a large-scale business in recent years, controlled by organized crime groups and supported by corrupt officials, a significant number of whom are affiliated with Chinese businesses.

Lumber Liquidators, the largest seller of hardwood floors in North America, has been the largest reseller of Russian wood; however, the company may significantly reduce its purchases—and even leave the market—in the near future, due to a recent investigation of the company in the U.S.

U.S. Lawsuits

According to U.S. media reports, Lumber Liquidators pleaded guilty to violations of environmental legislation of the United States, which was expressed in the imports of illegally harvested timber from the Russian Far East through Chinese intermediaries. According to the U.S. Department of Justice, the company has agreed to pay a penalty totaling more than $13 million. This is the first guilty verdict leveled for violation of the Lacey Act.

Still, Lumber Liquidators is not the only U.S. company involved in the purchase of illegally produced Russian timber through Chinese intermediaries, as illegal profits of this business have significantly increased in recent years.

According to the U.S. Forest Service, China currently remains the world’s largest supplier of hardwood to the U.S. (with a 43 percent share in 2014) and the share of Chinese suppliers will continue to grow in the overall structure of the U.S. hardwood exports during the period of 2016 to 2017. A significant portion of the Chinese supply of timber to the U.S. is of Russian origin.

Vladimir Platov, a senior expert in the field of forestry at the Russian Ministry of Natural Resources, stated that the annual profits generated by the illegal global timber trade, are estimated at more than U.S.$11 billion. According to his predictions, this figure will continue to grow during the next several years due to the expanding scope of the criminal business in the ever-growing demand for furniture and wood products in the U.S. and other Western countries.

Eugene Gerden is a forestry freelance writer working out of Russia.

TimberWest November/December 2013
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