The new version of the Russian Forest Code was discussed recently, in an effort to settle the issue "once and for all", as Economic Development and Trade Minister German Gref put it. He seems to be right because time is running out. The Government of Russia is expected to consider this document on February 19, while the State Duma will discuss it in March. Prime Minister Mikhail Kasyanov has ordered Gref, who is the staunchest advocate of active market reforms, to supervise the drafting of this bill, which will decide the future of Russian forests. Previously, the Natural Resources Ministry had been responsible for the Forest Code.
Two points in favour of the Code are that it includes a clear concept and abides by the reform's logic. "The code's ideology means that the federal centre shall own all forests, but Russian Federation constituent members will manage them," Gref stressed, while taking part in the discussion. He also referred to the new Code as a key document, which will accelerate GDP growth inside the forestry sector.
The state has now decided to share its hitherto absolute forest-property rights with the regions, which is an entirely new aspect of the draft document. From now on, Russian forests can be privatised in line with the Code's regulations. This will make it possible to solve the main problem facing Russian's timber industry. The state retains legislative functions, control and management. Article 51 states expressly that any private individual or legal entity shall have the right to buy forest plots they rent, after using them in line with the law for 15 years. The federal centre no longer distinguishes between Russian and foreign forest users; the latter shall be covered by certain restrictions in border areas alone. All private forest users are duty-bound to conduct full-scale sectoral operations, while they shall face losing all their property in the event of blatant violations.
Lease contracts shall have a maximum duration of 99 years and shall be awarded in the course of open federal auctions, which will be held according to traditional rules: he who pays more, wins.
The draft code seeks to liberalise the way forestry is used, as well as the choice of sectoral-activity methods. All businessmen will be expected to compile individual economic plans and state their intentions in a declaration. The document's authors believe this will ensure that the businessmen will act independently. However, the document's critics are not very happy about precisely this provision. They believe that sectoral businessmen will become entangled in a web of tough and extremely detailed technical instructions that will hamper all initiative.
Those opposing the new Forest Code fear that its amendments will drastically change many current normative acts. Consequently, the transitional period's legislative chaos will lead to numerous illegal and semi-legal tree-felling operations.
Russian forests are being felled on a drastic scale even today and this process has assumed extreme forms in some areas. Indeed, 50% of all Far Eastern timber is being felled in violation of the law, with the north-western share varying between 25% and 50% depending on the region. This can be explained by the following reasons.
The timber industry production scaled down considerably after Russia made the change to a market economy. All sectoral enterprises were involved in the denationalisation and privatisation process. As of today, 30,000 enterprises, including 3,000 large and medium entities, operate within the timber industry's framework. What we have now is that state controls the forestry sector, while the Russian timber industry has passed into private hands.
The Forest Code is supposed to deal with this contradiction.
