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Monday, October 24, 2016

Ukraine will have to adopt a “wood ultimatum” of the European Union

The requirement of the European Union to lift the moratorium on the export from Ukraine of round timber in exchange for another portion of financial aid can erase one of the few common initiatives of the current government in the economic sphere. But Kiev seems to be no. Moreover, many in Ukraine are interested in how to meet the demands of the EU.

A ten – year moratorium on the export of timber and lumber valuable hardwoods (primarily oak and beech) in raw form was introduced by the adoption in April of last year amendments to the law of Ukraine “On peculiarities of state regulation of activity of subjects of entrepreneurial activity related to the sale and export of timber”. The initiators of the amendments by the group of deputies from several factions of the Verkhovna Rada, representing the regions that are richest in forest – Lviv, Ivano-Frankivsk and Dnipropetrovsk region.

“The pressure of Europe in the issue of uncontrolled timber shows all colonial and exploitative nature of the Maidan regime”

MPs against logs

In the explanatory note to the bill it was said that the forests of Ukraine (within the boundaries of the beginning of 2014 accounted for 16% of the whole territory of the country – of 10.78 million hectares) are used very inefficiently. “Forestry of Ukraine uncontrolled deforestation and timber exports have become a serious problem, – said the authors of the bill. – Among the main causes that force people to cut down forests and sell the timber, – the socio-economic problems (unemployment, low wages). In the structure of domestic exports of wood and wood products roundwood dominates, which is usually sold at low prices. Despite the limited amount of public resources of forest raw materials, there is a tendency to increase exports. The technological level of exported raw materials is extremely low.”

According to the deputies, each cubic meter of exported forest Ukraine loses 120 UAH (about 4.7 current dollars). In the explanatory note given as to the opinion of the President of the Association of furniture and woodworking enterprises of Ukraine Sergey Sagala: wood, sold in the round, has more than 20 times less value added than wood in the form of furniture. However, large-scale export of round timber led to a shortage of raw materials for the Ukrainian woodworking and furniture factories (there are more than 6.5 thousand), many of which were forced to suspend work.

Export logs also prevents the creation of new jobs. According to estimates of the Association of wood processing enterprises of the Carpathian region, to create one job for the average enterprise in the industry with an average depth of processing is necessary 200 cubic meters of wood per year. In 2013 from this region were exported abroad, 200 thousand cubic meters of logs. This means that without work there were a thousand people, and the losses of the budget in unpaid taxes is estimated at 8 million hryvnia in the year. In addition, the result of the uncontrolled export of wood steel shortage and high cost of wooden mounts for the mines of Ukraine, which is a very high death rate from debris.

The main objectives of the moratorium was named the modernization of the woodworking industry and the recovery of the Ukrainian economy and the preservation of valuable and rare tree species. The deputies referred to the experience of neighbors such as Belarus, Russia, Romania and even Moldova.

You have to work with Tymoshenko

The positive effect of the ban Ukrainian industry felt quickly. According to the state statistics service, in the first eight months of this year, woodworking and production of wood products showed an increase of 3.5% compared to the same period last year, and within the industry segment of the sawmilling and planing of production increased 13.9%. Furniture production during this time increased by 1.7%. More than 60% of wood products and more than half of the furniture sold outside of the country.

Even more optimistic data results in the Verkhovna Rada Victor Galasyuk – Chairman of the Committee on industrial policy and entrepreneurship, which was held on the bill on the moratorium on the export of logs. In response to the request of Galasyuk, the Ministry of revenues and duties of Ukraine reported that for the first half of the woodworking industry increased by 15% and furniture by 12%, and this despite the fact that the volume of industrial production during this time decreased in dollar terms by 6%. The export of processed timber from Ukraine in the first half increased by 12%, earning the country $ 22 million.

That the moratorium on the export of logs provided the impetus for lesopererabotki, evidenced by this fact: in the first half of Ukrainian enterprises imported woodworking machines for 55 million dollars – 3.5 times more than in the first six months of last year.

That is why the recent statement by the head of the EU delegation in Ukraine, Hugues Mingarelli that the lifting of the moratorium on the export of logs is one of the key conditions for granting the country the next tranche of macro-financial assistance in the amount of 600 million Euro, caused a sharp reaction of some Ukrainian politicians.

“I think it would be more accurate to call the offer an ultimatum, says chief editor of the portal LIVA.com.ua Andrey Manchuk. – As far as I know, the Ukrainian authorities understand that they will have to accept it, especially as the export of timber lobbying by the interested local elite Western regions. Now there is a debate about how best to present the surrender of the Ukrainians.” According to Manchuk, now one of the main objectives of European diplomats – to work with the top Ukrainian politicians: Yulia Tymoshenko, Oleg Lyashko, and Oleg Tyagnibok that they are “sympathetic to the problem and did not make a fuss about it, using it for propaganda attacks against the government”.

“Along with the tariff terror and demanding the sale of land, the pressure of Europe on the issue of uncontrolled timber shows all colonial and exploitative nature of the Maidan regime in Ukraine, – said the leader of the party “Union of anarchists of Ukraine” Vyacheslav Azarov. – European officials are well aware of the barbaric cutting of the Carpathian forests, and they do not care about our environment. But their persistence suggests that, in Brussels see the current government in Kiev as completely dependent of favorites, which is not sorry for his people and who love money so much that you completely ruin your own country.”

Officials oppose lifting the moratorium have already expressed the head of the Transcarpathian regional state administration Gennady Moskal. “Our oblast is the only oblast that has not exports on the export wood – no fuel, no business and does not pass over the border of the forest from other regions of Ukraine. For this, we have a bunch of checks, claims and lawsuits, he said on his personal website. – Export of wood from Ukraine we actually closed the state border in the Transcarpathian region of the castle and insist that a moratorium on the export of round timber should be preserved. Why do EU countries do not want to cut down their forests? Slovakia and Romania cherish the Tatra mountains and the Carpathians, Austria and Italy Alps. They are aimed at the Ukrainian forest, buy for a penny, produced from it products, and then sell it (including us) at exorbitant prices”.

Fifth column” of the forest industry

However, supporters of lifting the moratorium on the export of logs is a lot in most of the forest industry of Ukraine. For example, opponents of the moratorium are paying attention to the fact that the adopted last year amendments to the law on timber exports set a minimum threshold value of the wood moisture of 22%. Meanwhile, the natural moisture of the wood is 25-40%, and in order to fit in with the established standard, it is required to subject it to heat sterilisation, which involves additional costs SFE for the installation of drying equipment and gas.

Therefore, some industry representatives believe that the amendments were aimed at reducing competition, also among the sponsors is the Deputy of the Lviv region from the faction “Samopomich” Ostap Yednak, who led in the recent past close to woodworking companies. For example, in 2014, he headed the Committee to ensure transparency of activities of public Council under the Agency of forest resources of Ukraine and has a reputation for “looking beyond the forest”.

Currently Yednak seeking reform of the forest sector of Ukraine, involving the elimination of the State forest Agency. The Agency is, according to the MP, the successor to the ineffective model of the Soviet Union, and in present conditions “of organized crime, which should be eliminated as a phenomenon and as an institution” (quoted by recording on the Facebook page). In order for the forestry sector in Ukraine was “responsible, transparent, frugal to the environment and economically viable,” says Yednak, the country needs to create several forest holdings, which would unite the state forestries and functioned according to the world standards of management of state-owned companies.

The proposal the MP last week wrote to the Prime Minister Volodymyr Groisman, and it is possible that it will find the latter understanding. In may Groisman already had to fire the previous head Goslesagentstva Alexander Kovalchuk in connection with the unsatisfactory state of Affairs in the industry and haphazard deforestation.

Meanwhile, the efforts of the Maidan politicians, many of whom actively used environmental slogans in the period of the “revolution of dignity”, have not yet led to any significant reduction in corruption in the forestry sector. Official timber exports from Ukraine is estimated at about 272 million dollars, and the volume of smuggling – twice, and corruption in this area is taking new forms. For example, this year was recorded an impressive growth of exports from Ukraine of firewood from 0.9 million tonnes in the first half of 2015 to 1.1 million tons in the first half of this year. A significant portion of this amount represents the smuggling of roundwood.

In July, the Prosecutor’s office in Lviv region held more than a dozen searches of employees of the forest enterprises that were involved in the export of logs under the guise of firewood. “Really we are talking about the ecocide of the Carpathians. Under the knife fir a century allowed to make out like firewood”, – said the Prosecutor General of Ukraine Yuriy Lutsenko. Another popular mechanism is the removal of valuable timber hardwoods in the guise of a pine.

Given the huge amount of corruption interests, the initiative of Hugues Mingarelli can easily find understanding, many Ukrainian entrepreneurs and related government officials. As stated last week, the Director of the Kiev ekologo-cultural center Vladimir Boreyko, the idea of lifting the moratorium on the export of logs could be initiated by Ukrainian businessmen who have lost a significant portion of revenue.


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