Defending Siberia's Natural Resources - What Role for NGOs And the West?

by Lisa Tracy & cartoon by Golliver

How will Siberia "develop"-will its resources be robbed or its nature protected? Citizens and governments of the West already play a far more pivotal role in determining this remote region's fate than we often think. Siberia's vast wilderness, the world's most magnificent forest and wetlands ecosystem, is an object of intense Russian pride. But Siberia is also coveted by Western investors who value it not for its wild nature, but as the world's most promising natural-resources frontier. Following decades of isolation, in the 1990s Siberia suddenly finds itself on the world market, rapidly opening up to exploitation by international logging, mining, and oil and gas ventures. Siberians now stand at a major fork in the road. At stake is not only their cherished nature, but control over their economy and their way of life. In hard times, it is tempting to take the first investment offers that come along. Unfortunately, outside investors are often more interested in extracting and exporting resources for quick profit than in sustaining the lifestyles of Siberian communities. A village wants to obtain a sawmill to provide local jobs; instead it faces visitors who propose to log the region in a few years and ship every log, and virtually every job, overseas.

Also at stake is the relatively positive attitude of Siberian citizens towards the West. Building positive US-Russian relations required no small amount of time and effort in post-Cold War diplomacy. In my travels through Siberia, however, I have noted a gradual but clear reversal of our gains, starting around 1994. Increasingly, Russian strangers on trains and in villages-unaware that I work in the environmental movement-eye me suspiciously and accost me with something like the following: "So you must be one of those American developers who is trying to turn us into a raw resource colony for the West! Well, we won't let you!"

Their point of view is not entirely unfounded. Since the early 1990s, taxpayer-funded banks and agencies of US, European and other governments have been supporting joint ventures and studies to open up Siberia's natural resources. US and European government backing to Siberian resource investments reflects global trends in trade that are driving the economic pressure to open Siberia's wilderness. For instance, bids to log Siberia have been motivated by a dramatic drop in softwood availability elsewhere in the world. Under similar pressure, Russian gold mining, which is concentrated in Siberia and the Far East, jumped by over 25 percent in the first four months of 1997. The hunger for oil, particularly in the West, is fueling a rush of exploration and pipeline construction plans that reach some of Siberia's last untouched corners.

Armed with the belief that the West's contribution to Siberian "development" should be guided by citizens and nongovernmental organizations-not just by global trade trends and companies-a US-Russian movement has mobilized to examine the ecological sustainability of Western government investment programs affecting the Siberian wilderness.

Siberian NGOs Spur Changes in US Policy

In 1995, the Pacific Environment and Resources Center (PERC) issued a report on the environmental impacts of Russian natural resource project financing by US bilateral agencies such as the Export-Import Bank, the Overseas Private Investment Corporation (OPIC), Trade and Development Agency (TDA), Department of Commerce, Defense Enterprise Fund and others. Russian and US groups began negotiating with the agencies to halt or place conditions on their financing of certain projects, to operate transparently by openly disclosing information on their potential investments to Russian and American citizens and to require world-standard environmental impact assessments. Because they are publicly funded, these bilateral agencies are accountable to both the Russian "borrowing public" and to the US "lending public" for their environmental policies. In turn, these agencies can force US companies investing in Siberia-many of whom cannot afford to launch their joint venture without US government subsidies in the form of political risk insurance, credit or credit guarantees-to observe the strictest international environmental standards, or else risk being denied financing.

As an example of our joint efforts, in 1996 a team of Russian and US environmental NGOs convinced the US Trade and Development Administration to refuse funding to a US-Russian-Norwegian joint venture proposing to irradiate Russian timber for export to the US. The companies, who sought to kill pests in the logs using gamma rays, planned to build up to 17 irradiation plants in Russia for this purpose. They would have exported from Russia 5.5 billion board feet of timber per year-by comparison, this nearly equals the timber harvest on all US national forest lands in 1993! In December 1995, 47 Russian and US NGOs wrote to US Vice President Al Gore, urging his office to assume greater control over US aid to US-Russian companies. The letter captured the attention and active involvement not only of Gore's office, but also of the State Department and the Gore-Chernomyrdin Commission, launching a process of US agency reform.

A second joint Russian-US NGO letter to Al Gore, signed by 93 groups in January 1997, urged the US government to speed up bilateral agency reforms. The letter also focused on critically needed environmental and procedural reforms within the Overseas Private Investment Corporation (OPIC), an agency that has begun financing a wide spectrum of forestry, mining, oil and fisheries ventures in Russia. Once again, this Russian-US NGO campaign spurred a movement compelling OPIC to initiate agency-wide environmental reforms for its $29 billion in US-taxpayer backed investments all over the world-not just in Russia. This time the NGO letter drew a written response from Gore himself and efforts to reform OPIC were heralded by President Clinton at his Earth Summit speech in June, 1997.

Taking on the Multilateral Development Banks

Even more active in Siberia are the multilateral development banks-institutions drawing their support from several governments rather than from one. Two banks that already significantly shape mining, forestry, oil, gas and environment in Siberia are the European Bank for Reconstruction and Development (EBRD) and the World Bank and its subsidiaries (including the International Finance Corporation and the Global Environmental Facility). The multilateral development banks (MDBs) are relatively well-financed, and enter Russia at a time when investment available from local sources is steadily shrinking. For that reason, the investment strategies adopted by the MDBs-for instance, their degree of commitment to re-building Russia's own processing capabilities or their opinion on whether to focus on increasing the efficiency of Western Siberia's operating oilfields or to pursue new oil development in a roadless wilderness-sway the course of Siberian economic development.

To ensure that these critical decisions are made not only in the boardrooms of Moscow, London, and Washington, DC, but in Siberia itself, Siberian citizens and environmental NGOs are organizing to influence the multilateral investment projects from an early stage.

An example is Central Siberia's Krasnoyarsk Region, which has a sea of forests the size of Ukraine and a dedicated tradition of citizen environmental activism. In 1996, Russian NGOs took advantage of the World Bank's open comment period to "environmentalize" its Russian Forest Policy Sector Review, which will guide over $400 million in forest industry loans initially targeting Krasnoyarsk Region, Khabarovsk Region in the RFE, and Leningrad Region. NGOs were partially successful in inserting into this Forest Policy Sector Review language on environmental criteria, public disclosure, NGO and indigenous participation and a preference for investing in Russia's non-timber industries. Krasnoyarsk citizens are advocating that the World Bank create a non-traditional micro-loan structure to support small enterprises in non-timber forest products, such as pine nuts, berries and medicinal plants.

The critical test will be in 1998: As the World Bank hands out the first loans to the Krasnoyarsk timber industry, Russian NGOs will be watching to ensure that the loans indeed meet these environmental criteria in practice. Several members of the Krasnoyarsk NGO, Friends of the Siberian Forest, were hired directly by the World Bank to develop detailed "environmental criteria" that will guide loan decisions. In theory, Krasnoyarsk forestry enterprises that do not meet these environmental forestry practice standards will not be eligible for loans.

Citizens from all over Siberia are venturing to influence the whole spectrum of World Bank investment projects. A Bank project to improve the road network from Siberia to the Pacific coast has sparked action by NGOs such as Chita's Baikal Fund. They are concerned about the Chita-Amur portion of the road, which will cut through new wilderness and will likely open it to exploitation by forestry and mining interests. In Khanty-Mansiisk Autonomous Region, the Association to Save the Yurga River and organizations of indigenous peoples worked together with German groups to stop a World Bank loan to develop the Priobskoye Oil Field, which would have destroyed sacred sites and introduced oil spills and forest fires to some of the Khanty people's last intact land. (Currently that loan has been halted owing to a dispute between the American and Russian investors.)

One solution increasingly pursued by Siberian environmentalists is the creation of a formal or informal "council" of local NGOs to advise the Bank on ecological issues pertaining to a given loan. For its coal sector loan affecting Siberia's Kemerovo Region and other coal-producing regions of Russia, the World Bank is in the process of creating a citizens' advisory council that aims to minimize the loan's environmental impacts. At Lake Baikal, citizens' environmental organizations formed an NGO Observation Committee to monitor the Baikal aspect of the World Bank's Global Environmental Facility (GEF) loan to Russia. Although the GEF money is an "environmental" loan with positive rather than negative ramifications for Siberian nature, NGO involvement is critical to guarantee that the loan will be spent effectively.

Addressing Private Companies Directly

When financing for a forestry, mining or oil venture comes from a private source-or even when it does come from a public development bank-Siberian NGOs increasingly are trying to influence the foreign joint venture partner directly.

In 1994, when the US company P&M Cedar Products proposed to log part of Altai's famous Pyzha Taiga forest to make pencils, the environmental group Katun TV-Radio Company and PERC met with the company and with Altai officials and organized a media campaign drawing attention to the vulnerability of this unique forest. The company later abandoned its plans owing to a range of local setbacks, including environmental concerns.

In 1996, Chita's Baikal Fund organized an independent public hearing to address environmental concerns related to development of the Udokan copper mine, which was to be the world's fourth largest copper mine. PERC researched the environmental record of the foreign investor, and local scientists informed the public about the mine's potentially dangerous impacts on the fragile tundra ecosystems of northern Chita Region. In general, organization of independent hearings has proven to be a very effective tool for many Siberian environmental groups; since the Udokan hearing, the original investor has abandoned plans to develop the mine, although the Chita regional government is now seeking new investors. The groups hope to use this opportunity to find a more ecologically responsible investor.

map by Todd Karl

What Else Can the West Do?

Aside from helping Siberian NGOs gain direct access to the Western bilateral agencies, multilateral development banks and corporate investors, the best thing the West can do at this point is to substantially increase the very minor amount of financial support that we have managed to get into the hands of the growing Siberian environmental movement over the past five years. Western financial support is especially critical for Russian NGOs defending the conservation hotspots that have virtually eluded Western funding, particularly the high-biodiversity Southern Siberian mountains and the great Western Siberian wetlands.

Controlling development requires Siberian NGOs to press on with a wide variety of environmental strategies simultaneously. In these days of slim budgets, without financial support from the West many of these groups will shrink in effectiveness and lose some of the moral strength and momentum they gained in the 1990s. Even now, many Siberian groups cannot even afford to ride a bus to a proposed mining or logging site, much less organize a full investigation and strategy for addressing investment projects. Yet Siberian NGOs need to create a tradition of citizen control over natural resource development now, while large-scale outside investment is just starting and while development banks are just beginning their work.

The fate of Siberia's nature is not merely the concern of a narrow group of environmentalists. I do not think Russia and the West put themselves through the terrific effort of ending the Cold War only to turn Siberia into a resource colony for the West and thus incite conflict all over again. And if we allow a wilderness as unimaginably huge and remote as Siberia to be conquered by outside developers, what does that say about our collective chances of protecting wilderness elsewhere on the globe?

Lisa Tracy directs Pacific Environment and Resources Center's Siberia office in Barnaul.

PERC, Fort Cronkhite, Building 1055, Sausalito, CA 94965; phone: (415) 332-8200; fax: (415) 332-8167; e-mail: perc@igc.org