CORRUPTION HINDERS ARMENIA'S ENVIRONMENTAL POLICY

UNCLAS SECTION 01 OF 02 YEREVAN 002446

SIPDIS

SENSITIVE

STATE FOR EB/CBA, EUR/CACEN, EUR/ACE

E.O. 12958: N/A
TAGS: ECON EAID ETRD AM
SUBJECT: CORRUPTION HINDERS ARMENIA'S ENVIRONMENTAL POLICY


1. (U) Sensitive but unclassified. Please protect
accordingly.

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SUMMARY
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2. (SBU) Armenia faces severe and continuing deforestation.
Although the law prohibits commercial cutting, corruption
and inefficacy in Hayantar, the state forestry agency,
result in the continued illegal clear-cutting of Armenia's
forests. While some cutting may be ascribed to allowable
personal uses, a sizable percentage of deforestation,
especially of valuable hardwoods, is attributable to corrupt
deals between Hayantar, commercial interests and regional
law enforcement. In addressing environmental challenges as
in other areas, the Government of Armenia has not
demonstrated the necessary political will or the ability to
enforce the law and pursue its stated public policy. End
Summary.

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ARMENIA'S SHRINKING FORESTS
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3. (SBU) Armenia's tree cover has shrunk significantly in
the last century, and deforestation rates have accelerated
since independence. According to NGOs and the GOAM, less
than nine percent of Armenia is currently forested, twenty
percent less than at the time of independence. Because
intensive cutting is not accompanied by replanting, and
because the older trees (which bear the most seeds) are also
the most attractive sources of wood, forests are being
logged beyond the point of sustainability. Clear-cutting
has accelerated soil erosion, making it difficult to
successfully cultivate anything, including new trees. At
its most extreme, erosion has caused mudslides to bury homes
and roads in villages near deforested slopes.

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POVERTY STILL TAKES ITS TOLL
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4. (SBU) The large-scale deforestation of the early 1990s is
attributable to the energy crisis that forced many Armenians
to burn any available fuel; stands of trees inside and near
cities suffered particularly. According to the World Bank,
Hayantar, and NGO sources, some cutting is still
attributable to Armenians who are either unable or unwilling
to pay for electrical or gas fuel, or live in areas not
served by these utilities.

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BUT ILLEGAL COMMERCIAL CUTTING LOOMS LARGER
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5. (SBU) Illegal commercial cutting is currently more
damaging to Armenia's forests than cutting for personal
uses. Poor enforcement and corruption in Hayantar
contribute to unsustainable commercial cutting of large
areas of forest. Hayantar's director admitted to us that
there is corruption in his ranks: recently Hayantar fired
two employees for sanctioning illegal cutting in exchange
for kickbacks. Hayantar has authority to issue licenses
only for sanitary cutting -- the removal of fallen trees and
the preemptive cutting and removal of sick trees that will
soon fall naturally. In fact, sanitary cutting licenses
operate as cartes blanches to clear entire stands of healthy
forest. A local brandy company told us that its agreement
with Hayantar limited only the total amount that it cut to
make its barrels, and that Hayantar had no effective method
of tracking of this amount.

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NASCENT PRO-FORESTRY EFFORTS
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6. (SBU) Investigative journalists and NGOs have been
raising public awareness about the cutting of Armenia's
forests. After NGO workers videotaped illegally cut stands,
Hayantar fired local officials who had permitted the
logging. President Kocharian made strong public statements
condemning commercial cutting, and changed the management of
Hayantar. New customs regulations require a permit from
Hayantar to export wood: total exports should be limited to
the total amount of allowed sanitary cutting. Nonetheless,
Armenia, a deforested country that bans commercial cutting,
continues to be a net exporter of lumber despite double-
digit growth in the domestic construction sector.

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COMMENT: CORRUPTION TRUMPS POLICY
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7. (SBU) In tackling deforestation the government has
reached the point where it must decide if it is willing to
challenge profitable enterprises owned by well-connected
oligarchs. (Note: The main exporter of lumber, Harutyun
Pambukyan, is one of Armenia's richest men and a Deputy of
Parliament. End Note.) The trickle-up corruption of
forbidding logging but sanctioning it in exchange for bribes
benefits Armenia's major players more than would the
legalization of commercial logging.
EVANS