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Press Releases From Summit Highlight Russian Enviro Issues

From the Pacific Environment and Resources Center (PERC) and Friends of the Earth-Japan (FoE-J), June 1997

This document contains eight press releases developed by the Pacific Environment and Resources Center (PERC) and Friends of the Earth-Japan (FoE-J) for the "Summit of the Eight" held in Denver Colorado in June 1997. The releases are presented here to provide readers an overview of issues facing the Russian environmental movement as it attempts to advance a state policy that protects environmental and human rights of the citizens of the Russian Federation.

If there are questions or comments, please post to this conference, or contact either PERC or FoJE at the following addresses:

Pacific Environment and Resources Center (PERC)
email <percsiberia@igc.apc.org>
or
Friends of the Earth - Japan (FoE-J)
e-mail <foejsiberia@igc.apc.org>

OVERVIEW

Russia Joins Exclusive "Summit of the Eight" To Promote Economic Development. But Will Russia's Search for Quick Cash Destroy the Environment, Natural Resources, and Local Jobs?

FORESTS

Russia's "Frontier Forests" Endangered by Multinational Corporations, Illegal Trade. Can Russia Practice Sustainable Forestry that Protects the Ecosystem While Supporting Local Communities?

MINING

Russian Klondike: Foreign Companies Move Fast to Mine Russia's Gold and Other Precious Minerals. But Will Poor Environmental Oversight Lead to a Legacy of Poisoned Rivers and Abandoned Mines?

FISHING

Russian Fisheries Under Threat from Poaching, Overfishing, and Habitat Degradation. Will Natural Resource Extraction Wipe Out Russia's Rich Salmon Stocks?

OIL AND GAS

Oil and Gas Development Destroys Environment and Indigenous Peoples in Siberia and the Russian Far East. Will Drilling Transform Western Siberia, Sakhalin Into "National Sacrifice Areas"?

ROCKETS

As Western Satellites Rise, Rocket Parts Fall into Russian Nature Preserve Colorado-based Lockheed-Martin Complicit in Toxic Contamination of Russian Nature Reserve, Villages

BILATERAL RELEASE

Bilateral and Multilateral Finance Agencies Pour Funds Into Russia. But Are They Part of the Solution or Part of the Problem?

RECOMMENDATIONS

How to Ensure that Economic Development Does Not Destroy the Environment, Natural Resources, and Local Jobs in the Russian Federation A Partial List of Recommendations to the Russian Federation and the Other Industrialized Nations at the "Summit of the Eight"

Russia Joins Exclusive "Summit of the Eight" To Promote Economic Development
But Will Russia's Search for Quick Cash Destroy the Environment, Natural Resources, and Local Jobs?

The Russian Federation is participating in its first "Summit of the Eight" in Denver, Colorado from June 20-22, 1997. But environmental groups fear that negotiations in Denver between Russia and other members of this exclusive "club" will lead to faster environmental degradation in a country that is still recovering from environmental problems caused during the Soviet period.

"Russia is moving fast to sell off its most valuable natural resources to the highest international bidders," says David Gordon of the Pacific Environment and Resources Center. "Foreign corporations are moving in rapidly, with the support of bilateral and multilateral bank financing, to mine and export Russia's rich natural resources. Japanese and U.S. companies are taking over Sakhalin Island to extract offshore oil reserves despite the great risk to the environment posed by drilling in this seismically active region. U.S., Canadian, and Australian mining companies are looking to exploit gold and other minerals in pristine wildlands of Siberia and the Russian Far East. Primary forests in the Russian Far East are clearcut and sold as raw logs to Asian markets and are now being put up for grabs by multinational companies, regardless of their cut-and-run practices. Most of these ventures treat Russia like a resource colony, causing environmental damage while returning a scant few benefits to local communities that depend on these resources."

Russia contains tremendous oil and gas, timber, gold, and other mineral reserves -- many of which are found in relatively pristine Siberia, which has been spared much of the environmental degradation found in other industrialized countries. "Russia holds much of the world's remaining northern wilderness -- forest frontiers which are a treasurehouse for biodiversity, including such animals as the Siberian tiger," says Josh Newell of Friends of the Earth-Japan. Newell pointed out that the vast lands of Siberia and the Russian Far East contain 2.3 million square miles of forest, equivalent to the continental United States, and play a vital role as a carbon sink in preventing climate change. "Russia has a unique opportunity to promote sustainable development while preserving its unique plant and animal biodiversity and setting aside adequate lands for Russia's many indigenous peoples. But first, Russia must do a better job of fulfilling its obligations under Agenda 21 by practicing sustainable forestry, protecting its biodiversity, and ensuring that development moves forward only in an ecologically sustainable manner."

Russia must drastically improve enforcement of its environmental laws, says Gordon. "Environmental degradation is worsening in Russia despite relatively strong environmental laws. Neither Russian nor international companies do an adequate job of obeying local, national, and international requirements for environmental protection," he says. "They avoid environmental impact assessment requirements and only pay lip service to complying with strict international standards. Rampant corruption within the Russian government is leading to mismanagement of forests and fisheries, illegal exports of natural resources, and a fire sale of oil, gas, and minerals to foreign companies who know they won't have to meet the same environmental requirements they would have in other G-7 countries."

Other industrialized nations play a role in Russia's environmental degradation, Gordon pointed out. "The U.S. government provides financing and political risk insurance to natural resource extraction ventures through Overseas Private Investment Corporation (OPIC). Japan Export-Import Bank (JEXIM) is considering support for a huge deforestation project in the Russian Far East. The European Bank for Reconstruction and Development, JEXIM, and OPIC may support the Sakhalin II oil drilling project, which is being developed by a consortium composed of some of the world's most environmentally irresponsible companies, including Shell and Mitsubishi. The International Finance Corporation of the World Bank may support gold mining in the Russian Far East. These projects provide few benefits to the local economy, yet they lead to environmental degradation. Yet none of these finance agencies are demanding that ventures comply with strictest environmental standards, adequately disclose information to the public, or ensure that projects do not harm environmentally sensitive areas."

Russia's natural resource sale does not benefit local people, says Newell. "Jobs and profits are created almost exclusively for multinational corporations and a select few of the Russian industrial elite. The timber resources are exported as raw logs, so no local processing jobs are created. Fisheries are being decimated by factory trawlers with foreign crews. Meanwhile, locally based and sustainable industries that would support local jobs and keep the profits in country are not being developed. "There is a tremendous need to develop projects that support local value-added products and the development of non-traditional industries including ecotourism and non-timber forest products. The G-8 countries and bilateral and multilateral finance agencies should prioritize these urgent sustainable economic development needs rather than supporting Russia's transformation into a resource colony controlled by foreign multinationals." Newell also pointed out that indigenous peoples are particularly affected by this large-scale natural resource development. "Native peoples in Russia continue to live in poverty and are regularly denied their land rights to make way for resource extraction. This loss of land is destroying their traditional livelihoods such as reindeer herding, fishing, and hunting.

Pacific Environment and Resources Center and Friends of the Earth-Japan are calling on Russia and the other "Summit of the Eight" countries to stop transforming Russia into a natural resource colony for the industrialized world. "Russia's inclusion as a full member of the 'Summit of the Eight' offers it the unique opportunity to develop a sustainable economy that will protect the environment and benefit local peoples," says Gordon. "But first Russia must stop selling its natural heritage to the highest bidder and start planning for the future. And the other industrialized nations can ensure Russia's environmental sustainability by making sure that they only support ventures that meet the strictest international environmental standards, that involve affected communities in environmental planning, and that support locally based economies."

Russia's "Frontier Forests" Endangered by Multinational Corporations, Illegal Trade
Can Russia Practice Sustainable Forestry that Protects the Ecosystem While Supporting Local Communities?

The Russian taiga stretches from the Ural mountains to the Pacific Ocean and represents 54 percent of the world's coniferous forests and 21 percent of the world's remaining standing forests. Much of this vast Russian forest remains intact and have now been recognized as 'frontier forests' -- area that are relatively undisturbed and large enough to maintain all of their biodiversity, including viable populations of the wide-ranging plant and animal species. A January 1997 study by the World Resources Institute determined that Russia contains more than 26% of the world's remaining frontier forests. These Russian forests provide habitat for a dazzling array of rare species, including the Siberian tiger, Amur leopard, brown bear, and Japanese crane and provide livelihoods for Russians and indigenous peoples alike.

Scientists are also beginning to understand the vital role that the healthy Russian taiga, recognized as an enormous carbon sink, plays in protecting the world from climate change. Large-scale logging of the Russian forests could have a disastrous effect on the global climate. Intensive logging would be particularly dangerous in the northern climes, where the clearcutting that results in the melting of permafrost could release methane gas, one of the more harmful greenhouse gases, into the atmosphere.

Russian Forests: A Natural Resource Colony for the World?

Large-scale timber harvesting projects, along with mining and oil and gas development projects and associated road, port, and rail infrastructure, are fragmenting and destroying Russia's globally important 'frontier forest.' In the Russian Far East, international companies including the U.S. government-backed Global Forestry Management Group and Pioneer Group and the South Korean Hyundai Corporation are clearcutting coastal forests. Regional governments are striving to increase logging rates. For example, the Khabarovsk government recently announced a 49-year forest lease tender to log 550,000 cubic meters per year over an area of 800,000 acres in the Sukpai watershed. Environmental groups are especially concerned that this unprecedented lease will give a foreign corporation complete control over these forests. The Russian government does not plan to conduct an environmental impact assessment on this lease, although it is required by the Russian "Law on Protection of the Environment." Environmental groups fear that the foreign company will use the same cut-and-run clearcutting practices that these companies use in the U.S., Canada, and Southeast Asia. In the end, the local communities, in the end, will be left deforested landscapes and no financial gain.

In addition to foreign multinational control over timber resources, inadequate enforcement of existing Russian environmental laws, forestry regulations, and port customs regulations allow illegal logging and trade to flourish. Unknown amounts of raw logs are exported each year to Japan, China, and South Korea, the Russian Far East's three principal export markets. Russia's Institute for Economic Research estimates that 20% of all trade in timber is illegal and unreported.

Russia's local timber processing industry is in disarray. In large part, this is the result of a series of Japanese-funded Siberian Forestry Development Agreements dating back to the late 1960s in which Japanese logging and harvesting equipment was traded for raw logs. Japan, eager to protect its own processing industry, refused to export significant processing equipment as part of these agreements, thus slowing the growth of a Russian timber processing industry and creating a dependence on raw log exports. Russia has been unable to export value-added timber products that would bring in more money, create local jobs, and slow unsustainable logging rates.

A regressive Forest Code recently passed by the Russian Duma threatens to speed logging of Russia's frontier forests. The Code allows long-term leases by foreign corporations and limits public participation in forest management decisions. The "Sukpai Tender," a precedent-setting long-term lease, will place more than 300,000 hectares (800,000 acres) of primary forests in the Russian Far East on the chopping block. U.S., South Korean, and Malaysian multinational corporations are competing for the tender, which is to be issued under the new law. Russian and international environmental groups are concerned that the new Forest Code will make it impossible for the Russian government to uphold its international obligations to promote sustainable forest management.

Bilateral and multilateral finance agencies are speeding Russia's deforestation. The U.S. Overseas Private Investment Corporation has provided tens of millions of U.S. taxpayer dollars in insurance and financing to two U.S. companies logging ancient forests in Khabarovsk Region of the Russian Far East. The U.S. Export-Import Bank (Ex-Im Bank) has signed a Memorandum of Understanding with Roslesprom, the Russian timber industry, to provide equipment that may allow Russian companies to log on steep slopes and in areas that have been previously inaccessible to the timber industry. Local environmentalists are especially concerned about potential Ex-Im backing for the sale of harvesting equipment to Sakhalinlesprom in the Russian Far East, which hopes to log on steep slopes on Sakhalin Island. Sakhalin is one of the Russian Far East's richest areas in salmon runs, and steep-slope logging could lead to serious erosion that would destroy salmon spawning beds. Meanwhile, Japan Export-Import Bank is considering support for the Fourth KS Sangyo Project, an agreement that would prolong the destructive history of raw log exports from the Russian Far East to Japan.

Pacific Environment and Resources Center and Friends of the Earth-Japan call upon the Russian Federation and other industrialized nations at the "Summit of the Eight" to:

Conduct full environmental impact assessments and allow for meaningful public participation in timber harvesting projects and forest lease tenders;

Take immediate steps to halt widespread corruption within the Russian Federal Forest Service;

Fully enforce Russian environmental laws and timber harvesting regulations;

Not support projects that fail to support the development of Russian value-added products and those that do not provide long-term benefits to the local community.

Require performance bonds to ensure compliance with environmental laws and mitigation measures;

Take immediate steps to stop unsustainable logging practices in all of Russia's "frontier forests" in order to protect these large ecosystems.

Russian Klondike: Foreign Companies Move Fast to Mine Russia's Gold and Other Precious Minerals
But Will Poor Environmental Oversight Lead to a Legacy of Poisoned Rivers and Abandoned Mines?

Mining companies say that they are finding bonanzas of gold and other precious minerals that are similar to the deposits found in the Gold Rush days of 19th-century California. Yet in their rush to extract these mineral resources and in the Russian government's race for quick cash investments, it appears that basic environmental standards are being forgotten.

With the financial backing of the U.S. and other governments, major international mining corporations are focusing their attention on Siberia and the Russian Far East. Canada's TVX Gold is preparing documents to mine the Asachinskoye site in Kamchatka. Kinross Gold, also from Canada, has been trying to develop Kamchatka's Aginskoye site for more than two years now, despite its proximity to a UNESCO World Heritage Site and a protected nature park. The U.S. company Cyprus Amax is already pouring gold at the Kubaka site in Magadan Region, home to much of Russia's worst mining pollution.

The U.S.-based Homestake Company, a part owner of Zoloto Mining Co., is looking to develop the Pokrovskoye site in Amursky Region. Australian Armada Gold hopes to reprocess tailings in Chita Region's town of Balei, despite serious environmental health problems in the town and the participation of Robert Friedland, responsible for some of the mining industry's most infamous environmental disasters at Colorado's Summittville (a Superfund site) and Guyana's Omai mine, where 17 miles of river were poisoned from the collapse of the tailings dam.

Regional governments are eager to bring these foreign companies to their regions. Yet the environmental standards proposed by these multinationals do not compare to the same standards they promote at new mine sites in the U.S. Some proposed mines do not include detailed reclamation plans, and not one has offered a financial bond that would guarantee reclamation -- now a standard practice in the United States, which has suffered from the huge number of mine sites left abandoned and unreclaimed by irresponsible companies.

Mine plans in Russia also fall short in their engineering and design of tailings impoundments and their assurances that groundwater and surface water will not be polluted. Technical mining specialists point out that such mines in the U.S. would not be allowed to move forward without meeting significantly higher standards to ensure that an accident will not occur.

Proposed mine sites in Kamchatka -- where the local economy is almost entirely dependent on fishing and thus interested in the protection of salmon spawning grounds -- have proven to be especially controversial. Kinross Corporation's proposed Aginskoye mine has thus far been blocked while environmental officials with the Kamchatka Committee for the Protection of the Environment and Natural Resources demand that the company meet strictest applicable environmental standards. Local scientists are especially concerned that the proposed Aginskoye mine will negatively impact the Bystrinsky Nature Park and the newly created UNESCO World Heritage Site, "The Volcanoes of Kamchatka." They point out that President Clinton blocked plans to develop a gold mine on the border of Yellowstone National Park and they suggest that the Aginskoye mine would similarly damage neighboring Bystrinsky Park.

Bilateral and multilateral finance agencies among the other industrialized nations continue to promote the development of environmentally dangerous mines in Russia. The U.S. Overseas Private Investment Corporation recently withdrew its proposed support to Kamchatka's Aginskoye project only after intense pressure from environmental groups, UNESCO's declaration of World Heritage status for Kamchatka, and a resolution from the International Union for the Conservation of Nature.

The Canadian government is considering support for the controversial Ametistovoye Mine in the Koryak Autonomous Region, on the northern part of the Kamchatka peninsula. the Ametistovoye mine is also controversial since it borders the Koryak Nature Preserve. A recent environmental assessment of the Ametistovoye mine noted a great number of inadequacies in the mine plan.

The International Finance Corporation (IFC) of the World Bank is considering support for the Pokrovskoye Mine in Amursky Region. IFC has tried to fast-track approval of this project despite being made aware of environmental deficiencies in the project by environmental groups. Environmentalists note that the Pokrovskoye Mine is a clear example where multinational mining companies like Homestake -- which have engineered "model" mines in the United States -- are not engineering to best possible standards in Russia.

Pacific Environment and Resources Center and Friends of the Earth-Japan call upon the Russian Federation and other industrialized nations at the "Summit of the Eight" to:

Ensure that proposed mine sites do not impact pristine wildlands, existing or proposed protected territories, or World Heritage sites;

Condition support for new mines on their meeting strictest international environmental standards, including complete and detailed reclamation plans, financial assurance for performance of environmental measures including prevention of toxic spills and reclamation and mine closure, prevention of groundwater surface water pollution, and reliable and safe tailings impoundment systems.

Russian Fisheries Under Threat from Poaching, Overfishing, and Habitat Degradation
Will Natural Resource Extraction Wipe Out Russia's Rich Salmon Stocks?

Unlike purely extractive industries such as oil and gas, fishing is a potentially renewable industry. Yet unsustainable harvesting rates around the world are leading to the threat of ocean fisheries collapses throughout the world, destroying marine ecosystems and the livelihoods of local fishermen.

The fisheries of the Russian Far East (RFE) are among the richest in the world.

Russian waters including the Sea of Okhotsk, the Bering Sea, and the Sea of Japan provide vital marine habitat. Rivers in the RFE create spawning habitat for more than half of the Northern Pacific's healthy salmon runs. Nonetheless, these fisheries are under threat from habitat degradation and overfishing.

Poaching and illegal fishing are decimating the fisheries of the of the Russian Far East. As early as 1993, the Procurator General of the Russian Federation noted, "As a result of intensive and essentially uncontrolled exploitation...by both domestic and foreign fishermen, the stocks inside Russian territorial waters and within the Russian EEZ are on the brink of collapse."

Weak regulation and enforcement capabilities among Russian agencies, alarming rates of corruption among fisheries inspectors, and the high demand for seafood products in Japan and other Pacific Rim countries combine to compound poaching in RFE waters. Poachers on internal RFE rivers are destroying salmon spawning grounds to harvest the valuable caviar. To fight poaching, the Russian government must take immediate steps to prevent corruption within the regional governments and fisheries protection agencies.

Overfishing in the Russian Far East (RFE) stems from the large-scale unsustainable overharvesting of the oceans by factory trawlers. Some of these factory trawlers are drawn to the RFE after having overfished waters elsewhere in the Pacific Rim. The "American Monarch," for example, is an American Seafoods factory trawler that has been banned from Chilean and Peruvian waters -- yet it is now applying for a permit from Russia. Other industrialized nations are contributing to overfishing in Russian waters through their own fleets or through support for the purchase of factory trawlers from bilateral and multilateral finance agencies such as the U.S. Overseas Private Investment Corporation (OPIC), which recently provided $80 million in financing to All Alaskan Seafoods Company to provide overfishing capacity to the Russian fishing industry.

Mining, forestry, and oil and gas development threaten to degrade the habitat of the RFE's unique salmon runs. Salmon is vital to the economy, culture, and ecology of the RFE -- the Kamchatka peninsula is the only area of the Pacific Rim with habitat for all species of Pacific salmon and still sports salmon runs that number in the millions. Yet an International Union for the Conservation of Nature Resolution calling for the "Conservation of Proposed Volcanoes of Kamchatka World Heritage Site" notes that pollution from mining and forestry threatens salmon spawning rivers in southern Kamchatka, which in turn threatens the livelihood and culture of Kamchatka's indigenous Itelmen, Koryak and Eveni peoples.

Another major threat to salmon survival in the Russian Far East is logging of boreal and temperate coastal forests that provide habitat to these salmon runs. Roadbuilding and clearcutting in coastal watersheds lead to scoured rivers and silted spawning beds.

Although RFE salmon runs are in better condition than salmon runs in the Pacific Northwest, extinction of salmon runs in inland RFE rivers that have been overlogged has already been noted. Potential new logging enterprises in coastal areas of the RFE, especially in Sakhalin, Khabarovsk, and Primorsky Regions, threaten to destroy valuable spawning grounds. Environmental groups are especially concerned about a proposal to the U.S. Export-Import Bank to provide equipment to "SakhalinLesProm," the Sakhalin Timber Industry, that would allow it to log on steep slopes that have previously been off limits to logging. Groups are similarly concerned about expanded logging plans by OPIC-backed U.S. companies including Pioneer Group and Global Forestry Management Group to log in coastal watersheds of Khabarovsk Region and by the Khabarovsk government to provide an enormous logging concession in the Sukpai watershed.

The Russian fishing industry is the cornerstone of the regional economy in such areas as Primorsky, Sakhalin, Kamchatka, and Magadan regions of the Russian Far East. Yet overfishing, poaching, habitat degradation, and development of other industries threaten to destroy this sustainable economy. Pacific Environment and Resources Center and Friends of the Earth-Japan call on the Russian Federation and other industrialized nations at the "Summit of the Eight" to:

Protect the ocean fisheries from illegal fishing;

Ban factory trawlers in Russian waters;

Prevent corruption within the fisheries protection agencies;

Protect salmon spawning grounds from poachers and habitat degradation including logging and mining;

Restore the viability of Russia's fisheries research and enforcement agencies.

Oil and Gas Development Destroys Environment and Indigenous Peoples in Siberia and the Russian Far East
Will Drilling Transform Western Siberia, Sakhalin Into "National Sacrifice Areas"?

Oil and gas development in the Russian Federation has left a legacy of pollution, degraded ecosystems, and devastated cultures in its wake. From the Komi Republic in Russia's Northwest to the Yamal Peninsula in Western Siberia to Sakhalin Island in the Russian Far East, oil and gas development promises only to worsen the environmental and social conditions that now exist.

Much of Russia's oil and gas development has taken place in northwestern Siberia, which produces 78 percent of Russia's oil and 84 percent of its natural gas. This area is also populated by seven indigenous nations. The oil and gas development has led to serious environmental, social, and health problems among these indigenous societies.

Aleksandr Pika and Boris Prokhorov, two researchers, say:

"It is painful to see how the few improvements in the lives of northern peoples...are more than cancelled out by the damages from the organizations developing these regions. Over many years, day and night, the gas-burning flames around Nizhnyevartovsk have been lighting everything in a crimsong glow, oil has been floating on the tributaries of the Ob, the forest has been cut down on the shores of the Taz and the Iceland moss in the reindeer pastures of Yamal have been perishing under the tracks of cross-country vehicles and through burning. And all this is because of the endless haste, indifference, and obvious neglect of the land providing the wealth."

In Khant-Mansi Region of Western Siberia, the Regional Ecological Committee points out that as many as 1,000 oil spills occur every year. Many indigenous families have lost their access to adequate pastures for reindeer herding. Meanwhile, indigenous families are not offered adequate compensation: one family, for example, received in return for leasing its land to the U.S. oil company Amoco a walkie-talkie, a generator, 8 sacks of flour, sugar, tea, and 8 round batteries.

Andrew Wiget and Olga Balalaeva, two researchers funded by the MacArthur Foundation, write about oil development's impacts on the Eastern Khanty people:

"In the late 1960s oil was discovered in the basin of the middle Ob' River, and the Soviet government and state oil monopoly began a virtually unregulated oil rush. By the early 1980s Samotlor, the name of the region's first major area of petroleum development near Nizhnevartovsk, had already becom a mark of shame.

Today throughout the area, oil spills and casual pollution blacken the wetlands, raised roads trap water causing flooding and ruining the forests, fires caused by oilworker carelessness and petroleum-soaked debris send columns of smoke into the air, acid rain blights huge territories. Western Siberia, like the America's Appalachian coal fields at the beginning of this century, has become a national sacrifice area."

A proposed biosphere reserve in Khant-Mansy region that would protect the land of more than 800 Khanty people is being subverted by the Russian government and oil companies despite support from local people.

Oil and gas development is expanding in Siberia and the Russian Far East with the help of both Russian companies and multinational corporations and governments of the industrialized nations. For example, projects to develop offshore oil and gas fields near Sakhalin Island in the Russian Far East involve massive multinational investment from Shell, Mitsubishi, Mitsui, MacDermott, Marathon, and Exxon.

Unfortunately, involvement of Western corporations does not seem to improve the environmental or social impacts of oil and gas development. In Sakhalin, the Sakhalin Energy Investment Company (a consortium of Shell, Mitsubishi, Mitsui, MacDermott, and Marathon) have yet to receive necessary environmental permits and are threatened by a lawsuit by Russian public interest environmental lawyers. Yet the venture is still under consideration for support from bilateral and multilateral finance agencies including the European Bank for Reconstruction and Development and the U.S. Overseas Private Investment Corporation.

Sakhalin's development could have enormous and unforeseen impacts on pristine ecosystems in one of the world's richest seas and most fragile marshland, tundra, and coastal habitats. The indigenous Nivkh people on Sakhalin Island has been entirely excluded from negotiations on the proposed development -- even though their livelihoods depend on the salmon fisheries that will be most impacted by offshore oil and gas development. Indeed, Sakhalin's rich fishing industry -- which constitutes one-third of Sakhalin's economic activity and employs more than 50,000 people -- is at risk from such large-scale oil and gas development. Sakhalin's natural conditions are far more hostile than other regions where these oil companies have drilled before (even Alaska), with a unique combination of ice sheers, thick pack ice, tidal waves, and high seismicity.

Exxon's drilling experiments were postponed in 1995 due to the tragic Neftegorsk earthquake in Northern Sakhalin.

Pacific Environment and Resources Center and Friends of the Earth-Japan call upon the Russian Federation and other industrialized nations at the "Summit of the Eight" to:

Support the proposed Yuganski-Khanty Biosphere Reserve, which would protect the traditional lands of more than 800 Khanty people;

Provide adequate compensation to indigenous peoples and local inhabitants from drilling that has already occurred;

Ensure that all oil and gas development projects comply with relevant Russian law, including requirements to provide an adequate environmental impact assessment and to provide indigenous peoples with adequate compensation, and with Russia's international environmental and human rights obligations;

Prioritize support for traditional, renewable economies in Western Siberia, Sakhalin, and other areas slated for oil and gas development over support to multinational oil companies.

As Western Satellites Rise, Rocket Parts Fall into Russian Nature Preserve
Colorado-based Lockheed-Martin Complicit in Toxic Contamination of Russian Nature Reserve, Villages

For more than 30 years, Soviet rockets have blasted off from the Baikonur Cosmodrome in Kazakhstan. And for more than 30 years, hazardous toxic and carcinogenic debris from the falling stages of these rockets has rained down on a nature reserve and surrounding villages in the Altai Republic of Southern Siberia. Falling debris has created serious environmental problems for this nature reserve and severe health problems for local residents. With the end of the Cold War and the growth of global communications through satellites, use of Baikonur by Western aerospace interests is expanding rapidly, adding U.S. and Western responsibility to a worsening environmental crisis.

Russia's system of nature protection includes areas so strictly protected that humans are barred from entry. Hence, the "Altai Zapovednik" (nature reserve) in Southern Siberia's Altai Republic made a "perfect" place for secretive Soviet authorities to target the fall of rocket launches from neighboring Kazakhstan. Falling rocket stages often ignite forest fires. More than 118 Proton rockets are known to have fallen onto the Altai Zapovednik.

By far the biggest danger, though, is geptil/hydrazine, the highly toxic and carcinogenic fuel carried by these rockets. The falling debris is covered with both spent and unspent components covered with this deadly fuel. And the falling rocket stages don't always land in the Altai Zapavednic: Russian scientists have estimated that almost 1/4 of the Ulagan region of Altai (where the Zapovednik is located) is contaminated with geptil. Bird, fish and other animal populations have declined, and rivers, forests, crops, livestock and people have been poisoned. There is also evidence of geptil bioaccumulation along the food chain.

This fuel contamination has had disastrous health consequences for residents of the region. This includes increased hypertension and nervous system disorders, cancer, nosebleeds, irregularities in blood pressure, stomach problems, nausea, and premature greying and hair loss. Liver problems are 10 times higher than the national average. The area has had a high concentration of "yellow child syndrome"--babies born with yellow skin, most of whom die within months. This is believed to be a direct result of hydrazine. Because of its toxicity, the use of hydrazine in the United States is highly restricted, and very rare. Yet in Russia there are no plans to find an alternative, despite evidence of these harmful effects.

A New Threat from Global Telecommunications and Western Companies

While in the past rocket launches were conducted solely by the Russian government and military, the region today faces a new threat--the rapidly expanding global telecommunication industry. Currently, there are only about 50 satellites in orbit worldwide. However, several companies are currently racing to create global communications networks, which requires launching many more satellites. One company alone, Irridium (a consortium of Motorola, Lockheed and other smaller concerns), plans to launch 67 by 1998 (the first 5 are already in space). Microsoft's Bill Gates has stated he plans to launch several hundred satellites in order to create an "internet in the sky" for a newly established company, "Teledesic." This consortium, is made up of Microsoft, cellular phone mogul Craig McCaw, and Boeing.

Because of the depressed economy and lack of environmental and other regulations, rockets can be launched from Baikonur, Kazakhstan for about half the cost of launches elsewhere in the world. Leading the way to more Russian launches is International Launch Services (ILS), a Russian-American joint venture made up of Colorado-based Lockheed-Martin, and 2 Russian companies, Krunichev (which manufactures Proton rockets) and Energio (which controls the Baikonur facility). Backed by the U.S. government funded (delete backed) Overseas Private Investment Corporation (OPIC), ILS markets satellite launches to Western companies, and is responsible for arranging 6 of 8 launches planned for Baikonur this year alone. Lockheed-Martin has also discussed plans to improve the facility, and expand launch capability, yet has shown no interest in addressing the critical and growing threat its launches pose to the Russian environment and to human health.

Ecologist Lisa Tracy of Pacific Environment and Resources Center, who is based in the Altai Republic, says, "With the end of the Cold War, there has been a new commitment to cooperation between Russia and the U.S. for the peaceful use of space. However, for the people and environment of this region, this has made no difference. If things go as planned, this so called space cooperation will just cause more diseases for people, and bring further damage to the region's pristine environment."

Bilateral and Multilateral Finance Agencies Pour Funds Into Russia
But Are They Part of the Solution or Part of the Problem?

The collapse of the Soviet Union and the opening of Russia's emerging economy to foreign joint ventures created a financial vacuum which attracted both foreign investors and foreign bilateral and multilateral finance agencies. As a "developing" country and an "emerging" market with large supplies of natural resources, Russia offered bilateral and multilateral finance agencies a new venue to expand their repertoire of "economic restructuring" programs and a rationale to justify their continued existence. Bilateral and multilateral finance agencies such as the U.S. Overseas Private Investment Corporation (OPIC), the U.S. Export-Import Bank (Ex-Im Bank), Export-Import Bank of Japan (JEXIM), and multilateral finance agencies such as the World Bank and the European Bank for Reconstruction and Development (EBRD) started investing in joint ventures in Russia. Now as an "equal partner" in the G-8, Russia alone among the elite club of industrialized countries receives an unprecedented volume of unequal business and trade subsidies from other member countries that transform it into a natural resource colony.

Will billions of dollars in bilateral and multilateral finance agency subsidies help jump-start Russia's lagging economy, promote democracy, and protect the environment to a level equal to other industrialized countries? The five-year track record of these agencies in Russia suggests that in many cases these subsidies do not. Since 1991, bilateral and multilateral finance agencies have provided billions of dollars across Russia, many of which have negatively affected oceans, forests, wildlands, and rural communities.

In the forestry sector, OPIC provided over $62 million in political risk insurance and $9 million in financing for at least two joint ventures that seek to clearcut over two million cubic meters of timber annually from primary forests in the Russian Far East, an area of great forest biodiversity and global ecological significance. In 1996, OPIC provided $7 million in political risk insurance for an associated longshoring facility to export unprocessed logs to Japan, thus foregoing the benefits of value-added local processing.

Meanwhile, Ex-Im Bank signed a Memorandum of Understanding with Roslesprom, the former Russian government timber monopolist, to facilitate the export of tens of millions of dollars of US forestry equipment to Russia. Such export could speed the rate of deforestation and increase the Russian timber industry's ability to log primary forests in roadless areas and on steep slopes that have been previously inaccessible. Conservationists fear that the first timber export deal to Russia under the agreement will be for Sakhalin Island in the Russian Far East, where logging on steep slopes is expected to liquidate primary forests, lead to streambank erosion, and degrade the aquatic habitat for wild salmon stocks.

JEXIM also wants to enter the Russian forestry sector as it considers a proposal to provide as much as 85% of financial backing for the proposed $300 million "KS Sangyo" joint venture to export unprocessed logs from the Russian Far East to Japan. While Russians will bear the eventual environmental costs of unsustainable logging, the export of raw logs will leave them with no sustainable economic benefit from this venture that promotes Russia's transformation into a natural resource colony.

In the mining sector, OPIC gave initial approval to a gold mine on Russia's Kamchatka Peninsula, despite the fact that the proposed mine site was on the border of a new protected territory that has now become part of the UNESCO-recognized "Volcanoes of Kamchatka" World Heritage Site. Scientists point out that Kamchatka's pristine wildlands, which would be impacted by this and other mining ventures, are vital to the region's primary economy, based on fishing, and to a future economy based on tourism.

Also in the mining sector, the International Finance Corporation (IFC) of the World Bank Group is deliberating over proposed financing of a large open pit mine in the Amur Oblast of the Russian Far East. Independent expert review of the project indicates that the proposed mine is far inferior to international mining norms, including unsatisfactory measures for containment and treatment of toxic waste and tailings, the lack of a performance bond to ensure enforcement of environmental mitigation measures, and the lack of investment in local communities.

In the fisheries sector, OPIC provided $80 million in loan guarantees in 1996 to the U.S. fishing industry giant All Alaskan Seafood's "New Pollock" affiliate. This U.S. taxpayer support enabled the company to transfer six enormous fishing vessels from U.S. to Russian Far Eastern waters to compete for pollock in this already over-harvested and degraded marine ecosystem. Most of the catch and associated profits will likely be exported, leaving the Russians with an ecologically and economically degraded fishery.

Looming large on the horizon are extensive oil and gas projects off the coast of Sakhalin Island. Offshore reserves there are thought to comprise some of the biggest potential sources of oil and gas on the Pacific Rim, but the areas simultaneously maintain a great concentration of marine biodiversity, are essential for the survival of fisheries stocks, and are among the most seismically active areas on the Pacific Rim. The EBRD and OPIC are currently deliberating about whether to provide hundreds of millions of dollars to the Sakhalin II project, despite the fact that the venture has not met its environmental requirements under Russian law.

While the U.S. and other G-7 countries purport to promote open government and other civil society policies in Russia, bilateral and some multilateral finance agencies operate in secrecy and refuse to disclose environmental impact assessments associated with their projects. For example, citizens have been compelled to file Freedom Of Information Act lawsuits to force OPIC to disclose basic environmental documents which are commonly released by other domestic and multilateral agencies.

Will Russia become an "equal partner" in the emerging G-8, or will other G-8 members continue to subsidize its resource colonization and destruction of natural heritage? Pacific Environment and Resources Center and Friends of the Earth-Japan call on the Russian Federation and other industrialized nations at the "Summit of the Eight" to:

• Support and strengthen the US initiative at the G-8 to call upon member countries to harmonize upward their bilateral finance agencies to World Bank or domestic standards;
• Establish or enhance information disclosure policies of bilateral and multilateral finance agencies that mandate the timely release of all non-business confidential information including environmental assessments, human rights and development-related documents and monitoring reports;
• Involve affected citizens in Russia in all stages of project development.

How to Ensure that Economic Development Does Not Destroy the Environment, Natural Resources, and Local Jobs in the Russian Federation
A Partial List of Recommendations to the Russian Federation and the Other Industrialized Nations at the "Summit of the Eight"

Prepared by Pacific Environment and Resources Center and Friends of the Earth-Japan

The Russian Federation should ensure that all development projects strictly comply with environmental legislation, especially the "Law on Protection of the Environment."

The Russian Federation should take immediate steps to curb corruption among government officials, particularly within regional governments and federal agencies, including the Federal Forest Service and the State Committee on Fisheries.

The Russian Federation should ensure that all natural resource extraction projects, including logging, fishing, mining, and oil and gas extraction projects, conduct thorough environmental impact assessments and change their projects as necessary to reflect problems identified through the environmental impact assessment process.

The Russian Federation should ensure that full information about potential development projects are provided to the public well before decisions are made by relevant agencies.

Other industrialized nations should ensure that public and private investment into Russian natural resource development projects are subject to the strictest international environmental and public participation standards for projects of their type.