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Russia’s timber trade circumvents EU sanctions amid Ukraine conflict

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In defiance of EU sanctions aimed at curbing timber revenue that indirectly finances Russia’s war in Ukraine, Russian timber continues to flow into the European Union through indirect trade routes. A recent investigation by the International Consortium of Investigative Journalists (ICIJ) and its European partners, including Paper Trail Media, Der Spiegel, and ZDF, has unveiled the intricate pathways used to mask the origins of Russian timber.

Despite a ban on Russian timber imports into the EU since July 2022, imposed following Russia’s invasion of Ukraine in February 2022, banned timber from Russia is finding its way into the EU through a network of third countries. ICIJ’s Deforestation Inc. project, known for uncovering environmentally harmful practices, has now exposed how this illicit trade is flourishing.

Russia, home to over a fifth of the world’s forests, has long been a major timber exporter. In 2021 alone, the European Union imported more than $3 billion worth of Russian timber, making Russia its fifth-largest trading partner. The swift sanctions following Russia’s invasion disrupted direct trade channels, but this merely led to the emergence of alternative, covert global pathways.

Trade data analyzed by ICIJ’s partners in Europe points to countries such as China, Turkey, Kazakhstan, and Kyrgyzstan as pivotal players in the subterfuge of Russian timber. These countries are being used to divert timber through deceptive trade routes, with smugglers exploiting false certifications to mask the origins of the wood.

While these new pathways have been identified, the evasion of sanctions is not without its risks. Messages obtained by ICIJ revealed traders offering Russian timber from various countries, including China. The traders either falsify the origins of the timber or provide explicit details of how they’re bypassing the sanctions.

Key industry stakeholders have expressed concerns over these practices. The European Confederation of Woodworking Industries (CEI-Bois) acknowledged being alerted to the issue, noting that countries not subjected to the strict EU sanctions can continue trading with Russia. This revelation raises questions about the effectiveness of the EU’s sanctions regime in response to Russia’s actions.

The implications of this timber trade evasion extend far beyond economic concerns. Oleg Ustensko, advisor to Ukrainian President Volodymyr Zelensky, stressed that the sources of funding are irrelevant to the families affected by the conflict. “For families of killed and injured Ukrainians… there is no difference whether this was paid for Russian wood, oil, gas, or diamonds,” Ustensko commented, highlighting the devastating human cost of these operations.

The investigation conducted by ICIJ and its partners is part of their ongoing Deforestation Inc. project, which has previously exposed the validation of products linked to deforestation and conflict logging by major certification firms. The project has drawn attention to the discrepancies between green labels and the actual environmental impact of these products.

In a parallel report, the investigation also sheds light on the continuing flow of Russian birch plywood and other wood products into the EU through third countries. Despite comprehensive sanctions, including a complete prohibition on Russian timber imports, these products are evading restrictions through misleading paperwork and alternative trade routes. Industry associations warn of the potential consequences, including penalties and loss of reputation for companies involved in these practices.

Russia is a conflict area when it comes to the European Timber Regulantion (EUTR)
The issue of timber originating from conflict zones has gained significant attention in recent years, particularly within the framework of the European Union Timber Regulation (EUTR). The EUTR, implemented in 2013, aims to combat the illegal logging and trade of timber and its products. This regulation imposes stringent requirements on timber placed on the EU market, with the goal of ensuring that only legally sourced timber enters the market.

In the context of ongoing conflicts and human rights abuses in various parts of the world, the EUTR takes on added significance as a tool to address the flow of timber originating from conflict zones into the EU market. The regulation places the onus on operators placing timber on the EU market to exercise due diligence, thereby discouraging the trade in timber sourced from illegal logging or conflict-affected areas.

The legal implications of importing timber from conflict zones under the EUTR are profound. Importers are required to undertake a comprehensive due diligence process to assess the legality of the timber they trade. This involves gathering information on the timber’s origin, compliance with applicable laws, and adherence to social and environmental standards. If the due diligence process indicates that the timber is associated with illegal logging or conflict, importers are obliged to refrain from placing such timber on the EU market.

Failure to comply with the due diligence requirements of the EUTR can have serious legal consequences. Importers found to be trading in timber from conflict zones without adequate due diligence may face penalties that vary across EU member states. These penalties can include fines, confiscation of profits, and even imprisonment in some cases.

The broader implications of importing conflict timber extend beyond the realm of legal consequences. Ethical and reputational concerns come into play as well. Companies found to be associated with the trade of timber from conflict zones can suffer damage to their reputation, potentially leading to financial losses and decreased market trust.

To address these challenges, industry associations and organizations have been working to promote responsible timber trade and raise awareness about the importance of due diligence. Certification schemes like the Programme for the Endorsement of Forest Certification (PEFC) and the Forest Stewardship Council (FSC) classify timber from conflict-affected areas as “conflict timber” and offer guidance on responsible sourcing practices.

The complexities of global supply chains and the interconnectedness of economies make enforcing regulations like the EUTR challenging. However, the regulation’s role in discouraging the trade of timber from conflict zones is undeniable. By placing legal obligations on operators, the EUTR contributes to greater transparency and accountability in the timber trade, ultimately fostering sustainable practices and contributing to international efforts to curb the illicit trade of conflict timber.

As conflicts continue to impact regions around the world, the role of regulations like the EUTR remains crucial in addressing the trade of timber with links to human rights abuses and conflict-related activities. Through continued collaboration between governments, industry stakeholders, and civil society, progress can be made towards ensuring that timber entering the EU market originates from responsible and sustainable sources.

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