US embassy cable - 04YEREVAN2446

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