Global Economics

A Setback for Russia's Lake Baikal


The world's deepest lake enjoyed environmental protection from Vladimir Putin until his shock decision to reopen a polluting paper mill controlled by Oleg Deripaska

Four years ago, Vladimir Putin surprised environmentalists by saving Lake Baikal from an oil export pipeline that would have run within a kilometer of its northern shore. The Russian president announced on national television an abrupt pipeline diversion 40 kilometers farther north that would cost state-owned Transneft nearly $1 billion. Pointing a red pen at Lake Baikal on a giant map, Putin said, “If there is even the smallest, the tiniest chance of polluting Baikal, then we must think of future generations and we must do everything to make sure this danger is not just minimized, but eliminated.”

Last month, with the stroke of a pen, Prime Minister Putin reversed an environmental victory by allowing the major source of direct industrial pollution to Lake Baikal to resume operation. A governmental decree changing the list of activities prohibited in a protected zone near the lake was issued in order to allow the Baikalsk Pulp and Paper Mill (a unit of Continental Management), which closed in 2008, to resume production. Environmentalists in the Baikal region were shocked, seeing their victory in a 44-year battle to close BPPM slip from their grasp.

The Russian environmental movement began in the 1960s with a strong campaign to protect the unique ecosystem around Lake Baikal in southeast Siberia. The deepest freshwater lake in the world, Baikal plunges to depths of more than 1,700 meters. These deep waters are teeming with life, with most of its roughly 1,500 species endemic to the Baikal watershed.

While Baikal has been intermittently threatened over the years, these threats have afforded notable victories for the environmental movement. In 1996, Lake Baikal was declared a World Heritage Site by UNESCO, offering the ecosystem the protections of the World Heritage Convention (ratified by Russia in 1988). A list of prohibited activities was created in 2001 to add further protection to the Central Ecological Zone of Lake Baikal.

In 1987, it was announced that BPPM would be closed in 1993, but this promise was lost amid the general disarray of the Soviet Union’s collapse.

Protests in 2006 over the proposed construction of the Eastern Siberia-Pacific oil pipeline within Baikal’s watershed led to Putin’s intervention to reroute the pipeline. In 2008, the Baikalsk paper mill attempted to implement an environmentally friendly closed water system after Rosprirodnadzor (the Federal Service for Natural Resources) sued the mill for exceeding government standards for levels of pollutants in Baikal’s water. A representative of the agency flew to Baikal to oversee the transition to the new system in October 2008, after which the company deemed the switch unprofitable and shut its doors.

While the controversy over the factory’s closing persisted into early 2009, the local government remained firm in its pledge to keep it closed.

Yet as environmentalists rejoiced in their long-awaited victory, the town of Baikalsk suffered the negative consequences. The global economic crisis hit Russia at the same time as the closing of the factory in the fall of 2008. The paper mill’s 2,000 workers lost their jobs with the closing. At first, the newly unemployed workers in Baikalsk held protests, most to demand unpaid wages and severance pay. Some have since found jobs elsewhere while others continue to look for work. Other options for the remaining jobless workers have been discussed, including bolstering local ecotourism or building an alternative factory outside the Central Ecological Zone with a cleaner production cycle.

Why did Putin decide, 15 months later, to allow the mill to reopen without limit to its effluent for the next three years? The technology in BPPM is outdated, and it will take years and substantial investment to bring the plant up to modern standards.

Putin has given the factory three years to operate without the closed-loop system and to continue to dump pollutants into the lake, seemingly having decided that a short-term economic fix is worth the long-term ecological damage. Environmentalists say the government stimulus money could be better spent not at a run-down, bankrupt, polluting plant, but on budding new initiatives, such as increasing local winter sports tourism or opening a canning factory for strawberry jam after the recent inauguration of an annual strawberry festival.

The decision to reopen the plant, without limit to pollution, calls into question Putin’s commitment to the World Heritage Convention, which gave Lake Baikal its UNESCO site status and which Putin is violating by altering conservation laws that were put in place to protect Baikal.

Critics of the reopening cited Putin’s recent economic handouts to Oleg Deripaska, the billionaire owner of over half of BPPM, via his investment firm Basic Element, whose decision it was to close the mill instead of operating under the closed-loop system. Deripaska is also the owner and CEO of Rusal (486:HK), a Russian aluminum company that owed billions in foreign debt at the onset of the financial crisis. A state-owned bank, where Putin serves as supervisory board chairman, provided Deripaska with an emergency loan of $4.5 billion to make it through the crisis.

On 29 January, Irkutsk police raided the office of a prominent environmental organization. The police, without warrant, came to seize the computers and modem of Baikal Ecological Wave (BaikalWave) to search for pirated and unlicensed software just as the group had been loudly protesting BPPM’s reopening. Without computers or access to the Internet, BaikalWave is unable to function. The group’s website has been offline since 28 January. Even without a functioning website, BaikalWave plans to stage a protest on 13 February.

Representatives of Greenpeace and WWF Russia say they will urge UNESCO to consider Putin’s breach of the World Heritage Convention at the July meeting of the World Heritage Committee in Brazil. In early 2006, when the oil pipeline route near Baikal was announced, the committee chairwoman sent Putin a letter expressing concern over the potential threat to Baikal. The letter stated that if the original plans were kept for the route, it would result in UNESCO placing Baikal on the List of World Heritage in Danger. The letter contributed to the unwanted media attention that culminated in the reroute of the pipeline.

Environmental groups are hoping that a well-worded letter from UNESCO could help do what they’ve been struggling to do for decades: close BPPM for good.


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus