Logging site in Irkutsk Oblast, Siberia.
US authorities will be forced to examine more closely continued imports of Russian conflict plywood, after one of the largest and most controversial Russian suppliers was sanctioned by the US Treasury Department on 2 November. But the partial block on Russian conflict wood will be challenging to implement, and stops short of the total ban demanded by Ukraine.
Russia is the world’s largest timber producer, and sales of wood an important source of revenue for its economy and its government. While other key allies against Russian aggression in Ukraine, including the EU and UK, have banned Russia’s lucrative trade in timber, the US has so far failed to follow suit. As a result, tens of millions of dollars’ worth of Russian timber continue to arrive on US shores every month. In terms of numbers of shipments, this trade now represents more than half of all the US’s remaining imports from Putin’s kleptocratic regime.
As Earthsight has repeatedly highlighted since the February 2022 invasion, US imports of Russian wood – which mostly take the form of birch plywood sheets, used in furniture and kitchen manufacture – are doubly controversial since many are linked to firms owned by Russian ‘timber oligarchs’ with close ties to Putin.
One such firm is Segezha, one of the largest forestry companies in the world, which controls an area of Russian forest bigger than the state of Illinois. Segezha’s largest shareholder is billionaire Vladimir Yevtushenkov, who was among a select group of oligarchs who met with Putin on the day of the Russian invasion in 2022, and also toured Russian-occupied Crimea with the Russian President in 2015. Based on official filings, Earthsight has calculated that Segezha paid $103m in dividends to the oligarch and his family members in 2022.
Segezha’s largest shareholder, Vladimir Yevtushenkov
Segezha has been the second largest supplier of Russian birch plywood exports to the US in recent months. In July 2023, the last month for which data are available, 10,973 cubic metres of Segezha plywood left Russia destined for US buyers – with an estimated retail value when sold in the US of $49m1.
Earthsight drew renewed attention to these imports in September 2023, when we revealed that the Russian logging firm was clear-felling precious ‘intact’ forests, in contravention of Russian law.
Just over six weeks later, on 2 November, the US Treasury Department added 130 names to its list of individuals and entities subject to sanctions in relation to Russia’s invasion. This includes Sistema AFK, the parent company of Segezha. Though Segezha is not named specifically, the sanctions apply to all firms in which Sistema holds a controlling interest. US firms are therefore now prohibited from purchasing Segezha’s plywood.
This belated action is welcome, but enforcing the ban will be challenging for US Customs officials. Earthsight’s analysis of past shipments shows that unlike wood from other Russian suppliers, most Segezha plywood imported into the US is traded through middlemen, its true origin already being disguised. Documents leaked to Earthsight and investigations by journalists in Europe have also confirmed the lengths Russian plywood manufacturers have been willing to go to launder their goods in order to breach sanctions in the EU. It is hard to see how any US importer or US official can be sure where Russian ply was made.
Customs officials’ jobs could be made a lot easier if the US were to follow its counterparts in the EU and UK and ban all Russian wood imports, something the Ukrainian Parliament has been demanding it do since May this year. This could be done with the stroke of a pen by the US Treasury Secretary.
Meanwhile, US firms who choose to continue to buy or ship Russian plywood are taking a big risk.
References:
- Cubic metre figure
from Russian export shipment records obtained and analysed by Earthsight. Retail
value estimate based on Baltic birch plywood retail prices at West Wind
Hardwood Inc of $4479/m3, calculated from $240 for a 3/4”x4’x8’ sheet (actual
size 18x1220x1440mm) of BB/BB grade Baltic birch plywood as of 10th Feb 2023 - https://www.westwindhardwood.com/product/plywood-veneers/cabinet-grade-plywood/baltic-birch-plywood/
