Russia shifts focus from oil to timber

The Russian government turned its attention from oil to timber on June 18 as Prime Minister Mikhail Kasyanov struggled to find a way of meeting President Vladimir Putin's demands for faster economic growth.

A stern Kasyanov told ministerial colleagues that timber remained one of the most untapped resources of the Russian economy and ordered his government to spring into action on that front.

"What is more plentiful in our country, oil or timber?" Kasyanov demanded in televised remarks.

"The answer is clear - forests are a renewable resource. We have the largest forest supplies in the world," he said.

"Yet we are only chopping down 15 percent of the timber that we need, and there is no (economic) stimulus in place for improving volume."

He further pointed out that Russia accounted for only 3 percent of the international timber market although nearly a quarter of all forests were on its territory.

"We can easily expect 5 (percent) and even 7 percent growth in production in some spheres of the timber industry."

The government's apparent shift in strategy comes amid a tense battle between Kasyanov's Cabinet and Putin's economic advisers over growth figures.

Russia's economic growth slowed to 5 percent last year after registering a record rise of 8.3 percent in 2000 on the back of high oil prices on world markets.

Kasyanov's government had originally predicted only 3 percent to 4 percent growth for this year but better results in 2003.

Those comments, however, were quickly condemned by Putin, whose popularity in part depends on Russia's ability to recover from its post-Soviet malaise, and who faces re-election in 2004.

Putin said in April that the government should "adopt more ambitious goals" and stressed that present plans were inadequate, urging ministers to come up with new ideas for ensuring economic development.

He repeated the criticism 10 days later in his annual state of the nation address, observing that the current growth estimates would not allow Russia to catch up with the more advanced Western economies. Those comments appeared aimed directly at Kasyanov, a protïgï of former President Boris Yeltsin and who has served as prime minister since Putin came to power over two years ago, despite persistent media rumors of his imminent sacking.

The forestry issue has dominated Russia's political agenda since Putin focused on timber June 17 in his latest remarks upbraiding the government for its lack of ambition in setting long-term economic goals.

"Russia possesses enormous forestry resources which can bring stable and beneficial revenue to the government," Putin told a meeting of regional bosses.

Putin further branded the timber industry "uncivilized" and remarked that the industry's production had shrunk threefold since the Soviet Union's collapse.

An economic program drawn up two years ago after Putin's accession to power noted that economic growth of at least 8 percent a year over 15 years would be necessary for Russia to catch up with living standards in Portugal, one of the poorest of the 15 European Union nations.