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Cablegate: What's Ruining Fishing and Why Legal Catch Doesn't Pay

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RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHVK #0103/01 2621020
ZNR UUUUU ZZH
R 181020Z SEP 08
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1011
INFO RULSJGA/USCG HQ WASHDC
RUCPDOC/USDOC WASHINGTON DC
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION COLLECTIVE
RUEHUL/AMEMBASSY SEOUL 0267
RUEHKO/AMEMBASSY TOKYO 0129
RUEHVK/AMCONSUL VLADIVOSTOK 1100

UNCLAS SECTION 01 OF 02 VLADIVOSTOK 000103

SIPDIS

E.O. 12958: N/A
TAGS: PREL SENV ECON RS
SUBJECT: WHAT'S RUINING FISHING AND WHY LEGAL CATCH DOESN'T PAY

REF: VLADIVOSTOK 082

VLADIVOSTO 00000103 001.2 OF 002


1. Summary. Industry experts gathered in Vladivostok for the
2008 Fishery Congress to discuss problems facing Russia's
fishing industry. Participants outlined several problems which
include an obsolete fleet, confusing regulations, lack of
processing facilities, and dwindling fisheries. An
ever-worsening situation has resulted in a decline in total
official catch for Russian boats of 56 percent over the two past
decades.

----------------------------
New Conference, New Promises
----------------------------

2. Fishing industry experts gathered for the Fifth Annual
Fisheries Congress in Vladivostok September 3-5 to discuss
strategies for sustainable development of the industry.
Speakers and participants focused on protecting marine
resources, combating illegal fishing, and promoting and
marketing sustainable fishing practices. Many participants
commented that little follow-up was made on issues raised at
last year's congress, and that federal officials followed
through on few of the promises made in earlier years. They also
noted that participation by foreigners was down this year. The
main problems the industry faces are outlined below.

---------------
Rusty Old Ships
---------------

3. Russia's fishing fleet is woefully outdated. Most vessels
are over twenty years old and not equipped with modern
navigation and tracking technologies, and are therefore unable
to fish extensively in international waters. Most banks are
unwilling to finance fleet modernization, as they consider the
industry to too big a financial risk with boats being movable
assets that can easily disappear to North Korea or elsewhere.
Though the government has acknowledged the credit problem, it
has thus far refrained from taking action to provide alternative
sources of funding. In addition, the inefficient old fleet
results in increased fuel consumption. Fishermen at the
conference stated that fuel now amounts to 30 percent of the
cost of their catch.

--------------------------------
Dwindling Fisheries and Poaching
--------------------------------

4. Poaching remains a serious problem. Illegal fishing of
protected species, unlicensed foreign boats in Russian waters,
and catches exceeding quotas continue to deplete fisheries and
seriously impact legitimate fishermen. Although Russia banned
the export of live crab in May 2007, large amounts continue to
be smuggled out of the country, primarily to Japan, South Korea
and China. More than 30,000 tons of crab were taken from
Russian waters during the first half of the year and sold to
Asian markets. The amount is already triple the legal quota for
the year. Experts at the conference estimated that at least 30
fishing boats continue to regularly poach crab in the waters of
the Russian Far East, most of which are Cambodian-flagged with
Russian crews. Vladimir Belyaev, a representative of the
Federal Fisheries Agency in Moscow, noted that, so far, the
Japanese and South Korean governments are reluctant to cooperate
in preventing illegal fishing, and refuse to share information
regarding the quantities of crab and fish delivered by poachers.

-----------------------------
Lack of Processing Facilities
-----------------------------

5. Russia lacks fish processing facilities, which reduces the
potential for adding value to the fish caught. It is hardly in
a fishing boat captain's interest to haul his catch back to
Kamchatka or Sakhalin when he could take it directly to
processing plants in China, Japan, or Korea. Currently, exports
of fish that actually make it back to Russian shores are in the
form of unprocessed frozen fish. During the Soviet era the
government operated both on-shore fish processing facilities and
maintained giant processing ships offshore.

-------------------------------------
New Regulations that Beg to Be Abused
-------------------------------------

6. Russian-flagged boats are now required by law to bring their
catch back to Russian ports for inspection. The rule was
designed to bolster the local fish processing business and
provide tax revenue. In practice, however, the system remains
so complicated that it almost begs to be abused. High port and

VLADIVOSTO 00000103 002.2 OF 002


customs dues coupled and excessive controls at Russia's fishing
ports simply encourage boats to go directly to foreign ports
where they are welcome to sell their catch. Even though Russian
fishermen do pay customs duties to land their catch in Japanese
or South Korean ports, overall costs remain significantly lower,
and procedures take hours instead of days.

------------------------------
"The Stupidity of Bureaucrats"
------------------------------

7. More than forty federal agencies regulate the fishing
industry, often unpredictably, overstepping their mandates and
issuing contradictory regulations. As one participant put it,
"we need to fight more against the stupidity of bureaucrats than
against poachers." For example, a bureaucratic disagreement
over the interpretation of a new fishery law turned the 2008 Sea
of Okhotsk pollock season into a disaster for many Far East
fishing companies. The Northeastern Border Guard Directorate
narrowly interpreted the new regulations and accused nearly all
of the pollock fishermen in the area of poaching and other
violations, detaining dozens of boats for weeks pending
investigation and court decisions. The RFE Military
Prosecutor's Office eventually stepped in and found the
Directorate's actions inappropriate, ruling in favor of the
fishermen. By then the season had been disrupted, companies
were unable to meet their quotas, and they suffered heavy
financial losses due both to lost productivity and un-refunded
fines.

------------
GOR Response
------------

8. Within the framework of a recently enacted national program,
Moscow has pledged to allocate 62 billion rubles (2.5 billion
USD) to support and encourage Russia's fishing industry. Thirty
percent of the program's budget will be allocated to the Russian
Far East to build 27 new research and fishing vessels, fifty
fish farms, and to expand fishing port facilities in
Vladivostok, Petropavlovsk-Kamchatskiy, Nevelsk, and in a number
of smaller towns. The GOR has also set up a fisheries
protection program through 2020. Federal fish hatcheries in the
Russian Far East are also meant to increase production and guard
against precipitous declines in fish stocks.

-------
Comment
-------

9. Prospects for the Russian fishing industry in the Far East
remain less than promising, but the conference does bring
together the right players and is a necessary forum that may
eventually bring results. Greater participation by the US in
the forum would be welcome and could contribute to the
industry's success and could provide some opportunities for the
American seafood industry. But, while officials annually
discuss various big-picture reforms to improve the industry,
they tend to avoid details and ignore the immediate needs of the
industry, leaving the most pressing problems unresolved.
Regulations, taxation, and a lack of subsidies make legitimate
fishing unprofitable. The 62 billion rubles allocated to
develop the industry is a negligible sum considering the
significant problems which fishermen of the Russian Far East
meet daily. As one participant at the conference candidly
assessed, "catching legally earns you nothing."
ARMBRUSTER

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