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12 Nov, 2008 15:20

Timber export tariffs held off as Prime Minister Putin visits Finland

Russia won't increase export duties on timber in the next nine to twelve months. Prime Minister Vladimir Putin announced the decision after negotiations with his Finnish counterpart on Wednesday. But other issues like the construction of the Nord Stream p

Finland's wood – processing industry may breathe freely for at least another nine months. Russia has postponed an increase in timber export duties, but Prime Minister Putin pointed out it will stick to its plan to produce value-added wood goods at home.

“Russia wants to use its resources with maximal efficiency and not just export unprocessed logs. I hope everyone understands that. But in the global financial crisis cuts in timber supplies to Finland's industries may create a critical situation in the country's economy. It may also provoke social difficulties as the result of job cuts. So the Russian government thinks it's possible to postpone an increase in timber export duties by up to 12 months.”

Russia supplies almost 80 percent of the lumber for Finnish timber imports. A trebling of export tariffs would means Russia would simply stop its wood supplies to the country, threatening the existence of the Finnish wood processing industry. Finnish Prime Minister, Matti Vanhanen, says this gives the country time to adjust.
“It's very important for Finland that higher duties are postponed. We will have more time to work out solutions for our producers and consider investment in the wood-processing industry in Russia.”

Putin and Vanhanen also discussed another touchy issue of bilateral relations – the Nord Stream pipeline linking Russia to Europe across the Baltic Sea. Russia expects Finland to approve the route for the new gas artery. But the Finnish prime minister said the government wants to see an ecological assessment first. Putin replied by saying Russia may simply stop the project if need be.
“We took everything into account: seals, birds, navigation, ammunition left in the sea from the Second World War. Europe has to decide whether it needs Russia's pipeline gas or not. If not, we won't build the pipeline.”

He noted that Russia could always make liquified gas and sell it on the global markets – including Europe – at higher prices if need be.