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Montenegro’s New Forestry Law Eliminates Harmful Concessions

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More than half of Montenegro’s territory is covered by forests, with estimated wood reserves of around 72 million cubic meters.

However, the greatest financial benefit from this natural wealth has, until now, been enjoyed by concessionaires who exploited the forests, generating significant profits.

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The damage to the forests and the state budget from long-term concessions, introduced during the time of the former government of the Democratic Party of Socialists, is estimated to be in the hundreds of millions of euros, as confirmed by analyses from the Ministry of Agriculture and Forestry.

The new forestry law aims to change this situation. It envisages the abolition of concessions and the establishment of a state-owned company for forest management.

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However, at the local level, in municipalities in northern Montenegro, there is opposition to this solution, and Pljevlja is one of them.

“The adoption of this law would be catastrophic for Pljevlja. We would lose the largest source of funding. Last year’s revenue from concessions was around 3.5 million, and according to the amendments, it would be around half a million,” says Dario Vraneš, the head of the municipality, in an interview with Radio Free Europe (RFE).

Municipalities, where forests are located, have so far received 70 percent of the revenue that the state collected based on granted concessions.

Despite that benefit, residents of northern municipalities have been warning for decades about the detrimental forest management policy through the granting of concessions, which were awarded to companies close to the former government.

In essence, the state and local authorities received a symbolic share of the profits from the logging of Montenegro’s forests.

The state received up to 14 euros per cubic meter of wood, while the concessionaire sold them, loaded onto trucks, for up to 60 euros, and in cases of export, up to 120 euros per cubic meter.

In addition, concessionaires were abusing so-called sanitary cuttings, which involve the cutting of diseased or fire-damaged trees. They would also cut down high-quality conifers, fictitiously classifying them as trees designated for sanitary cutting.

Frequent fires concealed illegal logging. In the last ten years, more than 90,000 hectares of forests have been destroyed by fires.

During the same period, over three thousand criminal charges were filed due to forest theft and illegal logging.

After the change in power from the Democratic Party of Socialists (DPS), the new government announced a crackdown on the so-called “forest mafia.”

Former Prime Minister Dritan Abazović stated in Berane in October of last year that the state had lost more than a billion euros due to forest exploitation and officially declared war on the forestry mafia.

In order to bring order to the forestry sector, all long-term concession contracts were either terminated or expired by the end of 2022.

Instead of concessionaires, the sale of wood continued in the so-called “standing state,” where the buyer pays for logging, skidding, and transport on an annual basis.

Those one-year contracts are essentially the same as concessions, just of shorter duration, stated the environmental organization Green Home to Radio Free Europe (RFE).

While supporting the abolition of concessions, the organization points out the slowness of the changes, as the law was promised as far back as 2021.

What should the new law bring?

The Forestry Law, expected to be adopted in the parliament in the next two months, is intended to establish sustainable forest management.

It envisages the abolition of concessions and the establishment of a state-owned company for forest management.

Srdjan Pejović, a forestry master and former director of the Forestry Administration, explains that the solution for local authorities to receive 70 percent of the state revenue from concessions was problematic because there was no obligation to invest that income in forest maintenance.

“A forest is an ‘open-air factory,’ and investment is necessary to ensure that current and future generations can benefit from it in the long term,” says Pejović.

He believes that the forest management system must be reorganized, primarily by introducing expertise into this field.

“However, it is challenging when politics decides instead of expertise. No matter how good the law is, it won’t amount to much if decision-makers don’t appoint knowledgeable individuals to lead the job,” he says.

He points out that the number of forestry engineers, currently at 70 in the Forestry Administration, must be at least doubled. There also needs to be a solution for more than half of the staff who are not from the forestry profession.

“Forestry is viewed as a political spoil,” he emphasizes.

Pejović was at the helm of the Forestry Administration from the end of 2021 until August 2022, during the ongoing long-term concessions under favorable conditions.

As he mentions, during that time, a 340-page analysis of the existing concession contracts was conducted and submitted to the special police department.

“To this day, I haven’t received any feedback on that,” says Pejović.

How much profit does the state expect?

The Ministry states that the changes in the law will bring at least a hundred percent more profit to the state. They provide an example:

If the turnover of wood and wood products in 2022 amounted to 129 million euros, the application of the new law would double that amount with the same volume of logging.

Additionally, if production were to increase, the revenue could reach 400 to 500 million euros, according to the statement provided to RSE by the Ministry.

Moreover, they estimate that the state is losing tens of millions of euros annually from unpaid taxes due to the shadow economy.

There is also a plan to transform the current Forestry Administration into a commercial company that would employ loggers, climbers, drivers, crane operators, and mechanics.

By abandoning the “sale of standing timber” model, i.e., concessions based on quantity, they would shift to logging, production of timber assortments, and their transport.

An investment of 9.5 million euros would be required for the acquisition of technology, machinery, equipment, and working tools.

Doubts about the new forest management model

The Mayor of Pljevlja, Dario Vraneš, is convinced that the proposed new forest management model is ‘doomed to fail’ because a similar one existed about twenty years ago. ‘That model only produced losses,’ says Vraneš, who believes that concessions should not be abolished but should be under greater control.

Besides Pljevlja, other municipalities rich in forests include Mojkovac, Plav, Andrijevica, Rožaje, and Berane.

Local authorities in Andrijevica, as per RSE, state that municipalities should receive 100 percent of the concession fees, instead of the current 70 percent.

Other municipalities in the north have not responded to RSE’s inquiry about their stance on the announced new law.

In the Forestry Administration, there are currently around 400 employees throughout Montenegro.

In Pljevlja, where the administration has had its headquarters with 85 employees, there are concerns that the transformation into a new company could lead to job losses.

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