COMPARATIVE ECONOMIC STUDIES, XLIII, NO. 4 (WINTER 2001), 67-93

Sources of Crisis in the Russian Far East Fishing Industry Anthony Allison Western Washington University

Introduction Following the collapse of the Soviet Union, privatization and commercialization of the fishing industry of the Russian Far East (RFE) spurred widespread technological modernization of its fleet. Fishing effort shifted from lower-value species, bound mostly for the captive Soviet domestic market, to higher-value products sold internationally. But fleet modernization, financed and often supervised by foreign interests, has in turn led to harvest overcapacity and, combined with rampant illegal fishing, to the depletion of key fisheries stocks. Many RFE fishing enterprises, struggling already with rising input costs, international competition for markets, and the end of government subsidies, face economic disaster if these stocks continue to dwindle. RFE maritime communities dependent upon the fishing industry must contend with a future that appears tenuous at best. The economic health of the RFE fishing industry and its communities has been further undermined by ineffective fisheries management practices, and by a non-transparent system of allocating fishing quotas between users. Substantial rents from this valuable national resource have been lost to the public through capital flight and through unofficial payments for access to fishing quotas. The key fisheries management tasks of gathering data, setting biologically sustainable fishing limits, allocating quotas within those limits to domestic and foreign operators, and enforcing fishing rules, tasks have been plagued by bureaucratic infighting, lack of funding, and corruption. At the same time, the burdensome tax and regulatory regime in Russia for vessel operators has driven much of the industry's activities abroad, where Russian vessels call in foreign ports for repairs, supplies, and cargo transshipments. RFE ports, formerly hubs of fishing fleet activity in Soviet times, have become increasingly inactive and dilapidated. All of these trends, taken together, constitute a widely proclaimed "crisis" in the RFE fishing industry. The Putin administration has responded by introducing a controversial quota auction system for the most valuable species, and supervision of the auctions has been given not to the industry's traditional administrator, the State Committee for Fisheries, but to the Ministry

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of Economic Development. A new head of the State Committee for Fisheries, the former Primore Governor Evgenyi Nazdratenko, widely seen as an opponent of reform in his previous post, was appointed in March of 2001. These and other steps have met with broad skepticism from industry participants, who feel that such actions illustrate the federal government's inability to devise workable solutions to the industry's problems. A study of the recent history of the RFE fishing industry raises several key questions: • Why did the privatization and commercialization of the RFE fishing industry lead to results that have so seriously compromised industry's longterm health? • How has the opening of this industry to foreign interests, and their widespread participation over the last decade, contributed to the current crisis? • How have institutional arrangements in the industry evolved since the collapse of the USSR, and how have they facilitated large-scale overfishing and capital flight? • Finally, what measures are being undertaken by the Putin administration to reform the structure of this industry, and what are the prospects for their success? What other measures and models for optimal management of this public resource might be considered? To develop answers to these questions we begin by examining the nature of the RFE fishing industry's current impasse.

Characteristics and Sources of the Crisis The fishing industry of the Russian Far East (RFE) is experiencing a severe and enduring crisis that bears directly on the economic and political stability of the region. Fishing, including fish processing, storage, transport and related activities, is probably the region's largest industrial sector, and in many localities it represents the only significant form of economic activity.' Taking into account estimated unrecorded high seas shipments, products of the fishing industry have constituted roughly one-half of all export revenues for the region.2 Because of the fishing industry's pervasive economic influence and its connection to foreign currency earnings, regional politics are closely tied to the industry's development. Fishing is also crucial to the region's international dimension. Foreign companies and governments, especially those of Japan, Korea, China, and the United States, have been more active in the fishing industry than in any other sector of the Russian Far East economy.3 The forms of this activity have ranged from direct fishing by foreign fleets in Russian waters to joint ventures, seafood trading, fleet modernization, and supply of provisions for vessel operations. Japan's seafood import market, the largest in the world, has for

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several decades been dependant on output from Russia's Far East. China and Korea both serve as centers for transit and reprocessing of Russian seafood, as well as end markets in their own right. Crab, salmon, pollock, scallops, and bottomfish from the RFE are familiar to importers throughout Asia, North America, and Europe. Through these far-reaching connections foreign interests have played a key role in transforming the structure of the Russian Far East fishing industry. Enormous modern trawling fleets, built in the shipyards of Norway, Spain and Germany, and financed through long-term bareboat charters, have appeared in RFE waters. Large state-of-the-art crab catcher-processors have been sold from the United States, where crab stocks have sharply declined, to Russian shipowners. Dozens of Russian-built vessels have been refitted in Korea, China and the US for crabbing, shrimping, and longlining operations. In most cases the technological efficiency of these new and refitted vessels was a great improvement over that of the Soviet fleet. However, the removal of subsidies, coupled with the vessels' expanded capacities, higher operating costs, and debt loads has meant that they must be operated effectively, and use relatively large volumes of quotas, to be economically viable. During this same period the Russian fleet, both old and new, has come to rely on foreign ports for repairs, crew changes, and even transshipment of products, leaving Russian port facilities inactive and decaying. The numerous shoreside plants, which functioned throughout the Russian Far East in Soviet times, have deteriorated, and in many cases have virtually ceased operations. Many large state fishing companies have disappeared, become privatized "holding companies" for smaller entities, or are struggling under imposing debt loads and tax arrears. Russian sources of financing for the industry have been almost nonexistent, resulting in widespread reliance on foreign credits. Much of the rents extracted during the "boom" years of crab and pollock fishing in the 1990's have, through a variety of circumstances, gone offshore. Against this background, the overall fisheries harvest in Russian Far East waters has fallen dramatically. This drop in volume has been accompanied by a radical shift toward export sales in place of traditional shipments to the internal market. However, Russian fisheries statistics, especially regarding exports, are notoriously unreliable; lack of funding for responsible agencies, corruption of monitoring bodies, and illegal and otherwise unregistered exports have undermined the integrity of the data. Foreign import statistics, as well as anecdotal information, must be used to fill out the picture. Existing fisheries information is nonetheless sufficient to draw a central conclusion: while Moscow has struggled with the regions (and the regions with each other) for control of the resource, the most important commercial stocks, king crab and pollock, have been sharply reduced in many areas through overfishing and ineffective management. Falling quotas have recently been accompanied by unprecedented public conflicts between the krai/oblasts over rights to a shrinking resource, and by growing hostility toward foreign participation in the fishing industry.

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Although the underlying economic reasons for the fishing industry's crisis evolved during the 1990's, they have their roots in the Soviet period.

The Heritage of the Soviet Fishing Industry The fishing industry of the USSR was based on a highly centralized, hierarchical administrative structure. This structure was designed to procure an inexpensive, stable protein supply for the Soviet population, and to further national security interests. Beginning in the mid-1950's the USSR engaged in a massive program of shipbuilding and fishing vessel deployment in the world's oceans. Large autonomous catcher-processors were constructed first in Polish and German yards, then later in the Ukraine. Hundreds of smaller ocean-going vessels (ships of roughly 50 meters in length and less) were built in Russia itself. The annual Soviet marine harvest grew from less than a million tons in 1950 to over six million tons in 1970. At the end of the 1980s volumes peaked at a level of almost 10 million tons per year, with roughly 65% caught in the Pacific Ocean.4 By this time the USSR had come to possess the largest fishing fleet in the world, and was second in marine harvest only to Japan.5 Consumption of seafood per capita grew to over 20 kg per capita, exceeding US levels by a factor of three.6 However, the economic efficiency of the vessels which produced most of this seafood, based on vessel tonnage per unit of output, appears to have been well below that of other fishing nations.7 And although some high-value products such as salmon, pollock roe, and crab were exported, most of the seafood produced by this fleet was not highly valued by the international marketplace, and almost all of it—over 90% by tonnage—was sold to the captive domestic consumers of the USSR.8 The economic characteristics of this enormous build-up of fishing power were similar to those in other industrial sectors in which the Soviet government invested heavily for several decades: physical assets reflected an emphasis on volume rather than efficiency, and the quality of output lagged behind international standards but was accepted domestically. Inputs, such as fuel and capital, were highly subsidized, and product prices were set within the range of consumer purchasing power. An important local social consequence of these policies was that large numbers of employees were recruited into enterprises that, when exposed to non-subsidized economics and open markets, had to transform themselves quickly - a painful process often involving lay-offs or non-payment of wages - or perish. Unfortunately for many employees of the fishing industry and their families, most of these fishing enterprises were located in remote areas, where, during the Soviet era, the enterprise had often become the largest employer and the most important provider of social amenities. The artificiality of the Soviet economic system created, in the case of the RFE fishing industry, artificially "successful" enterprises, communities and towns, whose fate in a post-Soviet era would be highly uncertain.

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Because the output of each enterprise and region ultimately depended (and still depends) on the size and type of fishing allocations received, the process of establishing quotas was inevitably subject to controversy and to attempts at influence both regionally and in Moscow. However, throughout the Soviet era most fisheries stocks of the RFE and in accessible foreign waters were generally underutilized, and therefore sufficiently available for those with harvest capacity. Also, the entrenched, centralized Soviet allocation system was relatively resistant to influence by regional leaders and by individual enterprises, and was also largely capable of enforcing harvest limits. Anecdotal evidence suggests that corruption in the form of personal gain by regulatory officials played almost no role in the system of establishing and allocating quotas, and only a marginal role in the activities of enforcement agencies. Disputes between regions and the center over control of the allocation process were not allowed to develop, and complaints between or from the regions were resolved through Moscow's all-encompassing administrative power. The scope of the government's power and its involvement in the fishing industry, like the structure of the industry itself, changed quickly and drastically when the Soviet system ceased to exist.

The Changing Role of Government The end of the USSR's command economy caused an abrupt decline of powerful state industrial structures such as the Ministry of Fisheries. After the collapse of the USSR in 1991 the Ministry shed its former industry-leading role, and its authority was restricted to management, instead of exploitation, of fisheries stocks. In 1991 the Ministry of Fisheries became the Russian Committee of Fisheries, with its staff reduced from 1,200 to 400 employees.9 The reduction in authority was accompanied by frequent changes in the top position of Chairman: six different individuals have held the job since 1991, and there have been periods of several months at a time with no Chairman appointed, or with a temporary "acting" Chairman. Although many powers were lost, the all-important function of setting and allocating overall harvest levels has remained in Moscow, and chiefly with the Committee, as has the licensing of vessels and fishing companies. However, the authority of the Committee in this most crucial of areas has increasingly been impinged upon by other entities, and by the late 1990's the Committee was forced to share with other government bodies the establishment and approval of quotas, introducing serious delays and uncertainty around their issuance. The reasons cited by participants for inserting additional controls into the quota allocation system are various. The Russian press describes fishing as a "criminal industry," "mafia-controlled," with hundreds of millions, if not billions, of dollars disappearing every year through bribes to officials, illegal fishing, and unrecorded exports. Yet another element is the alleged eagerness

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of other bureaucratic agencies to enjoy the fruits of control over an industry with substantial hard currency earnings.10 By the late 1990's the Soviet fisheries management and quota allocation system had evolved into the elaborate structure depicted in Appendice 1 A. At the base of the structure, the local scientific work is done by oblast-krai scientific institutes with far more independence than before from "Tinro-Center" in Vladivostok. The oblast/krai fisheries science centers have gained their independence in a period of drastic drops in central funding for scientific research at every level. This raises concern that the very data on which quota decisions must ultimately be based is inadequate or suspect. Formally, the next steps in determining quota allocations are much the same as before: Tinro-Center in Vladivostok collects the data and makes recommendations to Vniro in Moscow. Next, in an increasingly politicized process, the recommended allocations by fishing area and species are divided up by the Committee between oblast-krais. Now, however, instead of having the final word, the Committee sends its recommendations for review by a government commission of "experts," mainly ichthyologists from various national institutes appointed by the State Committee for Ecology, and then to the State Committee for Ecology itself. Once any questions or objections are resolved, this entire set of harvest recommendations, by fishing area and by species, with rights of harvest divided between oblast-krais, is forwarded to the Russian prime minister for signature. Only after this signoff by the highest government official are harvest limits considered to be approved, at which point they are passed to oblastj-krai administrations for distribution between companies, sometimes through an intermediary industry association group. This distribution of long-awaited quotas to the end-users, with subsequent issuance to specific vessels of a fishing "ticket," is based on the types of vessels owned (or operated through charter) by each company, and their historical catch levels. Additional criteria explicitly considered by oblast/krai governments are the vessel operator's record in tax and wage payments, its importance as an employer and social service provider to the krai/oblast, and any record of fisheries violations. Less formal criteria, according to industry observers, range from family ties to political leanings to outright bribery. Instances also occur of "special" quotas of considerable value being awarded directly from Moscow to individual firms, including even to firms without vessels to harvest the quota received." The quota allocation system is complicated additionally by the existence of different types of quotas. There have been four basic types for domestic users: -industrial quota, which is the great majority of all quotas, and has been usually free of charge; -control catch quota, which is typically in biologically sensitive areas not generally open for operations, and requires fishing with a scientist on board who monitors and analyzes the catch;

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-scientific quota, which requires fishing according to a program devised by scientists to systematically explore an area and species about which information is insufficient to establish an industrial quota; -paid, or commercial, quotas, which are sold through designated agencies (usually in Moscow) for fees that are ostensibly used to support fisheries science, enforcement, search and rescue, and other functions needed by the industry. In 2001, as will be discussed below, a new mechanism was established for allocating many of the most valuable quotas: open auctions, held in Moscow periodically for different species, at which the highest bidder receives the right to fish for a given quota. In addition, there are separate quotas set aside for bilateral fisheries agreements, which allow foreign vessels to fish in Russian waters. These quotas are provided to foreign governments in exchange for payment in cash or in kind (for instance, salmon hatcheries or scientific vessels) or, less frequently in recent years, in exchange for reciprocal fishing rights. The scope of these quotas has been reduced as pressure on Russian stocks from Russia's own fleet has grown. The possibility to move allocations between quota categories or even to create new "special" quotas, and to treat the criteria and rules for each category subjectively, has created a high potential for corruption in the allocation process. It is not surprising, in this context, that the top executives of fishing enterprises and the heads of oblast-krai fishing departments spend several months of every year in Moscow trying to protect and enhance their interests. There are additional obvious and pervasive moral hazards which arise on the local level when oblast/krai administrations divide quotas between companies based on the changing mix of objective and subjective criteria described above. A third level of vulnerability in the fisheries management system is monitoring and enforcement. Underpaid (or unpaid) scientists and enforcement officers are often offered cash, alcohol, or valuable seafood products in return for falsifying records, easing the rigor of scientific fishing programs, or simply looking the other way during violations. Although such hazards may be encountered by sea-going fisheries scientists and enforcement officers in every country, in the Russian case their sense of abandonment by the government, along with the widespread view held by Russian fishermen and their employers that success can only be achieved through violating the formal rules, makes this a particularly serious problem. As with the Committee in Moscow, during the 1990's the traditional enforcement agency, Rybvod, has faced growing criticism for unregulated exports and unpunished fishing violations. Another organization, The Special Marine Inspectorate (Spetsmorinspektsiia), a division of the State Committee for Ecology, began to patrol and pursue violators alongside Rybvod. Capture of violators became the subject of competition, and sometimes of conflict, between the two organizations, leading to confusion. Finally, in 1998 the enforcement functions of Rybvod were transferred to the Federal Border Guard,

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a further impingement on the power of the Fisheries Committee, and another case - like that of the State Committee for Ecology approving fishing quotas — of an outside entity receiving decisive authority over an activity with which it was only generally familiar. It appears that this inexperience was recognized, and many Rybvod personnel have been integrated into the Border Guards units involved in fisheries enforcement. But issues of competence and motivation remain, and anecdotal evidence indicates that problems of corruption have not eased significantly. Indeed, some industry participants have portrayed the takeover as an effort to find a source of unofficial revenue in the form of bribes to appease the Border Guard, whose troops are usually asked to serve in difficult and remote areas of the Russian borderlands with little recompense. Quotas, the status of the resource, and enforcement of fishing rules are all central topics at sessions of the RFE Scientific-Industrial Council, which meets either in Moscow or at a RFE location at least two times per year. Councils are made up of government and industry representatives from each Far Eastern oblast-krai. Often Council meetings in the past were marked by common positions and actions by RFE oblast/krais in support of the industry and the region. More recently, however, regional meetings are marked by conflicts over fishing rights between fishing companies in different regions. These constituents now openly and aggressively compete with each other for markets, sources of financing, vessels, and, above all, quotas.

The Emergence and the Struggles of Private Industry The number of independent firms in the fishing industry exploded in the 1990's. Not only did the former state enterprises and the fishing kolkhozes break free from their controlling umbrella associations; a myriad of new ventures continuously appeared on the scene. One source, writing in 1996, cites an "incomplete assessment" that found over one thousand firms active in the RFE fishing industry.l2 Official data from 1999 indicate that in Sakhalin Oblast alone some 598 enterprises are active in the fishing industry, a ten-fold increase since 1990.13 Cut loose from subsidies as well as from the Ministry's administrative control, RFE industry participants formed new companies and transformed old ones, and in either case were forced to adopt new products, new production techniques, and new markets in order to survive. The formation and transformation of so many enterprises, many of them at least temporarily successful and oriented to foreign markets, may be an anomaly among industries in post-Soviet Russia, and is connected to several factors: -the presence of key moveable assets (vessels) that could be easily appropriated from state concerns, or imported, and quickly modernized for high-value production;

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-an economic activity that takes place mainly on the high seas, with shipments directly to foreign ports, and so is relatively sheltered from the severe problems that have plagued the Russian business environment, including the weakness of Russia's infrastructure; -the existence of cadres of experienced fishermen and seafood executives with at least passing knowledge of international production methods and markets; -the availability of foreign financing for an industry that could deliver, with limited infusions of capital and expertise, seafood products of high quality for the international marketplace. Although every maritime REF oblast-krai has seen a proliferation of new, small companies in the industry, in Primore and Kamchatka large former state enterprises and large kolkhoz organizations continued to dominate the scene through the 1990's, while on Sakhalin newly formed companies, often with foreign participation, emerged at an early stage alongside the kolkhozes as industry leaders. Given the upheaval and change that have pervaded the industry, it is additionally noteworthy that the CEO's of the largest companies in Primore and Kamchatka - the leading localities in the RFE for seafood production - were almost all the same at the close of the decade as at the beginning. Large former state enterprises headed by longtime chief executives had certain advantages over their smaller new competitors. The influence of these enterprises and their executives was likely to be higher among Moscow bureaucrats, and especially among regional officials. Quotas could be easier to obtain for this reason, and also because these companies typically already had a long history of receiving quotas for their huge, if outmoded, fleets - and history was one of the key criteria for quota allocation. Additional arguments for receiving valuable quotas under favorable terms were the social infrastructure, extended workforce, and broad tax base typically connected to large former state enterprises. Finally, the familiarity and visibility of these firms, and their size, was often an asset in attracting foreign credits, at least in the first years of reform. On the other side of the ledger, the new firms were free from the financial burdens and distractions of supporting social infrastructure. They also could hire the most talented managers from the older firms, offering better compensation and greater independence, and could tailor their workforce to their firm's developing needs. A lower company profile could also help in avoiding the worst onslaughts of the Russian regulatory and tax services, and of the criminal world. The most successful of the new companies have usually been headed by executives who were already well known in the industry from their prior service in state enterprises, and who had useful connections locally, in Moscow, and, in some cases, overseas. The advantages and disadvantages to an oblast-krai of maintaining large former state fishing enterprises, and the reasons for doing so in the specific cases of Kamchatka and Primore as opposed to Sakhalin, are difficult to mea-

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sure. Kamchatka, the most dependent economically on the fishing industry, has witnessed more stability, and less open conflict, in regional quota allocations. Primore seems to have suffered from the highest degree of violence and bitter shareholder disputes in its fishing industry, and from repeated scandals over vessel ownership and charters. In recent years the largest Primore companies, VBTRF and Dalmoreproduct, have become entangled in these scandals and have been either broken up or paralyzed by legal actions and by lack of quotas; only one of the huge former state enterprises in Primore, NBAMR, remains intact, relatively free of legal conflicts, and fully active. Sakhalin, though home to several successful and apparently viable new companies, has seen many of its large fishing kolkhozes default on debts and declare bankruptcy, with unhappy consequences for their long-suffering local populations. Also, illegal fishing, mostly by small operators delivering crab secretly to nearby Japan, has apparently been more ubiquitous in the Sakhalin area than in any other region of the RFE. Although since 1990 some RFE oblast-krais have made a greater attempt than others to promote continuity of participating firms, the RFE fishing sector as a whole has experienced chaotic change and a growing crisis throughout the period. The RFE catch plummeted from 4.6 million tons in 1990 to a nadir of 2.3 million tons in 1994. This initial decline resulted in part from the collapse of demand from the Soviet market and the need to reorient the fleet to new products, but also from the combined effects of an aging fleet and lack of capital. After recovering, with the help of chartered ships from Europe and modernized Russian vessels, to almost 3 million tons annually during the next four years, the catch dropped by some 350,000 tons in 1999 and continued to fall in 2000.14 While the initial reduction in catch in the early 1990s was temporary and correctable, with the help of foreign capital and redirected operations, the latest trend reflects an increasingly severe resource constraint involving especially the most abundant commercial species, Alaskan pollock. Meanwhile the annual harvest of the other major commercial species of high value, king crab, peaked in 1996 and faces a steep decline in 2001 and beyond. With the exception of imported or refit pollock and crab vessels, most of the fleet has continued to age and deteriorate. In Primore, the area with the largest concentration of vessels, it was estimated in 1999 that over 65% of the fishing ships were more than 17 years old.15 The situation is similar in other RFE areas. A sharply reduced and declining overall catch, overfished pollock and crab stocks, and an aging and decrepit fleet are only the most blatant signs of trouble. Production by shoreside plants declined even more precipitously than that by the fleet — by almost 60% between 1990 and 1994.16 According to materials from a State Committee-sponsored conference in mid-1999, shoreplants and ship repair facilities are both utilizing only 20-30% of their capacities. Fishing ports, formerly bustling centers of repair, resupply and transhipment, have seen their turnover curtailed by a factor of three.17

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As a result of these developments, the fishing industry throughout the RFE has lost roughly 30% of its workforce between 1990 and 1996.18 However, this decline should be seen against the background of a loss of 8% of the general RFE population, and some 26% of the number employed in all RFE industries, between 1990 and 1996.19 As a result, the percentage of workers employed by the fishing industry has remained large and fairly constant throughout the maritime areas of the RFE: for example, roughly 18% in Primore, 28% in Sakhalin, and 50% in Kamchatka in the second half of the 1990's.20 The economic significance to local communities and regional governments of the fishing industry's transformation during the 1990's is extremely difficult to quantify. Much of the industry's activity, including substantial amounts of compensation to seamen, has taken place offshore or is otherwise hidden from scrutiny. Unofficial payments to regulators and tax collectors grossly distort measurements of financial flows to government, and of industry burdens. Besides employment of large numbers of local residents, the only obvious physical evidence on shore of the industry's transformation seems to be the new or rehabilitated luxurious offices and expensive foreign cars of fishing firms - and, much less often, new or refurbished shore plants - and powerful vessels of recent vintage sometimes tied up in RFE ports. Reliable data on the profitability of companies in the fishing industry is also nearly impossible to obtain, given the ubiquitous practice of underreporting catches, revenues, and profits. However, the fragile state of the industry's financial condition is attested to by frequent and well publicized cases of tax arrears, vessel arrests by unpaid creditors, and bankruptcies. Although anecdotal evidence suggests that some individual entrepreneurs who participated in the crab and pollock "boom" years of the early and mid-1990's managed to accumulate substantial personal wealth in overseas banks, this appears to represent a very small fraction of the industry. Most importantly, the lack of capital investment in the industry (outside of crab and pollock vessels, many of which are chartered or are heavily mortgaged) has contributed to the downward spiral of undercapitalization, underperforming assets, increased reliance on foreign financing, and additional scrutiny and bureaucratic interference in attempts to stem capital flight. In summary, during the 1990's, the industry faced a range of fundamental problems: lack of domestic capital; a confiscatory tax system; outdated technology (this applies especially to shoreplants); and, by the late 1990's, lack of adequate quotas for some key species, especially pollock and crab. Additional difficulties have included the underfunding of fisheries science and the confusing, inefficient, and corrupt system of quota allocations and fisheries enforcement discussed earlier. Yet another important issue, and one which has received increasingly negative attention in recent years, is the role of foreign interests. This role has several dimensions, and it is one of the most controversial elements of the current debate over the crisis in the RFE fishing industry.

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The Role of Foreign Interests The experience of recent years has shown that foreign investors enter the Russian fishing industry with one goal: to get access to Russia's marine biological resources and supply seafood products to the international market. In doing this foreigners are not in the least interested in the preservation of our resources, or in the life of our villages, and less so in Russia's food security. And although we continue to work with foreign investors, trying to find mutually profitable alternatives, basically we rely on our own capabilities. - Evgenyi Nazdratenko, then Governor of Primore, speaking at a government hearing on fisheries, December 9,1999. Nazdratenko was appointed head of the State Committee for Fisheries in March of 2001. (Digest of Fishermen's News and Regional Press. December 1999-January 2000.) The proliferation of new firms in the fishing industry in the early 1990 's was accompanied by a radical threefold reorientation of business strategy: toward foreign markets, toward foreign financing, and toward foreign technology. The shift was caused by factors common to other industrial sectors in post-Soviet Russia, especially lack of domestic capital and the need to upgrade assets to competitive international levels. But this movement into the international marketplace was particularly abrupt and widespread because of several factors peculiar to the RFE fishing industry in post-Soviet Russia: -a history of close international contacts, including joint fishing operations with foreigners (especially Japan and the US); -the relative insulation of the fishing industry, and especially its export activities, from the imposing barriers of the Russfan business environment that have inhibited foreign involvement in other industries; -the established value of many RFE seafood products in international markets, along with the relative ease with which these products could be increased in value; -the decline of fisheries, and of access to fisheries, throughout much of the world, which affected the major potential foreign partners of the RFE fishing industry (primarily Japan, the US, and Korea, as well as Europe); this decline made foreign shipyards particularly eager for new buyers of their ships, foreign vessel owners enthusiastic about sending their vessels to Russian waters in search of better catches, and international seafood marketers hungry for new sources of product. Foreign-built vessels have attracted perhaps the most attention of all aspects of foreign involvement in RFE fisheries. In the first half of the 1990's some 50 large new pollock "supertrawlers" were delivered under bareboat charter from the shipyards of Norway, Spain, and Germany in the largest infusion of foreign capital the industry has ever seen. A fleet of 12 new longline vessels arrived from Norway under similar conditions during the same period. Approximately 15 large existing crabber-processors and at least one newly

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built one, with capacities roughly three times greater than Russian counterpart crab vessels, entered RFE fisheries between 1990 and 1996 from the US, where crab stocks had sharply declined. In addition, a large number of smaller used vessels of various types have been sold or chartered to RFE fishing companies from Japan and Korea. These foreign vessels were typically placed under Russian flag, and the effective charterers/operators or owners have been Russian companies based in the RFE. Arrangements have commonly included operational management and product marketing by a foreign company, foreign specialists in key positions on the vessel, and financial control through chartering or mortgage obligations to foreign entities. Operational control has tended to revert to the Russian side as financial obligations are satisfied and as the Russian fishermen gain experience with the new vessels and their technology. Although many of these new and chartered vessels have operated successfully in RFE waters, their combined impact has helped to deplete resources, and payment of loans has often been problematic and led to conflicts with foreign entities, and between Russian operators, over the terms of these transactions. High taxes and duties, along with burdensome regulations and inefficient port procedures, have caused many Russian operators to keep their foreign-built vessels out of RFE ports. Even crew changes are often done at sea or in foreign locations. Russian-built vessels are more likely to call in Russian ports between voyages, but almost uniformly ship their export seafood products directly from the high seas to foreign ports. Russian-flag vessels, or those delivering their product, then stock up with provisions from these ports to be delivered directly to the Russian fleet at sea. During the 1990's Busan, Korea, because of its nearby location and its marine service capabilities, has come to resemble an offshore Russian port city - drydocks full of Russian vessels, business hotels host to delegations of Russian fishing industry entrepreneurs, and one entire area of town, around "ulitsa Texas," which caters to Russian fishermen as well as shuttle traders and resembles a Korean version of Brighton Beach's commercial strip. The financing by foreign interests of vessel acquisition, refits, repairs and provisioning has been closely connected with obtaining marketing rights to vessel products. These rights provide some ability to control cash flows, and therefore give increased security to the financing entity in an environment where mortgages and other legal instruments lack sufficient power. Marketing rights also allow the financing entity to achieve the central business purpose of making a profit above financing charges or charter payments, through margins or commissions on the sale of product. This approach to profitability usually substitutes for a more traditional equity stake, which would carry with it the vagaries of shareholder rights in Russia and the dangers of Russian taxes. For the aspiring Russian seafood executive, initially inexperienced in international markets, assigning rights of sale to a foreign partner has provided a way to learn about these markets firsthand before entering them directly, and also of checking on the sales results of other foreign partners. This arrange-

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ment may also offer, through transfer pricing and other methods, a mechanism to accumulate funds not subject to confiscatory Russian taxes and harsh currency controls. The dramatic shift by RFE seafood producers to foreign markets after the collapse of the USSR did not represent a calculated preference for higher returns - in effect, Russian producers had no alternative. The domestic market was no longer viable. A steep fall in the purchasing power of Russian consumers was accompanied by a breakdown of old Soviet marketing channels, a general lack of financing for producers to offer the extended terms of sale required by most Russian buyers, and a business environment that made collection of sales proceeds problematic. Additionally, rail tariffs on the traditional trans-Siberian delivery route from the RFE to populations centers in European Russia skyrocketed, and reliability of the service declined. Fortunately, RFE producers had Pacific Rim markets close at hand.

Chart 1: Comparison of Total USSR/Russian Pacific Ocean Catch and Total USSR/Russian Catch

Production Years

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Chart 2: Comparison of Total Marine Harvest for Japan, USSR/Russia, Korea, USA, and China

Because of the extent of unrecorded and underreported export shipments, it is difficult to measure the true quantities of exports of seafood from the RFE in the 1990's. Yet a glance at official figures makes the trend plain: revenues from export shipments roughly doubled from late 1980s to 1992, and then doubled again by 1996.21 This should be viewed in the context of a fall in the volume of harvests of approximately 40% over the first period, and another 10% over the second. The sharp rise in export revenues in the face of large declines in harvest were achieved in part by terminating or decreasing fishing efforts for low value species, which made up a significant part of the catch in the Soviet period While the catch by Russian vessels of the most abundant species in RFE waters, pollock, has also fallen steeply, by some 50% since 1988, this drop has' been offset to some degree by an increase in the value of the products produced. The arrival of the European supertrawlers, whose predominant finished product is frozen fillet block, along with the refitting of several existing large Russian trawlers for producing the same products, has caused Russia to become a major supplier of relatively high-value pollock fillet blocks to international markets. The Russian pollock fillet fleet is capturing the value traditionally added by reprocessing operations, potentially providing a higher return to the vessel owner.

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Chart 3: Pollock Catch as a Component of Total RFE Catch

— — Total RFE Catch •RFE Pollock Catch

* 2000 -

** "" "*» X

' V

% %

*

1000

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 19! Years

Besides pollock, the other major RFE seafood product contributing to export sales, and the one most associated with problems of unrecorded shipments, illegal fishing, and underreported foreign-source revenues, is king crab. Prior to 1990 only a few RFE companies fished for king crab, and they used small, Japanese-style conical pots. Most of the catch was canned for deliveries to Europe. With the arrival of US-style crabbers and large rectangular pots in the early 1990's, and with the deterioration of Russian monitoring and enforcement capabilities, both the legal and illegal catch expanded quickly. The catch rose from approximately 15,000 tons per year in the late 1980's to over 70,000 metric tons by the late 1990's. Because harvesting king crab and delivering it in live, chilled or frozen form is possible and potentially very lucrative with a relatively small boat - as compared to operations involving pollock and other species - incentives for illegal fishing and unrecorded exports are very high. As a result, informed observers estimate Russian king crab harvest levels not from official catch and export data, but by extrapolating from import data of the two major importing countries, Japan and the US. This data shows that about 43% of the actual catch of the most abundant and lucrative crab

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Chart 4: Red/Blue King Crab Harvest, USA vs. Russia

-USA Harvest — -

Russian Harvest

70000

70 71 72 73 74 75 76 77 78 79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 99 Years (Note: Volumes for Russian harvest in '92, '93 extrapolated from partial data; Also, Russian data for 1985-1993 may include other types of crab)

species caught in the RFE between 1996 and 2000 - red and blue king crab represents overharvest and illegal fishing.. Based on these estimates, the implied value of illegal shipments of red and blue king crab in 1996-2000 is approximately $ 180 million per year. This figure relates only to the problem of overharvest - it does not count underreporting of revenue through transfer pricing, misidentification of species, or other techniques used for avoiding income reporting or quota limitations, and relates only to red and blue king crab. A similar situation exists with other crab species, but on a smaller scale. The above estimate for red and blue king crab covers what appears to be the most significant single aspect of illegal seafood exports from the RFE. Japan's northern ports, processing plants, and entrepreneurs have benefited greatly in the short term from illegal live crab exports from Russia. But it is clear that such rates of overharvest represent a serious danger to one of the

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Chart 5: RFE Red/Blue King Crab Harvest, Estimated Catch vs. Quota

Chart 6: RFE Red/Blue King Crab Harvest Estimated Total Value vs. Estimated Overcatch Value

600.000,000

500,000,000

400.000.000

300.000.000

200,000.000

100,000,000

of Overcatch

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RFE's most valuable resources, and to all who rely on it for economic sustenance. Developments in king crab and pollock fisheries reflect the complex and sometimes paradoxical role of foreign interests in RFE fisheries. New fishing and processing technology, financed, installed, and often temporarily operated by foreigners, has sharply raised harvest efficiency and has greatly improved the quality of products. This harvest efficiency, combined with ineffective control and monitoring of fisheries, has pushed pollock and crab stocks into decline. Financial obligations attached to deliveries of technology have led to many cases of substantial foreign control of operations, and especially of marketing channels. At the same time international transactions, including unreported deliveries of product to foreign ports, have allowed Russian entrepreneurs to hide income, accumulate personal and corporate wealth abroad, and reduce Russian government rents from use of this valuable public resource. Undoubtedly far greater rents, both public and private, however, have been lost to the RFE through the wholesale shift of industry support activities - shipbuilding, repair, provisioning, transhipment, crew rest and recreation to foreign ports. This shift, as opposed to the shift to exports, is not stimulated by the logic of geography and markets. It is instead largely the result of Russian tax, customs, and regulatory practices, along with the deterioration of port facilities throughout the RFE. This result has greatly benefited foreign shipyards, foreign ports, and foreign vendors of marine equipment and supplies. In this situation it is no surprise that proposals for improving the performance and prospects of the RFE fishing industry often involve recasting the role of foreign interests, as well as fundamentally reforming management of the country's fisheries resources.

Reform of the RFE Fishing Industry: Other Institutional Models and the Response of the Putin Administration Lessons from the experience of the RFE's neighbors are important to consider as Russia formulates proposals to deal with the crisis in RFE fisheries. In the recent past other Pacific maritime states have, like Russia, faced major declines in their harvest volumes and threats to their most important stocks, as well as bitter conflicts between resource users and arguments over the role of foreign interests in the fishing industry. However, none of Russia's neighbors has faced these problems while simultaneously confronting dramatic national political and economic change on the scale of that experienced in Russia. The key economic issue for RFE fisheries is how to maintain the stocks of these economically valuable resources in order to assure long-run sustainability of harvest. Pollock and king crab, taken together and considering estimates for illegal fishing and unrecorded exports, have probably ac-

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counted for well over two-thirds of all revenues earned from RFE fisheries in the past decade. The status of these stocks is likely to determine, in large part, the health and viability of the RFE fishing industry in coming years. In the US Pacific area, where pollock and king crab stocks have had a similar economic importance, stocks have also seen startling vicissitudes in abundance, and have been the subject of ferocious debate over the reason for these vicissitudes. Political battles continue both regionally and in Washington DC over the allocation of quotas to users of these species. The US has had significant success in recent years in resuscitating its pollock stocks and increasing the value of pollock products produced at sea through management measures such as limited entry and individual transferable quotas. Meanwhile, Russia's pollock stocks have continued to decline, with Chairman Nazdratenko, among others, calling for a moratorium on all fishing for pollock in the Okhotsk Sea.22 Exchange of management experience and scientific data with the US may be useful in exploring management alternatives for Russian stocks, but will have no lasting impact until uncontrolled fishing in RFE waters, by Russia's own fleet and by foreigners, is sharply reduced or eliminated.

Chart 7: Pollock Catch Comparison for Asia (including Russia), North American, and Russia

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Years

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Regarding king crab, the enormous Alaskan stocks declined precipitously in the early 1980s, and at present the fishery is a fraction of former levels. It is still a matter of argument in the US as to the roles played in this dramatic and enduring downturn by overfishing, environmental change, and other factors. Negative lessons may be the key ones here: once a king crab stock is driven below a certain level, its recovery may be problematic even if fishing effort is tightly controlled, as it has been in Alaska. The Russian catch appears to have peaked in 1996, then declined slightly in annual tonnage through 2000, but with a substantial drop in average size of crabs caught, according to industry observers. Quotas for king crab were reduced by over 40% in 2001, with still larger cuts under consideration for 2002. Although stock assessment and fisheries management are inexact sciences in any country, most experts believe that environmental change and fishing pressure interact, so that a stock under fishing stress is more susceptible to climate change and vice-versa. This is one reason why the problems of unreported catches and ineffective monitoring and enforcement are so troubling for the future of Russia's pollock and king crab stocks: it is not just overfishing that is worrisome, it is the perceived inability to set and enforce rational rules at all. The government of President Putin has the expressed goal of establishing the rule of law and attacking illegal activities, especially those that directly harm Russia's national interest. The fishing industry appears to be a good candidate for attention. The main danger in such efforts would be to make more burdensome an already harsh and complex regulatory regime in the name of law and order, without actually reducing illegal fishing and corruption. Another mistake would be to further damage national interests by seeking scapegoats in the form of foreign involvement. Since taking power the Putin administration has, chiefly through top officials in the State Committee for Fisheries, consistently advocated certain planks of federal fisheries policy which may be summarized as follows: -The current shortage of resources for the fleet in RFE waters must be offset by increased fishing in the open ocean and in the fishing zones of other countries. -More emphasis must be placed on development of inshore, smallboat fisheries, which deliver to shoreside facilities, thus increasing employment and other benefits to the local economy. -Tax and customs regulations must be altered to attract the Russian fleet back to Russian ports for repairs and other services. Other regulations must also be streamlined to avoid costly delays of vessels in RFE ports. -Shipbuilding in Russia, as opposed to abroad, should be stimulated by offering guaranteed quotas to those companies that have fishing vessels built in Russian shipyards. -The quota allocation system should be reformed to provide greater "transparency," should tie each allocation to a specific vessel capable offishing for it, and should reward those companies that have no tax arrears and that

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"integrate" their business activities with the Russian economy (through delivery of product to the Russian market as well as through ordering vessels from Russian shipyards). In fact, certain quotas may be available only to those shipowners who agree to deliver the resulting product to the Russian market. The goal of "transparency" has been pursued, beginning in 2001, through open auctions of many valuable quotas (e.g most king crab), where the buyer has no obligation other than to pay for the quotas in full in advance of fishing for them. -There must be a crackdown on illegal fishing and illegal exports. A continuous monitoring system, based in Petropavlovsk-Kamchatsky and Murmansk, whereby vessels are required to install and operate approved electronic transmitting systems, has been introduced to track catches and ship locations. Mandatory port clearance calls may be introduced for all vessels carrying product for export, especially crab. These policies have not all been implemented (and indeed could not be), and thus far have brought little or no improvement to the problems they were designed to address. The reasons for such ineffectiveness are a combination of the unrealistic, ill-informed character of some of these policies, and the deep, recalcitrant nature of many of the political and economic problems affecting the industry and its environment. Although some Moscow and regional officials, including Chairman Nazdratenko, continue to advocate a return to fishing in open ocean areas and in foreign zones as was done in Soviet times, experienced industry participants point out that such operations would have been extremely unprofitable to ship owners without subsidies, and would be disastrously so at present given the cost of inputs such as fuel; and that in any case the entire access regime in foreign zones has changed completely, and would no longer be open to Russia on an acceptable basis.23 Advocacy of this policy appears to be based more on nostalgia for the Soviet worldwide fishing presence, and desperation regarding the state of the RFE's own stocks, than on sober and realistic strategy. Second, widespread development of inshore fisheries and related shoreside plants will remain extremely unlikely since the existing large fishing fleet, which processes its products on board, lacks sufficient quota and has already depleted many key RFE species. In addition, any shoreside-based operation will encounter all of the regulatory and infrastructure problems that the offshore fleet has attempted, with some success, to avoid, by basing many of its operations overseas. For these reasons most attempts to attract investment, either foreign or domestic, in shoreside development projects in the RFE have failed completely in recent years. As for reforming regulations in order to attract the fleet back to Russian ports, Chairman Nazdratenko recently complained publicly that some 17 separate agencies harass fishermen in their attempts to earn a livelihood, and that to receive the proper licenses and permits for fishing operations requires 102 separate signatures.24 Putin's efforts at strengthening government controls in all sectors may run counter to the goal of reducing and simplifying port

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procedures. In any case there appears to be little meaningful progress in this area, which is so crucial to the future of RFE fishing ports, and several foreign ports remain centers of offshore Russian fleet activity. Any attempt to stimulate shipbuilding in Russian yards through quota allocations is wrong-headed and doomed to failure as long as those yards cannot turn out vessels of acceptable quality under competitive terms. At the present time Russian shipyards produce an inferior and inconsistent product at a high price. While far fewer vessels are entering the RFE fisheries today than previously, those vessels that are entering are typically older, foreignbuilt hulls with lower fixed and operating costs, and higher productivity, than new Russian-built ships. For the federal government to force Russian operators nonetheless to purchase Russian-built ships in order to procure quotas would be to undermine the industry's chances of achieving economic viability. The most controversial and visible change enacted by the Putin administration is the introduction in 2001 of auctions for the most valuable quotas, especially crab. It is still too early to identify clearly the many effects of these auctions, much less to measure their overall impact on the industry and the stocks. The auctions do seem to be achieving one of their purposes: they are relatively open and transparent compared to the opaque traditional quota allocation system described earlier. However, purchase of auctioned quotas depends strictly on financial wherewithal (whether from foreign credits, "mafia" money, or other sources) and possession of requisite vessels. Social and historical criteria, along with economic factors connected with how and by whom this public resource is used - all considerations explicit in the quota allocation regime in most developed countries - are not taken into account. This system, particularly in the absence of established financial and legal institutions, is likely to create ongoing upheaval in the industry and the communities dependent on it. While auctions are clearly less vulnerable to manipulation and fiat than the traditional system in Russia, problematic repercussions may result if quotas are bid up for monopolistic and other anti-competitive reasons, and thus lost to companies and regions. Auctions also make the planning and financing of efficient fleet maintenance and fishing operations difficult, since until the auctions are held no company can be certain of what its fishing quotas will be. Perhaps more challenging still, many industry observers are convinced that some companies have bought small amounts of quotas at high prices with the intention of abusing their access to fishing licenses through the illegal harvest of volumes far above those purchased. Finally, the financial impact for the government budget is questioned by top officials: Chairman Nazdratenko has recently stated that the auctions have not brought more money to the Russian treasury, but in fact have "brought Russia only losses," which he assesses at $33 million (the auctions have contributed some $ 190 million in total to the Russian budget in 2001 ).25 Finally, in regard to the central problem of enforcement, despite several highly publicized arrests of both foreign and Russian vessels for violating fishery rules, the picture remains bleak. The total amount of illegally caught

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live red and blue king crab shipped to Japan was virtually the same in 2000 as in 1999. Since the total volume of this crab caught in the RFE was lower due to resource depletion, illegal crab actually made up a larger percentage of the catch in 2000 than in 1999. The data for 2001 is far from complete but is not encouraging, and informed speculation about the role of auctions in stimulating illegal fishing continues. Meanwhile, as in the case of zealous regulators in Russian ports, enforcement agencies, as they try to fulfill their mandate to end illegal fishing, take little note of increasingly costly disruptions they cause to legitimate operators. In the end successful and cost-effective enforcement depends not only on public campaigns and on more and better-equipped (and better paid) officers, but also on creating a management regime that provides sufficient stability, predictability, and opportunity for operators to make a profit without resorting to illegal actions. In summary, it is possible that current policies, particularly nationalistic ones, ostensibly aimed at correcting the industry's problems could make the situation worse rather than better. The RFE would bear high costs if government policy ignored the advantages of international trade and insisted that seafood products be delivered to the Russian market or to Russian shoreplants even if these products have a far higher value abroad. The importation of supertrawlers and other sophisticated fishing vessels in the 1990's gave the industry access to expensive foreign technology and expertise, and the potential, under the proper management regime, to conduct profitable operations. Policies that force operators to make uneconomic trade and investment decisions will ultimately lower, not increase, the industry's potential contribution to the regional and national economies. An expansion of domestic activity in Russia will require fundamental reform of tax, duties, and regulatory procedures to attract the fleet back to Russian ports. Predictability and equity, as well as transparency, is needed in the quota allocation process. Success will also undoubtedly require a determined, focused government effort aimed at prevention and interdiction of illegal fishing, along with the opportunity for legitimate operators to earn a healthy return without resorting to illegal actions. It remains for Russia's neighbors, particularly Japan, to assist these efforts through tighter controls and exchange of information regarding imports of RFE-origin seafood, especially live crab. A paradox of the RFE fishing industry is that it, alone among the region's economic sectors, has succeeded in attracting large amounts of foreign and domestic capital, albeit almost exclusively in the form of vessels, rather than shoreside assets - but it has succeeded so well that fishing power has outstripped the resource base upon which it is dependent. The implications for individual fishermen and their families, for shoreside communities, and for the region's tax base and overall economic well-being, are deeply troubling. Given the recent vociferous clashes between oblast-krais over fishing rights, and Russia's fundamental weaknesses in fisheries management and enforcement, it is difficult to envision how a rational division of a shrinking resource "pie," and a downsizing of fishing capacity, can take place. Discussion of a vessel

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buy-back program, as practiced in the US and other countries, and other capacity-reducing measures, must begin. The alternative may well be the destruction of the RFE's most important traditional industry. A more stable and sustainable system of resource management is thus a prerequisite for the long-term health of the RFE fishing industry, and for the well-being of the communities that depend upon it.

Notes 1. This statement is based on data for industrial output and employment by sector from oblast/krai Goskomstat data for selected recent years. Also see P. A. Minakir and N. N. Mikheeva, eds., Dal'nii Vostok: Ekonomicheskii Potentsial (Vladivostok: Dal'nauka, 1999). Page 87 provides data showing that in 1995 the food industry, which is heavily dominated by seafood, represented over 25 percent of the region's industrial output, with nonferrous metallurgy and energy each around 20 percent. From 1996-1998 the fishing industry retained its production levels, while the RFE's industrial output as a whole continued to shrink; fishing production dropped in 1999 and 2000, while industrial production as a whole in the RFE increased in those years (Goskomstat, 2001 data). Also, the fact that a very large part of the fishing industry's production and income is unreported means that the industry's role tends to be heavily understated in official statistics. Visits to remote coastal areas of the RFE, and discussions with residents and officials, are sufficient to convince most observers of the utter dependence of these areas on fishing activities. 2. "The Russian Far East: A Survey," The Economist, September 1999, 6-8, contains official data and an estimate of $ 1 billion per year of unrecorded seafood exports. Also see Minakir and Mikheeva, Dal'nii Vostok: Ekonomicheskii Potentsial, 213, for RFE export data by sector 1991-1996. 3. While this is a difficult measurement to quantify—especially since the activity is often not only unrecorded but also very diverse: bilateral and multilateral treaties, direct fishing, commercial and government credits, scientific exchanges, chartered vessels, and vessel management support are all part of the picture—it is doubtful that this statement would be disputed by anyone who has tried to compare this situation with other Russian Far East industries. However, from the standpoint of foreign financial investment and employment, it is likely that the oil and gas sector on Sakhalin will soon surpass the fishing industry, if it has not already done so. 4. Food and Agriculture Organization (FAO) of the United Nations, country and area catch data for the USSR and Russia 1950-1997, FAOSTAT Database (www.apps.fao.org). 5. Ibid. 6. See Regiony Rossii 1998, vol. 2 (Goskomstat Rossii, 1998), 136-37 for Russian consumption and 1999 Annual Report on the United States Seafood Industry (Bellevue, Wash.: H. M. Johnson and Associates, 1998), 90, for U.S. consumption (this study utilizes statistics from the US National Marine Fisheries Service). 7. Milan Kravanja and Ellen Shapiro, World Fishing Fleets: An Analysis of DistantWater Fleet Operations, Past-Present-Future, vol. 5, The Baltic States, The Commonwealth of Independent States, Eastern Europe (prepared by the Office of International Affairs, National Marine Fisheries Service, US Department of Commerce,

1993), 98-99.

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8. FAO, see data for fisheries trade by country, and compare catch data to exports. 9. Kravanja and Shapiro, World Fishing Fleets, 108. 10. Such views have been voiced frequently in the RFE press. For a good summary article from the national press on views of the fishing industry and its bureaucracy, see Viacheslav Zilanov, "Morskoi uzel" (Marine Knot), Nezavisimaia Gazeta, October 10, 1999. Zilanov is a former Deputy Minister of Fisheries of the USSR. 11. A well-publicized instance of this was a large crab quota awarded to the Kamchatka company Ekofim in 1999. For an industry view of the quota allocation system, with reference to the above case, see "The Misfortune Is that There Is No Unity," interview with Valery Vorobiev, general director of ZAO Akros, one of the largest RFE fishing companies, in Rybak Kamchatki, April 20, 2000. 12. Pavel A. Minakir, ed., The Russian Far East: An Economic Survey, trans, by Gregory L. Freeze (Khabarovsk: RIOTIR 1996), 112. 13. Goskomstat fisheries data for Sakhalin, 1999. 14. Goskomstat and State Committee for Fisheries data for selected years. 15. A. P. Latkin, Na Rubezhe Vekhov (The Fishing Industry ofPrimore Between Two Eras) (Moscow: More, 1999), 46-47. 16. Minakir, ed., The Russian Far East: An Economic Survey, 112-13. 17. State Committee for Fisheries, materials prepared for and industry conference on Sakhalin, July 1-2, 1999. 18. Minakir and Mikheeva, eds., Dalnii Vostok, Ekonomicheskii Potentsial, 123. 19. Ibid, 36-37 and 323. 20. Goskomstat fisheries data for Primorie (contains data on other oblastj-krais) 2001. 21. Minakir and Mikheeva, eds., Dal'nii Vostok: Ekonomicheskii Potentsial, 126; and Goskomstat, various years. 22. "Headquarters Takes Responsibility," an interview with Chairman Nazdratenko published in Tikhookeanskyi Vestnik, No. 16 (41), August 9, 2001. 23. "We Don't Need the Shores of Chile," an interview with Anatoly Kolisnechenko, General Director of NBAMR, published in Tiknookeanskyi Vestnik, No. 16 (41), August 9, 2001. 24. "Headquarters Takes Responsibility," op. cit. 25. "At the Collegium of the State Committee for Fisheries of the R.F.," Tikhookeansky Vestnik, No. 16 (41), August 9, 2001.

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