The newly appointed Supervisory Board of Latvijas valsts meži is like the pike, the crayfish and the swan from the fable by Ivan Krylov (1769-1844). Each member is responsible for his own area of activity, and only one is required to have expertise in forestry. If the company's next Management Board is selected on a similar basis, this will already create risks at an operational level. The holders of Latvia's green gold will soon have to make crucial decisions that will affect the entire Latvian economy.
Invoking the fable of Ivan Krylov, Kristaps Klauss, Executive Director of the Latvian Forest Industry Federation, hopes that the crayfish and the swan will not both set fire to the cart in order to fry the pike. As Neatkarīgā has already reported, there are several signs that the State forests are being prepared for sale. And this is far from the first time that the idea of selling the company has been thrown around in political circles. Back in 2010, a document entitled "On support for the privatization of SJSC Latvijas valsts meži" appeared on the official website of the European Commission's Directorate-General for Competition, and the then European Commissioner for Development, Andris Piebalgs, had to justify at length that what had happened was just a bad misunderstanding.
In recent years, the idea of selling off state-owned companies, already with a prettier presentation - by listing shares on the stock exchange - has been pushed through the Cross-sectoral Coordination Center. However, so far the idea has not been matured to the point where anyone would try to sell it to the public. State-owned enterprises that are not to be privatized should remain the property of the state and society as a whole, be it Augstsprieguma tīkls or Latvijas valsts meži. "This topic should not even be flirted with," says Kristaps Klauss. People who flirt with this idea pop up from time to time, but they are also quickly shut down. Regarding the strange appointments to the Supervisory Board of Latvijas valsts meži, Neatkarīgā also asked the Ministry of Agriculture whether they were related to hidden ideas about selling the company. The answer is a clear no:
"Regarding the question that raised the possibility of LVM privatization, Minister Kaspars Gerhards is categorically against the privatization of Latvian state strategic companies."
So, at least officially, the government's position on keeping forests in state ownership should not change. Another thing is that the company will soon have to make crucial decisions - related to the European green course, so it is essential that it is run by professionals in the sector, not by a party politburo that hinders the work of middle management.
The company will have to cope with a lot of pressure, both from the so-called Nature Census project, which counts protected habitats in commercial forests, and from the newly introduced concept of green taxonomy by the Euro-bureaucrats. This is a fundamentally new classification system that subordinates all economic activity in the European Union to climate and sustainability objectives. In the forest sector, the principles of the taxonomy will start to apply in 2023, explains Kristaps Klauss. The regulation adopted by the EU sets six environmental objectives, one of which must be chosen as a priority. And if, for example, Latvijas valsts meži were to choose biodiversity promotion as its top objective, which would be welcomed by many environmental organizations, Latvia's forests would become one big nature reserve. A giant Slītere park. We could forage for mushrooms as much as wanted! But this would have a negative impact on everyone in Latvia because 90% of the income of Latvijas valsts meži is generated by the timber trade. If the scope of protection is expanded, the forests will no longer generate income for the state budget. Artificially limiting the company's economic activity would create a shortage of timber on the market. Green construction will be forgotten, and a new energy crisis will be inevitable, as around 150 boiler houses in Latvia are fired with wood chips. The impact of Latvijas valsts meži is not limited to the forest and timber industries. The company affects the entire Latvian economy. Decision-makers must therefore be knowledgeable enough to prevent the degradation of the company.
Asked whether it is true that a change of the Management Board is in the pipeline, the company's press service says that "the appointment of the company's management is the responsibility of its owner, in this case, the shareholder, the Ministry of Agriculture". However, this is not formally the case. This is what the Office of the Minister of Agriculture points out:
"The approval of the composition of the LVM Management Board and the evaluation of its performance are the responsibility of the LVM Supervisory Board - the Minister of Agriculture does not participate in the economic activities of LVM. The Law on Governance of Capital Shares of a Public Person and Capital Companies stipulates that the task of the Supervisory Board is to elect and recall the Chairman and members of the Management Board.
Section 107. Tasks of the Council, second paragraph, first subparagraph."
It is to be hoped that the all-round super-officials assembled on the company's Supervisory Board, most of whom have no knowledge of the forestry sector, will be able to choose a Management Board in which the crayfish and the swan will not burn down the cart to fry the fish.
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