TED Case Studies

Amber Trade and the Environment in the Kaliningrad Oblast

CASE NUMBER: 451

CASE MNEMONIC: AMBER

CASE NAME: Amber Trade and the Environment in the Kaliningrad Oblast


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I. Identification

1. The Issue

Amber is an enigmatic object of beauty. Considered both a mineral and a semiprecious stone, amber is actually the product of the secretions of ancient conifers. The resin produced by these trees eventually hardened, sometimes trapping small, living organisms inside. Most are familiar with the image of the yellowish, sometimes transparent substance encasing an insect or small vertebrate. The film Jurassic Park also introduced amber to the public, although the substance is not likely to be the key to recreating dinosaurs. Amber was one of the first commercial products and has been traded for centuries. The ancient amber trade routes brought faraway nations into contact with one another. As a luxury item found only in a few widely dispersed areas, amber was one of the few products which was transported such long distances. This case specifically involves the amber deposits found in the Russian region of Kaliningrad and the effects of amber's continued extraction on the environment. Ninety percent of the world's amber deposits are located in this small Russian outpost on the Baltic Sea, and the constant extraction of this precious substance has been a major cause of environmental degradation. Pollution generated from the extraction process harms not only Russian soil, but the Baltic Sea and its neighbors as well.

2. Description

Recovery Methods

Amber has historically been extracted from the sea and land by a number of different methods. Extraction methods have become more efficient and, at the same time, more harmful to the environment. Early records show fishermen actually casting their lines for amber, which storms and winds brought up from the bottom of the sea. Natives of the Baltics also gathered amber by using nets, which separated the valuable substance from seaweed, allowing the amber to be scooped out. This method led to the coining of the layman's term "scoopstone," another, more colorful, name for amber. Other methods of recovery included raking the bottom of the sea with long sticks and, in marshy areas, the collection of "Northern gold" by men on horseback. ( See Susie Aber's Article) In ancient times it was found by searching in sandstone and loose shale, but these land-based deposits have been exhausted. Most recently, the development of open pits has allowed amber to be extracted more quickly and efficiently. However, this method has proved most detrimental to the environment.

Uses

Although the Romans believed that amber possessed medicinal qualities, current medical practitioners would certainly disagree. Despite its lack of healing powers, amber still serves a number of useful purposes. The best specimens contain exquisitely preserved life forms and command high prices from private collectors and museums. However, ninety percent of all extracted amber is of poorer quality and can be used only as an ingredient in other products. These include varnish, amber oil and distilled acids. Craftsmen mold the remaining ten percent into jewelry and ornaments, some of which fetch fairly high prices on the international market.

Trade

The ancient amber trade route ran from the Baltic Sea, down the Elbe River, and on to the Danube. From there roads led overland through the Brenner Pass into Italy, the heart of the Roman Empire. Rome was the undisputed center of the amber industry. The Romans used amber in a number of different objects, including coins. They apparently valued amber even more than the fair-haired Baltic slaves, the harvesters of amber, whom Tacitus regarded as savages. Not until the third century A.D., when wars with the Goths made such trade in luxury items unsustainable, did the Roman domination of the amber industry come to an end. (See Spekke)

Part of the Amber Trade Route

During medieval times amber was the property of the finder. However, the Baltics eventually came under the rule of the Dukes of Pomerania and, later, the Teutonic Knights, who exercised absolute control over all aspects of the amber trade. They even prohibited the unsupervised collection of amber on beaches under penalty of hanging. (Grimaldi 160) As late as the 17th century fishermen were obliged to swear the "amber oath," a denunciation of amber smugglers. As the Knight's power waned, guilds became increasingly important players in the amber trade. The guild established in Danzig in 1477 still exists today. (Grimaldi 167)

In modern times amber has remained a valuable substance as ornamentation techniques have become more complicated and the creations of the masters more exquisite. As more value is added to the raw material, the new product becomes more expensive. Ironically, amber deposits tend to be located in countries which lack the required technology and skilled labor for adding value to the raw form.

Modern Extraction

Amber is typically found not where it was formed, but where it was transported. In the past, Baltic amber tended to wash up on the shoreline after storms, mostly on the Samland (today's Kaliningrad) Peninsula. The top layers were exhausted by the mid-1800s, however. In order to extract the amber located in lower strata, engineers had to begin dredging operations. Dredging on the (then) East Prussian shore began in 1854 and reached 35 feet below sea level. This mining process led to an enormous increase in amber recovery. In one day at Palmnicken (the site of the mine) in 1862, workers extracted 4,400 pounds of amber. By 1865 the Stantien and Becker mining firm's 1000 employees were operating 22 steam barges, and three years later they collected 185,000 pounds of amber. In 1875 the first open pit amber mine was established at Palmnicken, and the million pound mark was reached in 1895. The extraction process had undergone complete mechanization by 1930, and the procedure has changed little since then. Conveyers dump earth containing amber into waiting freight cars, which then transport the earth to spray houses. Next, high-pressure hoses separate the "blue earth," the name which the Germans gave the amber-containing soil, from the amber. (Grimaldi 47-53) Amazingly, experts estimate that more than 180,000 tons remain in the Palmnicken (now Yantarny) mine, enough for another three centuries of extraction at the current rate.

Environmental Consequences

In addition to the damage done to the environment by mining itself, the processing of amber also harms the local ecology. The Baltic Sea, which has been deteriorating at an alarming rate for the last 50 years due to rapid industrialization, bears the brunt of the harm. Since strip mining started over a century ago, more than 100 million tons of waste has been discharged by the Yantarny plant into the Baltic. The mining and processing of amber produces matter which the Baltic's brackish water cannot dissolve. Sewage produced by the plant is discharged onto the recently built dam, over which it flows into the sea. The amber plant is one of the world's biggest culprits in the environmental crime of anthropogenic suspended material expulsion, the results of which cause the sea to become turbid as pulp from the plant impedes the natural flow of water. (See Sivkov) Since the Baltic is largely cut off from the Atlantic Ocean, it cannot easily refresh itself. Water renewal in the pollution-sensitive Baltic takes 25-30 years. (See the World Bank article.)

Other Consequences

Amber-related crime has recently become an issue in the Kaliningrad Oblast as well. A Wild West atmosphere reigns at the Yantarny mine, where amber treasure hunters fish for pieces discharged from the malfunctioning sewage tube. When they are lucky, the amber seekers retrieve sizable specimens which are sometimes worth more than four times the average monthly salary in this region. The mines are huge and poorly patrolled, and underpaid bureaucrats often facilitate the "loss" of stones in transit. The local authorities imposed a fee of $35 on the free-lance retrievers, but mine management concerns itself mainly with large-scale theft and mafia connections. Shootouts over control of the black market are not unheard of. According to a 1996 estimate, annual losses due to illegal extraction and smuggling amount to $1 billion.

In the tiny village of Muromskoe, not far from Kaliningrad, an "amber rush" began when a farmer happened upon a large piece while plowing his field. One resident referred to the ensuing free-for-all as "Klondike." Overeager residents dug up the field so haphazardly that several people died, including a 12 year old boy, who was crushed by a pit wall. The locals quickly stripped the pits, which are now water-filled holes usable only in the summer. The authorities cracked down somewhat in 1996 with 200 arrests and the confiscation of ten kilograms of amber, but they have so far failed to address the sources of the problem- umemployment and a low standard of living. (For the full story, go to this eyewitness account. )

New Laws

In 1996, legislation passed by the Duma put the State Committee for Precious Metals and Stones in charge of all amber activities in the Kaliningrad Oblast. Although the new law might offer better protection for the amber left in the region, most residents are skeptical of Moscow's intentions. In addition to fears of government tinkering with their livelihoods, workers at the Yantarny Kombinat worry that the new law will impede privatization and consequently restrict hard currency earnings. Furthermore, Committee officials are under investigation for illegal diversion of more than $170 million in diamonds, gold and silver to colleagues abroad. As a result of the legislation, amber will have to be guarded in vaults like other precious stones. Its movement will have to be documented from the mine to the factory to the retail outlet. Needless to say, the appropriate funds are not readily available, leaving even less money for environmental concerns.

3. Related Cases:

Keyword Clusters:

1. Trade Product= AMBER

2. Bio-geography= SEA

3. Environmental Problem= Pollution Sea [POLS]

4. Draft Author:

Douglas Jacobson, Fall 1997

II. Legal Clusters

5. Discourse and Status: AGREEMENT and INCOMPLETE

The Baltic Sea Joint Comprehensive Environmental Action Program (BSCJEAP) was signed by Russia and approved in Helsinki in 1992. The states surrounding the Baltic Sea signed this agreement to restore the ecological balance of the Sea. It includes the following components that could be related to amber extraction and processing:

1. "Infrastructure investment in specific measures to control point and nonpoint sources of pollution and to minimize and dispose of wastes."

2. "Aid in the management of coastal lagoons and wetlands."

Although the agreement contains no specific references to amber, Russia could possibly exploit the accord to receive funds from its richer neighbors to help clean up the waste created by amber extraction.

6. Forum and Scope:

Baltic Agreement and REGIONal

The BSJCEAP is the product of the Helsinki Commission, a regional organization.

7. Decision Breadth:

Russia and the other 13 states in the Baltic catchment area.

8. Legal Standing:

Treaty (or joint understanding)

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: EUROPE

b. Geographic Site: Northern Europe [NEUR]

c. Geographic Impact: RUSSIA

10. Sub-National Factors:YES

Interest in creating an atmosphere that would attract foreign investment to the Kaliningrad Oblast began during the Soviet days. The Supreme Soviet passed legislation in 1990 which created a Free Economic Zone, but lack of investment led to its demise. After the collapse of the empire, the Russian Federation reintroduced the idea, creating the Kaliningrad Special Economic Zone by decree in 1993. The region would have been exempt from paying customs duties for ten years. Strangely, this decree was rescinded in 1993, but the Duma passed similar legislation in late 1995 which was approved by the Federation Council in early 1996. The legislation states that the Federation may delegate licensing authority for most goods and services to the Kaliningrad Regional authorities. However, amber is a different case. According to the law, the "processing of and trade in amber and objects made of amber shall be subject to the agreements between the Government of the Russian Federation and the Administration." This law, in addition to the legislation designating amber as a semiprecious stone, is an obvious attempt at exercising federal influence over Kaliningrad's amber industry, a potential revenue builder for Moscow.

11. Type of Habitat: OCEAN

IV. Trade Clusters

12. Type of Measure:

Regulatory Standard

Because of the new legislation, foreign businesses wishing to exploit Kaliningrad's most attractive resource must deal with Moscow as well. In this respect, Kaliningrad is not quite a free trade zone.

13. Direct v. Indirect Impacts: INDirect

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: NO

b. Indirectly Related to Product: YES (AMBER)

c. Not Related to Product: NO

d. Related to Process: YES (POLLUTION SEA)

15. Trade Product Identification: Amber

16. Economic Data

Yantarny and its Kaliningrad Amber Combine are the center of Russia's amber industry, which has not been able to avoid all the symptoms of Russia's ailing economy. Obsolete equipment, low quality products, and a lack of hard currency to make improvements keep Russia from being internationally competitive. Rapidly changing and confusing legislation also inhibits much needed modernization, without which Russia will not be able to add value to raw amber, the second stage of production. Russia needs to coordinate its mining, processing, and marketing processes in order to compete with countries such as Germany and Poland. Entrepreneurs in these countries import raw amber (sometimes through smuggling) and add value to it by transforming the amber into jewelry or objets d'art . The entrepreneurial situation appears to favor foreigners and Moscow over the inhabitants of the Kaliningrad Oblast, who see little of the estimated $50 million generated by the international amber market. It already costs 28% more to mine amber than the raw stones are worth, and new legislation will probably drive up prices which are unacceptable to all but the most ardent of amber importers, such as Japan. According to a saleswoman in Yantarny, if prices go up "...no one will buy [amber]. After all, we're not talking about gold here." (Williams, L.A. Times August 22, 1996)

17. Impact of Trade Restriction: LOW

18. Industry Sector: STONE

Amber is technically not a mineral, but is still treated as a semi-precious stone.

19. Exporters and Importers: RUSSIA and MANY

The leading importers include the United States, Poland, Russia and Japan.

V. Environment Clusters

20. Environmental Problem Type:

Sea Pollution[POLS]

Waste from amber mining and processing runs into the Baltic Sea.

21. Name, Type, and Diversity of Species

Amber is the ancient resin of conifer trees. It is found mainly in the Kaliningrad Oblast of the Russian Federation, but is also mined in such diverse parts of the globe as Burma and the Dominican Republic.

22. Resource Impact and Effect: LOW and SCALE

23. Urgency and Lifetime: LOW and decades

24. Substitutes: SYNTHETIC

VI. Other Factors

25. Culture:YES

The amber trade played an important role in increasing contact among ancient cultures. Few other items were traded so extensively and across such great distances.

26. Trans-Boundary Issues: YES

Numerous other states border the Baltic Sea, the site of the pollution.

27. Rights: NO

28. Relevant Literature:

Aber, Susan. "Recovery Methods." From Internet;

www.emporia.edu/s/www/earthsci/amber/recover.htm; accessed 9/27/97.

Baltic News Online. From Internet; www.viabalt.ee/news/BNS/1995/3.html

Grimaldi, David A. Amber: Window to the Past. New York: Henry N. Abrams, 1996.

Guryev, Vladimir. "Masters of Amber." Soviet Life 10 (October 1991): 14-17.

Kaliningrad In Your Pocket. From Internet; www.inyourpocket.com/knamber.htm.

Koretsky, Aleksandr. "Hearings on the Kaliningrad Province: The Amber Enclave is not

Being Allowed to Become a Gold Mine." Current Digest of the Post-Soviet
Press 47 (5 July 1995): 4.

Russian Federation Federal Statute on Special Economic Zone in Kaliningrad. From

Internet; www.baltica.koenig.su/SEZamber/Pages/ZAKONE_ENG.htm.

Sivkov, Vadim, and Boris V. Chubarenko. "Influence of Amber Mining on the

Concentration and Chemical Composition of Suspended Sedimentary Matter."
Marine Georesources and Geotechnology 15 (April-June 1997): 115-126.

Williams, Carol J. "Law Leaves Amber Region With Precious Little Hope for its Future."

Los Angeles Times, August 22, 1996.

Spekke, Arnolds. The Ancient Amber Routes and the Geographical Discovery of the

Eastern Baltic. Stockholm, M. Goppers, 1957.

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