Russia’s Far East dilemma

On August 20, 2012 by stratagem

Source: The Moscow News

When Prime Minister Dmitry Medvedev caused controversy earlier this month by suggesting that Russia needs to defend the Far East from excessive expansion from bordering states, he was merely voicing a concern that has long been on everyone else’s mind: if the country doesn’t get its act together and develop the neglected region, someone else will.

The region that spans an area twice the size of India on Russia’s Pacific coast has long caused management issues for the Moscow-based federal government, some 6,000 kilometers away. After vague attempts to develop it during the Soviet Union, the area fell into disrepair during the economically turbulent 1990s and has since seen its population drop by some 14 percent.

A decade ago, the federal authorities might have gotten away with leaving the region to stagnate, as it has with many other areas in the country’s vast hinterlands, but now pressure is building up from across the region’s southern border: resource-hungry China with its 1.3 billion-strong population.

The Chinese have already begun to make their presence felt in the region, with many cities home to large Chinese districts and streets adorned with bilingual signs. Russia has responded by stepping up its political and military presence in the region, but the necessity of developing it is taking on greater and greater precedence.

Earlier this year, President Vladimir Putin said the development of the Far East is “the most important geopolitical task” facing Russia and called for high growth rates over the next 10 to 15 years to close the economic gap with the rest of the country. A Far Eastern Development Ministry was created in the newly formed government in May, alongside plans for a state company for the development of the Far East and eastern Siberia that would control hydrocarbon licensing rights and set conditions for foreign investment.

But perhaps the biggest sign that the government is taking the region seriously is its decision to host the Asia-Pacific Economic Cooperation Summit in the Pacific port city of Vladivostok in early September at great national expense, and rejuvenate the city’s infrastructure in the process.

Developing the region is not just a matter of national security – it also has significant strategic and economic significance for the country, not least due to its proximity to the rapidly growing Asia.

“The Russian economy is still too orientated toward Europe, which is stagnating,” Artyom Lukin, an associate professor of regional and international studies at the Far Eastern Federal University told The Moscow News by e-mail. “If Russia wants to be part of the flourishing Asian economies, it needs to develop its Pacific territories.”

Resources galore

Although the region constitutes 36 percent of Russia’s national territory, it contributes just 5.6 percent to the country’s gross domestic product, according to the State Statistics Service. But this is much more a result of lack of development than a lack of potential. The region boasts vast oil and metals deposits, plentiful arable land and great swathes of untouched forest.

A report published in July by the Valdai Discussion Club said Russia has the potential to increase its grain crop productivity by around 150 percent by developing land in Siberia and the Far East. Demand for food sources in China, meanwhile is growing by the minute.

Of course, the region will only really have export potential when the right infrastructure is put in place. Currently there is not even a highway linking the region with China, and most transportation relies on a single railroad.

Plans to modernize the railroad link and develop shipping routes between Russia and Asia are expected to be revealed at the forthcoming APEC summit, which will certainly be a start, but is unlikely to fulfill the potential for trade relations, analysts say.

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