Posts Tagged ‘Putin’

August 23rd is the birthday anniversary of the prominent Russian politician Nikolai Muravyov-Amursky. This man, whose image is displayed on the five thousand rouble note, is known for his substantial contribution to the development of East Siberia and the Russian Far East. Today, some 150 years since, we have little idea how to properly dispose of his heritage. In the meantime, our Chinese neighbors are more than happy to take advantage of the region’s enormous resources for the benefit of their growing economy. Will we be able to use Siberia in a way that, 150 years from now, will make our descendants proud and grateful?

Dubious benefit

Some of the corporate media portray worst case scenarios of the Far East being inevitably run over by hordes of hungry Chinese, who lack the space to sustain continued population growth. Frankly, with equal probability we can expect a hungry alien invasion. And yet, it is foolish to deny the danger of Chinese expansion into Russian soil – it’s just that it will happen according to a completely different scenario.

This scenario is laid out in great detail in the co-operation program between the regions of the Far East and Eastern Siberia, Russia and Northeast China over the period 2009-2018, approved in 2009 by the leaders of Russia and China. After its publication the document caused quite a stir. The fact that it secured the position of Russia’s eastern regions as China’s raw materials appendage caused considerable outrage. Under the program, the Chinese are going to build numerous production facilities in their north-eastern provinces, which will use Russian raw materials. This means that the Russian territory will contain only mining and transportation resources, while the Chinese side will be home to processing and manufacturing of finished products. And even then, the Russian companies will be created using Chinese capital. It’s a great win for China, which will allow it to solve the problem of large-scale revival of its north-western provinces with the help of Russian natural resources. But what’s in it for us?

It was planned that Russia will develop a program that will help maximize profits from such cooperation with China. Not only from the sale of resources, but also from the powerful impulse that was bound to arise as a result of massive growth in cross-border trade. However, as time passed, the media’s hue and cry over the content of the program subsided, yet no coherent strategy for the Far East and Eastern Siberia is in sight.

New resource pipeline

In 2012 the problem resurfaced at the highest level. Sergei Shoigu (Moscow region Governor) proposed to create a state corporation for the development of Eastern Siberia and the Russian Far East. The structure was to have unprecedented powers of distribution of rights for exploitation of natural resources. The government supported this idea, but it was never implemented. Instead, it created the Ministry of Development of the Far East. But once again, without any single view as to the region’s strategy of development.

Obviously China plays a huge role in this process, which means that development of such a strategy should focus on the basis of building a relationship with her. According to some experts, China’s interest in gaining access to Russian resources far exceeds Russia’s willingness to sell them. Siberia’s vast timber, metals, energy and hydrocarbon resources are essential for the maintenance of China’s economic growth. Hence, it would seem that Russia as a competent seller should take advantage of this huge demand and bargain for the best of terms. Alas, this isn’t happening. Instead of adapting a prudent approach to the wealth of her East, Russia is planning to build another resource pipeline.

Key problems: transport and manpower

Among the major challenges facing the region are its lack of a developed transport infrastructure and outflow of workforce. In addition to its resources the Far East has strong potential to become a major transport corridor. Development of railways and roads in conjunction with the Vanino and Nakhodka ports, amongst others, can help create a powerful regional logistics hub, a kind of land-based Panama Canal.

No less acute is the problem of attracting workers. The situation is such that able young people continue to leave the region in an effort to move closer to the country’s center, or to China. This applies to professionals in all areas – from construction workers to scientists.

By the way, the conventional wisdom that the Far East is flooded with cheap Chinese labor, is not true.

Sergei Mazunin, chairman of the Khabarovsk regional branch of Opora Russia party as quoted by the Kommersant daily as saying that “Chinese citizens today often ask for salaries higher than their Russian counterparts. But the productivity of our workers is much lower. For example, logging companies confirm that a single brigade of Chinese workers outperforms three brigades of locals.”

In sum, development of the Far East requires extensive construction, but where will the manpower come from? There is no answer to this question still.

Summit as a chance to break the deadlock

Nevertheless, we would prefer to abstain from hopeless criticism of Far Eastern policy. Much attention is paid to the upcoming APEC summit in September 2012. For the first time it will be held in Russia on Russky island (yes, that’s the actual name), which was used as as a pretense for some large scale construction in the region, such as a bridge across the Golden Horn Bay, a bridge to Russky island and the Far Eastern Federal University.

It is assumed that during the summit Russia should be able to attract foreign investment in development projects in the region. Or at least the general idea:

According to President Putin, “The forthcoming summit is a significant political and economic event for the entire. Certainly, its success will allow Russia to strengthen its international position and help establish additional contacts with our partners in the region. But it is, above all, a good opportunity to focus resources on solutions to the many problems of our largest metropolis in the Far East, to make life more comfortable for its citizens, to position Vladivostok as the “Pacific Gate,” and Russia – as a promising center of international cooperation.”

But as usual, most skeptics do not expect any breakthroughs to write home about. Russia is a newcomer in the Asia-Pacific region, home to such economic sharks as China, the US, Japan and South Korea. So far, all of our attention was drawn to the West, but times change, and the East is increasingly attracting more and more attention. No doubt 150 years from now our descendants will glorify either our wisdom and prudence, or the Chinese.

The struggle for influence in Central Asia, similar to an endless tug of war, seems to be approaching its final stage. As 2014 draws near, it is becoming increasingly difficult to pursue a multi-vector policy of wearing several hats at the same time. Recently we guardedly wrote that Kyrgyzstan seems to turn more and more towards Russia, and today this hunch received strong confirmation. At the same time, our concerns about spreading US influence in Uzbekistan have also been confirmed. Thus, as of today, the balance of power is this: Russia is solidifying its power base in Kyrgyzstan, the U.S. must negotiate with Uzbekistan, while Tajikistan remains at a crossroads. What was the cost to us (Russia)?

The Kyrgyzstan accord

Following the recent visit of Kyrgyz Prime Minister Babanov to Moscow, it seemed that the proverbial skies over our relationship have cleared. In order to consolidate this foreign policy success a Russian delegation headed by Mr. Shuvalov arrived on the shores of lake Issyk-Kul.  According to Mr. Shuvalov, he was ordered by Mr. Putin not to come back without positive news. And it is obvious that concrete results of this meeting are more than necessary – the Russo-Kyrgyz talks on the fate of national debt, construction of hydroelectric power plants and purchase of defense companies has been a protracted one. Solutions to these issues will ultimately determine the level of influence Russia would be able to exhort in Kyrgyzstan.

But why did the need to reach agreements on these issues come to head now, and not later? After all, they have been postponed many times in the past, so what happened to make them different this time?

Perhaps the Russian side has been spurred into action by Uzbekistan’s new law “On Approval of the Concept of foreign policy of the Republic of Uzbekistan”. It states, inter alia, that “The Republic of Uzbekistan does not allow placement of foreign military bases and facilities on its territory.”

If so, then the U.S. air base in Kyrgyzstan acquires even greater significance for the US, and, therefore, the Americans will try to win the republic over even harder. This would explain why the Russians are suddenly in such a hurry to resolve all pending issues, aiming to ensure that in case President Atambayev does not change his mind to expel the U.S. forces from the Manas military base in 2014.

But the Americans were also quick to act. While Russia was busy negotiating, the US showered the republic with unexpected gifts. Just a few days ago the U.S. gave the Kyrgyz border guards a new barracks, dining room and headquarters facilities.

However, these gifts pale in comparison to what the Russians brought to the table. Russia agreed to forgive Kyrgyz debt of almost $ 500 million, get involved in the construction of hydropower plants and promised to aid in reconstruction of the Bishkek heat and power plant. Moreover, if earlier Russia was demanding the transfer of shares of the Dastan torpedo factory in exchange for debt forgiveness, there is no news where such transfer was part of the deal in this latest round of negotiations. We only know that a portion of the factory shares will be offered for sale “to all interested investors.”

One can assume that the situation became aggravated enough to force the Russian government to withdraw from its previous rather stringent demands, in exchange for loyalty of the Kyrgyz leadership. We can only hope that in the long run such concessions will be justified.

Uzbekistan plays games

Uzbekistan’s decision to ban deployment of foreign military bases on its soil introduced more volatility into the Central Asian setup. But Russia was not the only one forced to react. U.S. Assistant Secretary of State Robert Blake urgently postponed all his meetings and went to see President Karimov. Incidentally, he also canceled the planned visit to Alma-Ata and Bishkek, knowing full well that such an insult would not be easily forgotten.

The discussion revolved around economic cooperation and the situation in Afghanistan. Mr. Blake “praised Uzbekistan’s role in ensuring security and sustainable development of the region, peaceful revival of Afghanistan, and reiterated U.S. interests in adding new practical implications to the comprehensive partnership with Uzbekistan.”

We cant help but wonder what Hillary Clinton’s aide is counting on, if Uzbekistan isn’t going to allow foreign military bases on its territory? As it turns out, all is not yet lost. The law was approved by the lower chamber of the Majilis, but the upper chamber deferred consideration until September. This means that there is still time to bargain.

Meanwhile, President Islam Karimov has prepared another surprise for his American partners in the form of increased cost of transit through Uzbekistan. Under the new law, international freight companies whose trucks weigh over 50 tons will be required to pay a toll for using the country’s roads, at a rate of $1 per kilometer. And if the axial load should exceed approved standards, the fee will be raised to $2 per kilometer. So much for “practical implications!”

Of course, one must always exercise caution and reserve final judgment when talking about events and agreements in Central Asia. Loyalties here have a finite value and are traded like fruit at the local bazaar. Nevertheless, it is perhaps for the first time in a very long while that we are able to glimpse the shadow of the future balance of power in this region. Is the situation becoming really so dire?..

Eugene Super