The development of Russia’s Far East: Driven by Pioneering Spirit

By Elisabeth Hellenbroich

A fascinating conference took place September 4^th to 6^th in the Russian city Vladivostok (located in the region Primorye). It was the fifth Eastern Economic Forum (EEF) since its foundation 5 years ago. The theme of the congress was to discuss perspectives for boosting the economic development of the Russian Far East- a colossal project for the future of mankind. Like in the past, when the German Scientist Alexander von Humboldt (1769 -1859), whose 250th birthday is celebrated this year, became a pioneer in discovering the geological, geographical and scientific wealth of Latin America, as well as of Siberia, one of the big challenges today is how to explore and develop a region that in its size is twice as big as India(!), but has only 8 Million inhabitants.

In his greeting address to the 8.700 participants from 65 countries, including delegations from China, India, South-  and North-Korea, Japan, Malaysia, Mongolia and several other Asia- Pacific countries, as well as for the first time a large business delegation from Italy (the only one worth mentioning in terms of European presence at the Congress), President Putin qualified the development of the Russian Far East, the strengthening of its economic and innovation potential and raising the living standards of its residents as  “key priority and a fundamental national goal of Russia.” He emphasized that Russia as a “key player in Eurasia is very supportive of a dynamic development of the Asia- Pacific region.” Putin’s optimistic speech which he gave during the plenary session stands in stark contrast to the inhibition and cultural pessimism that has developed in several European countries. For instance, at present, Germany almost exclusively focusses the attention of its citizens on the question of Climate change, while at the same time it maintains its stubborn attitude concerning the anti- Russia sanctions and has a critical attitude concerning China’s role in the world.

According to the Russian media (Kremlin.ru), China is a very important partner in the Far East: It was this year present with a delegation led by State Council Vice Premier Hu Chunhua. It was reported that the regional government of Khabarovsk (at the Amur near the Chinese border) and the Chinese enterprise Sherwood energy during the forum signed an agreement to install the world wide biggest methanol facility near the regional capital. Chinese enterprises also want to invest $ 700 million in milk processing enterprises. Aside China, there was also a large Japanese delegation, led by Japanese Prime Minister Shinzo Abe. Russo-Japanese projects involve projects in the field of modern medicine and the Russian company Rosneft offers the Japanese partners participation in projects of oil and gas exploration and production, in oil refineries and in petrochemical projects. The largest project is Japanese participation in the construction of the Arctic LNG Liquefied Gas Facility on the peninsula Jamal, which includes $ 5 billion Japanese investments. Aside large delegations from China, Japan, Malaysia, the Republic of Korea and Mongolia also a large delegation from India led by Indian Primes Minister Narendra Modi was participating in the EEF. In his address to the plenary session Indian Prime Minister Narendra Modi announced a $1 billion line of credit for the development of Far East region of Russia and unveiled the “Act Far East” policy to boost India’s engagement with Russia’s Far East region.

The Indian Prime minister underlined that “Vladivostok is a confluence of Eurasia and the Pacific. This represents opportunities for the Artic and Northern Sea routes,” and that the Far Eastern region of Russia is approximately twice the size of India with a population of only 6 Million, but a region which is “rich in natural resources like minerals and oil and gas. People here have overcome the challenges of nature with their tireless hard work, courage and innovation.”  Due to the tireless fight of the people, by transforming frozen Land into a flower bed, they have prepared the base for a golden future, Modi said. He referred to President Putin who had declared the “development of the Russian Far East a National Priority for the 21rst Century (…) His holistic approach here is a motivating effort to make every aspect of life better, be it economy or education, health or sports, culture or communication, trade or tradition.” Modi further announced that “we are about to start a new era of cooperation on the Indo- Pacific region. When the ships will start sailing between Vladivostok and Chennai and when Vladivostok will become India’s springboard in North- East Asia market, India-Russia partnership will further deepen and flourish. The then Far East will become a confluence of the Eurasian union on one side and the open, free and inclusive Indo- Pacific on the other.”

Europe not really present

While it was reported that the Russian railway RZD has announced that it will reduce freight deliveries via the Trans- Siberian Railway from Russia to Europe from 19 to 11 days, what was noteworthy at this year’s EEF was that Europe with the exception of a large delegation from Italy discussing during the Russia -EU panel, as well as a delegation from Great Britain, has lost a lot of influence in Russia, being trapped by its sanctions obsession against Russia and its incapacity to give a productive answer to the Chinese Belt and Road initiative.

During the plenary session at the EEF President Putin gave a bold outline. “The power and competitive advantages of the Far East lie in its talented, hard- working and energetic people, educated and ambitious youth, in new centers of research, industrial growth and industries of the future.”  Its power is in “rich natural resource, enormous logistics potential such as the Northern Sea Route and other trans- Eurasian routes. Last but not least its power is a symbol of innovation in its proximity to rapidly developing economies and the world’s most dynamic region, the Asia- Pacific.” While according to the president in former times, during the SU and Cold War period, the Far East was an area mostly used for military purposes, he President underlined that this had radically changed in the past years. “The Far East has become symbol of openness for the whole country, a symbol of innovation and resolve in lifting all sorts of barriers to business and human contacts and cooperation in the APR (Asia- Pacific region)  as a whole.” He pointed to the excellent relations with India, China, the Republic of Mongolia, the Republic of South Korea, Malaysia, Japan and other APR countries, which are based on the “principles of respect and honest dialogue.”

Putin’s vision for the development of the Far East

The President spoke about “special conditions” offered by the Russian state for launching production in the region, involving special tax regimes and state support measures and he mentioned that about as many as 369 companies have registered there that  have signed contracts worth nearly 2,5 trillion rubles and announced the creation of more than 60.000 new jobs. “The Vladivostok free port regime,” he said, “has been extended to 22 municipalities. Its goal is to facilitate integration of the Far Eastern regions into the Asia Pacific economic space and promote the development of high tech enterprises.” Putin reported that industrial production growth in the Far East over the past five years has increased by almost 23 percent- almost three times greater than across Russia.

Putin referred to the “Far Eastern Federal University” (in Vladivostok)  that is developing as a center of new competencies, youth exchanges and international cooperation, ambitious experiments in education, science and innovative industries in the new technological era. “During the previous academic years, the university welcomed 20.000 students, including 3.500 foreigners from 74 countries. More than 200 foreign professors are teaching there and will translate the region’s economic achievements made over the past years into a social breakthrough in order to offer people a better quality of life.”

The President characterized Russia’s Far East as “a very young region,” that has an enormous demographic potential that had to be preserved and augmented. “The aggregate birth rate is here higher than the national average. Nearly 1,5 Million out of the 8,2 Million residents of the federal district are school, college and university students,” Putin said. “They have won in sports competitions and international and national academic Olympiad and contests.” He announced that there must be a dramatic increase in the construction of modern housing which must be as affordable as possible. This includes a special mortgage program, so that young people can borrow money to purchase flats or houses in the Far East. The health care system should be modern and affordable. It was also important to adapt the Rural Doctor and Rural Teacher national program to Russia’s Far East. This could include offering doctors, paramedics and teachers willing to relocate to small communities in the Far East greater benefits. “I propose doubling these allocations for the Far East compared to the existing national rates.”

Vladimir Putin further emphasized that “the future is in the hands of today’s youngsters and school student who love their region and want to live and work here. We need to offer them an opportunity  to get quality education regardless of the income or financial situation of their families.(…) Of the 1.834 communities in Russia’s Far East, 1614 have a population of less than 5000 people each, while towns and villages can be hundreds kilometers apart,” Putin reported. He further stated that on Russky Island a new “innovation cluster” is being created. A space industry cluster is emerging around the “Vostochny Space Launch Center”. Aircraft manufacturing, natural gas processing and chemistry are all actively developing in the region. The construction of the “Zvezda shipyard” is underway and announced that “by 2024 we will have modernized 40 airports in the Far East that will expand the network of domestic flights.”

During the discussion period the President was asked about the “Vostochny Space Launch Centre” and the “Zvezda Shipyard”, which he visited together with Indian Prime Minister Narendra Modi. He reported that the “facility will build modern large capacity ships for operations on the continental shelf, in the Arctic zone and for carrying liquefied natural gas , petroleum products and other consignments” and stated that Russia will build parts of vessels and Indian shipyards will complete them; he also announced that Russia and India implement joint space exploration projects, “we work actively on these programs with the People’s Republic of China; in principle we maintain good cooperation with the European Space Agency and we hope that this process will continue to develop ad we also cooperate with the United States.”  In terms of environmental protection, the Russian President aside praising the natural beauty of Russia’s Far East stated that on a global scale the structure of Russian energy industry is one of the “greenest” in the world. “The hydropower and nuclear energy account for over one third of our power industry, gas fuel amounts to more than 50 % of it and gas is known to be the most environmentally friendly fuel of all hydrocarbons.”