Publication: Eurasia Daily Monitor Volume: 4 Issue: 25

The Kremlin has pledged to spend nearly $4 billion in government funding to boost economic growth of Primor region in the Far East, which borders China and the Pacific. The revival plans also affect the local energy sector, including nuclear power facilities.

During a surprise visit to Vladivostok on January 27, Russian President Vladimir Putin announced that hosting the Asia-Pacific Economic Cooperation (APEC) summit there could give a much-needed boost to the development of Russia’s Far East.

Putin suggested building a resort area on Russky Island, off the Pacific port of Vladivostok to host the APEC 2012 summit. “We have a unique opportunity to create a very interesting recreation area on Russky,” Putin said during a regular Kremlin meeting with his top ministers. Then in Vladivostok he added, “Whether or not the APEC summit will be there, we need to invest big money and resources if we want to develop the Far East.”

Putin issued a special decree to establish a state commission on the socio-economic development of Russia’s Far East, headed by Prime Minister Mikhail Fradkov. Some 100 billion rubles ($3.8 billion) would be spent on the preparations, which also include road improvements and airport modernization (Itar-Tass, RIA-Novosti, January 27).

Russky Island last made international headlines in 1992, when four sailors posted there died of hunger and many others suffered starvation. A subsequent investigation found that Russian naval commanders had not sent proper rations to the Russky Island garrison for months, reportedly pocketing the funds instead.

Last November, Moscow formally proposed that Russia should host the APEC summit in 2012. On January 29, Putin confirmed that Russia would seek to host the APEC summit in Russky. “After the APEC summit, the island could be turned into a tourist area,” Putin told the cabinet meeting. He also indicated plans to build a sea research institute, an aquarium, hotels, and recreation areas in the mountainous 98-square kilometer (38-square mile) island in the Sea of Japan, several kilometers off Vladivostok.

Russia’s Security Council met in December to discuss a plan for the economic revival of the Far East, which included development of infrastructure and local industries. During his speech in Vladivostok, Putin urged new investment to raise the region’s competitiveness and expand ties with the Asia Pacific region. He added that an economic revival of Russia’s Far East would make it more attractive to the Asia-Pacific region, where “huge capital and high-tech industries are concentrated” (RIA-Novosti, January 29).

Russia’s dominant political party lost little time in supporting Putin’s initiative. Vyacheslav Voronin, deputy head of United Russia and vice speaker of the State Duma, said the party would prioritize development of Russia’s Far East and Siberia when discussions begin on the federal budget for 2008-2011. The federal government should support infrastructure development projects and help create new jobs, he added.

Apart from economic development plans, the Kremlin emphasized Far Eastern security issues as well. The country’s Far Eastern military district has been holding major war-games since 2002, involving land forces, the air force, railway, and interior ministry troops. In August 2005, Russia held unprecedented joint war-games with China in this region.

The Kremlin’s vision to revive the country’s Far East also involves building nuclear power facilities. Plans to develop Russia’s Far East and Eastern Siberia cannot go ahead without nuclear energy, Putin said at his annual news conference on February 1. Siberia remains a priority in terms of nuclear power development, he said.

Also on February 1 Rosenergoatom, which currently operates 10 nuclear power plants in Russia, announced it would scrap plans to build two new blocs at the Kola nuclear power plant in Northern Russia. The new blocs were expected to come online in 2013 and 2015, but Rosenergoatom came to believe that the project was not economically viable (Interfax, February 1). Despite serious doubts about the economic viability of new nuclear power facilities in remote regions, the Kremlin appeared to be prepared to go ahead with such projects in the Far East anyway.

Leaders of the Far Eastern Railways and the Norwegian company Hydro Aluminum have discussed plans to build an aluminum plant near the town of Komsomolsk-on-Amur in Khabarovsk region, according to a company statement issued on January 26. The $4 billion plant is expected to begin production by 2012 and would have an annual capacity of 800,000 tons of aluminum.

However, official corruption remains one of the reasons for the chronic underdevelopment of potentially rich regions. Nonetheless, Putin ruled out stronger measures to combat corruption in the Far East. “I think we have no need to introduce direct presidential rule in Primor region,” he said during his annual news conference on February 1.

But the Kremlin still dispatched Russian Prosecutor General Yuri Chaika to meet with local law-enforcement officers on February 5 in Vladivostok. Chaika strongly criticized local prosecutors and said that 56% of all crimes in the region went unsolved in 2006. He also said that at least 60 major criminal groups operate in the region, and he ordered a crack down on organized crime and local government corruption (Interfax, RIA-Novosti, February 5).