Publication: Eurasia Daily Monitor Volume: 4 Issue: 171

Regional leaders in the Russian Far East want to speed development of the country’s remotest regions in a bid to strengthen the Asia-Pacific dimension of Russia’s external economic ties. Notably, the Far Eastern Primor Region, bordering China and the Pacific, is supposed to become a gateway to the booming Asia-Pacific. However, the prospects of increased funding from the federal coffers remain far from certain ahead of Russia’s parliamentary and presidential elections.

According to Primor Regional governor Sergei Darkin, hosting the 2012 Asia-Pacific Economic Cooperation (APEC) summit in the Pacific port of Vladivostok would give the development of Russia’s Far East a much-needed boost. The APEC summit is expected to become an important factor in the development of the Primor Region, indeed of the entire Russian Far East, he said in a statement released on September 10.

Subsequently, Primor regional authorities requested increased funding from the federal government to boost economic growth. According to Darkin, the city of Vladivostok is now set to become Russia’s key outpost in the Asia-Pacific. He said Primor would need 147.5 billion rubles ($5.8 billion) to spend on the preparations to host the APEC 2012 summit, including development of Russky Island, modernization of Vladivostok’s airport, as well as other infrastructure and environmental protection projects.

These plans are parts of the “Greater Vladivostok” program designed to turn the city into a modern urban center with a population up to 3 million people. Subsequently, the towns of Artem and Ussuriisk would be better connected with Vladivostok via a new high-speed railway network. Therefore, the city of Vladivostok would become a showcase of Russia’s emerging economic might, according to local planners.

Darkin also suggested setting up a special economic zone at the Vostochny port and establishing a branch of the state-run shipbuilding company in Primor in order to revive the region’s shipbuilding sector. Primor regional authorities have drafted plans to build a nuclear power plant, oil refineries, petrochemical and liquefied natural gas plants — linked to the planned Vladivostok-Khabarovsk gas pipeline — as well as a new aluminum plant, he said.

However, Primor regional authorities concede that their ambitious vision would require huge spending. Investments in Primor Region could total 2 trillion rubles ($78.7 billion) eventually, Darkin estimated. Subsequently, the gross regional product could increase six-fold by 2020, he argued (Interfax, RIA-Novosti, September 10).

Other regional leaders echoed Darkin’s arguments, saying that strengthening ties with Asia-Pacific states would make Russia’s foreign economic policies more balanced. Russia should prioritize ties with the Asian-Pacific region, and Russia’s APEC membership requires achieving a new level of development for the country’s Far Eastern regions, Khabarovsk regional governor Viktor Ishayev said on September 12. Cooperation with Europe alone is not enough, because market potential is limited there, he said (Interfax, RIA-Novosti, September 12).

The Kremlin has long mulled plans for the economic revival of the Far East, including development of infrastructure and local industries. Russia could spend trillions of rubles (tens of billion of dollars) to develop its Far Eastern regions, outgoing Prime Minister Mikhail Fradkov announced during a trip to Vladivostok in March 2007. He said that regional development strategies should prioritize energy, transport, shipbuilding, fishery, and port projects in the near future.

In November 2006 Russia formally proposed hosting the APEC summit in 2012. In January 2007, Russian President Vladimir Putin ordered a resort area be built on Russky Island, off the Pacific port of Vladivostok, as a venue for the summit. Putin said 100 billion rubles ($3.94 billion) would be spent on the preparations, which also include construction of roads and modernization of the Vladivostok airport.

In March 2007 Russia’s Economic Development and Trade Ministry pledged to allocate 35 billion rubles ($1.38 billion) this year to develop the Far Eastern regions, including 15 billion ($590 million) for Vladivostok alone. The ministry also pledged 358 billion rubles ($14.1 billion) to develop the Far Eastern regions over the next six years.

Subsequently, regional government officials have been rushing to announce ambitious goals to develop the Far Eastern regions. Apart from Vladivostok development, in March this year local officials also indicated plans to raise the gross regional product by 12 times in 2020, despite an apparent lack of evidence of whether these plans could prove economically viable.

In the meantime, the Kremlin’s program to revive the country’s Far East is understood to face a reality check with Russia’s upcoming parliamentary and presidential polls. Earlier this year, Putin issued a decree establishing a state commission on the socio-economic development of Russia’s Far East, headed by Fradkov. In the wake of Fradkov’s sudden resignation on September 12 and the choice of a little-known financial official, Viktor Zubkov, as his successor, it remains to be seen whether the new cabinet can deliver on earlier pledges to increase federal funding to develop the Far East.