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Development of Russia's Far East

Development of Russia's Far East

The Forms of Advanced Economic Cooperation In Eurasia and Asia Pacific Region and Its Implications for The Development of Russia’s Siberia and Far East.

On September 26-28th, 2016, experts from seven countries converged on East China Normal University to discuss and share information on the development of Russia’s Far East. The conference addressed areas of cooperation and possible competition within the region and how this will shape the Russian Far East. With it being Moscow’s goal to re-create the Russian Far East into a region highly integrated with East Asia, continued information sharing between experts within the region is required to achieve this goal.

The conference was divided into six different panels focusing on specific issues pertaining to the development of Russia’s Siberia and the Far East.

Panel 1: International Cooperation in the Development of Siberia and Far East Under the Conditions of Consolidating Multipolarity

The first panel addressed the changing global power structure and how this would present an opportunity to Russia and other Eurasian powers to increase their prowess within the wake of America’s “declining hegemony.” As the “post-WWII world order is collapsing”, there arises opportunity for a new Eurasian security agreement to be created, founded upon the principles of the UN charter, focusing on state sovereignty. Caution was also warranted towards over-optimism of the creation of a new, regional-wide security agreement or anything of its nature: China has thrived under the current order; it is China’s goal to be adopted into the Western led order and to have its influence over its future, from within.

Panel 2: Russia’s Economic Integration into Asia-Pacific and Implications for the Development of its Far East and Siberia

The second panel discussed Russia’s integration into the Asia-Pacific and the global economy. Discussed was Russia’s lacking from large regional-wide trade agreements outside of the Eurasian Economic Union. The idea was proposed as to whether it would be more beneficial to Russia and her economic future as to continuing to rely on the old alliance and trade structure left over from the Soviet Union or to look to integrate itself further within the globalized world. New statistics were presented to the conference regarding the amount of Chinese agricultural laborers active in the Russian Far East. An analysis of recent anti-Chinese statements by local Russian government leaders in the affected regions lead one to believe that ethnic tensions and conflicts may arise. What was also presented was the interesting fact that the overwhelming majority of Chinese agricultural workers were of skilled labor thus highlighting their importance to the development of the region.

Panel 3: Russia’s Siberia and Far East and Cooperation in Greater Eurasia: New Transport Routes Logistics and Co-Development

The third panel sought to look further into the development of transportation routes,logistics and regional cooperation. The One Belt One Road’s transportation routes through Central Asia are essential to connecting China with traditional Europe. If Russia’s economy were to fail, the economies of Central Asia would intrinsically fail, leading to regional instability thus negating any hopes for the region to be used for the One Belt One Road project. In the New Eurasianism, the first priority is security issues and after that comes economic benefits in importance. Arctic cooperation was also discussed including the continual belief and reservation towards the Northern Sea Route’s perceived inability to be profitable. Also discussed was Japan’s worries of Russian aggression within the region and Russia’s military strategy being to balance against the US within the Arctic.

Panel 4: Economic Institutions of Advanced Development: World Experience and Lessons for Russia’s Far East and Siberia.     

Roman Vakulchuk initiated discussion regarding Russia’s new economic policies regarding Asia since 2014. The drive for these new economic programs comes from the increasing attractiveness of Asian markets to Russian businesses. By creating new economic zones to facilitate trade between borders, more business can be absorbed by East Asian regions to curb the current decline in trade due to falling Russian oil prices. These Special Economic Zones (SEZ) would alleviate unemployment, provide an experimental testing ground for new economic policies, and attract foreign direct investment from the Middle East. The performance of these SEZ can be measured in an ease of doing business score, typically reserved for cities, as well as serve as a grounds for collecting market research based on participating businesses. Most importantly perhaps, is the impact of these zones reducing the perception of formal and informal barriers such as ineffective state-business communication, administrative and transportation costs, and marketing/language complications. In conjunction with the creation of SEZ, Russia is committed to a reduction in non-tariff barriers which largely result from countries having different standards and regulations for the trade of goods and services. 

Panel 5: Sectorial Priories of Development of Russia’s Far East and Siberia.

The panel began with Igor A. Makarov, Director of the BA program in International Economics at the National Research University in Moscow. Makarov focused the abundance of natural resources in Eurasia and Siberia which could be a vital export to Chinese markets. Russia’s Far East has ample land for growing grain and other food resources as well as vast mineral wealth, however, the fall of oil prices and international sanctions against Russia have left the country unable to develop these sectors. Coupled with a lack of funds, logistical operations in the far east region are underdeveloped, leaving up barriers for Russia to overcome in order to get their resources to Asian markets. Following Makarov was Lee DaeSeob, a research Fellow in Korea’s rural Economic Institute, and Shi Ze, senior researcher at the China Institute of International Studies. These two individuals were concerns with the changing climate, specifically the impact of global warming and increased pollution levels have on agricultural developments. Due to climate change, new seeds and agricultural strains of wheat, rice, and other grains will need to be developed in order to maintain current production levels. If pollution cannot be stopped and new strains cannot be developed, then exports will suffer.

Panel 6: Natural Resources, Environment, and Financial Industries as Drivers for Development of Russia’s Far East and Siberia.

This panel focused on the potential mineral and labor benefits of the Russian Far East and Siberia. Extracting the mineral wealth in the region can boost both domestic production and allow for trade between Russia and China. The process of extraction will need foreign investment as Russia does not have the funding to invest in the advanced extraction technologies needed to safely reach these minerals, which although creates jobs for Russia, leave Russia vulnerable for exploitation. Moving forward, it will be of upmost importance to find a balance of interests between Russian companies and foreign trading partners along technological cross-boundary chains. Due to Russia’s lack of financial resources and need of specialized labor, Russia must rely on foreign investment and aid. After investment and the construction of delivery methods, destination markets for Russian mineral wealth must be determined. In conclusion Russia’s strategic interest lie not only in the supply of oil and gas in the production and supply of high added value products and in the establishment of joint venture and cooperative investment opportunities.

In conclusion, it is clear the development of Russia’s Far East and Siberia can hardly be possible without active involvement of the representatives of business community and the cooperation of Eurasian states. The conference has been instrumental in engaging CEOs and management staff of a wide variety of international organizations and corporations with stakes in Russia’s Far East. By providing this springboard for the mobilization of resources in the Far East, the development of this region is becoming more realizable for the future.