Russia’s ‘Re-Exploration’ of Siberia and the Far East: Tools, Plans, Ambitions (Part Two)

*To read Part One, please click here.

During the Sixth Eastern Economic Forum (EEF-2021), hosted by the Far East Russian city of Vladivostok, on September 2–4 (see EDM, September 14), Defense Minister Sergei Shoigu put forward a number of economic development proposals to be implemented across Siberia (see Part One in EDM, October 25). But at the same time, EEF-2021 saw several notable ideas concerning Russia’s Far East, articulated by none other than President Vladimir Putin. Development of the Russian Far East has long been a top area of concern for the Kremlin leader. Just prior to this year’s economic forum in Vladivostok, Putin pointedly stated that Russia’s “historic task” is to increase the Far Eastern population by expanding the local industrial potential, creating new jobs and improving living standards (TASS, September 2). Speaking to the EEF-2021 audience, the Russian leader once more returned to this subject, stating that since “Russia is an integral part of the Asia-Pacific Region,” all necessary measures to revitalize this strategic macro-region will be taken. Putin went on to claim that the ultimate goal is to turn the Far East into a “center of attraction for financial capital” (Izvestia, September 3).

The Russian government hopes to implement these extremely broad and ambitious plans through several concrete measures and initiatives over the next several years.

First are policies designed to transform the macro-economic situation in the regions of the Russian Far East. For this purpose, Putin declared that for the next ten years, companies (both foreign and domestic) operating on the territory of the Kurile Islands will be exempted from taxation. However, this rule will not automatically apply to all sectors: exploration/processing of bio-marine resources as well as extraction/processing of hydrocarbons will be excluded from the list. Russian sources argue that in his reference to “foreign companies,” Putin was specifically alluding to Japanese actors (Rossiyskaya Gazeta, September 3). Based on the number of preferences that Kurile-based businesses could count on, Russia is effectively creating a third domestic “offshore” economic zone—in addition to Kaliningrad Oblast and Primorsky Krai (Lenta.ru, September 3).

Second are measures to improve the demographic situation. Namely, during the EEF-2021, speakers voiced various plans to build new cities in the Far East—in many ways similar to the idea put forth by Shoigu with regard to Siberia. Dmitry Rogozin, the head of Russia’s Roscosmos state space corporation, called for the creation of a “city of Russian cosmonautics” in Amur Oblast (near the Vostochny Cosmodrome) (Lenta, September 3). Another, far more ambitious proposal was to establish the first Russian Far East city of one million inhabitants (gorod-millionnik). This city is to be created through the merger of Vladivostok (600,000 inhabitants), Artem (100,000) and a new agglomeration forming around multiple local mega-projects (Lenta, September 2). This newly established city-agglomeration would be turned into the capital of Russia’s Far East and become the “third, after Moscow and St. Petersburg, most attractive Russian city” (RIA Novosti, August 31). According to Alexei Chekunkov, the minister of development of the Far East and the Arctic (Minvostokrazvitia), this plan is to be implemented via the formation of more than 4,000 industrial plants and over 300,000 new jobs. Minister Chekunkov stated that this ambitious plan will require the investment of 11 trillion rubles ($151 billion) over the next decade; he also argued that in the next 15 years, the total population could reach the 2 million mark. Chekunkov added that the Russian state (and other potential investors) could count on a return on these investments in the next 25 years. For now, however, the only publicly named donors are the state-owned bank VEB, the Corporation for Development of the Far East, and the government of Primorsky Krai (Izvestia, September 4).

Despite the lack of a concrete development strategy and/or sources to finance this Far Eastern megalopolis initiative, local political leaders have rushed to persuade Moscow that the plan is realistically achievable. For instance, the mayor of Vladivostok, Konstantin Shestakov expressed buoyant optimism about the ability to attract the necessary number of experts and professionals; furthermore, he stated that the declared plans could be over-fulfilled (RIA Novosti, September 4), though without going into any specific details.

When it comes to addressing the demographic aspect of this ambitious program, the Russian side aims to use a combination of tools. In addition to (unnamed) economic/financial stimuli for settlers, the Russian authorities are apparently borrowing from both Soviet experience and contemporary foreign practices. Namely, the Federal Agency for Tourism (Rostourism) is planning to launch the Russian analogue to the United States’ Work and Travel program, specifically designed for the Far East. Unlike its US analogue, however, the Russian program is not offering high levels of economic remuneration for participants. Rather, the focus is on the “joyful life experience” that young Russians (mainly students) will ostensibly receive by spending their summer in the Far East (EADaily, September 3).

In the final analysis, three main conclusions can be drawn.

First, the plan to attract foreign investors by establishing a (partial) tax-free regime on the Kurile Islands seems to have already failed: last month, Japanese authorities declared their unwillingness to take part in this initiative (Rosbalt.ru, September 24). So far, no other foreign investors have expressed any interest either. And it is dubious to expect that large foreign businesses would be attracted by either the length of time (ten years is clearly not enough) or sectoral areas (which exclude the most lucrative local industries) that this tax scheme concerns.

Second, it is not at all clear how Russia is planning to address the demographic issue. While both central and local authorities have proposed grandiose plans for attracting hundreds of thousands of new settlers, facts point to a continuous unsettling reality—the collapse in the population of the Far East continues unabated (Eastrussia.ru, February 11, 2019; Deita.ru, March 11, 2021).

Third, it appears that within Russia’s ruling elite, no clear position on the subject exists—to some extent akin to the Siberia-related projects (see EDM, October 25)—exists. For instance, speaking about these ideas, Yuri Trutnev, the presidential envoy to the Far Eastern Federal District, clearly stated that the creation of new cities and/or urban agglomerations in the Far East would make sense only if the region starts producing new economic opportunities; until then, the government should concentrate on developing already-existing cities (Lenta, August 31).