Is There Life in the Far East?

This year Vladivostok hosts the fifth Eastern Economic Forum (EEF) – a key international geopolitical and geo-economic event in Pacific Russia. The forum attracts more attention every year, and not only from Russia’s neighbors in Asia but from all over the world. This year, Indian Prime Minister Narendra Modi is expected to attend as the guest of honor. Visits by Japanese Prime Minister Shinzo Abe and Mongolian President Khaltmaagiin Battulga have become a tradition.

The EEF not only reflects Russia’s image abroad, based on the number and level of the guests, but it also provides an opportunity to evaluate the progress of Russia’s “turn to the East.” Many analysts describe Russia’s turn to the East in terms of the deterioration of Moscow’s relations with the West, but there is more to it. Indeed, geopolitical turbulence and sanctions have limited opportunities and have prompted the Russian political establishment to become more active. Nevertheless, the realization of the growing role of Asia and the non-Western world in general and the need to diversify foreign policy dates back to the mid-1990s. This is evidenced by Yevgeny Primakov’s doctrine, official Russian strategies at the turn of the century, political and diplomatic efforts to promote cooperation with China, India and the Latin American countries, Russia’s active position at the six-party talks and the launch of infrastructure projects (for example, the development of the Eastern Siberia-Pacific Ocean oil pipeline).

Turn to the East and the New World Geopolitics
Timofei Bordachev
These days Vladivostok hosts the 5th Eastern Economic Forum (EEF), the largest representative event at the highest political level in Russia. This year, the forum will be attended by the heads of state and government of India, Malaysia, Mongolia and Japan as participants in a panel discussion, along with the President of Russia Vladimir Putin.
Valdai Papers

This policy was prompted not only by multi-vector political influences but also by the economic imperative of turning the Asia Pacific Region into the driver of economic and technological progress in the 21st century. Although the center of economic and technological breakthroughs has not yet unequivocally moved from the Euro-Atlantic Region to Asia, this macro region remains the most dynamic in the world. This can be seen in the economic development of the Asian states, their advanced political, diplomatic and military status and in innovation achievements during the fourth industrial revolution.

It is important to understand that for Russia such Eastern rebalancing is influenced by a package of external and internal factors that cannot work without each other. This is why Russia’s role in the world and Asia cannot grow without socio-economic progress in Siberia and the Far East.

Far Eastern imperative

It is impossible to deny the importance of the Far East for Russia. It is a source of precious minerals, a window to Asian and Pacific markets, and a strategic defensive frontier that gives Russia free access to the Pacific and sovereign control over the eastern part of the Northern Sea Route. Moreover, the “cold potential” is Russia’s additional climatic and geographical advantage in the development of the modern digital economy with its urgent need for large amounts of information storage capacity.

In this context, the location of the Russian Federation in Asia Pacific and the Russian Far East is unique. Access to the seas of the Pacific and the Arctic oceans simultaneously defines Russia as a continental and a maritime power with all the advantages and problems of this position. A number of leading Russian scholars, for example, Yaroslav Lisovolik, base their analyses on the concepts of Eurasianism and the ideas of their predecessors Nikolai Trubetskoy and Pyotr Savitsky. They suggest that Russia should primarily be seen as a continental power and the center of Greater Eurasia with its package of problems that put continental powers at a relative disadvantage compared to maritime states. Meanwhile, if the Greater Eurasian project with its main elements – the EAEU and One Belt, One Road – is viewed through the prism of Russia as a unique dual continental and maritime power, the Russian Far East does not look like a backwater at all. On the contrary, it is seen as a juncture of three tectonic plates of global geopolitics that is taking shape now – mainland Eurasia, the Pacific and the Arctic. In May 2018, Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev was also appointed government curator of the Arctic. This decision shows that the Kremlin understands these fundamental geopolitical trends.  

Overcoming gaps

Nevertheless, to become a fully-fledged part of the integration processes in Asia Pacific, Russia must overcome the gaps in the development of the Far East. Despite the priority dynamics of investment in the region (for the first time, investment growth in the Far East reached an unprecedented 117.1 percent in 2017, exceeding the national average of 104.4 percent; in 2018 the figure for the Far East was 121.3 percent versus a national average of 109.8 percent), it is still too early to talk about huge investment in the Far East economy. Regrettably, even the fact that a region that totals 8 percent of the national economy receives about 30 percent of all foreign investment and that the bulk of investment is made by domestic business (about 76 percent or 101 investors) testifies not only and not so much to the growing economic appeal of the Far East but to the general decline of foreign investment in the Russian economy (according to the Bank of Russia, in 2018 foreign direct investment decreased by almost 67 percent compared to the year before).

There are some factors that make it possible to maintain stable indicators: a more neutral foreign policy climate in the East; a number of special instruments (the APEC summit, the EEF, priority development territories, and the Free Port of Vladivostok); the adoption of priority sectoral projects (about 18 percent of investment goes to agriculture; the transparent use of forests for industrial production, the application of new technology for mining mineral resources, etc.). Yet, all these positive factors are not leading to a major breakthrough largely because of existing structural gaps.

Thus, negative trends persist in demographics in all Far East regions with the exception of the Sakhalin Region that shows moderate growth. The other ten regions are losing population to migration despite positive natural dynamics. The infrastructure of the Far East remains in a poor condition. Low population density on huge territories with inferior infrastructure is a tangible obstacle to breakthrough development. Hence, the capacity of local industries is low which compels Russia to use imports from its Asian neighbors rather than just attract them as investors.

Key capital

Interestingly, the response of the people in the Far East to the invigoration of Moscow’s Asian policy is not always unequivocal. Despite a general willingness to work for development, some people find it easier to leave things as they are. There are some nuances in this context and it is important to understand that some people are just tired of periodic splashes of activity, which do not result in any real improvement, whereas others are reluctant to work under transparent rules and on a competitive basis. This is less typical of the younger generation. Despite the persisting drain of young people, not only to Moscow but also to neighboring Asia Pacific countries, the number of those who are interested in contributing to the development of their home and the region is growing. Indicatively, this is true not only of Far Eastern residents but also of those who come from other regions of Russia. This is especially pronounced at Far Eastern Federal University (FEFU), which attracts talent from Russia and the rest of the world. It is turning into a driver of regional development and a kind of testing ground for new mechanisms of involvement and cooperation and cutting edge technology. FEFU has helped Russia substantially step up education and academic relationships with almost 300 of its partners from 40 countries.

Along with academic contacts, tourism also promotes contact between people. Although the region’s tourist potential is not yet fully tapped, it has turned into a fashionable trend for young people from the eastern Asian countries (which is partially facilitated by arising problems, for instance between South Korea and Japan).

The timeserving and strategic intentions of Russia’s Asian partners also facilitate cooperation at the grassroots level. It is important not to underestimate the potential of the “numbers diplomacy” of the South Korean and Japanese leaders (the nine bridges of Moon Jae-in and the eight items of Shinzo Abe) and the prospects for conjugating the two major economic projects – the EAEU and the Belt and Road initiative.

Occasional instances of cooperation with India may turn into an established practice. A representative delegation of Indian businessmen and politicians came to prepare Narendra Modi’s first visit to the EEF. Considering New Delhi’s increasing global ambitions, this could lead to more stable and longer-term contacts and projects.

It is important to support Asian investors in the Far East because success stories are bound to attract new investment and stakeholders.

Goodbye Pacific Rim, Hello Indo-Pacific?
Anton Bespalov
In recent years, the term “Indo-Pacific” has been used more and more frequently. According to some analysts, it is replacing the well-established concept of the Asia-Pacific region, reflecting a new balance of power in Asia. Beijing is suspicious of the fact that the Indo-Pacific concept is being actively promoted by Washington, believing that its ultimate goal is to contain China. We investigating whether or not this is so – and whether Russia should be wary of the emergence of a new regional construct.
Expert Opinions

Persistent variable

Regardless of what comes of the transformation of the system of international relations and the changes in the positions and roles of the major countries, and regardless of the strange form of any new geopolitical structures, the considerable potential for development in Pacific Russia will remain a persistent variable. The key issue comes down to a willingness to risk and offer innovative solutions for the use of this potential for developing the entire country and its integration in the changing international system on mutually acceptable terms. However, all this is impossible without strengthening the backbone of the Far East economy and using its competitive, sustainable and fully-fledged development and export potential that is primarily aimed at the larger Pacific economies.

Departing from former paradigms and established political practice also creates additional opportunities for Russia’s foreign policy aspirations. The Far East, as the intersection of three key regions, Eurasia, Pacific Asia and the Arctic, opens prospects for overcoming the false dilemma of the traditional division into continental or maritime states. The former implies integration with mainland Eurasia and the latter, deeper involvement in the processes that are unfolding in the Asia Pacific Region. The dual geopolitical nature of the Russian Federation allows it to move in two directions at once, thus multiplying the benefits of each.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.