The Necessity of Integrating the Russian Far East in the Asia-Pacific Region

Russia’s development strategy in the Asia-Pacific region in the 21st century has been well underway since President Putin’s approval of the establishment of the Ministry for the Development of the Russian Far East and the APEC meeting in Vladivostok in 2012.

This strategy is becoming increasingly refined in the context of China’s One Belt, One Road initiative, Russia’s strained relationship with Europe and investor interest from China, South Korea and Japan. It has become a reality that the successful development of Russia’s Far East simply cannot be realized without the integration of the region with the Asia-Pacific economies. It is now up to Russia to spread its sails in the newest gusts of the Asian-Pacific wind.

China, of course, is one of the major strategic partners of Russia’s economic integration with the Asia-Pacific region. As China is also undergoing an internal rebalancing to address underdevelopment in its western and central regions, it has proposed a development strategy focusing on the “connectivity” between infrastructure networks and productivity hubs within and between the underdeveloped countries of Central, South and Southeast Asia. This strategy promises the developing neighbors along the route “an open, inclusive and balanced regional economic cooperation architecture that benefits all.” The Silk Road Economic Belt development initiative, the newly-set up $40 billion Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB) are testaments to the Chinese leadership’s determination to push for further integration with neighboring countries on the Eurasian continent. Sino-Russia Eurasian economic integration is becoming more promising, as President Xi Jinping confirmed with President Putin the idea of the co-development of the Eurasian Economic Union and China’s One-Belt-One-Road initiative during his visit to Moscow on May 8-9, 2015. A number of multilateral cooperation prospects might emerge, including the possibility of an EAEU-China Dialogue, a new infrastructure agenda in the EAEU and new multilateral initiatives within the BRICS Development Bank, AIIB and the SCO Interbank Consortium.

The Russian Far East has already been an integral part of regional cross-border trade with China, the Korean Peninsula and Japan for more than two decades. However, the region's potential has not properly been unleashed. The development of greater Eurasian “connectivity” is capable of solving the problem of inefficiency and high cost for transporting goods and resources, which currently presents itself as an obstacle for the region’s development and integration with the Asia-Pacific market. The modernization and development of the transportation network of the Russian Far East should be part of the overall goal of a well-connected Eurasian continent. The challenge is to envision, coordinate, and facilitate a more complex network of interregional trade and production hubs with differentially applied innovations according to resource clusters. As the establishment of priority development territories and special economic zones has already taken that approach, it remains to be seen how well such a vision will be implemented.

Besides China, South Korea’s ambitious Eurasia Initiative is also pushing for deeper integration with the Russian Far East. Given the geographical location of South Korea and the fundamental problem of unification and stability on the Korean Peninsula, the Eurasia Initiative envisioned by President Park’s administration involves both the element of regional economic integration and geopolitical cooperation. It seeks a “peaceful” continent through the creation of an “integrated” and “creative” continent featuring a high-tech IT logistics network, railway, gas pipeline and electric transmission line extending from Russia’s Far East to South Korea via North Korea. Such logistics and transportation infrastructure networks also involve strategic considerations on the increasing significance of the Northern Sea Route. Korea’s port in Busan could serve as a logistics link between Asia and Europe with an expected reduction of logistics distance from 22,000 kilometers (via the Suez Canal) to 5,000 kilometers (via the Northern Sea Route). The city of Vladivostok in the Russian Far East and the Sabetta port on the Yamal Peninsula along the Northern coast of Russia would be important partner to the logistics projects. Moreover, given the North Korean factor in President Park’s Eurasia Initiative and the geopolitical scope of the development of the Northern Sea Route, these projects require a multilateral approach. Russia has a decisive role to play in any multilateral mechanism established to promote these developments. Korea’s Eurasia Initiative thus provides a major opportunity for Russia’s integration with the Asia-Pacific region both in economic and security aspects. Russia’s policy in response would necessarily involve the development of the Primorye Territory of a Pacific Russia. Vladivostok would play a key developmental and stabilizing role in the Korean Eurasian vision.

  While Japan has joined the Western sanctions against Russia, however reluctantly, its energy demand (LNG in particular) pushes for greater cooperation with Russia. Politically, Japan and Russia never signed a peace treaty to end World War II, and the territorial dispute over the Kuril Islands/Northern Territories persists. But Russia’s strained relationship with the West and the need for investment in the Russian Far East have made political cooperation between the two countries more significant, despite the unresolved problems in their bilateral relations. According to the Ministry of Finance of Japan, Japanese automobiles accounted for 63 percent of Japanese exports to Russia. Mineral fuels accounted for 82 percent of exports from Russia to Japan. Due to the proximity of Russia’s Sakhalin oil and gas fields to Japan, the Sakhalin Region has attracted 86 percent (US $ 8.6 billion) of Japanese capital investment, according to official Russian statistics in 2014. Japanese energy strategists have also advocated pipeline projects and electric transmission projects across the disputed territory and undersea. The Northern Sea Route has also attracted attention in Japan. The idea of a transport and power ring around the Sea of Japan which includes gas pipelines, electric transmission lines and a railway would certainly require multilateral cooperation between Russia, North Korea, South Korea, Japan and China.

The cases of China, South Korea and Japan show that the demand for integration between Russia’s Far East and the Northeast Asian countries is quite high, at least from foreign perspectives. The key challenge for Russia’s pivot to the East is therefore setting the right frame for multilateral cooperation and differentiating policy priorities accordingly. 

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