Russia looking east
Vladivostok is the biggest and most neglected port city of Russia. Once a closed naval port city of Soviet Union era it is now standing spectacularly with a $20 billion recapitalisation. Vladivostok has been readied as the host city for the next APEC summit as part of a Russian grand plan to become a bigger player in Asia. President Vladimir Putin seems all set out to turn Russia east and tap into the growing Asian economies.
So far Russia's trade with the EU accounts for 50% its total trade. The euro zone crisis has naturally sent oil exporters like Russia looking at China and India as the future place for energy trade.
Less than a quarter of Russia's trade is with APEC, whose 21 members include China, Japan and other Asian economies in addition to the United States.
"We will have a future of accelerated growth when we have two strong legs: not just one in Europe, but one in Europe and the other in Asia," said Igor Shuvalov, the first deputy prime minister responsible for economic issues.
Russia has the oil and natural gas that Asia needs to fuel its economic expansion. Until recently, though, all of its export pipelines flowed west to Europe.
The first pipeline to send oil east to China began operation in early 2011. An extension of the pipeline to a port near Vladivostok is scheduled for completion by the end of this year, and Russia wants to build plants there to produce petro-chemicals and fertilisers, adding value to its exports.
The eastern regions of the country also have rich deposits of coal and metals, vast forests and plenty of undeveloped land where grain could be grown to meet rising demand in China.
On the drawing board is a plan to turn Vladivostok into a giant transportation hub for trade. "Building a reliable transport and logistics hub across Asia to Europe is clearly in Russia's interests, but also it is something that APEC leaders want to look at as well," said Myron Brilliant, the Senior Vice President of International Affairs at the U.S. Chamber of Commerce.
"You recognise that if Russia really wants to be a transportation hub, it's got to pick up its game," Brilliant said. "It's got to invest in the infrastructure."
The home of the once mighty Pacific Fleet, Vladivostok was a closed city until after the Soviet Union collapsed in 1991. It continued to be neglected since then encouraging many people to move to Moscow or other more prosperous cities. "Nothing will come of all these big plans," said Irina Makhura. "They will forget about us as soon as the summit is over. This is all for you foreigners."
Viktor Ishayev, Minister for Far East Development, disagrees. Russia invested so heavily in the APEC summit, he said, "so that people, heads of state, will come here and see that they are able to do business here." Russia's economic and strategic interests in Asia can only go in one direction, and that is up. The future of Sino-Russian alliance is poised to step into a very different role on the world stage, one where Russia will have a much important role to play, in peace and conflict resolution.
The writer is a Director, Financial Excellence Limited.
The writer is a Director, Financial Excellence Limited.
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