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The Edge of Reality

Igor Melamed: Many of the megaprojects of the Far East are unrealizable in principle

The Edge of Reality
Special project TORA and Free Port

In an interview with, Igor Melamed, General Director of the International Center for Regional Development (ICRD) CJSC, told why the Far Eastern youth should be exempted from military service, what Singaporeans had been waiting for in Primorye for three years, and why the Jewish Autonomous Region could get a key role in relations with the Celestial Empire ...

- Igor Ilyich, you have been dealing with the problems of the Far East for a long time, you have supervised the development of a number of regional comprehensive development programs. Tell me, do you yourself feel the dynamics in the region over the years?

- Of course. Today we have a completely different Far East, especially after the APEC-2012 summit. Earlier, roughly speaking, it was treated like this: there is Sakhalin with its oil and gas projects. And there is everything else - gray, incomprehensible, uninteresting. And among the local population there was such pessimism! Say, we are all abandoned, at the expense of the Chinese survive. Today, the attitude towards the Far East has changed radically, as has the outlook of the Far Easterners themselves. When real investments began in the regions, repairs and construction of roads, power lines began - people felt it. Began to equip high-tech medical centers. And it's not just about Primorye, but about the entire Far East.

The events that took place in the region were both an incentive for investments and an opportunity to openly demonstrate achievements. For example, in 2009 we organized the Russia-EU summit in Khabarovsk and showed the Europeans a real Far Eastern Russia. And the APEC Summit in Vladivostok became an event of the whole country.

- What is the main thesis in the strategy for the development of the Far East?

- The main thesis, which is incorporated in the Strategy for the Development of the Far East, is very simple: special measures of customs, tariff, tax and budgetary policies should be implemented on this territory. The colossal drawback is that we have not managed to fit the social policy into the Strategy. This is a kind of nonsense. Nobody wanted to take on social obligations, although they are there and are asking for it. So, if we want the population to remain in the Far East, then a special social policy is needed. Let's say that, for example, to consolidate youth in the region, let's not take graduates of the Far Eastern universities into the army, if they stay to work in their specialty. There are many such ideas. There was an idea to provide housing in the Far East to children in orphanages. But the Interior Ministry immediately spoke out against the proposal, saying that in this way we will create a criminal situation in the region.

- How to attract staff at the moment - because the implementation of projects requires more than one dozen people?

- According to the Strategy, about 1,5 million people were required to implement the projects that were planned for these years. And with people in fact, everything is simple. There are 4 factors that influence whether a person lives here or not. The first is the opportunity to have a job, and a long-term one, so that a person can "settle down", knew that for his children there will also be work. The second is housing. Housing in Russia is a key moment. If it is possible to obtain housing in some quicker, simplified, cheaper order, this is a very important factor. Third, of course, the level of services. Well, who will go to a place where there is nowhere to give a child a good education or get qualified medical help? And the last thing is the mobility of the population. There are very few people in the Far East. And when the mosaic economy is read - there is a project, here the project - people are not enough. For example, to make the largest copper deposit of Udakan work, the minimum will be required for 8 thousand shift workers and 5, and even 10, for thousands of personnel. So, we need a settlement for 15-20 thousand people with an attendant infrastructure, but who will build it?

If we hang it on the owner of the deposit, then it's easy for him to master it. Contain the city - who is in a position ?! Although, in addition to the owner, nobody needs this city any more. The state does not aspire to take such obligations for the time being. Even on the cosmodrome "Vostochny" and that is, problems with housing.

- What is the way out of this situation?

- There are outputs. It was Shuvalov's proposal (Igor Shuvalov - First Deputy Prime Minister - Ed.) create a "Far Eastern capital", that is, to give the population rights to land on 30 acres. The idea itself is not bad. To create a land market, the corresponding bank, which would take these shares as collateral for loans, arrange a turnover of land, resell this land. That is, to issue, as we have said, a land voucher, these 30 acres as a Far Eastern capital, like the parent capital that a person has the right to spend, for example, on housing.

However, everything needs a mechanism - this idea was taken quite literally and "strangled". Immediately, for example, the question arose: who is the infrastructure for them? Accordingly, who bears the costs?

Each time, many questions are limited to certain half measures. We have already started large projects in the Far East, that today the primary task is to link this all, to provide with resources, including infrastructure, human resources, so that these projects begin to give impact. Well, Mechel built 321 km of a private railway from the Elginsky coal field - the field is ready for operation, but you can not take anything out - the BAM is packed.

- Is it possible to say that the development of the Baikal-Amur Mainline will be the locomotive of the development of the entire Far East: the construction of skydiving railways will contribute to the development of production facilities and other centers, including in Yakutia and the Irkutsk region?

- It's true. The throughput of the railway is one of the three main factors limiting the development of our Far Eastern regions. On the so-called "Eastern Range", as railway workers say, about 2800 km of bottlenecks. And when the next bottleneck expands, it does not increase the bandwidth twice. Simply the most narrow place has disappeared, there was another, the next narrowest passage place. The Far East is so dependent on these two threads of railways (BAM and Transsib - approx. red.) that, as soon as we start to look at some project, first of all we consider: are we going to bring anything there? Or we must first expand a few hundred kilometers of the road and then, maybe, something we will bring. And what schemes have to be invented to implement these projects! You can write the same novels. Here is the project "Eastern Petrochemical Company", which "Rosneft" implements in the Nakhodka area. To build, they need 7 million tons of building cargo (metal, cement) per year, and this is a real problem! And next to it is planned the second large plant of Gazprom for LNG production, this is 10 million tons of cargo. 17 million tons - already out of bounds.

At us on the railway line to Hassan along this branch, where a bunch of ports are going to develop, today there are 9 pairs of trains per day, that is we can transport 8 million tons of coal. And in plans before 2020 year we will 16 steam trains pass. We pledge that we will have one port, a second port, for 10 million tons of grain to be exported. It's all fantastic. In reality, we will be able to export the entire volume of cargo only if we start shipping through China, our railway can not cope.

- And what are the other two main limiting factors?

- The second factor is energy, which is simply not available in some areas. And these are the most important areas. For example, the north of the Irkutsk region, where the cascade of Vitim HPPs was previously planned. Nobody has built it here. The Transsib is electrified, but it takes all its power. When the ESPO (the East Siberia-Pacific Ocean oil pipeline) was built, the power transmission line was built only for themselves, since nobody wanted to incur unnecessary expenses.

Well, the third factor, which I already mentioned, is labor resources.

- Your opinion, why do foreign investors not in a hurry to invest their funds in the Far East?

- Why do you think you are in no hurry? We have many projects, but in reality we are preparing certain things a little slowly. What are the advantages of TOPs, the creation of which is now being actively discussed? They are able to remove some of the administrative barriers that hinder the implementation of the project. Here is a living example for you: for several years in a row, a project was being prepared for the production of semi-submersible platforms for oil production in the Primorsky Territory, in the Pyati Hunters Bay. Partners are Singaporeans. Our foreign colleagues waited three years for the land to be assigned to them, and then the project dissipated by itself. Well, you can't allot the land for three years ...

- If there were TORs, would such a situation not happen?

- In this respect, TORs, no doubt, are useful. Land removal, administrative barriers, acceleration of customs work. These are all things necessary. It's another matter that a reasonable question arises: why is this all necessary to be removed from the legislation? Let's change the legislation so that we do not need to make withdrawals from it for the implementation of projects.

If certain measures were taken in time in the Bay of Five Hunters, then we would get a good plant. Now I do not know if our hands will reach these semisubmersible platforms. Although they are very necessary for the same Sakhalin, where there is a large amount of drilling work, in other places on the shelf.

In fact, in the Far East such TORs already exist. Make withdrawals need not just some abstract sites, but where the project is launched, where there are investors, Russian and foreign, and where it really needs to help people lift restrictions.

- Igor Ilyich, your center has separately registered the Development Strategy of the Jewish Autonomous Region. How is it different from other subjects of the Far East?

- Yes, we wrote Strategies for the Jewish and Amur regions, documents on Primorsky Territory will soon be updated. As for the Jewish region, then, of course, it is not so powerful in industrial terms, but from the point of view of development potential it can become, perhaps, a key region in the development of the Far East, especially in relations with China. We do not have a single major bridge along the 3000 km of the border with China along the Amur. There are border crossings through the Primorsky Territory and through Zabaikalsk, there are several entrances to China via the Amur, which operate in a ferry mode (for example, near Blagoveshchensk). In Khabarovsk, the automobile bridge across the island of Great Ussuri in China was put into operation. At the same time, very high expectations are associated with the prospective construction of the Nizhneleninskoye-Tongjiang railway bridge in the EAO. This bridge, the construction of which has already been decided, should become a link: it intensifies the exchange of goods and technologies, and many others. Only it should be built in a good version, just 25-30 million tons of cargo. This is the main element of a real relationship with China. Because EAO is a great place for dairy farming, growing soybeans, and also implementing a number of projects that can be implemented on our side together with China.

- Lately, much has been said about the "eastern" vector of Russia's development. Do you think this is a response to sanctions against our country or do we really need cooperation, for example, with China?

- Sanctions and politics on the Pacific coast of Russia - these are absolutely unrelated things. Russia's Pacific policy began with the East Siberia-Pacific Ocean oil pipeline in 1999, when it was first seriously discussed what to do with the Vankor oil and gas field, the largest in Eastern Siberia. At the same time, the idea was formulated that its development should be the "first swallow" in the eastern policy of Russia. Before that, we, of course, exported a certain amount of oil to China, and not only to China, but such a significant step that the "trumpet" went to the Far East clearly indicated the thesis: "Russia looks seriously at the East." To this pipe we have connected the deposits of Yakutia and others, to which God's hands would reach the time when. The same Talakan, Upper Chona. Now - on the turn of gas projects. We have the same giant deposits - Kovykinskoye gas field (Irkutsk region), Chayandinskoye oil and gas field (Yakutia). The perspective on them is also connected with the eastern direction.

In addition, an important point is the launch of Sakhalin oil and gas projects, because Sakhalin is a real breakthrough in Russia: these are the first offshore projects that Russia has been implementing with the whole world.

Although, for the sake of justice, I note that the intensification of relations with China, which is observed in recent weeks, is already largely connected with sanctions.

- Do you think that the West should still be afraid of such a reorientation of Russia to the east?

- Without a doubt. I'm not saying any official point of view right now. The official was expressed by the Chairman of the Government of Russia in Sochi ("The West is not the worst for our country" - wrote Russian Prime Minister Dmitry Medvedev on his Facebook page on the results of the forum "Sochi - 2014" approx. red.). I mean the popular opinion in the world, especially in Latin America, that there is a developing world and a developed world. Russia as a leader in the developing world does not need the Western world.


CJSC "International Center for Regional Development" - until 2002, the International Fund for the Development of Regions - was founded in 1995 with the aim of attracting investments in the regional economy, developing regional investment policy, federal target and regional programs for the development of constituent entities of the Russian Federation. Among the Center's developments are several editions of the target federal program "Economic and Social Development of the Far East and the Baikal Region", several socio-economic development strategies of the Far Eastern Federal District, including the "Development Strategy until 2025" (approved in 2009). 

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