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It's time to catch up

Sergei Karaganov: "We need to go for rapprochement with Asia"

It's time to catch up

Karaganov

Member of the Presidium of the Council on Foreign and Defense Policy of the Russian Federation, political scientist, dean of the Faculty of World Economy and World Politics of the Higher School of Economics

Sergei Karaganov, political scientist and dean of the Faculty of World Economy and International Affairs at the Higher School of Economics, talks about why it is time to forget about megaprojects in the Far East.

- The development of the Far East is proclaimed a nation-wide priority from the highest rostrum in the country. But our fellow citizens are very suspicious of slogans. Do you think that there are any megaprojects that could accelerate the development of the Far East, most regions of which suffer from stagnation in the economy and demographic problems, remain depressed and subsidized?

- Fortunately, now we are witnessing a “turn in heads” that has finally begun among the ruling elite. So far, we are not talking about any megaprojects, and in this sense it is good that it was decided to abandon the program for the development of the Far East, developed when V. Ishaev was minister. In its unrealism and isolation from pressing market needs, it reminded of Soviet, and then, Russian securities of the 1990s, which echoed them. An approach based on the key role of megaprojects (BAM expansion, construction of a bridge to Sakhalin, etc.) is already a thing of the past. The era of megaprojects (symbolically and politically significant, but extremely costly) is finally over. Moreover, the costs of them would be disproportionate to the result: for example, the estimated amount of funding for the ministerial program is 3,8 trillion. rubles from the federal budget - many times exceeded the possibilities of the treasury. The slowdown in economic growth and, as a consequence, the need to cut government spending dictate the abandonment of megaprojects in favor of less loud and more pragmatic steps.

- Including the outside world? Repeating the name of the series of reports prepared by the Valdai Club with your direct participation - “To the Great Ocean”?

- The center of the world economy from the 1990-s began to shift rapidly to the Pacific Ocean. And Russia, too, is gradually, albeit belatedly, reorganized into the Asian vector of development, at least at the level of the adopted strategic documents and speeches of the country's leaders.

The attitude of the Russian political elite to the Asian vector of Russian foreign policy and to the development of Siberia and the Far East began to change. Previously, a possible turn to the East was often perceived as unnatural for the Russian political and cultural tradition, as a result of the authoritarian instinct of the Russian government. Now comes the realization of the objective necessity of using the opportunities of Asian growth in the interests of our eastern regions and Russia as a whole. But this understanding alone is not enough. It is necessary to fill Russian policy in the Asian direction with real content and be able to use our competitive advantages. While we are just learning this.

Back in June, 2013, at the St. Petersburg International Economic Forum, Vladimir Putin stressed that Russia could boost economic growth only if it reorients its exports to expanding Asian markets. This idea was also developed by the President of the country in the annual message to the Federal Assembly, when he called the rise of Siberia and the Far East “a national priority for the whole XXI century”. Thus, Putin once again fixed and even strengthened the call “to catch the Chinese wind in Russian sails” contained in his election articles.

- And this "Chinese wind" will not blow us away?

- The myth that Russia is ready to submit to the Chinese giant is "pumped" constantly. While Moscow - in which it should be given its due - has done everything possible to make these judgments remain at the level of philistine stereotypes. Friendly and warm relations with China are balanced by efforts to preserve and modernize nuclear potential, as well as to establish relations with all the states surrounding China. This is the most important in this case: we need to move closer not with China, but with Asia as such, with advanced Asia, with all countries that are on its territory. As early as the beginning of the 2000, Vladimir Ryzhkov and Alexander Khloponin, under the auspices of SWAP (Council for Foreign Defense Policy), prepared a report "New Strategies for Developing Siberia and the Far East." The key point of this program was the creation of the so-called international project "Siberia" - that is, the development of Siberia and the Far East using technologies and capitals from all Asian and European countries. I emphasize: not only Chinese, but Asian. I recall: at the beginning of 2000-ies. By its stupidity and because of its commitment to Eurocentrism, we have missed this opportunity, which is why, in the last decade, I think that 20-25 percent of GDP was missing. Today, we could be much richer, and the Far Eastern regions - much faster to move forward. True, even now our fears of China and the habit of Russian consciousness towards Eurocentrism greatly hamper the cause.

- But fears do not arise out of the blue, there are always reasons for this ...

- The most fertile ground for fears is ignorance. In the past few years, we have finally realized that the rise of Asia is serious and lasting. Fears also increased that without a coherent development strategy, the country's eastern regions could fall under the dominance of China, which rushed forward. The fact is that an inadequate understanding of the Chinese demographic threat to the eastern regions of the country has strengthened in the public consciousness and still dominates. Although the Chinese are now in the East of Russia much less than there were in the Russian Empire (or the Germans in today's Russia). Another question is that it is necessary, if possible, to prevent the creation of large compact settlements of the Chinese in Russian territories, but a different logic works here, and not the fear of expansion and annexation.

In addition, any positive scenario we have taken to accompany a lot of "but". When it comes to programs for the development of the Far East, they constantly turn to unproductive arguments about low population density, unfavorable climate and labor shortages. All these obstacles must be taken into account. But none of them can not be considered insurmountable. In the same Canada and Australia, similar indicators of population density, and for cooling houses in Australia spend no less energy in the summer than heating in winter in Siberia. If it is reasonable to use local (highly qualitative) human capital and create conditions that people do not run to the center of the country and more and more abroad (by the way, mainly to Asia), it will be possible to solve most of the problems with the labor force. It is also possible to involve migrant workers on a temporary basis from Central Asia, India, Vietnam, Korea, and China.

One way or another, the main thing now is to form in Russia a philosophy and a strategy of turning to a new Asia through the development of Siberia and the Far East. In order to take advantage of the opportunities of international cooperation with the APR countries, to seek there not only because of military-political or defensive, but also because of economic interests. Unfortunately, so far only the outlines of the strategy and philosophy of development of the Far Eastern region have appeared. What can we talk about if there is not even a geographical definition for it! Speech is only about the Far East, sometimes in conjunction with the Baikal region. Meanwhile, the macroregion, which would be oriented to the new Asian growth and indeed, as a locomotive, could pull the whole of Russia along with it, should also include Siberia, connected with the Far East historically and infrastructurally. Siberia is able to provide eastern territories with high-quality human capital. It has a huge production potential, and the task is primarily to overcome the main curse - the world's strongest continentality, because of which the region has been divorced from world markets.

- Any strategy sooner or later rests on financial issues. Where to take all this money?

- Of course, the new philosophy can not exist "in general", it must be supplemented by calculations of the cost and effectiveness of specific projects. It is quite obvious that the Far East, Siberia (including the Northern Sea Route and Arctic riches) can not be seriously developed without a massive attraction of foreign investment from the entire Pacific region, and even under the sovereign control of Russia. The development tool should be a series of regional projects with special (facilitated) customs, investment and tax regimes. The study of the history of the Russian development of Siberia in the XVII-XIX centuries. Convinces that the most productive is the stake on the development of private initiative. Although, of course, the government will have to make serious efforts to introduce into the reasonable framework "wild capitalism" that has developed in the region over the past two decades.

Creating a favorable investment climate in the Far East is a long and time-consuming task. Everything is important here, without exception. It is necessary to radically change the institutional environment in the development of the region's natural resources and provide access to them not only to state companies, but also to medium-sized enterprises, foreign investors and, in general, any economic agent that can effectively dispose of such resources. Courts should defend the institution of private property - then there is a chance for the return of Russian capital from offshore, from some British Virgin Islands. Essential benefits offered by the law on territories for advanced development discussed in the State Duma can attract Russian and foreign businesses to the Far East. And, of course, we can not ignore the ideological component - the media, which will actively promote the ideology that it is fashionable and cool to live and work in the Far East.

Anyway, there will be no more money for expensive megaprojects, it needs to be understood once and for all. It is necessary to use painfully the opportunities and advantages that are given to us by history and nature. The development of human capital and the removal of barriers to growth (primarily institutional and infrastructural) should replace the quasi-colonial combination of subsidies and resource development. The philosophy of the region's economic integration in the APR region should replace the philosophy of its use as the rear of a hypothetical external enemy.

- What can be considered in the Far East as our competitive advantages and what should we bet on first of all?

“We must recognize that the basis of the new economy of Siberia and the Far East has been and in the foreseeable future will remain natural resources. There is nothing wrong with using the wealth of nature. But this must be done with maximum benefit for the region. It is necessary that the resource sector not only created jobs, but also served as the core for the development of high-tech industries serving its needs - from the production of equipment for oil production to biotechnology in agriculture.

Raw materials are not just coal, oil or gas. Russia has excellent opportunities for the successful extraction and processing of rare earth metals. Their reserves in Russia are unique both in their quantity (about 30% of world reserves) and in quality. Almost all of them are located in Siberia and the Far East, and the Tomtor deposit in Western Yakutia is one of the largest in the world and just crazy for wealth. However, now, to the east of the Urals, rare-earth metals are practically not mined in Russia, only in recent years there have been prerequisites for changing this situation. In 2010, China, which provides 97% of world production of rare earth metals, has sharply reduced their exports, which led to a deficit in the market and rising prices. Russian stocks can replace the reduced supply from China to the industrialized countries (Japan, Korea, the states of Europe and North America), and also to be used inside the country. The production of construction materials and other products using rare earth metals in the major cities of southern Siberia could be the basis for creating a new high-tech cluster in the region and establishing close cooperation ties between the northern and southern regions. Such products have a good export potential: cheapness is ensured by the proximity of mineral raw materials, and ease of transportation is low weight.

Water resources of the Far Eastern region can be used not only as a generator of hydro power. Throughout the world, and especially in Asian countries, there is a growing shortage of water. This opens the way for expansion of water-intensive industries in Siberia and the Far East, in particular, the production of chemical fiber, cellulose and paper. Special prospects for agriculture, for which, in addition to fresh water, need arable land and pastures. On the whole Eurasian continent, only the east of Russia can boast a significant number of such territories.

Fish resources of the Far East can become a unique source of wealth. Under one condition - it will be necessary to attract the latest technology from Norway, Japan for the development of fish farming.

Finally, another advantage that nature gives Siberia and the Far East is tourism. The eternal talk that the development of tourism in the region will "ruin the ecology" is untenable, which is confirmed by the experience of many countries. For example, New Zealand or Costa Rica, where millions of ecotourists flock to.

- There are myths, but there is an objective reality. What stereotypes regarding the Far East do you consider to be untenable - and what do we have to admit, even if we don’t really want to do it?

- I do not share the opinion that it will be beneficial to turn Russia into a land transport corridor between Europe and Asia. The corridor is marginally useful. But the main thing is different. Railways are needed to overcome the continentality of Western and Eastern Siberia, to ensure their access to foreign markets. In terms of transit potential, it will be difficult to compete with the Chinese variants of the new Silk Road Transsib. Somewhat higher is the transit capacity of the Northern Sea Route, which makes sense to use in conjunction with the development (together with partners) of the raw materials of the Arctic shelf.

I am skeptical about the ritual calls to “rely on high-tech manufacturing industries” - an eternal attribute of many programs for the development of the Far Eastern region. Of course, you need to create them where there are conditions. It is beneficial for the state to export raw materials at high stages of processing. It is impossible not to be aware that Japan, Korea, China, Southeast Asia, the main world centers for the production of high-tech products with, as a rule, cheaper, abundant and well-organized labor force, are very close. Nearby are also Australia and Canada, which, due to efficient mining and deep processing of raw materials and high-tech agriculture, have become one of the most developed countries. It is also stupid to ignore the fact that the market of neighboring countries is primarily requesting processed high-processing raw materials and energy-intensive services (for example, information storage and processing centers that consume as much energy as aluminum plants), water-intensive goods, especially food and paper. , man-made fiber. In this case, we can offer only a limited number of export items. China, for example, buys paper, including in Finland. And it may very well be that this paper was produced from Russian wood exported to Finland. The feasibility of creating pulp and paper production in the Far East is quite understandable and explainable.

The economic and partly political turn to the Pacific Ocean, which is urgently needed for the development of the country, is slowing down not only because of lack of funds, inert bureaucracy and objective developmental difficulties, which are often exaggerated. The underlying and sometimes obvious inhibiting factor is the presence of two more competing development projects in Russia - the European and the Eurasian. So far, the Russian elites are not ready to make a choice in favor of one or to tie them together. But at least one hypostasis of the Eurasian Union is obvious and useful - it is the creation of an economic and political center that benefits everyone in conditions when globalization is gradually reborn into groups of regional blocs.

- For how long can stretch our way to the Great Ocean? And will Russia remain great by that time too?

- We lost 15 years, for which we could not decide on the development of the country's economy taking into account the eastern vector, missed part of the Asian boom. We will not overcome the backlog if we are economically bogged down in the persistent alignment of ties with the West and in the struggle of forces, instead of building immeasurably more productive and expedient ties in the eastern direction.

As for the unstable situation in Ukraine - it can last very long. But this moment can be used to attract qualified people, close to us by mentality and language, to Russia for permanent residence. For this, special state programs are needed that will make the territories of Siberia and the Far East attractive for the citizens of the former USSR.

In the Russian Empire, successes in the development of Siberia and the Far East were associated primarily with private enterprise, which operated with the support of the state, which provided people who mastered vast desert territories with the opportunity to receive a stable income. The task of the state does not change even now: it, above all, should create conditions in the Far East for the full development of business. That is how, with the help of economic levers and political will, the sovereignty of the country is strengthened. Other ways are much less effective. 

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