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"A turn to the East" for the sake of Russia's future

Alexander Levintal on the prospects of a "turn to the East"

What does Russia promise a "turn to the East" and what tasks does it set for the Russian Far East? How to attract investment in this region from the Asia-Pacific region? The Acting Governor of the Jewish Autonomous Region, Alexander Levintal, discusses this topic.

"A turn to the East" for the sake of Russia's future
- Russia seems to have firmly decided that the time has come to pay the closest attention to the countries of the Asia-Pacific region. What is the role of the Far East in this “turn”?

- Now a ministry for the affairs of the Far East has been established in Russia. At one time, after working in the government of the Khabarovsk Territory, and then in the presidential administration, I wrote an article in which I tried to prove that Russia needs a new effective system for managing the Far Eastern region. True, at that time I didn’t “aim” to create a separate ministry, at that time there was still a ministry of regional policy of the Russian Federation. I proposed to make it more powerful, to raise its status and, as a consequence, the efficiency of its work. But in the ministry itself, I proposed creating a separate department for the affairs of the Far East, since this is a very large and, importantly, a very specific part of the territory of Russia.

Few people know that the Far Eastern Federal District is 36 percent of the entire territory of our country. In the general perception, the Far East is Vladivostok, Khabarovsk, well, Sakhalin and Kamchatka. And people are sincerely surprised when they are told that the Far Eastern Federal District is also Yakutia, it has been the custom since Soviet times. The Gosplan grid of territorial zoning determined the so-called Far Eastern economic region, and Yakutia was included in it.

But the importance of the Far Eastern Federal District for Russia is determined not only by its size. The okrug is of strategic importance, it is the Russian gateway to the Asia-Pacific region. And he, in turn, determines the vector of modern economic development of the whole world.

What is happening in the economy of Western Europe, we see: the growth rate is zero, plus or minus one percent. This is all that today's Europe is capable of. If Russia with the last bit of strength continues to cling to it, we ourselves will have the same rate of development - one or two percent. Now look at what the Asia-Pacific countries are showing: growth rates of five to seven percent. Now they say: "China is in crisis, the Chinese economy has fallen." At the same time, the growth rate of the Chinese economy after the "fall" is seven percent.

Remember how not so long ago Russian experts and officials said: "We would have to catch up with Portugal ..." A worthy task, there is nothing to say. It is necessary not to catch up with it, but to jump to a qualitatively new level of economic development. We are not Portugal or Spain. Russia is a global state that has enormous human and resource potential, but cannot take advantage of all this. Why is another question. It is possible to debate on this topic for a long time, but it is important to keep in mind the following: the Asia-Pacific region is a high-speed train, and it has already hit the road. We will have time to jump on his bandwagon, he will also take us forward, and at full speed. We will not jump up - we will remain standing still and will then bite our elbows. Time is running out.

We have always had a lot of people in the government and in the expert community who in their activities were more oriented towards Western values. This is easy to explain. First, the Asia-Pacific region began to develop actively relatively recently. Secondly, it is a kind of historical tradition. Where did Peter I cut the window, remember? That's right, to Europe, although during his time the first ties with Japan and China were established, he maintained contact. But the Western vector of development has always remained dominant for Russia. And today the situation is radically changing, and life itself pushes us to this. If Russia does not turn to face the APR, it will remain a secondary economic power. And if we use the APR as a factor in our own economic development, our future looks much more promising.

Throughout the 60s and 70s of the last century, we were engaged only in extending our oil and gas pipelines to the West, to Europe. And as a result, Russia found itself in the position of a one-legged colossus, and this leg is in Europe. Now let's look at the situation from the perspective of today. Ukraine "cuts" the traditional routes of gas transportation, and in the future, oil. Nord Stream is still operating smoothly, but it can be shut off in no time. The story with South Stream does not require a separate comment at all. In general, our country can easily and quickly find itself in a dramatic situation. And if Russia now had a “second leg” in the APR, we would feel much more confident. Fortunately, now the situation has moved off the ground and has begun to change dramatically, the diversification of supplies makes Russia more stable. Russian companies were given the opportunity to choose partners, work with them on their own terms, and not only on those imposed by the "European community".

“But the Chinese are also great masters in defending their interests, especially economic ones.

- No doubt, negotiating with them is more difficult than with the Europeans. You can never come to an agreement with them at once, you have to painstakingly look for mutually beneficial solutions, and I assure you, they will always be found. China is a great power that strictly pursues its own economic policy. But today China has chosen us as its strategic partner, and Russia needs to take full advantage of this chance.

- Only the lazy does not speak about the "turn to the East" in Russia today. But words must be followed by deeds, I mean the creation of an investment climate in the Far East that would interest very cautious Asian investors.

- At one time I was an investment commissioner for the Far East, and I am very familiar with the investment climate that has developed in the region today. He is, frankly, not the best. And as a result, even in the best years, European rather than Asian investments prevailed here. For Asian investors to come here, it is necessary to increase the investment attractiveness of the Far Eastern Federal District. It is necessary, first of all, to seriously invest in infrastructure: to build thousands of kilometers of roads and railways, to develop mineral deposits. And, of course, offer investors certain preferences, because, alas, you cannot change the climate. I once visited a furniture factory in southern China: a light frame workshop, they work for a salary of one hundred dollars, they produce excellent furniture under an Italian license. We would have to build a capital structure for such a factory and heat it for another six months. In general, a very favorable investment and business climate is needed. And with this, unfortunately, in the Far East is still not all right. All this is not yet conducive to attracting cautious and, frankly, fastidious investors from Asian countries.

In the minds of many Russians, there is a myth that the Far East, Yakutia is almost a world klondike and for these countless resources everyone is ready to gnaw each other's throats almost. And what about the reality? To make it clearer, I will give you one example. Forest for the Far East - as they say, "our everything." It would seem that this resource is in great demand in Asia. It was always bought - by the Japanese, Chinese, Koreans. Exactly until the government decided, as it seemed then, on the right maneuver: it decided to stop exporting round timber and reorient itself to exporting wood products. For this, a gradual increase in the export customs duty on unprocessed wood was established, so that in five years it would become virtually prohibitive. The idea, of course, was a good one. Only the same Japanese said goodbye to us and began to buy rough round timber in New Zealand, Australia, Canada, America. It cost them a little more, but taking into account the high customs duty, it was still profitable. The Japanese left, and we lost the market. Now it is already obvious that it was necessary to act differently: the same Japanese should have been interested in investing in processing on our territory. But how it happened, it happened. The mistakes made must be analyzed so as not to admit them in the future. Moreover, despite the political differences, the Japanese are willing to cooperate with us. In this they see their own economic interest, and secondly, the economy also opens up ways to resolve political issues.

As for China, in political terms, relations with it today are almost ideal, we have no territorial, political or economic claims to each other. The Chinese today are ready to go far in joint work. The only question, I repeat, is to create an appropriate investment climate. And now it is not in the Far East, so there are no serious Chinese, Japanese or American investments yet. In reality, there are only large projects on the Sakhalin shelf, but they have nothing to do with the state of the investment climate.

- In one of our programs, one specialist on China said that twenty or thirty years ago, in all Chinese cafes and restaurants, where foreigners came, leaflets were spread out calling to invest in China.

- It was, of course, a publicity stunt. In fact, a clear state policy has worked. The country's leadership charted a strategic course, and the country began consistently, step by step, to move along the chosen path, guided by a truly Chinese philosophy, the essence of which was that there was no need to make leaps and bounds, everything should be done gradually. China has adhered to this philosophy throughout its history. If you remember, China did not fight for Hong Kong either, it just waited. At one time, an agreement was concluded with Great Britain for 99 years, the Chinese just waited, and Hong Kong was returned back. It was the same with Macau. In this sense, the Chinese are very wise people. If you understand them, it is pleasant to work with them.

“But this requires specialists who know China well.

- I recently came across the following figures: in Russia, about 300-400 specialists, and in the USA 30-40 thousand. This is the question of our and American understanding of China. There are a lot of Chinese students studying in the United States, and Americans are trying to keep the best ones. We should learn from their experience in this regard. And to train our own specialists, because the "turn to the East" is for decades ahead.

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