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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.
- Now in Russia, the Ministry for Far Eastern Affairs has been formed. 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 needed a new effective system for managing the Far Eastern region. However, I did not "swing" to create a separate ministry, at that time there was still a Ministry of Regional Policy of the Russian Federation. I suggested to make it more powerful, to increase its status and, as a result, the effectiveness of its work. But in the ministry itself I proposed to create a separate department for the affairs of the Far East, since it is very large and, what is important, 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 mass perception of the Far East - this is Vladivostok, Khabarovsk, well, still Sakhalin and Kamchatka. And people are genuinely surprised when they are told that the Far Eastern Federal District is also Yakutia, this has been the case since Soviet times. Gosplan territorial zoning determined the so-called Far Eastern economic region, and Yakutia was included in it.
But the importance of DFO for Russia determines not only its size. The district is of strategic importance, it is the Russian gateway to the Asia-Pacific region. And it, in turn, determines the vector of modern economic development of the whole world.
What happens in the economy of Western Europe, we see: growth rates - zero, plus or minus one percent. This is all that Europe is capable of. If Russia will continue to cling to it with its last strength, we will have the same pace of development ourselves - one to two percent. And now look at what the countries of the Asia-Pacific region show: 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.
We always had a lot of people in the government and the expert community, who focused more on Western values in their activities. This is easy to explain. First, the Asia-Pacific region began to develop actively relatively recently. Secondly, this is a kind of historical tradition. Where Peter I cut the window, remember? Correctly, to Europe, although he had established the first ties with Japan and with China, he maintained contact. But the Western vector of development has always remained the dominant for Russia. And today the situation is changing radically, and life itself is pushing 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 of our own economic development, our future looks much more promising.
All the 60-70-s of the last century, we just did that, stretching our oil and gas pipelines to the West, to Europe. And in the end, Russia was in the position of a one-legged colossus, and this leg is in Europe. And now let's take a look at the situation from the position of today. Ukraine "cuts" the traditional gas transportation routes, and in the long run oil. "Nord Stream" is still operating smoothly, but it can be blocked in two counts. 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 shifted from a dead center and has begun to drastically change, diversification of supplies makes Russia more stable. Russian companies have the opportunity to choose partners, work with them on their own terms, and not only on those that are imposed by the "European community".
- But the Chinese are great masters in defending their interests, especially economic ones.
- No doubt, it is more difficult to negotiate with them than with Europeans. We will never agree with them, we must painstakingly seek mutually beneficial solutions, and I assure you that they will always be found. China is a great power that strictly conducts its own economic policy. But today, China has chosen us precisely as its strategic partner, and this chance Russia needs to take full advantage of.
- Only the lazy person does not speak about the "turn to the East" today in Russia. But the words should follow the case, I mean the creation in the Far East of an investment climate that would interest very cautious Asian investors.
- At one time I was an investment plenipotentiary for the Far East, and I know the investment climate that has developed in the region very well. He, frankly, is 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 FEFD. First of all, it is necessary to seriously invest in infrastructure: to build thousands of kilometers of roads and railways, to develop mineral deposits. And, of course, to offer investors certain preferences, because the climate, alas, cannot be changed. I once visited a furniture factory in the south of 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 conducive to attracting cautious and, frankly, picky 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 untold resources, everyone is ready to gnaw through each other's throats. And how are things really in fact? To be clearer, I will give one example. Forest for the Far East - as they say, "our everything". It would seem that a very popular resource in Asia. He was always bought - Japanese, Chinese, Koreans. Exactly until the government went, as it seemed then, to the correct maneuver: it decided to stop the export of round timber and reorient itself to export woodwork products. For this purpose, a step-by-step increase in the export customs duty on untreated timber was established, so that in five years it became virtually prohibitive. The idea, of course, was good. Only the same Japanese told us "goodbye" and began to buy rough logs in New Zealand, Australia, Canada, America. It cost them a little more expensive, but given 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: it was necessary to interest the same Japanese people to invest in processing in our territory. But as it happened, it happened. Allowed mistakes must be analyzed in order not to admit them in the future. Moreover, despite the political differences, the Japanese express their readiness to cooperate with us. In this they see their own economic interest, and secondly, the economy opens up ways to solve political issues.
As for China, politically, 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 question is, I repeat, in creating an appropriate investment climate. And it is not in the Far East right now, so there are no serious Chinese, Japanese, American investments. In reality, there are only large projects on the shelf of Sakhalin, but they have nothing to do with the state of the investment climate.
- In one of our programs, a Chinese expert told us that twenty or thirty years ago, in all Chinese cafes, restaurants, where foreigners visited, advertising leaflets were distributed that called for investing in China.
- This, of course, was an advertising move. In fact, a clear state policy has worked. The country's leadership outlined a strategic course, and the country began to move step by step, step by step, along the chosen path, guided at the same time by truly Chinese philosophy, the essence of which was that one should not make jerks, everything should be done gradually. This philosophy of China adheres throughout its history. If you remember, China did not fight for Hong Kong, he just waited. At one time with the UK was an agreement for 99 years, the Chinese just waited, and Hong Kong was returned. The same was with Macao. In this sense, the Chinese are very wise people. If you understand them, it's nice to work with them.
- But for this we need specialists who know China well.
- The following figures caught my eye recently: in Russia, China’s problems are deeply involved in