Rens LEE and Artyom LUKIN

• One third of Russia’s landmassOne third of Russia’s landmass• 6 mln residents6 mln residents• A subnational unit whose ties to the rest of A subnational unit whose ties to the rest of

the country can be seen as problematic the country can be seen as problematic due to the region’s remoteness from the due to the region’s remoteness from the nation’s core and its proximity to populous nation’s core and its proximity to populous and economically powerful countries of and economically powerful countries of the Asia-Pacific.the Asia-Pacific.

The Russian Far East: basic facts

Richly endowed with natural resources (metals, oil, natural gas, coal, diamonds, timber, fresh water, marine fish stocks, arable land).

Strategically situated in the North Pacific, where several big powers – the US, Russia, China, Japan, Korea– intersect.

Controls approaches to the eastern Arctic.

RFE’s geopolitical importance

Moscow’s game plan for RFE

Since around 2007, Moscow has declared the RFE a national development priority.

• APEC summit and the upgrade of infrastructure in Vladivostok.

• Far Eastern Federal University• Oil and gas pipelines, petrochemical plants• Trans-Siberian and BAM main lines expansion• Space launch facility• Etc.

Special governance and fiscal regime for the RFE

Territories of advanced development (“TORs”) with special fiscal, customs and regulatory regimes

Vladivostok Free Port Area with visa-free travelTax benefits for large investment projects in

RFE

Putin’s point man for the RFE:

deputy PM and presidential

representative Yuri Trutnev Ministry for the Far East

Development (reports to Trutnev)

Mixed resultsRFE’s economic growth figures are a little better compared to Russia’s average. But: •No noticeable increase in private investment, both Russian and foreign.•Population continues to shrink. •Ineffective governance is the main systemic issue. •Corruption remains a problem.

A Soviet-era monument in Blagoveshchensk: “The Amur land was, is, and will be, Russian”

China and RFE

Sino-Russian Eurasian Alliance?

Geopolitical alignment and single geo-economic space in Eurasia (EEU linking up with SREB)

Eurasianist discourse is on the rise in China and Russia

“Eurasian Friendship” hospital in Suifenhe (Heilongjiang)

The then PRC’s Vice President Xi Jinping visits Vladivostok in March 2010.

China and RFE

Beijing sets its sights on RFE

“We intend to integrate as one whole the program of the RFE development and the strategy for rejuvenating of NE China. Thus we will contribute to the linking up of labor, material and financial resources of the two regions, making these two regions into a big market with efficient distribution of resources, capital and technologies, and gradually, in the future, into a new economic bloc in East Asia…If we are successful in connecting NE China with the RFE, if we are successful in joining these points together, we will create a single economic integration zone.”

Chinese VP Li Yuanchao (2014):

Sino-Russian projects in RFE

Power of Siberia gas pipeline (under construction)Eastern Siberia-Pacific Ocean pipeline’s spur to China (in

operation and being expanded)Udokan copper field (suspended)Transport corridors from NE China to the Sea of Japan via

Primorsky Krai (under negotiation)Bridge across Amur (under construction)Joint investment fund for agriculture (being set up)Casino resort near Vladivostok (in operation)

Chinese seek to buy RFE’s assets on the cheap and demand parity or controlling stakes. This is holding up many potential projects.

For how long will the cash-strapped Russia be able to hold out?

China’s financial institutions are expanding apace into Russia and the RFE

Yuan expansion in RFE

China’s strategic rear areas/overland supply routes: northeastern (Russia), northwestern (C. Asia),

southwestern (Myanmar)

Japan and Korea - counterweights to China?

Big and Little Diomede Islands in the Bering Strait

The U.S. and the RFE: North Pacific neighbors

Scenarios

1. RFE as China’s “Outer Manchuria.”

2. RFE as a backwater.

3. Fortress RFE.

4. RFE as an area of international cooperation and integration.

5. Wildcard scenarios – China attempting to annex tRFE?

Recommendations

1.Determine the peer competitor.

2.Watch China’s behavior toward RFE as an indicator of its strategic expectations.

3.Ease the sanctions’ effect on RFE.

4.Let the Asians do business with RFE.

Recommendations

5. Encourage improvement in Japan-Russia relations.

6. Support Trans-Korean projects.

7. Encourage the US Pacific states’ partnerships with the RFE.

8. Resume inviting Russia to biennial US-led RIMPAC (the Rim of the Pacific) multilateral naval exercises.

Recommendations

9. Assist with Russia’s admission into the Asian Development Bank.

10. Work toward establishment of a Northeast Asian cooperation and development financial institution.

11. Form an ad hoc multilateral group to assist in the RFE development.

Rens LEE and Artyom LUKIN