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Sunday, March 9, 2003



All eyes on Russia's Far East

RUSSIA'S FAR EAST: A Region at Risk, edited by Judith Thornton and Charles E. Ziegler. Seattle: National Bureau of Asian Research, University of Washington Press, 2002, 498 pp. (paper).

The Russian Far East is a land of contradictions. It is a vast territory of 6.2 million sq. km., roughly one-third the size of the United States, although it has less than 3 percent of the U.S. population.

Despite being rich in natural resources, it is desperately poor. Largely neglected by Moscow, it is coveted by its neighbors. Ten percent of the region's Soviet population of 8 million have migrated away, notably from the far north, yet unemployment remains high as more than 40 percent of the population subsists at less than the official poverty rate. Meanwhile, an inflow of Chinese is raising concerns that the neighbor to the south may gradually annex the territory.

The Russian Far East is pulled between Moscow, its historical orientation point, and its Asian neighbors, which offer tangible benefits through greater integration into the regional economy. The future of the region and perhaps even that of Northeast Asia as a whole depends on how this tension is resolved. While predictions that the Russian Federation will be dismembered are more often than not attempts to get Moscow's attention, demographic and economic forces do tug at the region.

As the editors of "Russia's Far East: A Region at Risk," an authoritative assessment of the region's prospects, conclude, "The Russian Far East benefits significantly from greater integration with the Asia-Pacific economies without the necessity of a formal divorce from the federation. A separation might reduce security with respect to other Northeast Asian powers, particularly China."

During the Soviet years, the Russian Far East had unquestioned strategic significance. Moscow stationed some half million troops there, hundreds of ballistic missiles and bombers, and thousands of fighter aircraft. The Pacific Fleet had 160,000 personnel, 120 submarines and nearly 200 surface ships. By the end of the Cold War, defense enterprises in the Russian Far East employed about 40 percent of the regional work force and accounted for some 20 percent of industrial production.

Strategic importance meant that the center -- Moscow -- took care of the region's needs. Subsidies were common and essential to the population's survival. As those ties loosened with the end of the Soviet Union, the economy of the region has virtually collapsed. By one estimate, the value of four industrial sectors -- food processing, forest products, light industry and the chemical industry -- has declined, while the sectors of agriculture, ferrous metals and coal operate unprofitably. Unemployment has skyrocketed and millions have fled elsewhere for work and survival.

The natural engine for regional development is the dynamic economies that border the region. Even Japan, ensnared in its own economic quagmire, has money and geopolitical reasons to forge closer ties with the Russian Far East. Local political leaders have been quick to seize those opportunities, both to develop the economy and to increase their leverage with Moscow. But as two contributors note, cultural and ethnic pressures remain strong, and "local elites raise the separatist agenda as more of a bargaining ploy to enhance their political positions and extract resources from the center than a serious option."

"Russia's Far East" looks hard at the motivations of each of the key actors: Moscow, regional elites, decision-makers in China, Korea, Japan and the United States. All have an interest in seeing the region developed -- and they have interest in seeing its rich bounty shared. Competition for influence is a good thing -- as long as it does not go too far -- since the status quo cannot continue. The region is close to lawless, with crime and environmental degradation rampant.

Managing the development process is critical. China has a clear interest in extending its influence over the region -- and, some say, irredentist claims against Russia. There is growing concern about the transparency of the Russian-Chinese border in the Far East and the rising Chinese presence throughout the territory. Most of the warnings are alarmist and exaggerated: Claims of millions of Chinese immigrants, legal and illegal, are exaggerated.

Still, as one contributor notes, "China's demographic pressures could, if left unchecked, drastically alter the ethnic balance in certain regions of the Russian Far East . . . Heilongjiang, Jilin and Lionning provinces have a combined population of 105 million, 15 times the entire population of the Russian Far East . . . To date, the number of Chinese who enter Russia and illegally overstay their visas is very small. The question is whether pressures within China will increase the rate of migration."

The odds of that happening are long. Not only are Russians worried about such a development, but so are China's neighbors. The U.S., too, would be troubled by China's annexation of the region. It would likely oblige the U.S. to dig in its heels and reshape regional perceptions of China's long-term intentions.

The drivers are more likely economic than demographic. The region is inhospitable and money will be essential to its development. Here, China is at a disadvantage. It has less money to invest and the goods it exports are less appealing to local consumers. The difficulties ahead are plain: In 1996, Moscow and Beijing promised to increase trade to $20 billion by 2000; in 2001, bilateral trade reached just $8 billion.

In contrast, the U.S. has money, and the prospect of diversifying energy supplies has U.S. companies salivating. American companies have put up more than 80 percent of the total investment in the region and could produce more than $40 billion worth of Sakhalin's offshore oil and gas over the next decades.

For its part, South Korea invested in 55 projects in the Russian Far East between 1990 and 1999 -- worth some $69 million, or 59 percent, of South Korean investment in Russia. One contributor argues that it is in Russia's interest to prod South Korean interest in the region since it would diminish Japanese and Chinese influence, which are Moscow's main competitors in the neighborhood.

The biggest player? Japan. The long-standing political dispute between Tokyo and Beijing has slowed investment. At the end of 2000, Japanese investment in Russia was $372 million, 10th among investors and only 1.1 percent of all investment in Russia. But Japan is the region's largest trading partner. In 1997, the Russian Far East's total amount of total foreign trade peaked at $6.2 billion; one-third of the region's $3.7 billion worth of exports went to Japan.

A thaw in Japan-Russia relations, helped along by the recent visit of Prime Minister Koizumi Junichiro to Moscow and the region, would allow Japan to play an even bigger role in the Russian Far East. The ultimate objective -- a peace treaty to end World War II and settlement of the territorial dispute -- remains the same, but the window of opportunity is closing. The rising interest in the region shown by other nations will increase Russian President Vladimir Putin's leverage with Japan.

Unfortunately, no leader in Moscow or Tokyo has shown a willingness to put national interests above national politics and elbow aside homegrown nationalists. Until that happens, Russia's Far East will remain a region at risk.

Brad Glosserman, a contributing editor to The Japan Times, is director of research at Pacific Forum CSIS, a Honolulu-based think tank.

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