Russian Far East Will Only Develop in Near Term if China Invests More or Moscow Changes Course in Ukraine, Toth-Cifra Says

Paul Goble

            Staunton, Oct. 22 – The Russian Far East because of its natural resources and location on the Pacific Rim will happen “eventually,” Andras Toth-Czifra says, but Putin’s war in Ukraine has created a situation “from which there is no easy way out.” Moscow doesn’t have sufficient funds to develop the area, and China has a very specific agenda which is different from Russia’s.

            “At a time of high interest rates, uncertain returns on investments, rising taxes and worsening labor market pressure – all to a considerable extent consequences of the war – development of the Russian Far East will take enormous federal financing or considerable foreign investment,” the US-based Hungarian economist says (ridl.io/ru/shatkie-plany-rossii-po-razvitiyu-dalnego-vostoka/).

            Neither is likely in the short term as Moscow is spending ever more money on its war in Ukraine and China is investing only on projects in the region from which it rather than the region as a whole will benefit in the first instance, allowing Beijing rather than Moscow to set the agenda there, Toth-Czifra says.

            Moscow has made the development of the Far East a priority “for more than a decade,” but despite that, the region continues to lose population and its cities remain underdeveloped, its transit slowed by bottlenecks, and its energy generating capacity insufficient to meet developmental needs.

            Moscow set up a ministry for far eastern development in 2012 and added the Arctic to its responsibilities in 2019. “But this has not brought stellar results,” Toth-Czifra says; and many projects there have been delayed or cancelled altogether. Significantly, the region experienced “little or no growth between 2012 and 2017.”

            According to Toth-Czifra, it is difficult to imagine that “people will move en masse to regions [like the Russian Far East] with a significantly lower quality of life, salaries less than the national average, bad social infrastructure, and problems with transport” or that “manufacturers already experiencing problems will move capacity there needing infrastructure and people.”

            Consequently, unless Moscow can find money to address these problems, something unlikely as long as the war in Ukraine continues, or China adopts a totally different approach than it has up to now, the Russian Far East is unlikely to develop however much Putin calls for it to do so.