Monday, September 21, 2015

Putin’s ‘Turn to East’ Exacerbates Rather than Solves Russia’s Problems, Blagoveshchensk Economist Says

Paul Goble

            Staunton, September 21 – Vladimir Putin’s much-ballyhooed “turn to the east” will not solve Russia’s fundamental problems either at home or abroad, according to Yury Moskalenko, a Blagoveshchensk economist. Instead, this latest policy shift highlights Moscow’s underlying failures in both places.

            On the one hand, Moskalenko writes in today’s “Novaya gazeta,” the Kremlin’s exclusive focus on China is depriving Russia of the freedom of maneuver it needs in the Asia-Pacific regions, a region that is “not just China but includes Japan, South Korea, Taiwan, and the countries of Southeast Asia” (

            By focusing only on China, he argues, Moscow is ensuring that Russia will become simply a raw materials supplier to Beijing and that the Chinese authorities will apply to the Russian Federation’s Far East “the neo-colonial policy which Beijing is already practicing with regard to Africa.”
            And on the other hand, Moskalenko argues, “instead of creating a federation, post-Soviet Russia has again reproduced as quasi-colonial system of administration, which reflects the economic interests of the ruling group.  Residents of the Far East, he says, “most sharply feel the colonial status of their region.”
            They see a central government which views them as a place to solve all-Russia problems rather than one with its own needs. Thus, Moscow has announced plans to send people to the Far East even though there is massive unemployment in the region because of “a lack of attractive high-paying positions.”
            Moskalenko develops each of these points. With regard to China, he points out that the Moscow-planned gas pipeline will not be profitable for at least 30 years given current petroleum prices and that Moscow, not Beijing, will suffer as a result. And as the Chinese economy goes into recession, Russia’s Far East “will suffer the most.”

            In the first half of 2015, he continues, Russian-Chinese trade fell by a third. As a result, “for the first time in the last five years,” Russia was no longer among the 15 most important trading partners of China.  And it has not compensated for that loss by expanding trade with Japan or South Korea.

             Moreover, because China is establishing processing plants at home to exploit Russian raw materials, Beijing has no interest in setting up similar plans inside Russia, Moscow’s claims to the contrary notwithstanding. Clearly, Beijing would see any such plants as unnecessary competitors. Thus the Russian Far East is being condemned to a semi-colonial status.

            The Russian Far East, Moskalenko points out, is already characterized by low incomes, high prices for housing and services, and extraordinary transportation costs “which economically cut off the Far East from the center of the country.” What Moscow is doing will only make the situation worse.

            As a result, he says, Far Easterners are angry because “their current level of income is lower than in China, not to speak of Japan and South Korea.  The average monthly wage in the Amur oblast is 450 US dollars, while in China it is about 775 US dollars. Thus, the pay of those who live in a border oblast is “1.7 times lower than the pay in China.”

            Moscow’s single-minded orientation toward China “will not allow for the modernization of the economy of the country or the realization of corresponding investment projects.”  Instead, the Blagoveshchensk economist says, “it will lead to extraordinary dependence on the Chinese market” there.

            “For the Far Eastern region as for other regions of Russia, what is needed is the most rapid transition to real rather than simply declarative federalism,” Moskalenko concludes.

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