Russian Government Gears Up for Next Week's APEC Summit
August 29, 2012 • 10:12AM

The Asia-Pacific Economic Cooperation (APEC 2012) summit will bring leaders from all around the Pacific Rim (but not Barack Obama) to Russia's Pacific coast port city of Vladivostok on Sept. 7-8, with the official events of APEC Week starting already this Sunday, Sept. 2. Russian First Deputy Prime Minister Igor Shuvalov yesterday gave a press conference on the Russian perspective for the meeting: Moscow wants a big surge in its Asia trade. "Our trade potential with these countries is underdeveloped, we're barely using a quarter of it," Shuvalov said.

Woven throughout Shuvalov's statement was the growing Russian concern, which President Vladimir Putin has also voiced, about its economy getting clobbered by the Eurozone side of the global crisis, because 50% of Russian foreign trade is with Europe and the majority of its budget revenue derives from foreign trade (oil and gas exports). "Russia has its European agenda and is working on that, but we want to have an Asia-Pacific agenda. ... The future of faster growth for us is to have two strong legs, a European one and an Asian." He reported that Putin plans to set up some "special format" after the summit, for pushing "bureaucrats and businessmen to turn their heads to the East." He confirmed that Russia will try to use the APEC summit to engage its neighbors more seriously in investing in the development of Siberia and the Russian Far East.

Underinvestment there is a major issue right now. Victor Ishayev, the Presidential Representative to the Far East Federal District and now also Minister for Far East Development (a new post this year), warned July 2 that already in 2012 "the federal government has slashed by 80% the amount of investment going into the Far East." As APEC-related infrastructure projects and the East Siberia-Pacific Ocean oil pipeline neared completion, "the reduction of investments [could] already be felt," Ishayev said. In his view, "The Far East can be developed only through federal investment and big projects," but such projects have not been approved. Even the site-preparation work at a flagship project such as the building of Cosmodrome Vostochny, Ishayev said at a conference held at the Vostochny site in Amur Region on July 24, is slogging along because only 2 billion rubles was disbursed for it this year, but nearly 8 billion rubles worth of work has already been done, and more like 15-16 billion rubles was needed.

With the Russian budget-formation process still operating under monetarist rules, the Finance Ministry last month announced it will seek to cut at least 12% of 2013 federal spending (equivalent to tens of billions of dollars). Since defense, debt service, and the social spending promised by Putin during the Presidential campaign are protected from cuts, the Finance Ministry seeks to slash funds for "the regions" and for Russian Railways, among other needs — in other words, exactly the spending areas that would include projects in Siberia and the Far East.

At a July session of a new State Council working group on "issues of improving the economic and demographic development of Siberia and the Far East," Amur Region Governor Oleg Kozhemyako, who heads it, cited a recent alarming poll that found 40% of the population of these regions wanting to leave because of economic stagnation and living conditions. Kozhemyako announced that the working group's team of economists, led by Academician Victor Ivanter and including several other senior Academy of Sciences people who are not entirely stuck in the spending-cut doctrines of the government's budget process, will prepare new proposals for deliberation this autumn.