12 September 2023
Siberia’s Role in Turning East: How to Use the Far East Experience?
KEY CONCLUSIONS
The development of Siberia is essential for the whole of Russia
“The President put it clearly and succinctly when he said that the development of Siberia was to be a national priority for the entire 21st century. Therefore, the issue is clear – we need to move forward. And here I want to emphasize a crucial point: this is not about the interests of the people of Siberia and enabling them to live well there. It’s about the fact that the country as a whole needs to rely on Siberia. It offers a springboard for Russia to break new ground in its future development,” Alexander Uss, Senator of the Federation Council of the Federal Assembly of the Russian Federation.
Asia offers an enormous sales market
“RUSAL has been expanding into Asia for a long time. After all, the four million people who live in the Asian part of the continent represent an invaluable sales market for us. But that’s not even the most important thing. The most important thing is that these countries are growing three times faster than the others. They have the potential to grow, and others should invariably aspire for this growth,” Elena Bezdenezhnykh, Vice President for Regional Policy and Government and Administration Relations, RUSAL.
A separate structure for development in Siberia needs to be built
“If we are setting our stall on breaking new ground, let’s change the way this development is managed. We are speaking now about the experience of the Far East, where there is a corporation, and where a great deal has been done. Siberia is on another level – the objectives are different, but nevertheless, this experience of management can and must be put to use. We need a Russian national structure which will work on this from morning to night, and will have the administrative, organizational, and – ideally – the financial resources to do so,” Alexander Uss, Senator of the Federation Council of the Federal Assembly of the Russian Federation.
PROBLEMS
A lack of real strategic planning
“There are methodologies that have long been studied throughout the world. One of these is strategic planning. This is something we actually have no idea about, even when it comes to our development strategy for Siberia. That’s because it is not a strategy as such. <...> There need to be clear and concise goals, as well as clear and concise methods. A budget needs to be allocated for these purposes, and everything should be tied together. Only then will it work,” Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.
“The issue is that we unfortunately don’t [plan – ed.] anything for the long term. Basically, we set out things in strategies for 10 years or 15 years, but in reality, we don’t take any decisions, and don’t provide any financing or organizational support,” Andrey Klepach, Chief Economist, VEB.RF.
The need to increase resource processing depth
“It is absolutely clear that Russia’s main wealth is Siberia’s mineral resource base. And the key to restructuring the economy lies in alternative mechanisms for deriving socioeconomic benefit from these commodities, and in moving away from the primitive liberal strategy of ‘digging up, getting a profit, and sending money to the budget and the accounts of beneficiaries’. We need to derive a comprehensive socioeconomic benefit. That means shifting the focus of companies in the commodities industry onto developing high-tech production facilities, services, and high‑value‑added products,” Alexander Uss, Senator of the Federation Council of the Federal Assembly of the Russian Federation.
Problems concerning the export of products to Asia
“Over the past year, a little under 150 million tonnes were transported along the eastern branch of the Baikal–Amur Mainline and the Trans-Siberian Railway. The shortfall in transport capacity is around 100 million. Essentially, everything that went westward is now blocked. Essentially, we need to increase transportation capacity by 100 million tonnes or more in order to move this freight east and maintain communication between regions of Siberia. That’s because pivoting east means first of all focusing on Siberia itself so that the regions can interact with one another in a normal way,” Andrey Klepach, Chief Economist, VEB.RF.
Siberia’s low population
“When we have four billion people on one side ready to buy your products, you need to have people who are ready to produce them. And unfortunately, there has not been any population growth in either Siberia or the Far East in recent times. The strategy which was written five years ago is of course being implemented I think, but not in terms of getting an influx of people and increasing the population,” Elena Bezdenezhnykh, Vice President for Regional Policy and Government and Administration Relations, RUSAL.
Russian bureaucracy and a lack of stability
“Businesses need very little – there’s no need to go overboard trying to help. They just shouldn’t be interfered with. When you have a business experiencing growth, it should not be held back. That’s because as soon as we begin enacting one reform, we can find it being cut in two <...> as personnel changes are made in government. <...> It’s important for us that once a decision is made, it is not changed, and we don’t deviate from this path,” Mikhail Sutyaginskiy, Chairman of the Board of Directors, Titan Group.
“What’s the main thing businesses need? There are plenty of incentives and programmes. There is one problem though – bureaucracy. I speak to members of the business community, and they say, ‘Yes, there are support programmes. However, you need to be a professor in economics or jurisprudence in order to be able to fill in all these forms,” Evgeny Kogan, Professor, National Research University Higher School of Economics.
SOLUTIONS
Speeding up housing construction and improving living standards
“We know that the supply of new housing in the Far East and Siberia lags about 8% behind the overall average for Russia. And if we don’t build housing, don’t commission sports centres, don’t build roads, and don’t make these two vast regions attractive to at least those who are there currently, then we won’t produce anything. Remember, this is half of the country we are talking about, geographically speaking,” Elena Bezdenezhnykh, Vice President for Regional Policy and Government and Administration Relations, RUSAL.
“People don’t go to cities in Siberia in part because they don’t know what to expect other than frost and bears. <...> We know what someone means when they talk about making it in Moscow, but we can’t visualize moving to Krasnoyarsk. And yet, it would absolutely make sense to do so, because the average level of urban improvement in Krasnoyarsk, for example, is higher than in any other city in the country, and I have been to many,” of Petr Ivanov, Sociologist, Civil Engineering Laboratory; Author, Editor, Urbanism as the Meaning of Life Telegram channel.
Taking a differentiated approach to various territories
“When it comes to taxation rules and much else, virtually everything is the same for everyone. Neither the challenges of advanced processing of raw materials, nor the enormous differences between our regions are fully factored in. <...> That’s why we need to seriously think about differentiation, both in relation to taxation and financial terms. That is because Siberia currently accounts for around 9.5% of the country’s GDP, while per capita income is.... around half that of European Russia,” Andrey Klepach, Chief Economist, VEB.RF.
Reforming the tax distribution system
“Experts estimate that Siberia does not see around 20% of what it creates. This is happening due to exports going through Moscow and St. Petersburg – our goods are accounted for at the point of shipment according to the customs declaration. What does 20% mean? It’s somewhere upwards of RUB 1 trillion. In this respect, Siberia’s tax or revenue base for local budgets is much larger than it is currently. If we had slightly different rules, we would leave a certain proportion of locally generated revenue in the region itself, and could use it to improve housing, utilities, and infrastructure,” Andrey Klepach, Chief Economist, VEB.RF.
“A fundamental analysis was conducted on factors affecting socioeconomic development. What we saw was that of the RUB 1 trillion in investment, of that added estimated value we were planning to receive, more than half would not remain in Siberia. The beneficiaries of projects are not based in Siberia,” Gennady Guselnikov, Chairman, Siberian Accord Interregional Association.
For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en
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