Russian pacific port city,Vladivostok will host the III Eastern Economic Forum this September. What should we expect of this event where political and business leaders get together in relatively free atmosphere? Is there any chance that its participants could achieve breakthrough developments both in economic and political spheres? These are the key questions regarding the an important event going to be held in the Far East region of Russian Federation.
On September 6th -7th later this year Vladivostok will host the III Eastern Economic Forum (EEF-2017). Designed as a proxy to respectable St. Petersburg International Economic Forum (SPIEF) the Vladivostok event has already gained momentum. More than 3000 participants from 60 countries attended the events of the previous EEF-2016; contracts totaling $26 billion were reportedly signed; political and business leaders used the opportunity to outline their plans and establish new contacts.
We have grounds to predict that EEF-2017 will be at least as successful as its predecessor. However, is it enough to make real progress of “Pivot to Asia – Pacific” strategy of Moscow? (In fact, Russians use another term for this strategy. ‘Pivot’ was smartly invented by Barack Obama, or by his speechwriters. It has a conveniently vague meaning allowing wide range of interpretations.)
Frankly, we expect something more concrete, visible and profitable – for all sides. Russia needs launching new economic projects on its soil, providing economic revival and creation of new qualified jobs for the Far Eastern residents instead of abstract ‘investments’. I figure that ‘real sector’ business leaders in Asia – Pacific basically want the same – to stage joint projects with Russia aimed at overcoming bottlenecks and shortages in THEIR business activities. No one is saying about charity. All parts in a deal should get what they need, and mutual trade-offs are a must.
What do Russian neighbors in NE Asia want to get from economic cooperation with Russia? Generally, three things – stable flow of cheap energy resources, access to new transport and logistics routes and export market for infrastructure construction, equipment and services. The relationship between these fields of activities is different depending on specific economies’ priorities. Consumer market in Russian Far East is insignificant.
China seems to be mostly interested in solving transportation and logistics problems of its North-Eastern provinces, Heilongjiang and Jiling. Three decades ago this sub-region was an industry leader in China. Today these provinces fall far behind their counterparts in the South, and logistics remains a key challenge for economic development there. Opening new trans-border corridors and ensuring access to Russian ports in the Sea of Japan will tremendously increase the flow of export goods from NE China. It’s not accidental that Beijing has declared ‘One Belt, One Road” as its main ideology (that’s correct: we mean ‘Ideology’, not ‘Strategy’ or ‘Policy’). And, the transport corridors connecting Chinese Manchuria and Far East of Russia are essential part of it.
The attempts to increase the throughput capacity of existing trans-border corridors, known as “Primorye-1” and “Primorye-2” have low chances for success. The reason for pessimism lies in the fact that previous and ongoing modernization projects were based on traditional approaches and transportation technologies. For example, when Minister for the Development of the Russian Far East Alexander Galushka and Governor of China’s Heilongjiang Province Lu Hao discussed the problems of corridors in the fields of SPIEF on June 1, 2017 they focused on management issues, customs procedures, train wheelsets change, etc. The same topics were discussed five and 15 years ago, without any major progress. Time has come for revolutionary changes in trans-border connectivity vision.
What kind of changes do we imply?
Firstly, it should be recognized that the era of railroad transportation dominance is over for objective reasons. US and Europe have been gradually reducing the volume of cargo transit by rail. China remains one of few major powers which continue new railroad construction. But, even in China focus shifts to high-speed railways delivering passengers instead of commodities. The distance between the border and seaports in Southern Primorye is less than 300 km which makes new railroad construction commercially unprofitable even by the XX Century standards. Thus, two other available options should be assessed – highway and waterway transportation.
Secondly, it is the cargo processing time on Russian territory. The existing procedures of customs clearance and throughput capacity of border checkpoints’ cargo terminals do not meet world standards. If tomorrow transit cargo flow multiplies we should radically improve the support infrastructure on the border and simplify customs procedures to the point of transferring them to cargo processing facilities in China (for containerized cargo).
Thirdly, ecological aspects should be included in all new trans-border projects and thoroughly monitored on all stages of project implementation. Southern Primorye, Tumen River basin and adjacent waters have the unique natural diversity protected by Law. Any new transport infrastructure construction in the area may affect Red Book animals and species in “The Land of Leopards” nature reserve and the only marine biosphere reserve in Russia protecting scallops, trepang and more. As costly as it may be a successful incorporation of environment protection measures into the construction and operational modes of transport corridors will greatly improve the image of Russia and China on the world stage. The later will positively affect the market share for them because this is the way things are done in the world today.
Turning to Japan and South Korea, there are fewer options for launching breakthrough economic projects with their participation comparing to China. Chances for this are higher in the sphere of politics. Almost everybody in the region knows that the nuclear and missile programs stubbornly promoted by DPRK are a major threat of serious armed conflict. The state of permanent crisis blocks promising multinational economic projects on Korean peninsula, like Trans-Korean railway or gas pipeline from Siberia to South Korea. Settlement of the 60 years old conflict or at least reduction of tension and hostilities in Korea could give a powerful impetus to development in NE Asia. EEF-2017 may possibly have an ace in the sleeve for this. Or, a trump card…
This April the US president Donald Trump threatened to attack DPRK with cruise missiles. Looking at his previous deeds in Syria politicians and experts believed in reality of this threat. Pyongyang probably believed, too. A week later Trump publicly declared that he is ready to meet North Korean leader Kim Jong-un and talk to him anywhere. Judging from Trump’s career and image, the world has grounds to believe in his sincerity again.
Kim Jong-un became a ruler of North Korea more than five years ago and did not leave his country since then. The relations between DPRK and China have deteriorated this year, and Pyongyang official media attempted to harshly criticize China which they had never done before. Anti-DPRK economic sanctions are tightening now, and the first Russian companies supplying oil to North Korea fell under sanctions in the end of May.
All communist leaders of DPRK never used airplane for their visits abroad, traveling in armored train instead – to China or Russia. Vladivostok is only 6 hours by rail from DPRK border, and Kim could take a chance to pay visit here without leaving his country for long. EEF-2017 provides a perfect opportunity for such visit.
The domestic political situation for Donald Trump is unfavorable at least. Chances are high that he may be forced to leave Oval office sooner than expected. He badly needs success anywhere. No career politician in US would ever risk meeting with DPRK leader in Russia in Trump’s situation. But, Trump is not a career politician. Launching an armed conflict with DPRK will not give America and Trump personally anything but terrible headache. At the same time, negotiating with Kim Jong-un and persuading him for some minor symbolic trade-offs could skyrocket his public support level.
Sure, this proposal is crazy. However, our world has become volatile and unpredictable, and businessman with predator grip may perform much better than office lawyer.
Co-Author: Dr. Sergey M. Smirnov is Director at Center for Maritime International Studies, Admiral Nevelskoy Maritime State University, Vladivostok, Russia.