Russia spends billions in Vladivostok for Apec

Eleonore Dermy Vladivostok, Russia

Russia, which is hosting its first annual Asia-Pacific Economic Co-operation (Apec) summit this week, is seeking to assert its presence in the fast-growing region during troubled European economic times.

President Vladimir Putin championed hosting the summit not in Moscow or Saint Petersburg but in the far eastern port city of Vladivostok, in what the Kremlin hopes will be a symbol of Russia’s status as a major Pacific power.

Key members of Apec include China, with whom Moscow has had historically tricky relations, and Japan, which is embroiled in a bitter territorial dispute with Russia. But the Kremlin is hoping for major economic gains by playing a bigger regional role.

“Russia’s share in total regional [Asia-Pacific] trade is around 1 percent. Clearly this neither corresponds to Russia’s political profile nor its economic interests,” said Gennady Ovechko, Russia’s envoy to Apec.

The potential is huge. Russia is looking to diversify its exports of natural resources at a time when the expanding Asian economies are hungry for oil and gas.

Russia has long looked on Europe as its main foreign commercial partner and turned its back on Asia, considering players like China to be a threat and expressing concern about Asian labour migration to its de-populating far east.

But the woes afflicting the euro zone appear to have made Russia rethink its stance and realise that a rebalancing towards the east was indispensable.

From now on, “the rhythm of economic growth in Russia will depend on that of Apec”, Russian Finance Minister Anton Silunaov said last week ahead of the Apec leaders’ summit on Saturday and Sunday.

In a sign of the summit’s importance, Russia has pulled out all the stops to host the event, investing $20 billion (R168bn) on two bridges spanning the port, an airport terminal and a new airport rail link.

“Russia will try and use the chance of the Apec forum summit to change its image and appear not only as a European country but as an Asia-Pacific state,” said Vasily Mikheyev of the Moscow-based Institute of World Economy and International Relations.

Russia is hosting the summit in newly-built facilities on Russki Island just off Vladivostok after a massively ambitious project that troubled some officials who would have preferred to see the event hosted in more developed Russian cities.

But “holding the summit in Vladivostok is a symbolic choice”, said Dmitry Trenin of the Carnegie Moscow Centre. “It’s a sign not just of a desire to increase the quality of life on Russia’s eastern borders but also a desire to consider its eastern territory as an interface between Asia, the Pacific and Russia.”

According to the Vedomosti daily, the cost of hosting the summit itself has now risen to 6.3 billion roubles (R1.6bn), with 275 million roubles being spent on a gigantic summit fireworks display alone.

According to Vladislav Inozemtsev, director of the Centre for Post-Industrial Society Research, the ambitious logistics displayed are the most that Russia will be able to offer its partners.

He noted that in the past decade, no Apec summit had taken place on specially built premises nor has cost more than $100m.

But, he added, Russia must also show the qualities of transparency, industrial modernisation and global co-operation that characterised Asian growth.

Russia’s economy still holds few attractions beyond energy resources and its far east is battling to reverse a population drain as people head to the west of the country in search of better lives.

But Putin has created a ministry dedicated to the far east and the Kremlin appears intent on turning Vladivostok from a ramshackle port into a showpiece political capital. – Sapa-AFP