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Corruption hobbles Russia's Far East

Moscow is looking to Russia's Far East as a region poised for better times, and a building boom aims to make Vladivostok an investment hub. But young residents are still leaving the city in droves.

By Sebastian StrangioCorrespondent / September 20, 2011

A new bridge will link Vladivostok, Russia, with Russky Island in time for a trade summit next year.

Yuri Maltsev/Reuters

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Vladivostok, Russia

Mikhail Gorbachev once said that Russia's Far East had a "glorious future," describing it as a "land of colossal natural riches, huge social and economic potential, and a great international prospect."

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A quarter century after Mr. Gor­ba­chev boldly predicted prosperity for Vladivostok, a city 5,300 miles from Moscow and just a five-hour drive from China's border, this once-booming Pacific Ocean port is a rusted Soviet relic with a falling population beset by corruption and neglect.

But Moscow is once again looking to its eastern reaches as a region poised for better times. In fact, much of Vladivostok has been turned into a construction site as it is busily being rebuilt to accommodate the September 2012 Asia-Pacific Econ­omic Cooperation (APEC) conference. Moscow wants the prestigious summit to be something of a coming-out party for the region, hoping to promote foreign investment and stave off perceptions that it will one day be dominated by China.

The building boom is visible just about everywhere. Two pairs of concrete support pylons tower over the Eastern Bosphorus Strait, part of a cable-stayed bridge that will link the city to sparsely populated Russky Island, which will host the summit meetings. Highways are being chewed up and expanded and new hotels built. Another bridge reaches out across the Golden Horn Bay, dwarfing Vladivostok's imperial city center.

In Soviet times, Vladivostok – home of the Pacific Fleet – was a closed city run by the military, propped up by federal subsidies. When communism fell, subsidies ended, along with the military industries that had provided much of the region's jobs. Since 1991, Vladivostok's population has fallen from 648,000 to around 578,000, while the population of the Far East Federal District – a territory four-fifths the size of Australia – has dropped from 8 million to just over 6 million.

"This is why the Russian government is putting huge amounts of money into the Far East and into Vladivostok," says Alexandr Latkin, an economist at the Vladivostok State University of Economics and Service. "They want to bring back the status of the Far East that was lost during the 1990s."

Will the new construction help the region? Many locals say the influx of cash ahead of the summit – 426 billion rubles (just over $15 billion), or 60 times Vladivostok's annual budget – is doing little to bring jobs or other long-term benefits. Marina Rash­chep­kina, a second-year student at the Far Eastern Federal University, says young people in her hometown of Amursk, a pulp-industry town 500 miles north, are leaving in droves.

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