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Russia turns its gaze eastward with APEC economic summit

Russia hopes to transform Vladivostok, the host city for this year's Asia-Pacific Economic Cooperation forum, into a gateway for commercial trade with East Asia.

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Trade turnover with APEC countries – mainly China – was about $100 billion, or 23 percent of Russia's total, in the first half of this year, according to the Russian State Statistics Service. Russia's trade with Europe is currently about twice that. Officials say they hope that up to 50 percent of Russia's trade will be with the United States and Asia within a few years.

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Russia's huge investment in the Vladivostok summit is just one sign of Russia's eastward pivot. Another is Putin's plan to develop a Eurasian Union of former Soviet states, with Russia at its core, to restore some of the economic synergies that were lost when the USSR disintegrated.

Moscow has also steadily increased its involvement in the Shanghai Cooperation Organization, whose members are former Soviet central Asia republics plus Russia and China. Originally established to help settle border issues, the SCO has expanded into an economic forum and, increasingly, what looks like an incipient security alliance.

In May, Putin promoted the Kremlin's special envoy to Russia's far east, Viktor Ishayev, making him the first minister for far eastern development. Mr. Ishayev has become Russia's point man on the policy shift to Asia.

"Unlike crisis-ridden Europe, the Asia-Pacific region has developed rapidly, and the APEC countries, including China, are our important economic and political partners," he told journalists recently. "We are developing key transport and energy infrastructures [in Siberia and the Russian far east] as well as enterprises and social projects of all sorts."

Some Russians have ventured to criticize the staggering price tag for holding the week-long event, much of which will give Russia little more than a bit of transitory prestige. Much of the more than $21 billion went to construct two modern suspension bridges, conference facilities on the formerly fortified Russky Island, a new airport terminal, and an airport rail link. The cost of hosting the summit was estimated this week by the Moscow business daily Vedimosti at about $200 million, including a lavish $8.5 million fireworks display for the closing ceremony.

"I understand that it's important for Russia to demonstrate that we are in the circle of states that have heavy geopolitical weight," says Kirill Kabanov, head of the nongovernmental National Anti-Corruption Committee. "But from a Russian citizen's point of view, the budget for this summit looks incomprehensible and nontransparent."

"All that money might have been invested in many more productive ways for the economy and society....  Also, bear in mind that in Russia all such projects have a big element of corruption. It's the reason everything like this is so much more expensive to do in Russia than anywhere else," he adds.

But boosters say the money is well spent if it forwards the Putin era strategy of positioning Russia as a key economic and political player in Asia. Currently, trade with Russia makes up barely 1 percent of the APEC economies' total, but experts say that could change. Siberia is potentially the region's most important source of natural resources; new Russian road, rail, and pipeline infrastructure could create an indispensable transport corridor between the far east and Europe; and Vladivostok might become the new commercial hub of East Asia.

"Russia's been here in the far east for a long time, and will be here," says Ivanshevtsov. "Now the world's center is shifting right here. There is no way Russia can allow itself to miss this fast-accelerating train."


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