At the end of 2013, Russian President Vladimir Putin outlined a vision for the economic development of Siberia. Here’s one bold way to make it a reality.
Can the Sochi experience be applied in developing Siberia? Photo: Photoshot / Vostock-Photo
It’s now clear that what Russia does best is the type of project of the scale and scope of the Sochi Winter Olympics. While it’s nice to ruminate on why Russia needs to build a middle-class or encourage the formation of small, entrepreneurial start-ups, that logic seems to fly in the face of the past 300 years of Russian history, in which the state has always taken the leading role in driving growth. So here’s what Russia should do: it should leverage its know-how from the Sochi Winter Olympics to launch another massive, multi-billion project to jump-start economic growth in Siberia.
Quite simply, Russia does big better than it does small. Again and again, Vladimir Putin and his officials emphasized the “gigantic” scale and scope of Sochi 2014. The Sochi Winter Olympics went beyond just constructing brand-new winter sports venues in a city best known as a subtropical beach resort – it included digging holes through mountains to accommodate vast new infrastructure needs and completely re-purposing a low-lying swamp area.
In fact, you could view the “Sochi in Siberia” concept as the third template in the evolving model of massive, large-scale economic development launched in the past five years by Moscow.
The first, of course, was Skolkovo. This was a top-down, state-mandated attempt to create a Silicon Valley in Moscow by government fiat. Sochi was the second template in the model, predicated on building a sports and tourism powerhouse in the south of the country.
A Siberian Sochi would, in a best-case scenario, lead to the creation of a third economic template that could be exported around the nation, from Vladivostok to the Urals. It wouldn’t be based around sports and tourism, of course, but around Siberia’s vast natural resources.
1. Russia desperately needs to attract more investment to its regions.
Russia’s current economic development model – of attempting to entice Western investors by hosting a series of investment forums around the nation – has started to bear some fruit, but there’s always been one big factor mitigating against this: Western investors are scared of losing their money if they do deals with the Russians.
From a Western perspective, either you wind up with one of those nasty spats over natural resources, like we’ve seen over and over again with the oil and gas giants, or you end up with a PR nightmare like you’re having right now in Ukraine, where Western investors could see their hard work and efforts dashed by Russia’s inconvenient posturing on the world stage.
Yet, it’s unmistakable that Russia needs to do more to develop its regions, and that Siberia has always represented the natural target for these economic ambitions. Russian President Putin specifically mentioned Siberia in his State of the Nation speech at the end of 2013. Events like the Krasnoyarsk Economic Forum (taking place this week in Siberia) make the rational case for development. And ideas from Western think tanks like Brookings continue to percolate in the background.
Just as Sochi was an attempt to boost economic growth along the Black Sea coastline and in the war-torn Caucasus, a Siberian Sochi would attempt to jump-start economic growth in Russia’s natural resource-rich hinterland. If Western investors aren’t willing to ante up, Russia needs to go it alone.
2. Russia needs to do something to make its vision for a Eurasian Union far more attractive. A powerful army, cheap gas and promises from Moscow only go so far when it comes to enticing others to join a Russian-led economic bloc. This is perhaps one of the big lessons from the current Ukraine imbroglio – that Russia didn’t make its vision for economic integration enticing enough. At the end of the day, would you rather trade with Kazakhstan and Belarus – or the European Union? When Ukraine wouldn’t abandon its plans to join Europe, it only raised the stakes for Russia.
So think of what a Siberian project might do to enhance the appeal of a Eurasian Union. Just as Sochi helped to showcase a “New Russia” to the world, complete with world-class venues, five-star accommodations and modern transportation links, the new “Sochi in Siberia” would also center on a similar type of formula for success.
While this doesn’t necessarily mean building massive, large-scale cities (as has often been proposed for Siberia), it would focus much more on developing infrastructure and transportation links that would connect Russia to the Far East and the Asia-Pacific. Russia has to be seen as an attractive trading and economic partner.
3. Russia can capitalize on Sochi infrastructure know-how immediately with proven partners like Russian Railways and Megafon. There’s no denying that the vision for Sochi – the creation of two compact clusters of venues linked by high-speed train providing easy access to an international airport – has the potential to transform a region.
It took a lot of arm-twisting to get Russia’s oligarchs to kick in money to finance all the infrastructure projects, but the results were stunning. You can criticize Russia’s foreign and domestic policies all you wanted, but you really can’t criticize the planning and logistics that went into building a modern Sochi. (In fact, one of the signs that was prevalent at the Sochi Olympics was from Russian Railways, “We did everything, so that you would be first.”)
The Sochi vision – and execution - was so compelling, in fact, that South Korea plans to copy it largely in whole when it hosts the PyeongChang Winter Olympics in 2018. In Sochi’s Olympic Park, a pop-up “Korea House” detailed South Korea’s plans for the next Winter Olympics, and it was striking how much they appeared to emulate the Sochi model.
There is a mountain cluster, a coastal cluster, and a new high-speed rail link. And, just as central Sochi acted as a cultural and economic anchor for development in Adler and Krasnaya Polyana, Korea is using Seoul (located 180 kilometers away) as an anchor for development throughout the region. In other words, the Sochi model works and it can be exported elsewhere.
The only question, really, is what a “Siberian Sochi” would look like. The Australian and Canadian models for developing vast, unpopulated areas are getting attention from Russian officials at the Krasnoyarsk Economic Forum.
But there’s no reason why the new Sochi has to be located in Siberia. If you believe in the Siberian Curse, maybe you’d prefer to construct Russia’s next big economic showcase in the Arctic or in the Far East (i.e. Vladivostok).
The economic reality for Russia is that constructing these types of super-projects may provide the impetus for growth and development that a more organic Western model of modest growth, middle class development and small business creation hasn’t thus far. It’s hard to argue with 300 years of history.
The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.