Putin’s Ambitions Turn to the Far East

By David M. Herszenhorn

President Vladimir V. Putin of Russia is seizing on the Asia-Pacific economic summit conference being held here this weekend to turn assertively to the Far East, hoping to strengthen ties with the Pacific Rim and pursuing ambitious development in Russia itself, starting with this formerly secret naval fortress turned shipping hub on the Sea of Japan.

His timing could hardly seem better.

With major economies shaky in the European Union — collectively Russia’s largest trading partner — and Japan’s needing to buy vast new supplies of energy abroad, Russia, rich in gas and oil, is well positioned to capitalize on opportunities in Asia as a hedge against any contraction of its business in the West.

Mr. Putin’s look eastward also has political dimensions, as he aims to strengthen ties, particularly with Beijing. For instance, Russia and China have used their alliance at the United Nations Security Council to veto more aggressive intervention in Syria sought by other powers, including the United States.

“Presently, the Russian-Chinese relations are at an unprecedented high level, and we have a lot of mutual trust both in politics and economy,” Mr. Putin said in an interview with the state-controlled television channel, Russia Today, broadcast Thursday to coincide with his arrival in Vladivostok for the annual Asia-Pacific Economic Cooperation meeting.

This is the first time that the annual economic summit meeting is taking place in Russia, and the government has spent more than $20 billion to upgrade the city’s badly deteriorated infrastructure, with improvements that include a new airport, hundreds of miles of rebuilt roads and three new bridges.

One, the Russky Bridge, spanning two miles across the Eastern Bosporus to the sparsely populated island where the conference is being held, is now the longest cable-stayed bridge in the world.

There is a chance, despite Mr. Putin’s ambitions, that his economic and policy goals will amount to wishful thinking, given the long history of mistrust and unease between Russia and its Asian neighbors. On the domestic front, critics say the infrastructure spending, particularly on the big bridge, which alone cost more than $1 billion, is the latest boondoggle in a country so troubled by corruption and mismanagement that projects typically run double the cost elsewhere.

By this view, the corruption is a sign of a broader lack of rule of law that makes investing in Russia a risky venture.

Despite those endemic concerns, there are signs that timing is on the Kremlin’s side, if only by happenstance.

A blockbuster deal to sell liquefied natural gas to Japan, including construction of a $13 billion shipping terminal in Vladivostok, will be part of Mr. Putin’s discussions this weekend with that country’s prime minister, Yoshihiko Noda.

Russia already sells liquefied natural gas to Japan from a port on Sakhalin Island managed by Gazprom, Shell and two Japanese investment companies, Mitsui and Mitsubishi. And though there have long been talks of another big gas deal, the virtual shuttering of Japan’s nuclear power industry has left it with little choice but to increase energy imports.

The discussions will take place as European regulators have announced they are pursuing an antitrust investigation of Gazprom, Russia’s state-controlled gas monopoly, which provides about one-quarter of the Continent’s natural gas supply and is suspected of price fixing.

Given the rise in global energy demands, the Kremlin has maneuvered strategically to be able to redirect its gas sales to Asia should it encounter difficulties in Europe. It has also shown few qualms about using its dominant role in the energy sector for political aims, as it did when it limited gas supplies to Europe to punish Ukraine in 2006 and 2009, inadvertently shutting off supplies to several southeastern European nations.

Russia is also nearing completion of the second phase of a trans-Siberian oil pipeline, which already reaches the Chinese border and will soon stretch to the port of Kozmino, near Japan, increasing capacity and speeding shipments to Asian customers.

“Two-thirds of Russian territory is located in Asia, and yet the bulk of our foreign trade — more than 50 percent — comes from Europe, whereas Asia only accounts for 24 percent,” Mr. Putin said in the interview with Russia Today, predicting huge growth.

Although energy is Russia’s largest sector, it is not the only area of opportunity in Asia. As host, Russia set the meeting agenda, and Mr. Putin chose food security as a top issue — a recognition of Russia’s large, and growing, role in feeding the developing world with grain exports, and wider concerns about price spikes and social unrest.

Food exports also represent a potential windfall and closer bonds with Asia. “Russian agriculture is the opportunity of the century,” said Charles Robertson, global chief economist of Renaissance Capital, an investment bank that focuses on Russia.

With President Obama focused on his re-election campaign and the Democratic National Convention, he is not attending the conference this year, and American goals are more limited, focused largely on making progress on efforts begun at last year’s meeting in Hawaii. The conference gathered representatives of 21 economies bordering the Pacific Ocean.

In Vladivostok, a city of just under 600,000 people that had been shrinking in population until recently, local officials are reveling in the attention from Moscow, including the creation of a new federal agency focused on the Far East, and the huge bounty of federal spending.

There is a new sewage treatment plant and a new campus for Far Eastern Federal University, on Russky Island, the site of the economic conference. Many roads and bridges are so new they do not appear on maps. “It means quite a new life for the city,” Roman V. Karmanov, a deputy mayor who has helped with the preparations, said of the improvements.

But not everything has gone smoothly.

Two new luxury hotels and a new opera house could not be finished in time for the conference. Part of the road leading to the big new bridge collapsed after a light rain this year and had to be rebuilt.

But others said the Russian Far East and Russia’s relations with the Far East were ready to bloom, thanks to public and private investment. Sergei Sidirov, a vice governor of the Primorsky Krai region, said Moscow’s commitment was unmistakable. “You can feel that the federal government really cares about what is going on in the Far East,” he said.

Andrew E. Kramer contributed reporting from Moscow.


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