Wednesday, May 30, 2012

A New Capital For Russia?

Is a new capital city the key to revitalizing Russia's economy?  That is the idea being floated by Sergei Karaganov, the world economy and international affairs faculty dean at the Moscow Higher School of Economics, who wants to elevate Vladivostok, the Russian port city on the Pacific, near the borders of both China and North Korea, and more than 4,000 miles from Moscow, to capital city status.

Rather than shipping the seat of Russian power and governance east, Karaganov is talking about making Vladivostok a third capital city for Russia: Vladivostok would be the economic capital of the country, joining Moscow (political) and St. Petersburg (cultural) in this strata.  Karaganov's rationale is that the focus of the global economy is drifting steadily eastward and that Vladivostok is uniquely positioned to take advantage of this shift.  An economic capital in Vladivostok would make Russia a serious player in global trade patterns of the Pacific Rim and would signal that Russia was serious about building lasting ties with emerging Asian economic powers.

Karaganov's idea isn't as crazy as it may first sound.  Much of Russia's wealth in natural resources lie in the Asian portion of the nation; one of the largest economic infrastructure projects in Russia in the past decade has been the development of natural gas resources on and around Sakhalin Island on Russia's Pacific Coast; last year Russia opened the ESPO pipeline to send Siberian crude oil to energy-hungry China. And one other Pacific nation has already followed Karaganov's lead.  Earlier this year, the island nation of Samoa lost an entire day as it officially switched from one side of the International Dateline to the other – Samoa had originally opted to be on the same side of the IDL as the United States, which at the time was their main trading partner, but flipped to the Asian side to reflect the fact that now most of their trade is with countries like Australia and New Zealand.

Vladivostok today is a fairly run-down port city that has far more economic interaction with Japan and China than it does Moscow.  In fact, Vladivostok was the site of some of the largest public protests seen in Russia before last December's rallies against what were seen as rigged Parliamentary elections.  People took to the streets in Vladivostok in 2009 to protest new tariffs levied against imported used cars that Moscow launched as an effort to save Russia's ailing domestic auto industry. Importing used cars from Japan is one of the key economic drivers in Vladivostok, and local residents feared that the new tariffs would cripple their city's economy.

It's doubtful that the Putin government will take Karaganov's idea seriously, but that doesn't mean that it is not an innovative approach to deal with a very real issue in the Russian economy. 
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