December 1, 2001｜Russia
Director, Khabarovsk Japan Center
* The following is purely a personal viewpoint and does not reflect the position of the Japanese government, which conducts the Japan Center project.
Following the article I wrote in August, I would like to take this opportunity to write about the state of affairs and problems in the Republic of Yakutia (Sakha), Irkutsk and the Republic of Buryatia.
The Republic of Yakutia (Sakha) has the largest land area in Russia Far East; it has a population of 1.2 million, about 30% of which is indigenous, such as the Yakut people, while the rest are immigrants from other regions, such as Russia and Ukraine. In the 1600s, the native people and the Don Cossacks, who advanced into Siberia at the direction of the tsar, were at war for 60 years. It is said that those who come from outside the region have a strong immigrant mentality and in many cases, leave the region once they have received their “Arctic allowance” for working there for a certain period of time; this results in a low settlement rate. In the mid-18th century, ten Japanese castaways were taken to Yakutia; five of them stayed in the region and established a Japanese language school, while the rest were taken to St. Petersburg. The first Japanese language school in Far Eastern Russia was built in this region and its relationship with Japan dates back many years.
Of all the regions in Far Eastern Russia, this republic has the longest economic relationship with Japan. Under the South Yakutia coal development project, which is based on the fundamental agreement concluded between Japan and Russia 25 years ago, more than 3 million tons of coal (coking and steam coal) is exported to Japan annually, while related equipment and materials are imported from Japan.
Of the $1.09 billion value of total foreign trade in the Republic from January to June in fiscal 2001, trade with Japan is far and away the highest, at $235 million, almost as twice as much as the U.S., which occupies the number two spot with $121 million. (Heard from the Yakutia (Sakha) Statistical Commission)
In the future, the Elga coalfield development project will follow on from the Neryungri coalfield project in South Yakutia, and construction has begun independently on the Russian side of the spur from the Trans-Siberian Railway. This project will make it possible to supply high-quality low-sulfur coking coal and steam coal for fuel not only to Japan, but also to Far Eastern Russia, China and the ROK and is significant in terms of the energy balance and environmental improvement in Northeast Asia.
A shift to gas is conceivable in the long-term in Northeast Asia, but it will require a considerable amount of time. By displacing fuel for power plants in Far Eastern Russia and China, which currently use a large quantity of very poor quality coal, thereby causing environmental problems, it could make a meaningful contribution to improving the environment in Northeast Asia. Moreover, in terms of expanding transportation, the project is of great significance for the economy in Far Eastern Russia and it is greatly hoped that Japan will be active in its participation. In terms of ensuring iron and steel resources, as well as energy resources, considering this as a post-Neryungri project would seem to be most meaningful for Japan.
A collaborative feasibility study supported by the Japanese Ministry of Foreign Affairs has been conducted as a priority project between Japan and Far Eastern Russia, focusing on the construction of a gas pipeline between Srednevilyui and Irkutsk. This is one of the projects for which the Republic has great hopes.
In addition, the Republic is focusing on exports of polished diamonds. (Until now, exports were limited to those of rough diamonds via syndicates; however, the right to export polished diamonds has partially been granted to the Republic.)
The Republic is making the utmost effort in the field of human resources and the Khabarovsk Japan Center is cooperating closely with it in this. Expectations with regard to Japan are high, given its position as the Republic’s biggest economic partner.
The population of Irkutsk is about 270 million and the region has had a long relationship with Japan. A Japanese language school was built in Irkutsk in the 18th century, following the construction of similar schools in Yakutia and St. Petersburg. This school took over the Japanese school in Yakutia later on and has been a mainstay of exchange between Japan and Russia for many years, due to its position as the only Japanese language school in Siberia and Far Eastern Russia.
With its abundant, cheap electric power, industries such as aluminum refining, petrochemicals and aircraft manufacturing have developed, in addition to timber processing and the paper and pulp industry, which use the region’s copious wood resources. For the past 6 years, Japan has been top of the external trade list, with 98.3% of the $3.23 billion that constituted total exports destined for Japan; 75.4% of this consisted of recycled aluminum agglomerate, while 19.2% was wood and wood processed products. Imports from Japan amounted to 1.7% of total imports in 2000, comprising industrial plant, medical plant, chemicals, home electrical appliances, etc. A substantial portion of these is imported via Moscow and Europe. (Heard from the government of Irkutskaya oblast)
Until recently, it was the absurd case that procurement via Moscow and Saint Petersburg was cheaper than via ports in Far East Russia, because privileges were awarded to certain contacts in Moscow and Saint Petersburg; however, as these contacts have been scrapped, it is expected that procurement of equipment and materials via Far East Russia will increase. I believe that the cooperative relationship between Far East Russia and Japan will develop once this situation has been brought about.
Between 1992 and 2000, nine joint ventures were registered in Irkutsk – three wood and processed wood product companies, three retail and wholesaling companies, one consignment and transportation company, one repair and servicing company, and one consumer goods company – with investment from Japan totaling $13.76 million.
As a result of Irkutsk’s geographical situation, high value-added products that can absorb the cost of being transported 3,000 km to ports in Far Eastern Russia will be the major focus of visible trade between Japan and Russia. Consequently, aluminum produced with the advantage of cheap electricity, petrochemicals and value-added wood products will remain the major exports to Japan. In cooperation with the Republic of Buryatia, Khabarovsk, Primorskiy krai and Ulaanbaatar, the region should make efforts to attract tourists from Japan by developing tourist routes and air routes to Lake Baikal, an important tourist resource. (It would be impossible to increase the number of tourists given the unstable air services in place at present.) I would suggest that the region look at attracting tourists by inviting tourism promoters from Japan in cooperation with these regions. In addition, it might be worth considering the possibility of cooperation between such educational institutes as Irkutsk State University and educational institutes and the business world in Japan, in such fields as human resource development and high technology.
The governor of Irkutskaya oblast, who was re-elected last year, is putting a great deal of effort into exchange with Japan, and plans to send a large group of business representatives to Japan in 2002. As an important partner of Japan in East Siberia, the region should set goals for expanding exchange in various fields, placing the central focus on the economy.
The Republic of Buryatia has a population of about one million. Economic disparity is greater and the cost of electric power much higher than in the adjacent Irkutskaya oblast. The main industries are forestry, nonferrous metals and coal. During the confusion arising from the collapse of the former Soviet Union at the beginning of the 1990s, European countries and the U.S. tried to introduce American-style capitalism and the market economy; however, as the interest rates of Russian banks exceeded 250% at that time, an American method that presupposed an interest rate of around 6% was ultimately unsuccessful. An understanding of the actual situation in Russia was lacking, with borrowing money from banks thought to be easy.
Subsequently, the Republic experienced an economic crisis in 1998, but now there are quite a lot of consumer goods from European countries, including Italy, Germany and Finland. These are only seen in Ulan-Ude city, however, and there is a sizeable difference between the situation in the capital and that in outlying areas.
The value of trade with Japan in fiscal 2000 was $8.45 million, accounting for 6.3% of all trade with the Republic. Of this, $8 million was the export of Tugnui coal, which is an ideal coal for electricity in terms of quality and the mining conditions, as well as being competitive with other coals; an expansion of exports to Japan and the ROK is expected to take place in the future. (As a low-nitrogen coal, it is a very important resource for the Japanese electricity industry, which is tackling NOx levels.)
Lake Baikal is home to a wonderfully untouched natural environment on the Republic of Buryatia side. The Republic should make efforts to attract tourists in cooperation with Irkutsk by developing tourism, and there are many areas in which Japan can cooperate in this. In addition, the Republic lays a great deal of stress on human resource development among young people and has high hopes of Japanese cooperation. The Republic is cooperating with the Japan Center in this.
There is a fair number of ethnic groups in the Republic of Yakutia (Sakha), Irkutsk and the Republic of Buryatia, not only Russians, but also those of Asian ethnicity who resemble the Japanese. Speakers of such languages as Yakut, Mongolian, Chinese and Korean live side by side with those who speak only Russian.
These republics that are home to diverse ethnic groups also have a complicated relationship with the central government, and generally have high expectations with regard to their respective relationships with Japan.
I believe that understanding the situation in each region and establishing close relationships in such areas as the economy and culture will help Japan to expand cooperation with East Siberia and Far Eastern Russia as partner regions.
[Translated by ERINA]