For some Russians, moving closer to Asia economically is tantamount to moving away from the European mode of development, from closer relations with Europe, and even adapting the Chinese model.

       For the past four years or so, in my writings and speeches I have been criticizing Russian policy in Asia. Russia has not taken the initiative to link itself to the Asian economic locomotive, while the United States, Latin America and – in many respects – Europe have managed this quite successfully.

       True, in the past eighteen months the situation has begun to improve. Both the president and the prime minister on several occasions have pointed to the need for an economic shift towards Asia. Top officials at the Russian Foreign Ministry have repeatedly come out with reasonable proposals. Dozens of protocols and agreements on new projects have been signed with China. Some are already up and running – for example, on oil pipeline to the Pacific coast with a branch running to China. Construction of the pipeline has begun, a project to build a pulp and paper mill is reported to start soon, and a number of mining projects have been launched. The Trans-Siberian highway has been opened to traffic, lifting a mark of shame from Russia and its infrastructure.

       Interesting intellectual products have also emerged. The Russian National Committee of APEC has issued a report calling for a new Russian strategy in the Pacific. Well-remembered is the brilliant article “A Turn to the East” by Professor Viktor Kuvaldin, an expert at the Gorbachev Foundation. The need for Russia to turn towards the new Asia has been recognized in chorus by some leading experts on international affairs who would seldom look eastwards, if at all, just five years ago: Yevgeny Bazhanov, Fyodor Lukyanov, Vyacheslav Nikonov and Dmitry Trenin. The ice has been broken.

       But apparently, no long-term and comprehensive Asian strategy has been devised yet. Such a strategy is vital and must be linked with the larger strategy to develop the entire country, and not just its Siberian and Far Eastern regions. And it must be coupled with domestic policy, which suffers from clogs plugging the channels of upward mobility and the lack of decent career opportunities for ambitious, creative and educated young people – “the generation of the 1990s,” in fact the country’s first free young generation. Until now many young people have been voting with their feet and choosing to live abroad, while the less educated have been getting rebellious.

       Strategy-2020, which was drafted on Vladimir Putin’s order, does not seem to provide for a decisive turn towards Asia, and yet this is an urgent need.

       But first it is important that a wide range of people of thought and action determine which strategies for Asia would best meet Russia’s interests. After much discussion and research I have arrived at the conclusion that the main force holding us back from pursuing a reasonable and purposeful Asian policy is ignorance, misunderstanding of the opportunities, and myths about the real state of affairs in that region.

       To the Russian public and most of the elite, China still represents more of a threat than an opportunity. It is believed that China may directly threaten Russia’s sovereignty. At the same time, both the current level of its development and the prospects for the future have been grossly underestimated. There is a hidden – and often overt – expectation that China will be not be able to continue developing as rapidly has it has been.

       For some Russians, moving closer to Asia economically is tantamount to moving away from the European mode of development, from closer relations with Europe, and even adapting the Chinese model, which is still more undemocratic than ours. Another group of our fellow citizens, on the contrary, hope that we are still capable of flexing our muscles and choose the Chinese way.

       Widespread is the illusion that we can and must fight for positions in the markets of the New World and in Asia with our innovative, high-tech industrial products.

       Our knowledge of Southeast Asia is confined mostly to images of health resorts and tourist musts.

       I will try to allay these fears and illusions and draw what looks to me an adequate picture of the present-day developments in Asia, and then I will outline a strategy – an economic strategy above all – towards this rapidly rising continent.

       But first a few facts that look indisputable to me. There is no Asian alternative to Russia’s cultural and political orientation towards Europe. The great Chinese civilization and its “peripherals” – Japanese, Korean, Vietnamese and other Southeast Asian – are incredibly distant from Russian civilization. Their social experience is inapplicable to Russia, but their economic innovations readily offer themselves for copying. The embattled civilization of the Muslim world is a little closer to ours. But its best experience is already in use (take a look at Tatarstan); as for any other, it would be far better to steer clear of it.

       “The Asian mode of development” will take us not to advanced Asia (we cannot go there), but to Africa – where we seem to be already moving with our monstrous corruption and disdain for morality and culture. And if things go on like that, the joke by Helmut Schmidt, the West German chancellor and a brilliant wit, in which he called the Soviet Union “Upper Volta with missiles” – which seemed like an insulting exaggeration at the time – may become a reality.

       Estrangement from Europe threatens us with a further loss of the country’s identity and social and cultural degradation. Either we move closer to Europe, or turn barbaric. Russian civilization – with all its ethnic flavor – is still part of the European civilization. It cannot exist independently.

       A partial economic reorientation towards Asia, which I have been pressing for, does not carry the risk of disengagement from Europe, because over the past two years or so Russia has officially made a decisive (although superficial) turn in favor of closer integration with the European Union. There have been efforts to overcome residual military confrontation (President Medvedev’s idea for a new European security treaty and his and Chancellor Angela Merkel’s Meseberg initiative to establish a mechanism of online coordination between Russian and EU foreign policies) as well as Putin’s ideas, advanced in recent months, of a single, integrated economic and humanitarian space of Greater Europe and the formation of a single energy complex. The idea, in essence, is to move towards an Alliance of Europe. What’s more, in the context of our current domestic situation and because of the EU’s waning capabilities, progress in promoting the implementation of these ideas has been extremely slow. But the guideline has been declared.

       Now, about China. By virtue of several internal reasons, its rapid growth is bound to last plenty long. Despite the slowdown in population growth, China is not expected to face any labor shortages for a decade or two. At the same time, investments in science and education will accelerate technological modernization. China already accounts for more than 20 percent of the world’s exports of high-tech goods. The United States’ share is 13 percent, while Germany’s is 9 percent. Singapore is next with almost 7 percent. Russia’s share of this market is several tenths of one percent. And it is shrinking.

       Chinese high-tech goods are manufactured with imported or replicated know-how. But government investment in education and science is helping boost the skills of the workforce, and China is developing ever more new technologies of its own. The United States is recognizing with alarm that China has already become the world’s leader in the most advanced sector – green energy.

       In most industries competition with the new Asia would be pointless, especially considering the strength, quality and – most importantly – high cost of labor in Russia. The exodus and aging of research and technical personnel have to be taken into account, too. This situation has to be changed. But the trend of lagging behind stems from the policies of recent decades. Industrial production is shifting to the new Asia from far more developed countries. Something can and should be retained – two or three industries, or maybe three or four, if it is possible to unite them with those of Europe and create trans-European manufacturing complexes. But fighting on all fronts, declaring the need for new industrialization is, at best, harmful idealism.

       We have already witnessed Chinese military parades demonstrating hardware that was manufactured exclusively inside China, albeit partially replicated. Russia’s military exports to China are declining rapidly, and in five to seven years technology imports from China could become a reality.

       More than 50 percent of Russia’s trade turnover is currently with Europe. Russians, along with other Europeans, mention this figure with pride. But the problem is that the European market will no longer experience any significant growth. Europe has entered a period of sluggish economic development. I am not predicting a “decline of Europe” once again. It retains strong accumulated resources and a high quality of life; both can be consumed for a long time to come. The quality of life plus the accrued cultural wealth will allow the old continent to live in relative comfort in the foreseeable decades, even as it gradually cedes positions in the production of goods and knowledge. On the upside, it will increasingly turn into a tourist and ecological paradise, a place of rest and leisure for many hard working people from new Asia. The latter is already overcrowded, lacks recreational resources and has a relative paucity of material culture, of which there is an abundance in Europe.

       Russia needs to integrate economically with the rest of Europe, primarily with the remaining engines of innovation available there, especially in Germany, and to move towards a pan-European economic space, a single European energy complex, while at the same time understanding that the real growth potential in foreign economic relations lies in the Asia-Pacific region.

       Today that region, including the U.S., accounts for about 20 percent of Russia’s foreign trade. This share is growing, albeit very slowly.

       Partner number one is China. Russia supplies it with fertilizers, seafood, timber, nonferrous metals, ever more crude oil, and ever less industrial products. Mutual investment is meager, both with China and with other APEC countries. Russia exports more engineering products than consumer goods from China.

       Such trade dynamics cause understandable irritation in Russia. There have been frequent calls for diversification, for increasing the share of industrial products. But given the current trajectory of Russia’s development – which, unfortunately, has already been set for the coming years – the situation will not change. The pipelines – those under construction and those completed – will shift this structure in favor of oil and gas.

       Simultaneously, another process, potentially more alarming from my point of view, has been unfolding recently. Russia’s regions east of the Urals and, above all, its Far East are being transformed into a raw material appendage of rising China. More than that, human and educational contacts are being reoriented.

       While commentators have been speculating about the danger of Chinese demographic colonization of Russia’s eastern regions, far more Russians have been resettling in China than vice versa. People go there in pursuit of a less costly and more comfortable life. And those who do stay have been reorienting themselves to China economically.

       From a geopolitical standpoint, the situation is not dangerous yet. Territorial expansion is not a historical trait of China. The two countries have excellent political relations. I would dare say that for the time being a strong and friendly China is a geopolitical asset to Russia. The other APEC countries, especially Japan, the ASEAN countries and the U.S., fear further rapprochement between the two states and the possibility of Russia becoming semi-dependent on China, which would considerably add to its international clout.

       But if the current economic trends persist, it is very likely that Russia east of the Urals and later the whole country will turn into an appendage of China – first as a warehouse of resources, and then economically and politically. This will happen without any “aggressive” or hostile efforts by China, it will happen by default.

       The geopolitical implications of such developments are obvious. Russia will not be able to play the “Chinese card.” Beijing will rely on Moscow, whose real sovereignty over the eastern territories will be eroding.

       The Chinese are already offering us – quite rationally from their point of view – projects that are similar to those they promote in some African states: the development of resources with Chinese money and Chinese labor (which is still redundant at home); the construction of roads and local infrastructure; and the supply of ore and timber back to China for further processing. To my knowledge, some of these projects have already materialized.

       I am not over-dramatizing the possibility of Russia’s transformation into a raw material appendage and, in the future, into a political satellite of China. I feel sincere respect and admiration for China’s leadership and people and their ability to rebuild their great civilization after two centuries of collapse.

       But I believe that my country, Russia, can claim for itself a more dignified and beneficial place in the future world order.

       This will not be easy. For a start, Russia would be wise to give up the illusion of “catching up and overtaking” great powers, including through the re-industrialization of the country and its eastern regions.

       Nor will a one-sided economic orientation towards Europe help.

       In implementing interrelated strategies to develop Siberia and the Russian Far East and in harnessing the economic locomotive of new Asia, Russia should rely not on starry-eyed dreams, but on its real competitive advantages. And it surely has some.

       In recent decades, the rising markets of Asia have been experiencing fairly consistent food shortages. This is due primarily to the growing prosperity and, as a consequence, the increase in meat consumption. Producing meat requires fodder and grain. This largely explains why grain prices have long been on the rise throughout the world. Energy and fuel prices have been rising as fast, if not faster. The region is experiencing growing shortages of fresh water and farmland. In China, the shortages have pushed down the production of grain and a number of other foods for several years. There is very little the major grain exporters – the U.S., Canada, Australia and Ukraine – can do to increase grain production. Meanwhile, Russia’s potential for building up grain output is enormous.

       The consumption of paper and wood products has been growing rapidly in China and other East Asian counties, despite earlier forecasts to the contrary. China is importing more and more paper from around the world, even from Finland (which comes from Russian timber). Also, China is witnessing a boom in beer consumption and growing shortages of recreational resources.

       Meanwhile, Russia has 23 percent of the world’s forests, 20 percent of the fresh water and nearly 10 percent of the arable land. Especially great are the unused reserves in the south of Siberia and the Russian Far East. Climate change is probably improving the conditions for food production in those regions – while worsening conditions in the rest of Asia.

       According to estimates, Russia could increase its arable land by 10 million hectares, leading to a 2.5-time increase in yields. Russia can increase grain export several-fold. In the past, limited demand was a brake on grain exports. Now, China and countries in the new Asia offer an almost unlimited market.

       Until just recently we had been fooling around with stupid projects to divert part of the water flow from northbound rivers to the south. We had also been telling ourselves scary stories of looming conflicts over water.

       Meanwhile, our water resources are relatively easy to commercialize. But this should be done in a different way. We should sell not water but so-called virtual water. The production of each kilogram of food requires several dozen to several hundred liters of water, depending on the type of food. The production of pulp and paper products is very water intensive, too.

       So, what should Russia do?

       First, we should speed up effort to create a framework for the security and development of the entire Pacific region – something similar to Europe’s irrelevant and quietly dying OSCE, but adapted to meet today’s Asian realities. China has begun to understand the danger posed by its neighbors’ fear of its growing might, and it is on the verge on agreeing to the creation of such an organization. Russia, for a number of reasons, will play a much more important role than it might expect in such an organization, given its moderate economic strength.

       And yet the most important thing for Russia in Asia is not politics, but creating the conditions for building up its economic potential.

       This requires a new long-term strategy for the economic revival of Russia’s Trans-Urals regions. Many strategies have been proposed already, but they all lack realism and are pegged to the Soviet past and the idea of self-reliance. Quite predictably they failed even before they began to be translated into reality. There was no actor to implement such strategies – gone was the Soviet state, which had counted neither money nor the lives of its citizens, sending millions of them to labor camps and sacrificing them in the name of tapping the region’s potential.

       A modern strategy – let us call it Project Siberia – should be internationally oriented from the outset. Roughly speaking, it should combine Russian political sovereignty with foreign capital and technologies. And not only from China, but also from the U.S., Japan, the EU states, South Korea and the ASEAN countries, all of which are keenly interested in ensuring that China not gain dominance east of the Urals.

       Russia is a country with a poor investment climate and terrible corruption. If we wish to retain real sovereignty over the eastern part of the country, we will have to create incentives for investment and special economic zones. Special economic conditions like those in Skolkovo should be extended to entire regions. Foreign investment is needed both to develop the economy and also as a tool to fight Russian corruption – that is, if we really decide to fight it. Foreigners are stripped of their money less frequently; they enjoy international protection. And we will have to provide special Russian protection, if we can.

       The workforce for the new project can be found. There are still a few million surplus workers in Central Asia. It is also possible to bring in seasonal workers from India and Bangladesh. There is an enormous surplus of labor there. Some will have to be brought in from China, but under very strict quotas. Managers and engineers for the new companies will have to be recruited from around the globe. But the best solution of all will be to give the generation of the 1990s a chance, thus halting the exodus that is underway. Siberia has often been a threat. Now it can become an opportunity, as it was for the Russian pioneers who travelled east and for Stolypin’s peasants.

       Now, the main question – what is to be done (not how)?

       In some regions of Siberia and the Russian Far East, where the conditions are right (and they are excellent according to our studies conducted at the HSE), clusters of high-yield agricultural production should be created, with the bottomless markets of China and East Asia in mind. These clusters will produce grain, fodder, meat, poultry, pork and, possibly, beer.

       Creating such clusters will have a multiplication effect on a number of domestic engineering industries and will help preserve them. There will emerge a demand not only to import equipment but also to build new factories and develop existing ones for the manufacture of agricultural machinery and refrigerators. Such opportunities exist.

       In view of the demand in Asian markets, it would be wise to build two or three additional pulp and paper mills in Siberia and the Russian Far East.

       Of course, such a strategy will require the construction of highways, bridges, railways and seaports. (There are practically no grain export terminals in Russia’s eastern regions.)

       As for infrastructure, let the Chinese build it with our money and with the use of foreign technologies. It will be far cheaper that way. And less will be stolen.

       I have heard quite a few fears from some people, including senior officials: we will build the infrastructure, roads, bridges (which is ridiculously limited between us and China now), and Chinese people will come flocking into Russia. My answer is this: if we stay where we are, like a dog in the manger, the hay will rot, and the dog will run away. This is precisely what is happening now, and left unchecked this will lead to the loss of real sovereignty.

       Of course, Project Siberia should result in increased production and the maximum processing of the resources being produced. The export of round timber to both Europe and Asia should be stopped.

       Innovative production facilities should be created wherever possible, but they should complement industries where we have a competitive advantage. And this, let me repeat, applies to natural resources and potentially to agriculture, as well as the manufacturing of pulp and paper products.

       The project should be aimed at making Russian eastern regions one of the resource and food bases of a rising Asia – a provider of goods with a relatively high degree of added value, and not just round timber, oil, ore or seafood, as is the case now.

       Such a scenario would strengthen Russia’s geopolitical positions and begin to alleviate that empty feeling we get when we look at the demographic and economic development trends in Russian eastern territories.

       Agriculture can and must be promoted and upgraded in Central Russia. This modernization is already underway inconspicuously.

       Of course, this proposal to transform Russia, and especially its Trans-Urals regions, into a great agricultural power may offend some.

       What about innovation? What about a new technology? We need to develop them wherever possible and necessary – aerospace, nuclear power, aircraft building and arms manufacturing.

       But they will not develop Siberia and the Russian Far East. They can only protect them. And not very reliably. These regions need to be developed by proper means that will really work, such as water-intensive businesses: agriculture, the manufacture of paper and cardboard products, forest products, petro-chemistry, enriched ore production, and oil and gas.

       High-tech products should be manufactured where there are still people able to make them. There are such places east of the Urals. But they are concentrated in the European part of Russia.

       Project Siberia should have a European dimension, too. European companies, capital and technology should be welcomed. Europe should be extended to new frontiers – the frontiers Russian pioneers once reached to bring with them the European way of life.

       What makes the proposed mode of development so attractive is that it is beneficial to all. Russia will maintain its real sovereignty over the eastern territories and create a new platform for development. China, new Asia and the whole world will get a new resource and food supply base, easing the emerging shortages. The water problem will be partially solved. The international nature of the proposed project will prevent a geopolitical vacuum that would ultimately be unfavorable to China, too. The possibility of eastern Russia, and then of the whole of Russia, falling into the sphere of Chinese influence only strengthens the argument in favor of “containing” China.

       In short, I think this is a wonderful project. We should contemplate it when and if we calmly pass through the upcoming elections and have an opportunity to think of the future.

       This article was originally published in Russian in Rossiyskaya Gazeta (Federal Issue) No. 5505, June 17, 2011

       Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.