Vladivostok & The Primorye Krai: A Look at Far Eastern
Economies in Transition
by Richard A. Florez
Introduction
Since the fall of the Soviet Union and the command economy that was prevalent there, the focus on the cultural, economic, and political transitions taking place in the Former Soviet Union are based mainly on the Western or European regions of Russia. Many people tend to disregard the Far Eastern regions of the country. This is quite understandable because of the secondary status Russia has attached to the Far East in the past and now in the present. There are several other reasons the Russian Far East does not receive the same attention the other areas do. One of these reasons is that there is a relatively small population in the Far East. Moscow has had to tend to the needs of the greatest amount of people it could and they were located in Western Russia. The distance from the capitol to the regions of the Far East is another major factor why the area gets less than its equal amount of financial backing and support. How does this affect the people of the Far East? Does this secondary status help or hinder their transition into a market based economy? How does it influence the political situation in the Far East? These are some of the questions many overlook and only a few consider. The primary objective of this study is to answer these questions and provide a base for understanding the corresponding answers. The study will focus on a particular area in the Primorye Krai (translated as Maritime Region). It is a port city called Vladivostok. Being one of the major cities of Far Eastern regions, it is significantly important enough to base the three main aspects of transition: cultural, economic, and political; on Vladivostok to get a relatively fair representation of the conditions in the Far East. It is important however to remember that each region of the Russian Far East has its own unique identity, but the importance placed on the port of Vladivostok in the past, not only by Russia but by the surrounding countries as well, has given the city special favoritism amongst the other possibilities.
The Russian Far East
The Russian Far East is the area extending from the east of Siberia to the eastern most points on the Asian continent. (Please refer to map 1 in the appendix.) Altogether it accounts for over 1.2 million square miles in area and approximately eight million inhabitants.(1) The Far East consists of twelve regions and are listed as follows:
The Far East covers approximately 3,000 miles from the northernmost to southernmost point and approximately 2,000 miles from the western border of Siberia to the eastern isles of Kurile.(2) The area has some of the most abundant deposits of natural resources known to mankind. However, due to the rugged terrain and climate, it is nearly impossible to extract these resources from the ground. (Please refer to map 2 in the appendix.) Much of the landscape resembles that of Alaska and the southern portions of the Far East resemble Northern California.(3) It is mountainous with some peaks reaching well above 6,000 feet, many regions are covered by tundra and thick ice, and dense wooded forests can be found in the Maritime and Amur Regions. The climate of the Russian Far East for the most part is cold. The Republic of Sakha has the coldest temperatures in the world outside of the Antarctic.(4) Some regions however do have warm and even hot climates during the summer months. These are the southernmost parts of the Buryat Auton, Chita, Amur, and Khabarovsk regions and most of the Maritime Region. Geologists believe that the Far East is the oldest part of Asia. The rock formations in northern Sakha are believed to be the center of origin for the continent. (5) Because of the physical geography and setting of the Far East it is easy to see why little attention is paid to it. However, since it is part of Russia and has gone through the same events in history as the rest of the country to one extent or another, considering the effects of the current economic changes in the area is relevant to the entire country. Russia long ago realized and considered the benefits of the region and are prospering from the resources it provides to the rest of the country and Newly Independent States. The Trans-Siberian Railway links western Russia to the Pacific Rim countries, several regions within an area rich with economic and financial resources. Careful consideration and development of the Far East has to be implemented in order to realize the successful transition to a market based economy within the Former Soviet Union.
The Primorye Krai and Vladivostok
The Primorye Krai or Maritime Region is the southeastern most district in the Russian Far East. It lies across the Sea of Japan from the islands of Hokkaido and main island Honshu, Japan. The Primorye Krai is also east of China and northeast of Korea. (Please refer to map 3 in the appendix.) Within the region there is the Sikhote Alin mountain range which separates the region into two separate and distinctive areas marked by climate. It is in this district that the focal point of the study is located. Vladivostok is situated on the southern tip of the region on what is called the Golden Horn Bay also referred to as the Peter the Great Bay. (6) The name Vladivostok has several meanings depending upon whom is asked. Most seem to agree that it is "Ruler of the East", yet others have referred to the meaning as "Power of the East", "Lord of the East", and "Jewel of the East". (7) Whichever it may actually be, the significance that is placed on the city is obvious. From an early point in time the people of the area, Chinese, Koreans, Japanese, and later the Russians, all realized the strategic location of the port city. The Chinese occupied the region from roughly 600 to 1800 AD and called the city Haishenwei. (Please refer to map 4 in the appendix.) The Russians overtook the region in 1858 and founded the city of Vladivostok in 1860 which it set up as a military outpost. In 1872, the Russian Pacific Fleet was moved to Vladivostok and has remained there since making the city the main naval base in the east. Vladivostok received city status in 1880 and from then on grew in international importance. (8) It’s population today is roughly 700,000 people. (9) The major ethnic groups include Russian, Korean, and Chinese people. The city’s major industries are centered around ship building and repair, commercial fishing, and natural resources mining and processing. It is built on the surrounding hills of the Golden Horn Bay and resembles what one author describes as a Greek amphitheater. (10) The natural harbor of Vladivostok is notorious for freezing up for three months out of each and every year. It is kept open by ice-breakers to keep the harbor from closing down and discouraging trade and business. In 1891, work began on the construction of the Trans-Siberian Railroad that would link Moscow to the Russian Far East. This railway crosses 5,810 miles of terrain or approximately 9,350 kilometers. The trip takes seven, twenty-four hour days to complete or 170 hours and 5 minutes - if the train runs on schedule. (11) In 1903, the Chinese Eastern Railway was completed which crossed Manchuria and provided a more direct route to the region of Chita and thus a more direct route from Vladivostok to Moscow. The distance from Vladivostok to the Russian capitol is so great that the port city is actually closer to San Francisco, California. The time difference is seven hours ahead of Moscow time and traverses over one hundred degrees of longitude. (12) It took the first settlers approximately two years to cross over from the western regions of Russia. (13) The climate of the city is often compared to that of San Francisco’s because of the microclimates the two areas seem to produce. However, Vladivostok is latitudally located much more north of San Francisco - approximately parallel to Portland, Oregon. Even though parallel to this city in the United States the two have quite different weather patterns and conditions. The spring season is damp and is then proceeded by a hot, wet summer season caused by the monsoon rainfall the region receives every year. On average, the city of Vladivostok gets over 100 centimeters of rainfall each year. The autumn season is long and dry and the following winter is frigid and brutal in some years. The temperature can sometimes average as low as -55 degrees Fahrenheit in the month of January. (14) Despite the negative aspects of the area, Vladivostok is a center for commerce within the surrounding regions. The Koreans and Japanese use the port to do business with the Russian Far East as well as to provide their goods to the rest of Russia and Europe for that matter. The Trans-Siberian Railway, whose easternmost terminal is located in Vladivostok, links the Pacific Rim to all of Europe and Eurasia. The long established ship building and repair, fishing, and natural resources processing provides a good foundation to the region as well. It is therefore easy to see how important Vladivostok can be in the various cultural, political, and economic transitions that are now taking form within the Russian Far East. It is also plain to note how the further development of the area and infrastructure to support the area can be so instrumental in changing the standards of living for not only the people of the Far East but Russia as a whole. The country has no other feasible coastlines outside of the Arctic Circle, besides the small portion of Baltic Sea they claim in order to provide themselves with a channel to the Atlantic Ocean, to link them to the other oceans of the world. Russia’s emergence as a future global economic power could be determined by the development of the Russian Far East.
Vladivostok’s Culture
The culture of Vladivostok and much of the Far East takes root in the ancient nomadic tribes of the area. There is a strong Asian presence in Vladivostok. The major ethnic groups are Russian, Chinese, and Korean. As mentioned earlier, from 600 to 1800 AD the Chinese occupied the Primorye Krai and called Vladivostok, Haishenwei. After the Igun Agreement on May 16, 1858 the borders between Russia and China were drawn out and the Primorye Krai came into existence. (15) In the years that followed up until about the First World War, the Russian Far East had an extremely diverse ethnic makeup. Russians, Ukrainians, Belorussians, Cossacks, Finns, Estonians, Latvians, Germans, Jews, Chinese, Japanese, Koreans, Americans, Swiss, and Scots all made a home in what the people all called the "New America". (16) There were also native aborigines but their number dwindled at a constant rate as they were more or less forced out of their way of life by the groups of people mentioned above. The indigenous people spread out over the area and only remained dominant in the northern regions of the Far East such as the Republic of Sakha. During the time period of settlement into the Far East, from 1859 to 1917, peasant migration was common. One author breaks the migration down into three distinct phases separated by the government policies, modes of transport, and types of immigrants of each phase. The first phase corresponds to the years 1859 to 1882. This phase is known for producing the first settlers by offering each household that chose to migrate 100 desyatins which meant 270 acres of land per family. They were also given exemption from military service for ten years and tax exemption for twenty years. The major ethnic groups to take advantage of this migration into the Russian Far East were peasant Russians, Finns, and Estonians. The second phase of migration into the Far East was during the years 1882 to 1907. During this time frame, migration concentrated on settlement of the Primorye Region. Migrators were brought in, predominantly by ship, directly to the maritime region whereas the first phase of migrators came into settle the rural lands of the Far East by crossing the Siberian lands in wagons and carts. In 1882, the South Ussuri Resettlement Law changed the inducements for the would-be settlers. Fifteen desyatins per person were allowed with a maximum of 100 per family. Only five years of tax exemption were given, but in addition the settlers were given food supplies for eighteen months, free tools, construction materials, farming necessities, and free transportation to Vladivostok from Odessa. The principle ethnic groups of this time period are, in descending order, Ukrainians, Siberians, central Russians, and Belorussians. The third phase of peasant migration and settlement into the Far East lasted from 1908 to 1917. The peoples of this migration movement were mainly very poor peasants from Russia and Ukraine. They were given fair share of land but were soon in competition with the older settlers who were selling parcels of their land to merchants and other entrepreneurs or simply renting it out to Chinese and Korean tenants. This wave of settlers arrived by train in what the people called Stolypin cars. These cars had equal sections for the new settlers and livestock that was being transported to the region. (17) Today there are mainly the three groups of people mentioned before. In the 1920’s the Chinese and Korean presence was very dominant. These two groups had their own newspapers, schools, and theaters. Russian resentment and prejudice began to take form and with the onset of World War II, thousands of innocent Chinese were accused of being Japanese spies and sent to Gulag prisons in Siberia and the northern regions of the Far East where many spent their last days. The Koreans were noted for their complacency with the Russian way of life and many were spared the political persecution, although quite a few also suffered the same consequences as the Chinese. Many attribute this to the fact that the Koreans complied with the shutting down of non-Russian newspapers, schools, and theaters. (18) Vladivostok is the center of culture in the Far East today. It has three theaters, a symphony orchestra, an opera studio, song and dance ensembles, a union for artists, writers, composers, and theater workers, publishing houses, a circus, art galleries, several museums, thirteen cinemas, and 125 libraries, the Far Eastern University is the predominant school of all the regions, it also has the far East Branch of the Russian Academy of Sciences. (19) It is still quite diverse in its ethnic mixture which also adds to the culture of the area.
Vladivostok’s Politics
Vladivostok’s beginnings derive from a political background. It came into being because of its strategic and military importance to the country of Russia and grew in that aspect when the country became the Soviet Union. As mentioned earlier, the Russian Pacific Fleet is based here and has been since it was moved from the Khabarovsk region in 1872. Before the Bolshevik Revolution, Vladivostok was a developing international city with several foreign consulates, including the United States, set up there. After the Bolshevik Revolution in October of 1917, Vladivostok was soon under Soviet rule on November 18 of the same year. Although the major cities of the Far East had now been taken over by the Red Army, the more desolate areas did not quite feel the overall impact of the "ten days that shook the world". Vladivostok had many foreigners within the city and its limits. Many of these people were merchants and sailors who were politically active and did not support the intentions of the Red Army and communism since it affected their livelihoods. On June 29, 1918, a coup led by armed Czechs, Hungarians, and Russians broke out in Vladivostok. An ultimatum was given to the Vladivostok Soviet powers and with no response forthcoming, a relatively small battle broke out and the city was rid of Soviet rule. The Japanese Marines, during this occurrence, had seized the arsenals of the Red Army and a British firm took control of the railroad station. During the months that followed several nations who had an interest in the port city, brought in their respective militaries. These nations included the Czechs, Siberians, Kalmykovian Cossacks, Chinese, Japanese, British forces stationed in Hong Kong, and Americans. A provisional government was established, separate from communist rule, and the flourishing city of before again began to prosper. The Far East had now become the Far Eastern Republic, a separate entity within the Soviet Union recognized by Moscow as an independent state on May 14, 1920. It had its own government and acted solely on its own behalf, similar to what it was accustomed to in the past anyway. The Far Eastern Republic lasted for four years until 1922. The Bolsheviks had not given up their stance on acquiring the Far East. Through strategic advances and communist propaganda, the Far Eastern Republic was abolished and taken into the Soviet Union on November 15, 1922. The military forces that had set up in Vladivostok and throughout the Far East were expelled. The Japanese were the last to leave. (20) During the period of communist rule, the Far East went through the various five-year plans and restructuring programs. The Soviet Far East soon became a second rate region and many of the resources of the area were drained and shipped to the western side of the country. Financial backing was hardly ever provided as most of the funding went into developing the European side of the Soviet Union and the military. Vladivostok was simply regarded for its strategic importance to the military. It was slowly but surely fortified to protect its importance to the Union and then with the onset of the Cold War, that succeeded WWII, Vladivostok as well as many other important cities and regions were closed to non-Soviets. Vladivostok was actually off limits to many Soviet citizens because of its harboring of the Pacific Fleet and the nuclear submarines that could later be found there. The city was recently reopened on January 1, 1992 after the stagnation era associated with Leonid Brehznev and the final failing attempts of Gorbachev towards a command economy. (21) The mayor of Vladivostok, as of the time of this writing, is Victor Cherepkov who is not unlike many of the other Russian leaders of his time. He is currently under investigation by the City Duma for avoiding an audit and failing to turn in financial documents relating to his mayoral office. He has also postponed city elections that were scheduled for July 5, 1998 until July 12. He had initially wanted to postpone the elections until October but was overruled by the City Duma since his term ends on July 6. He is also constantly arguing with Primorye Krai governor Yevgeny Nazdratenko. (22) The political situation is not unlike the prevailing situation throughout the rest of the country. Hopefully it will not undermine the potential economic opportunities present in the Far East as the command economy did 76 years ago.
Vladivostok’s Economy
The economic problems of the Far East are characteristic of the rest of the Former Soviet Union. There is low production and output from the regions’ firms and industries. High crime is rampant across Russia and the Far East is no exception. Vladivostok is considered a "hotbed" for organized crime battling to control the docks of the port so many Pacific Rim nations use as a crossroads for trade. (23) The Far East also suffers from inadequate economic infrastructures. It lacks the central organization and planning provided by regulatory acts and measures. The problems the areas are facing are to be expected. Most of the region is fairly new to open market activities having been opened up to such economic influences only as recently as 1992. Only the elderly remember the glory days of the past and how Vladivostok and other areas of the Primorye and Far East used to flourish under open trade. This history is beneficial to the Far East, as many stories and ideas are being passed on to the younger generation who are in search of entrepreneurial skills and guidance. Many small business promoting institutions have yet to establish themselves but several are in the workings for the near future. Foreign investment has jumped right into Vladivostok and other port cities as well. Several hundred joint ventures with Chinese, Japanese, Korean, North American, European, and Australian have already been established and are continuing to grow in number. (24) Retail outfits such as restaurants, hotels, department stores, etc., are some of the businesses popping up around the Far East. Light manufacturing and some heavy manufacturing projects are also under way in the regions. Special economic zones are being set up to promote international trade with the surrounding countries. The fishing, shipping, and natural resource industries have always been a good source of employment and business within the Primorye Krai. It continues to do well and amid these troubled economic times are the only stable industries workers can depend on. Many projects are underway with the help of foreign investment. New airline routes are being established to promote business travel to and from the area. Transaero Airlines is planning to provide four flights from Moscow to Vladivostok on a weekly basis with the hope of establishing daily flights. Korean Air and Vladivostok Avia are getting scheduled service routes to and from Seoul, Korea. (25) In 1993, a stock exchange was established in Vladivostok and is now being rumored to merge with the existing currency exchange in the city. (26) Deals are being made with Chinese officials to facilitate the trade activities in the Far East and pacific Rim through Vladivostok. (27) A Japanese funded power plant is being constructed in the Priamur (or Khabarovsk) region to supply more power to the southern Far Eastern regions as the demand increases. (28) Vladivostok is notorious for power outages but these are not the direct result of poor electrical facilities. They are the result of an economy who’s people cannot afford to pay their utilities which in turn causes the power generating plants to not be able to pay their suppliers of natural resources. The European Bank of Reconstruction and Development has set up an office in Vladivostok to help the small business owner. So far it has lent $1.5 million dollars in loans with the goal being $3 to $4 million by the year’s end. (29) Although it may not seem like much, it is a step in the right direction whereas many other financing groups still consider any Russian region to be too much of a risk, never mind the Far East, the EBRD has overlooked the past and towards the future. Financing rates however are high and do represent the high risk associated with endeavors established in the Primorye Krai and surrounding regions. A rate of 40% is charged on long-term loans - long-term being 36 months. Shorter-term loans of 12 to 18 months charge a rate of about 19%. The recent turmoil of the Asian markets has unfortunately put a damper on the progress of the Russian Far East. (30) The situation arises from a decline in foreign investment. Most of this investment is from the surrounding Asian countries who have come under severe scrutiny over the past year. Without this much needed funding, economic development and industrial projects can not take place. Many still continue to have faith and invest money in what they truly believe is the "Jewel of the East".
Summary and Conclusion
It will certainly be interesting to see the events that unfold in the Russian Far East. The future may seem to look a little bleak right for some, but others, and hopefully the majority, see a better economic future ahead. The areas of the Far East, especially the Primorye Krai and Vladivostok, benefit from a good physical location as a prominent intermediary for the Pacific Rim and European countries. The diverse cultures add to the abundant resources of the areas. Foreign investment and commerce is under way and waiting for an economic instigator. Russia needs to develop and investment equal and adequate resources to the Far East. The times of past, when the Far East was considered second to the needs of the rest of the Russian empire, must never be revisited. Russia’s economy, as a whole depends on its integration with the newly established global economy. The Far East has long been considered a gateway to global trade and commerce. The Far East has to feel a sense of contribution to the country or turmoil, as it existed during the days that led to the establishment of the Far Eastern Republic, could develop and cause among other things, a negative effect to the overall economy. Self-sufficiency should be balanced along with the contributions from Moscow and the central government. These two forces have to work in conjunction for a smooth and easy transition to a productive market economy. The Russian Far East is abundant with natural resources that have yet to be tapped. Foreign aid should only be considered as a catalyst to the access of these resources. Domestic talents and investments should then result in establishing the Russian Far East as a dominant producer within the future global economy.
Appendix
Maps
References
Works Cited
Map 1
Map 2
Map 3
Map 4
References
Works Cited