09 December 2007

The Secret Struggle for Siberia--The Frozen Treasure

Russia has become a major player in the international energy market. Vladimir Putin's power play--a governmental takeover of the Russian fossil fuels industry--appears to have paid off. A recent gold strike in Eastern Siberia merely adds to the huge underground wealth present in Siberia. Siberia is a huge mineral treasure trove for whoever can harvest its riches. But will that be Russia?
According to Russian calculations, Siberia holds just under 80 percent of Russia's oil resources, about 85 percent of its natural gas, 80 percent of its coal, similar amounts of precious metals and diamonds, and a little over 40 percent of the nation's timber resources. As a result of this rich base, and its exploitation, Siberia is in many respects what geographer David Hooson would call Russia's "effective national territory," or its economic heartland—the region that produces a surplus relative to the size of its population and that essentially supports the rest of the country.

On the surface, Russia's economy appears to be booming. In fact, Putin was able to turn that popular belief into a recent election victory (with a little help from his friends, naturlich). But there are ominous cracks in the facade of a resurgent neo-Imperial Russia.
The Far East constitutes 30 percent of Russia’s total territory, but has less than 5 percent of its population. It has substantial natural resources which could stimulate economic activity and employment, but investors are becoming increasingly reluctant to commit themselves since there is almost no one left to employ there.....we are brought to the conclusion that Russia could eventually have a trade deficit, even with all the natural resources she has in play, and at the rate we are going this point may not be too far away. What we need to bear in mind is that while global oil prices may drop back slightly ..., they are unlikely to continue to rise at the same pace as they have been ...and so since Russian oil capacity is, at best, more-or-less constant ..., Russia cannot continue to rely so heavily on oil exports for continuing growth ...

China has historical claim to a large part of Eastern Siberia. China's voracious appetite for resources to sustain its exuberant growth rate will soon bring it into conflict with its neighbor to the north.
“With a history of conflict along a 2,600 mile border, with ethnic minorities sprawling across it, with a mineral-rich and sparsely populated Siberia facing China’s teeming millions” (Waltz, 2000b: 37-38). Historically, China has never been quite content with Russian expansion towards it boarders and already now massive Chinese immigration into Russia is taking place. Already in the 1990s, Russian Defence Minister Grachev therefore noted that, “the Chinese are in the process of making a peaceful conquest of the Russia Far East” (quoted from Huntington, 1996: 243).

The long Sino-Russian border has had an uneasy history, especially over the past 100-150 years. Now most Russians want out of Siberia, while millions of Chinese and Central Asians want in. With the huge prize of energy resources at stake, chinese workers have steadily been taking over, by default, much of the workforce in Eastern Siberia--both legally and illegally. It is unlikely that the Chinese government has taken any options for increasing its take of the booty off the table. China needs those resources. Russia does not have the human resources to develop them. An interesting dilemma, worth watching.

Hat tip Publius Pundit

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