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Russia, October 8, 1997

Some Think that Siberia is For Sale

Wanna buy Siberia?

Let's buy Siberia; don't laugh, it's a great idea!

By John Ellis, Boston Globe Columnist

It's a thin line between hope and fear. Six months ago, financial markets were bustling and there was learned talk in elite circles that perhaps the business cycle no longer applied. Today fear is spreading to the boundary lines of panic. President Clinton was not exaggerating Sunday when he said the world stood on the edge of a 'financial precipice.'

As detailed in yesterday's Wall Street Journal, a global credit crisis looms at exactly the moment credit extension is crucial to restoring confidence. To make matters worse, finance ministers at the meeting of the International Monetary Fund and the World Bank were unable to agree on a coherent response to the crisis. Markets from Hong Kong to New York to London continue to roil with doubt.

Deflation threatens virtually every national economy, including our own. There is no world government to deal with what has become a global crisis. Most of what is proposed reeks of throwing good money after bad. Doomsday scenarios are no longer dismissed out of hand. The world financial crisis offers President Clinton the opportunity to fix the problem, completely change the map of geopolitics, forestall his impeachment by the House of Representatives, and earn him a place in history worthy of his ambition. All he has to do is call Walter Mead at the Council on Foreign Relations.

Six years ago, Mead proposed that the United States buy southwestern Siberia for $1 trillion to $2 trillion. At the time, the Russian president, Boris Yeltsin, had offered to sell oil fields, production plants, and land to the United States to help pay down some of Russia's then $70 billion in foreign debt. President Bush dismissed the idea as crazy and far-fetched, as well it might have been at that time.

But things are different today. On Wednesday, roughly 40 million Russians joined a nationwide strike to protest years of unpaid wages and pensions. In the last six years the average Russian has seen his or her income drop from $20 per month to virtually nothing.

The near-term outlook could hardly be bleaker. According to the Journal, Russia's economy is expected to contract by 5 percent this year. Inflation is expected to reach 200 percent. Federal tax revenues are collapsing, and the ruble's decline in value continues apace. Russia is a country on the verge of economic collapse.

Mead's proposal fixes all that with the stroke of a pen. A $1 trillion purchase of southwestern Siberia pays off Russia's debt, stabilizes its currency, upgrades its infrastructure, and leaves more than enough left over to pay all back wages to every last pensioner. There might even be enough left over for an Alaska-style rebate to every Russian citizen, assuming the kleptocracy doesn't skim more than 20 percent off the top. Support for the sale of Siberia in Russia would be unanimous. [ Unanimous, my ass, it would start WWIII! ] In return, the United States would acquire a land mass larger than its own with a population of 15 million people. 'The combination of new territories in Asia,' Mead wrote, 'and a vast, suddenly solvent market in European Russia would amount, literally, to a new frontier with new opportunities and challenges for generations to come. This deal would double our size and put us on the Pacific Rim at the intersection of China, Korea, and Japan.'

'There's more.' Mead continued. 'Part of the deal would be for cash and part for credits; with, say, half the money, the Russians could place orders in the United States. Fiber-optics, consultants, computers, machine tools, whatever they wanted from whoever made the best deal as long as the stuff was American-made. Over a 20-year payment period, we would see something like $75 billion in exports each year to Russia. Minimum. That means 1 million jobs in today's 50 states. Even with all the incidental expenses - environment cleanup, infrastructure - the deal would more than pay for itself.'

Siberia is a land rich in natural resources. Acquiring its southwestern shank, America would gain the warm-water port of Vladivostok, the great timberlands to the northwest, and all the mining rights therein. Overnight we would become the world's largest oil producer.

Running up the American flag over Siberia would create an opportunity for global investors greater than anything since Asia in the post-World War II era. No one would invest in Siberia today. But if it was an American territory on its way to becoming an American state (or states), a gold rush would follow.

In 1803, President Thomas Jefferson did just such a deal. Napoleon was in a financial and political jam. Jefferson made him an offer. The result was the Louisiana Purchase. The Siberian Purchase makes every bit as much sense.

It probably won't be considered by the Clinton team. They are preoccupied with more urgent matters, like the head count on impeachment. Unless Clinton does something that changes everything, however, that head count will never add up. The Siberian Solution, far-fetched as it seems, is Clinton's and the world's way out of a very bad jam.



By Yuri Ephimenko, the Advisor of the Association "Far East - Zabaikalye"

Recently the American press seriously discussed the project of Walter Mead "to save Russia by buying for USD 2-3 trillion the Russian Far Eastern and Siberian territories".

This question was raised in the "Boston Globe" and discussed in a few central Russian newspapers. But nobody asks the opinion of Siberian and Far Eastern residents. I think that we must seriously consider this question. Moreover, exactly 150 years ago Russia and USA had started to compete in the Pacific Region. And I want to stress that they "had started", as the competition continues today and it will determine many regional political events in the 21-st Century. Let's take a look at the roots and history of this competition.

The two major events happed in 1848. That was a beginning of the first Russian naval expedition of Gennady Nevelskoi, who investigated the Low Amur-River coastal area and established port settlements. At the same time the member of the Supreme Court of USA Palmer submitted the famous "Siberian Note" to the President of USA. Palmer offered to colonize Amur-River area for arrangement of shipping, shipbuilding industries, farming and trade. That was not the first meeting of the two colonization waves, one was the Russians coming from the West, and the second one was the Americans coming from the East.

In 1846 after winning Texas and California from Mexico, the Americans suddenly found the Russian America. Russia colonized Aulet Islands, Alaska and the vast area of California in the beginning of the 19-th Century. The Russian Czar Alexander- I had declined a proposal from the King of Hawaii to join Russia. So, Americans used help from the Russian government to force the Russians from the West Coast. The major role in this deal was played by Foreign Minister of Russia Karl Nesselrode, who during 40 years of his being at high post did a lot of harm to Russia.

In 1848 the expedition of Gennady Nevelskoy overran the Palmer Note plan by establishing the Russian flag in the Amur-River area. When the USA naval expedition headed by Captain Ridgold later came to the Prymorye coast, they found it was already a Russian territory. Another colonization attempt was made by USA in 1858, when an American entrepreneur , Defreeze , offered to the Governor-General Muravyov-Amurky a deal to settle American colonists for farming, shipyards, and trade and providing with property rights of the land. Muravyev said that he remembers the destiny of Mexico: "Farmers came the first and then troops joined them" and declined the proposal. But Americans are brilliant politicians.

In 1859 they started talks about the sale of Alaska and 8 years later completed the Alaska deal. At that time Alaska was governed by a Russian-American Company, which at the end of 1850-th provided 142 thousand of Silver Rubles profits to the shareholders. But the Company fast went broke because an American lobby in the Russian government canceled all its benefits. In this way the sale of Alaska looked as a "reasonable deal". The key figure in this deal was the Great Prince Konstantin who was the lobbyist of USA interests in the Russian government.

Today we see a similar American lobby in Russian government regarding Russian Far Eastern policies, when the federal government doesn't allow local industries to develop, but when Americans come here they are provided with a "red carpet". In 1904 USA offered to the Russian government a famous project of Alaskan-Siberian Railway with a tunnel under the Bering Straight. Just do you think that Russia was only offered a railroad from Alaska along the Russian Pacific Rim and deep into Siberia ? Instead , Americans requested a 25 mile free trade zone around the railways line of detachment customs free zone with a right of independent business and other activities. It is interesting to note, that Russian Czar confirmed this project, and only traditional bureaucratic red tape and then the World War did not allow it to come true.

Today we can say that USA revives its Great Pacific Politics and first of all the same old projects of gradual colonization of the Far East and Siberia. In 1991 the office of "Transcontinental Railway and Bering Straight Tunnel" was registered . They considered the same old projects . When the Association "Far East-Zabaikalye" was struggling for confirmation of the long-term federal program for development of the Far East-Zabaikalye, than the Russian Economic Ministry silently included that project into the program. We never requested or offered that project to the government. It is like in 19-th Century, somebody at the "Czar suite" silently lobbies American interests.

We also see some other signs of this lobby. For example, in 1990 Gorbachyov signed an agreement about the transfer of our big Pacific Ocean economic zone area to the USA, which was not ratified by the Supreme Soviet and de-jure is an illegal act. But USA Coast Guards took that area under its protection. It is a dangerous sign of "Alaskan Syndrome". Any way it's not so easy to take the Russian Far East and Siberia. But American interests are already present here. We see a strong lobby of IMF and USA interests in Russian federal government. Everything is like 150 years ago.

The American Institute of World Politics initiated the project of Siberian Sates of America. It considers the division of the Russian Pacific Rim and Siberia into 7 states within USA. It may be a long term lease or purchase for USD 2-3 trillion , But the main trick is that this money will never cross the US border. I mean that the money will be used to purchase of new technologies for Russia in USA and paid as salaries to American specialists and workers and will provide its economic growth. Why is this project is very popular in USA? Because it may guarantee raise of the growth of the American economy for the future 300-400 of years.

I respect the American industrious persistence as they are continuing their expansionist programs of the past 150 years. But what can I say about us? We must reconsider what was done during the last 9 years. If we will use an example of USA and will work hard to accomplish our goals , then we can enter the 21-st Century as equal partners of the Asian Pacific region, but not as a colony. Thank you



From Alexander Samoiloff

Does Russia Really Need the Far East? That was the subject of domestic radio and TV hot discussion programs during the last two weeks. Territorial governors, leading local economists, scientists, politicians, businessmen, entrepreneurs shared their view on realities of Russian federal policies in the Pacific Rim of Russia.

On November 19-20 Russian Premier Evgeny Prymakov has stayed for two days in Khabarovsk on the way from Malaysian APEC summit, and held a meeting with the "Association Far East - Zabaikalye" (Governors of the Russian territories eastwards of the Lake Baikal). Head of the Association, the Khabarovsk Krai Governor Victor Ishayev has expressed the following opinion of the regions.

Historically the Far East and Zabaikalye (40% of Russian Territory) was considered by Russian Czars, and than by Soviets, as an important military Pacific frontier post region. In development of the territories Russia was moved rather by political than economic reasons. In the middle of 19 century Governor - General of Eastern Siberia Muravyov-Amursky had established all major Far Eastern cities as a military and paramilitary settlements and naval ports. Government provided Russian Far Eastern population with all kinds of benefits and never requested from them any taxes until 1910. Vladivostok was the major Pacific Naval Base and also enjoyed a status of Porte Franco. During that time Trans-Siberian Railway together with the world biggest bridge across the Amur-River were built. Soviets had created in the region a huge military industrial complex, and over 70% of the Far Eastern economy in 1990 worked for military purposes. Majority of food products and consumer goods were delivered from central Russia. Local residents enjoyed many social benefits and higher salaries.

From 1992 Russian government left the region to its own survival and never really supported any domestic initiatives to enter the Pacific markets by restructuring and developing of local industries, infrastructure, creating free economic zones, providing tax benefits and etc. So, in 1998 we see the following major results of such policies: - Far Eastern Fishing and Merchant Marine fleets and industries are disorganized and lose their positions. - Far Eastern wood industries suffer a sharp slump after the disastrous summer forest fires, which were ignored by federal government. - Far Eastern gold and mineral resources mining industries hardly survive in the times of good markets for their production. - It seems that the huge oil and gas projects Sakhalin 1 and Sakhalin 2 may be closed because of State Duma's and Russian government's reluctance to realize Production Sharing Law. -

Far Eastern military industrial complex is almost destroyed and receives only 10% of orders from the government. Moscow often sabotages signing of some major arms sales contacts. - Three biggest Russian military districts (Far Eastern Army, Far Eastern Border Guards and Far Eastern National Guards) and Russian Pacific Navy did not receive federal funds from the last June and are in disastrous situation. They are on the verge of famine, and receive food, heat and electricity support only from local governments and charity organizations. The similar hardships are beared by all federal law-enforcement agencies and organizations.

The famous Trans Siberian Railway is losing competition to the new Trans-China - Kazakhstan Railway, because of high taxes, energy and fuel cost. In 1998 the amount of railways transit traffic slumped to 50%. Next year Trans-Siberian Railway may lose over 30% of its today's traffic. But during Soviets thisTrans-Siberian Railway provided to the nation USD 3.00 billion of revenue per year. - BAM (4324-km long Northern Trans-Siberian Railway built in 1979) works at 10% of its 10 mln tons annual traffic capacity. Now local governments have a problem to support and evacuate the population from that rich with natural resources areas.

Major Far Eastern seaports Vostochny and Vanino work at 20-30% of their capacity. - Many Far Eastern territories suffer disastrous situation with fuel, heating, electric power and food supply. But this region is rich with energy and natural resources. - Russian government takes from the territories the bulk of regional revenue in the form of high federal taxes and doesn't return back due to them funds. For example, issued by the Japanese government loan to the development of the Far Eastern economy was received by Moscow and never reached the territories.

Together with that we see a fast economic development of the neighboring China. We watch increase of Chinese ethnic population in the Russian Far East and penetration of Chinese capital. Never in Russian history any government treated its territories in this way. Far Eastern territories understand that Russian government today has no funds and also understand the situation in the country. The Far East is thirsting for creation of a better industrial investment environment and a fair distribution of revenues. It is the last chance of Russian government to hold with Russia this territories. Today Russia has only two ways: to take am emergency measures for saving Far Eastern economy or to develop and implement a plan for evacuation of Russians from the region.

Evgeny Prymakov has assured that now he understands the regional problems, but will not give any promises. He stressed that it's better for Russian government not to give promises but to make the regional situation going to better with a real action. Russian Premier and Victor Ishayev visited a military aircraft plant in Komsomolsk-Na-Amure and a number of big construction sites in Khabarovsk. Evgeny Prymakov highly praised Victor Ishayev for creation of a better economic situation in Khabarovsk Krai compare to other Far Eastern territories.

At the same time Vice Premier Gennady Kulik, who is responsible for agricultural sector had a meeting with leaders of the Far Eastern agricultural industries. In his speech Kulik blamed agriculturists for the "following the easiest way of processing imported agricultural raw materials, like cheap Chinese raw meat", and said that now government gives them a possibility to win domestic food markets. He stressed that there are few good standing agricultural companies in Khabarovsk Krai and others must follow up this good example.

The meeting of Vice-Premier highly reminded us a traditional Soviet PARTKHOZACTIVE (Local Industries Reports to Communist Party Meeting) scenario, when a First Communist Party Secretary, after hearing out of some complaints, usually blames the industrialists and give them an example of a Good Boy.



By Antonina Greshnikh, Professor of the Far Eastern Police Academy

The Russian-Chinese governmental relations are developing in a civilized way. Together with that, we have many local problems which stay behind the scenes and are not widely reflected by the Russian press. One of them is the problem of Chinese migration into the Russian territories.

Today in the Russian Far East we have a popular joke like: The question: "How much will cost Russian vodka in Khabarovsk in the 21-st Century?" The answer: "100 Chinese Yuans". Today we feel that Russia has not created a proper environment for an open economy and migration of aliens into Russia. The 80% or about 800,000 Chinese who now stay in Russia are illegal immigrants. And the Russian Far East is an open traffic gate for them.

Some part of the Chinese immigrants are moved by their private interests, but together with that we know about the global migration policy of Chinese government. The fast developing China has a high unemployment rate, which is reported as 175 mln people. The Chinese come to the Russian Far East as an agricultural and low paid construction workers. Chinese criminal business now actively penetrates the Russian Far East. Many illegal Chinese travel through Russia to the West European countries. Also, we have information that the Chinese government supports and facilitates the presence of the Chinese in the Far East.

We have watched the rapid growth of the Chinese Diaspora in our southern regions. Their number today already is bigger than a number of native people. Chinese have rented land and established there a number of official Chinese settlements. They often set up Russian-Chinese joint ventures just to get quotas and licenses for export of Russian strategic commodities. All these structures are a 'basic support points" for illegal immigration.

The Chinese use few illegal immigration channels to Russia. The first way is a free (without visa) "Chelnok" exchange. They often use profits received in Russia to rent land areas, purchase real estate and counterfeited Russian documents through trusted Russians. Another way is to enter Russia as the contractual workers. Also, we have few examples when Chinese enter Russia with counterfeited passports and registering false marriagees to stay in Khabarovsk and appeal for Russian citizenship.

Illegal Chinese immigration creates two problems. Today we see an increase of their criminal activities, like smuggling from Russia of hard currency, strategic commodities, medical herbs, marine products and brining drugs and firearms. Chinese criminal gangs control automobile and railway border passing points, trade companies and Chelnoks. They supply Russian criminal gangs with Chinese firearms and cooperate in illegal prostitution export businesses . During this year we registered 500 of murders committed by the Chinese in Russia. Such rapid growth of Chinese migration may become one of the major Russian National Security problems in the future.

Today Russia has not a general legal system for solving of the illegal immigration problems. We still use the old Soviet legal acts issued in 1981. To enter the legal environment of the world community, Russia must create a proper legal base for the control of aliens during their incoming, outgoing and stay in its territory and to issue a number of special legal acts on criminal activities of aliens. For example, the deportation of an illegal immigrant to China today is done at the cost of Russian budget. We know about the growth of Chinese population in USA, Canada and other countries. But what makes us feel different is that the Russian Far East with its scarce Russian population (1 person per 1 sq. Kilometer) borders the fast developing and overpopulated China. In this way we really can talk about threat to the national security.

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