Russia’s Kuril Islands Next Investment Paradise – OpEd

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By Ilya Kharlamov

In 2010, the then Russian President Dmitry Medvedev toured Russia’s Kuril Islands and approved an ambitious development programme for the area. This programme is being acted upon, and according to Sakhalin Governor Alexander Khoroshavin, companies from China and South Korea are expected to come before the end of this year. They are apparently taking advantage of an improved business environment in the Kurils.

We have an assessment from Deputy Director of the Russian Academy’s Far East Institute Professor Andrei Ostrovsky:

“Economically, the Kurils are victims of their remoteness and unending territorial disputes with Japan. Chinese and South Korean investment in them will result in an improved infrastructure, creating conditions for further economic development. In its Far East, including the Kurils, Russia is seeking foreign cooperation in improving transport, stepping up food production, introducing latest technologies and upgrading cybersecurity. These and other matters are to be discussed at the next Asia-Pacific summit in the Russian port of Vladivostok on the Sea of Japan. (East Sea)”

Dr Konstantin Asmolov of the Academy’s Korean Studies Centre pours some cold water on this optimism:

“The required investment will come, but not at once. The actual pace of the process will depend on good will and international politics. Large-scale multilateral projects usually take time to pick up. The division of the Korean Peninsula, for instance, continues to hold up plans for a Trans-Korean railroad. The latest announcements about expected Chinese and South Korean investment will remain just music before concrete economic agreements have been signed.”

Any investment from Japan will apparently have to wait until that country drops its claims to Russia’s South Kurils and allows economic realism to prevail.

With China, Russia is creating a common investment fund worth $4bn. Two thirds of the investment from it will go to fund projects on Russian territory.

Strategic partnership between Russia and China will dominate a scheduled Beijing visit by Vladimir Putin, his first foreign trip since he took office last Monday.

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