MOSCOW POURS OVER 4 BILLION DOLLARS INTO A NEARLY DESERTED

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SIPDIS

E.O. 12958: N/A
TAGS: POL ECON
SUBJECT: MOSCOW POURS OVER 4 BILLION DOLLARS INTO A NEARLY DESERTED
ISLAND

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1. Summary. In preparation for the 2012 APEC Summit on Russkiy
Island off Vladivostok, Moscow is spending over 4 billion
dollars developing the island. As Consulate Staff verified
during a site visit, workers have begun constructing a one
billion dollar bridge from Vladivostok to Russkiy Island that
will be one of the longest suspension bridges in the world.
Builders are clearing an approximately 3-mile long site for what
we understand will be conference centers, hotels, and a
university campus. The Russian Government hopes to strengthen
its ties with the Asia-Pacific Region and promote investment in
the Russian Far East. Although the pristine island will be a
beautiful site for the 2012 APEC conference, analysts fear that
Russkiy Island will attract little interest after the 2012 APEC
Summit.

Project Part of Kremlin Plan For Asia Integration
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2. Supporters of Russkiy Island development hope to promote the
economic revitalization of the Russian Far East and to reinforce
Russia's importance in the Asia-Pacific region. In the words of
Mark Urnov, the head of the Moscow-based think-tank Expertise,
Russia's Far East is "one of Russia's most troubled regions. It
is not heavily populated and is surrounded by fast-developing
China. If Russia does not develop the Far East soon, it could
lose it." Prime Minister Vladimir Putin argues that Russia must
encourage economic growth in the region by developing local
industries and infrastructure. In his words, these steps "will
encourage new investment and contracts, kick-start the
development of the region and thus strengthen its competiveness
and expand its ties with the Asia-Pacific region." In 2007, Mr.
Putin argued that Russkiy Island is the perfect locale for these
ambitious projects, emphasizing that the island's proximity to
the ocean makes it a "very interesting recreation area" and the
perfect place for an international conference.


3. Mr. Putin's claims are not without foundation. Russkiy
Island features ideal fishing sites, a pristine natural
environment, curative herbs, clean air, and beautiful beaches.
The natural beauty of the island will undoubtedly impress
officials at the 2012 APEC Conference.

Construction May Harm Environment on Island
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4. The pristine natural beauty of Russkiy Island is also a
cause for concern. Already, as hooligans have drunken parties
on the island's beaches and leave their trash, the island is
becoming less attractive. Construction on a massive scale only
exacerbates this problem. Natalya A. Andreyeva, a doctor in
Vladivostok, advocates preservation of Russkiy Island's natural
beauty by transforming the island into a national park.


Doubts about the Island's Post-APEC Future
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5. Analysts fear that without sound infrastructure, this area
will attract little interest after APEC. Russkiy Island has
been nearly isolated for decades and lacks amenities that
tourists take for granted.


6. High airfare and competition from other tourist sites could
also make Russkiy Island an unlikely tourist destination.
Although the island may attract travelers from East Asia,
Vladivostok's distance from Moscow makes Russkiy Island an
unlikely vacation destination for residents of European Russia
or Eastern Europe. It takes over one week to reach Vladivostok
from Moscow by train and budget flights from Moscow to Russia's
Far East are non-existent. Turkey and Egypt are more economical
and convenient tourist destinations. In light of their decision
to scale down developmental projects on Russkiy Island, Russian
authorities have not ignored these impediments to Mr. Putin's
dream of transforming Russkiy Island into a resort. Officials
originally planned to build 5-star hotels and an opera and
ballet house on Russkiy Island. After failing to secure foreign
investment, they scrapped these plans because, according to
Valentin Anikeyev, Primorye Architect and Professor at the Far
Eastern Technical University, "the construction of an opera and
ballet house on the island would cost too much."

Unexploded Ordinance May Impede Construction
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7. Russkiy Island's history further impedes development on the
island. During Soviet times, Russkiy Island was a secret
military facility. Now the island is littered with outdated
artillery, cannons, and grenades. After exploring the bays of
Russkiy Island over several years, professional diver and former
captain Genrikh Kostin claimed that missiles, torpedoes, and
mines are "in immediate proximity to the Russkiy Island." In

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2007, he argued that the excavators, large welding systems, and
high voltages necessary for a massive construction project could
cause a non-neutralized missile to detonate.


8. Comment. With its pristine beauty, Russkiy Island will be
an ideal site for the 2012 APEC conference. Within the next
three years, the development of the island will bring
much-needed jobs to Primorye. However, in the long run, unsound
infrastructure on Russkiy Island and high airfare will prevent
the island from becoming a popular tourist destination. Russian
officials acted wisely in scaling back on development of Russkiy
Island.
MILLER