Russia must 'wake the sleeping Siberian tiger', urges Oleg Deripaska

Not for the first time the chairman of Basic Element, and chief executive of Rusal, is positioning himself up as the most articulate and forceful cheerleader for Siberia. 

'While Russia is rightly proud of its place in Europe, this focus has left our eastern regions underdeveloped. We need to put this right if we are to develop the full potential of Siberia for the benefit of the country and of the rest of the world,' he said in a guest blog for the Financial Times coinciding with the APEC summit. 

'Two thirds of Russia is in Asia and it is the Asian tigers, not Europe or North America, which are the great hope for the global economy.'

As the summit of the Asian-Pacific Economic Co-operation Forum will hear, Asia's share of world GDP 'has virtually doubled since 2000', he said. 

'With the eurozone crisis set to dampen European economies for years, Russia cannot rely only on its old partners, a shift which puts Siberia and the Far East firmly in the spotlight.'

Deripaska stressed: 'These regions are no longer on the periphery but at the new centre of the world economy.

'Even more importantly, it is Russia's east that contains the overwhelming majority of our country's rich natural resources and potential for rapid economic growth.

'To realise this promise, and facilitate trade with eastern neighbours, a big new effort must be made to develop the region's infrastructure.

'If you consider that 70 per cent of Russia's copper and nickel reserves and 80 per cent of coal are in eastern Siberia and the Far East, the geographical position ideal for building efficient supply chains.

'It takes as little as four days to transport goods by sea, for example, from Russia's Far East to China compared to 14 days from Australia, 23 days from South America and 35 days from Brazil. 

'Siberia can also help address global problems such as water and food shortages in heavily-populated Asian countries by exporting agricultural products and supplying much-needed fresh water.

'Siberia's natural advantages should be the basis for creating a new Asian tiger, providing a much-needed boost to the wider region and world economy'.

Deripaska - who has a home and extensive business interests in Siberia - warned this will not happen without a clear strategy, which means tackling a 'damaging legacy of lack of interest and investment'. 

Until now, Russia has 'walked in step with Europe' which is 'our biggest trade and foreign investment partner' and while proud of this link it 'has left our eastern regions underdeveloped'.

He warned: 'Despite all its advantages, the region remains Russia's poor relation. Incomes are well below the national average, and poor infrastructure is directly holding back long-term ambitions. 

'Supplying coal requires modern ports and rail routes. Yet transport links remain poor with the region's railways capable of carrying only 60 per cent of freight traffic demand.

'Generating and exporting energy needs new dams and transmission capacity. But a lack of modern power lines prevents energy being exported. Less than 20 per cent of the hydro-electric potential of the rivers of Siberia and the Far East is being utilised.

'It is not just roads, rail links, airports, power and IT infrastructure that must be transformed. We need to accelerate the modernization of the region's industries, invest in technology, renew communities and improve quality of life. For too long, the needs of Russia's Eastern regions and its people have been overlooked.'

Such a develop will not come cheap - the Russian Academy of Sciences estimates a bill for modernising infrastructure at $220 billion - but it is vital for the country's future, he urges, likening it to China's decision to modernise and resulting 'economic miracle'.

'Nor will it happen overnight. It took China decades to deliver major change,' Oleg Deripaska said.

'At the moment, China spends 9 per cent of GDP on infrastructure compared to 2.5 per cent in Russia. This is the future. America's total spending on infrastructure is steadily falling and now stands at around 2.4 per cent, while Europe invests 5 per cent but is dramatically cutting back. 

'The challenges these economies face should act as a warning and a motivation for Russia to shore-up its infrastructure.

'Siberia is, however, starting from a strong position.

'Its natural resource base and advantageous geographic location are such vital ingredients for economic growth that they will lead to much quicker progress.

'I expect to see great benefits within 10 years.

'I am convinced, too, that the impact could, in its own way, be as important as in China where the economic miracle is now driving global growth.'

Where does the money come form? 

It 'requires the private and public sector to work together in new innovative ways to deliver the funding and expertise. There has to be greater involvement, too, of foreign investment from Asia and beyond including support for cross-border projects.

'Asia itself has shown how investment in improving infrastructure and strengthening private-public partnerships provide the platform for outstanding economic growth.  I believe, with the right investment, we could see Siberia's per capita annual GDP increase four-fold within 20 years from today's level of $5,800. 

'And the full integration of Russia into the Asia-Pacific regional economy will provide powerful benefits for the global economy.

'While bringing this transformation about the ultimate goal must be to preserve the unique Siberian natural environment such as Lake Baikal for future generations. Siberia's future industry must be the one of the greenest on the planet by embracing modern technology', Deripaska stressed.

He said that the APEC Summit this week in Vladivostok - with an agenda including cross-border economic integration, improving supply lines and fostering innovation around the Asia and the Pacific rim - is the clearest sign of a recognition in Russia of a top level acceptance of the importance of the Kremlin looking east. 

'The attendance of Russia's most senior government figures and business chiefs underlines how the country's eastern regions are increasingly seen as central to its economic future,' he said.

'Russia's regional and national governments are also prioritising the modernisation of the country's creaking infrastructure. Stronger legal safeguards and frameworks have been put in place.

'Russia and the wider Asian region cannot afford to leave Siberia and Eastern Russia behind. The demand for infrastructure in Russia must now be met with investment.'