The Global Insight
The Vlad in Vladivostok
- Creating a Resilient Organisation
The Vlad in Vladivostok: taming the ‘Wild’ East
The Far Eastern town of Vladivostok, perched on the Sea of Okhotsk, used to only be worth a visit if you were a soldier or a sailor. Being neither, it was with some trepidation that I took the eight-hour overnight flight from Moscow in the depths of winter, and arrived to a balmy -27C. Under these conditions, the sea freezes over and you can walk alongside icebreakers ferrying products to Japan and South Korea.
The Far Eastern region is sparsely populated - just six million people live in a commodity-rich territory that makes up a third of Russia. Oil and gas, and precious metals such as gold, diamonds and coal are all sitting in the Amur and Yakutia region, waiting to be extracted but remaining largely untapped. Why?
The government maintains that Russia is open for business, and that Vladivostok is the ideal gateway to ferry goods between Asia and Europe. In practice, poor infrastructure, seasonal impediments and corrupt bureaucrats all hamper the region’s development. Western sanctions, a feature of Russia’s political environment since 2014, are an additional point of uncertainty that undermines investor confidence, and have the potential to stymie the advancement of the country’s Far East.
Eyes to the East
President Putin comes but once a year to Vladivostok. He is helicoptered onto nearby Russky Island, avoiding the newly-constructed Golden Bridge, and heads for the Eastern Economic Forum, a conference geared entirely towards attracting investment from Asian countries like Singapore, Japan and China. There, Putin presses the flesh with dignitaries such as Prime Minister Shinzo Abe of Japan, and swiftly heads back to Moscow. Since 2012, government subsidies have poured into the Far East, earmarked for new roads, bridges and universities.
In the 1990s, this part of the world was referred to as the ‘Wild East’. Organised criminal gangs had a virtual monopoly over businesses and sorted out commercial disputes among themselves, mostly messily - contract killings were de-rigueur.
All this has changed. Vladivostok is a city revamping itself and orientating towards the Asian market. Vladivostok (or ‘Vladik’ as it is affectionately known by locals) appeals as a cheap holiday destination for Japanese and Chinese tourists. Signs written in Chinese and Russian offer anything from shoe repairs to legal services, and every couple of hours - even more frequently in the summer high season - masses of tourists from South Korea disembark from enormous cruise ships moored at the port. There is also a smattering of North Korean labourers in the lumber industry, logging in the forests where they have an encampment and spirited back to the Democratic People’s
Republic when work is complete. There are likely to be fewer of these workers in the coming months, as Russia recently joined a newly vigorous sanctions regime against North Korea and will downsize its labour contingent.
The influence of Asia is palpable. Most cars are Japanese right-hand drive models, even though Russia drives on the right. Spins around the city are correspondingly more thrilling, and the local authorities have had to introduce ticket barriers on both sides in car parks, just in case. Chinese investors have been in the Vladivostok for years – some since the 1980s – and have developed close relationships with Russian businesses. The Japanese are newer to the market and more cautious, particularly because of the international sanctions on Russia, which has many businesses questioning the long-term sustainability of putting down roots.
This more amenable attitude to foreign investment is relatively new; Vladivostok was a closed city until 1992. Closed cities were Soviet-era towns that hosted sensitive military or scientific facilities. Soviet citizens needed a permit to visit; foreigners were barred entirely. Vladivostok was one of the last cities to open up to foreigners, chiefly because of its naval prominence. Nowadays, the uniformed soldiers and sailors milling around the port barely bat an eyelid when hordes of tourists approach, selfie stick in hand. While some parts of the port are no-go areas for civilians, on the day I went down to have a look there were at least two wedding parties gathering to take commemorative photos in front of an enormous World War Two submarine, now a museum to the Pacific Fleet’s wartime endeavours.
Vladivostok has now been branded as a logistics hub with the potential to link Asia up to Europe. But it seems that Putin’s grand plans for the East have hit a stark reality. There are the practical concerns of trying to build bridges and roads across expanses of territory either encased in permafrost year-round or engulfed by marshland during the summer months. While extracting natural resources in places like Yakutia and Chukotka is difficult enough, trying to ferry extractives across the country year-round is another problem altogether.
Climate is one thing; Russia’s business environment is another. In theory, Moscow has apportioned funds to develop the Far East. In practice, much of it disappears into the pockets of bureaucrats and regional officials in the process. The mayor of Vladivostok was removed and imprisoned in 2016 for misuse of regional budget funds, including organising preferential contracts for a cement company owned by his family. A quick stroll around town tells you all you need to know about where the local budget is going – roads are potholed and unpaved, and the streets look more like run-down parts of a developing nation than Russia.
Vlad for Vladik
Coming from Moscow, where there were unavoidable signs that a presidential election campaign was in full swing, Vladivostok seemed oblivious. In Moscow, you couldn’t cross a street without seeing a large billboard of Putin. I counted only a handful of billboards in Vladik, and only ones with the visage of Vladimir Putin, trading on the campaign of a ‘stable Russia’. Stability might sound boring, but the truth is that many people in the Far East aren’t really interested in change.
Other presidential candidates were nowhere to be seen. In Moscow there was the occasional poster featuring Pavel Grudinin, the fresh-faced 57-year-old representing the Communists and their predominantly ageing electorate, but in Vladivostok, he was absent. While many Westerners subscribe to the ‘anyone but Putin’ idea, it’s relevant that in many of Russia’s elections, the Communist Party usually takes second place. If the Russian people were to choose anyone but Putin, it would probably be a Communist.
This year, Putin is running a campaign as an independent candidate, separate from his United Russia party, for good reason. United Russia was blighted by a series of corruption scandals in 2017, led by vocal opposition activist Alexei Navalny. While these protests gained some traction in Vladivostok, the separation in the public’s mind is important – these were anti-government protests, not anti-Putin rallies. Locals in Vladivostok consider Putin a problem-solver: when things go wrong, they appeal to him personally. Putin even holds an annual phone-in called Direct Line where people across the country are encouraged to ring him up and complain about their issues. He then promises to resolve them with the flourish of a man who has unlimited resources at his disposal.
Vladivostok is a place where people genuinely quite like Putin. Local support for Russia’s 2014 annexation of Crimea is strong, with supportive graffiti to this end scrawled underneath the Golden Bridge. Host to Russia’s Pacific Fleet, the city was first established as a military fortress in the 1800s, designed to repel the Chinese. Most of the locals were sea-faring folk until the Soviet Union broke apart in 1989, after which the government-subsidised shipyards were shut down and abandoned. A handful of persistent fishermen still subsist by selling their catch at the local market, braving temperatures of -30C with wind chill to sit out on the sea ice in winter which, I was assured, is several metres thick in January. Living standards are below average for Russia, but locals recall a time before Putin when times were even harder, when gangsters ran amok and breadlines were long.
Against this backdrop, Putin is a guarantor of stability in a country where change usually means turmoil. Youngsters there appear broadly disconnected from political processes, and most people I spoke to indicated that they probably wouldn’t bother going to the polls. Others don’t really ‘get’ Navalny, don’t believe he has much of a platform or haven’t heard of him. For many, an alternative to Putin is unthinkable: a weak leader without his connections or control over the security and political environment. For now, it appears that if there is to be political change in Russia, it will not come from Vladivostok.
- Emily Ferris, Associate Analyst