The Trans-Eurasian Belt of development as a part of a larger geo-political Eurasian project': The State's role in the implementation of this ambitious project - Is there a real strategy for the Russian state? How and who to create TEBD project management? These are the highlights of our in-depth interview with VEB Deputy Chairman, Andrei Klepach. The questions were put by Nikolai Vardul.
"I am a supporter of the Eurasian project"
Q: "You are a supporter of the Trans-Eurasian project?"
A: "Yes, I am a supporter of the Eurasian project. The question is how to understand it."
Q: "I do not mean the great Eurasian project, but specifically the project "Trans-Eurasian Belt of Development (TEBD)."
A: "I would still distinguish: is it a question about the Eurasian project in general, which can be interpreted as a joint project or the model for the development zone with China and other Asian countries? I think there are still a lot of questions associated with this project. And there is a more specific infrastructure project in fact, although it is treated not only as an infrastructure project, but also as an endeavor that really connects to a belt of development, and relates to communications technologies, and many other projects creating the development 'zone', which includes Russia, China, Korea, and other regional countries – and then further on, of course, Europe . In this sense, it is a more 'specific' project, but that does not mean that the particular configuration of transport routes will ultimately go that way. I think more likely it will find a different path. I am a supporter of the Eurasian project in general: Russia together with China, India, Iran, Pakistan, plus our partners in Central Asia, will create a certain area, or areas for mutual development. In this sense, I am as well a supporter of the TEBD - the belt which comes from China, Korea via Russia to Europe, and a supporter of certain specific transport or infrastructure projects which are currently under development in this context, but still do not have an exact and defined solution".
Q: "Going back to TEBD; of course, it is a part of the larger Eurasian project, but let's for now focus on the TEBD. You said it might go by another route, different from originally suggested. Please be more specific. Does it mean that you think it is 'hypothetically' realistic, but not in the form or 'shape' suggested now?"
A: "There are different configurations, relatively speaking, both of the 'route' and the 'belt' which links China, Russia and Europe. This raises the first question: How realistic now is a new development zone, given the geopolitical conflict between Russia and Europe and the United States? The second question is: What is the specific configuration of the project? It's core part is railways, and if so, then, in my opinion, the most realistic 'track' or route would be the one which goes through north-western China via Kazakhstan into Russia and once in Russia, Ekaterinburg - Kazan - Moscow. That is not the route that goes through the Far East; the so-called 'BAM', but the Trans-Siberian line. There are, as I said, different variants of the Trans-Eurasian Belt, I am showing a shorter route and, in my opinion, it is more realistic."
Q: "The route which you have pictured corresponds basically to the variant of the current Chinese project the "Silk Road."
A: "Yes, this is an option, once historically associated with the Silk Road. But more important than historical parallels, is the fact that this route is interesting for Kazakhstan. In fact this is the option, which by and large works with the high-speed rail project Moscow - Kazan, and in the future the proposed Kazan - Ekaterinburg line, and this high speed link, in turn, can be one of the major drivers for the internal development of the Russian economy and the Russian regions specifically, whether it goes further on to Kazakhstan and China, or not. Continuation to Kazakhstan and China means that the project becomes international, yes, but it is also very important from the point of view of the development of the Russian regional territories."
Q: "But this route leaves the Far East 'out of the loop', doesn't it?"
A: "The Russian Far East will be developed on the basis of other projects. In particular we have, in any case, a project which also empowers BAM and the Trans-Siberian lines. A railway project linking Primorye with Korea through China is under discussion at the moment. This project has been under consideration since Soviet times, mostly in connection with Tumangan, but now it will get a new lease of life. It is a very important project - although it is local, it is strategic and long-term at the same time in terms of the development of Primorsky Krai and extending international cooperation opportunities for the region."
Q: "Going back to TEBD, did you notice that in official documents, the Russian word “razvitie” (development) is specifically written in the Latin alphabet? This underlines the special meaning of this project to its authors"
A: "Actually I did not pay any attention to it."
"Trans-Eurasian project can change the Russian province”
Q: "As far as I understand it, the TEBD, including both the Trans-Siberian rail route and BAM, is considered by the authors to be a development zone which goes beyond traditional economic growth and development, one which could be described solely from an 'pure economics' point of view. In other words, the authors of the project are breaking the boundaries of today's economic science. Don't you think that this approach could delay the project in its early stages?"
A: "In my opinion, Latin, the Cyrillic or English transcription is not a question of economics. I'm a conservative in this sense: Russian 'concepts' should be written in Russian. But the matter is not in writing and in transcription. If you're talking about the difference between growth and development, there is no contradiction. Any serious large-scale project, especially international and geo-political - and the Trans-Eurasian project is geo-political by definition - changes the quality of the economy. And not only in Russia. This is a serious integration project, and if it goes, as I said before, through Russia, Kazakhstan and Northwest China, then it may become more significant for integration than the agreements we have achieved with the help of the customs tariffs.The question of growth is a question of quantifying the contribution that the project makes to overall economic growth. It is important especially now, when our economy is in stagnation, and it can climb out of it only through changes in global market conditions (which are unlikely) or a shift in the situation regarding Western sanctions, which is also unlikely, I think, for the next few years ..."
Q: "Years?"
A: "Exactly; years. But we have a considerable internal capacity, serious potential for integration with Kazakhstan and China. This potential we can realize – under sanctions or without them, and these will make a significant contribution to economic growth. One can argue about the numbers, fractions of percentage of GDP growth, but this is something that will help to pull the economy out of stagnation. What is important to emphasize again is that the Trans-Eurasian project can change the situation in Russia's regions. In contrast to pipeline projects, whether it be "The Power of Siberia" project or a new one that is being lobbied at the moment to go through Altai, including through virgin lands which are extremely environmentally vulnerable, any and all projects related to pipelines have a significant budgetary impact but minimal actual input into the development of the Russian regions, especially when taking into consideration environmental risks. In contrast, the Trans-Eurasian project, no matter whether it goes through the Trans-Siberian railway line or through Kazakhstan, is a project that could change the life of the Russian regions. Take Ekaterinburg - Kazan - Nizhny Novgorod - Moscow - this is the heart of Russia. This project, in contrast to export pipelines, is able to give employment opportunities to local communities. It will not only raise their standard of living, but also will give a new meaning to life in the old
Russian regions. The multiplier effect of the project for Russia is huge.
Q: "Calculating the multiplicative impact always to some extent entails speculation. Considering what a huge multiplier effect could be gained from all Russian projects combined, one would wonder why Russian GDP is not growing."
A: "This is not speculation, but a product of science. And scientific pronouncement cannot be considered speculation. Scientific results can always be verified, unlike the multiplier effect. Nevertheless, GDP will certainly grow and this is the main thing."
"First we create an axis between China, Russia and Kazakhstan - maybe this will extend in future by Iran”
Q: "I agree. But let's put aside rhetorics and look at the project from the investor’s point of view. There is the project "The Silk Road", and then there is TEBD, and its route according to your vision is largely the same as the Chinese project; ideally they will complement each other. But investors will still have to choose, and they will choose those projects which are better "sold" to them and which are ready for investment first. Don’t you think that in both cases our project loses to the Chinese? Chinese Professor Li Xin, whom I also interviewed, says that by the end of this year, China will complete the "Silk Road" concept outline, and that is a decisive step towards its realization. I would like to be wrong, but, in my opinion, we are miles behind. Don't you think we should speed up a bit?"
A: 'I think we can look at it from a slightly different point of view. "The Silk Road" was not created by investors – not during the Middle Ages, and not even before that. And now neither is the "Silk Road" or the Trans-Eurasian Belt - it's not a conception of investors - it is a state project. "The Silk Road" does not exist at the moment. It needs to be created. The TEBD from the very beginning was positioned as a northern branch of the "Silk Road". The northern part of the Belt passes through Russia. The southern branch may go through India and Iran. Then there is the even more complicated problem - Iraq, Turkey, Europe. The same it was in antiquity and in the Middle Ages. There are several more borders to cross, several more military conflicts to negotiate, than going across Russian territory. The question of the "Silk Road" is still primarily one of a geopolitics, a question of agreement between the countries involved and creating the suitable geopolitical environment. That geopolitical situation is actually far more favorable, even taking into consideration all today's complications – if the track goes via the northern branch, ie via Russian territory. Creating a mighty corridor or Belt to the south of Russia - through Iran, Iraq, Turkey, is a task of several decades. There will be blood on these tracks, for sure, if it is ever to be built. A sane investor would never be involved in this project, unless he was an arms dealer or a mercenary..."
Q: "The Russian branch of the "Silk Road" is a priority objective. Convincing, but that too resembles the logic of "Gazprom", which has always argued that Europe can not escape dependence on its pipelines."
A: "And still cannot escape."
Q: "Of course, the tube is still there. And new tubes will doubtless appear in the future, but "Gazprom’s shares in the European gas market is fallings. Is something similar going to happen with the Russian bit of “The Silk Road"? In my opinion, the time factor is important. In this connection, let's go back to the theme of investors. Of course, the first investor should be the state. But how to attract other investors?"
A: "When I mentioned this government decision, it was not a reference to public investment. For an investor considering to invest in any project, State involvement is crucial. The first thing is a decision on the State level. Otherwise, any conversation about investment is pointless. First, we create the China, Russia, Kazakhstan axis, maybe extending eventually to Iran. Then, another key player in the Eurasian zone, as already mentioned is Turkey. Without this joint axis, any talk about infrastructure projects or the Belt of Development is pointless. Going back to your question, there are no private investors here, and for the foreseeable future, there will not be. Besides, most of them are covered by the current sanctions at the moment. Even Chinese investors appear to be at risk and take that into account. The Chinese are even balking at giving a short-term loan to Sberbank. So the problem is more or less global.Once again, first, you need a decision on the state level, then participation of sovereign wealth funds, state-owned banks, state-owned companies and then in turn private investors. The projects now in development: Moscow - Kazan, and further to Astana, are all based on money being sourced from China, from international sources, but in order to attract them, a first, serious step is required on the part of Russia. This step has not been taken yet..Everything comes down to the question of whether we are able to find a solution. I'm not just talking about the first step, but also about building some sort of consistent long-term policy. Therein lies the key problem, the bottleneck if you like - the bottleneck - ourselves and our inability to make strategic decisions and implement them. Let's take for example the Trans-Siberian Railway; at first it was a private project, but later the State assumed all its losses because the private investor had gone bankrupt, so the largest Russian Railway line was built on State money."
The revolution in management.
Q: "What are the prospects for the government's first steps? What do you think needs to be done to get the State to actually support this project?"
A: "Unlike China, here in Russia, what the State says, does and thinks, are three different things. We have several strategic documents: Strategy for development of transportation and infrastructure, and then the State program for the development of transportation and infrastructure. There are even documents on an purely ideological level, among them the concept for long-term social and economic development up to 2020. Development of high-speed rail is pointed out in each of these documents, including the route from Moscow to Kazan. Moreover, our President last year officially announced the launch of the project, and funding for it from the National Welfare Fund. Now, however, there is no money for this project in the budget. To be consistent, the government should either postpone the project, as well as talks about the Trans-Eurasian Belt of Development, or, in accordance with its own decisions, undertake some real action. Nevertheless, there is still hope. In November, both the President and Prime Minister are to have meetings with our Chinese partners and the issue of cooperation on the "Silk Road" project is supposedly on the agenda. Either the decision will be made, or the project will be postponed to the foreseeable future."
Q: "Once you mentioned the need for a "revolution in management". Does it mean the nessecity for real strategic decisions, and not just the bureaucratic ones?"
A: "A 'revolution in management' is not just a matter of strategy. All large companies, whether public or private, have one strategy or other . The question is whether these strategies are consistent with real life and the real actions of CEO's. Any crisis is not simply a shock - it exposes the disease and failures in the management of companies."
Q: "What has this project got to do with a "national idea"?
A: "It is part of a 'National Idea'. To be precise, this is a project that permits the implementation of a 'national idea', by which I understand the idea of the economic viability and sovereignty of Russia as a country that forms the Russian world, one which should be taken into serious consideration by everybody - Europe, America and China. We will be only respected if we can prove that we are able to implement such large-scale projects; then they will offer us money and technologies, as indeed they now offer to China. The Trans-Siberian Railway was built by Russia, by no one else, although a large part of the track goes through China. This iron road changed the way of life in Siberia and then Eastern China. The whole region immediately began to develop. We must pay more attention to projects like the TEBD in order to implement our Eurasian potential. To do that, we have already both economic and geopolitical opportunities. We can not afford to waste them."
