Putin unsatisfied with the Ministry of Far East Development

At a State Council meeting dedicated to the development of the Far East and Trans-Baikal regions, President Vladimir Putin reminded officials of what their predecessors had done to secure the eastern territory for Russia.

"In summer, they had to go by ship across the Indian Ocean; in winter, along the winter roads — it wasn't that long ago!" said Putin. He emphasized that the mission of today's generation is to ensure sustainable development for the Far East.

The government program for economic and social development in the region was due to be adopted by Jul. 1, but the document is still being drafted.

"Funds to develop the region are being diluted," said Putin, expressing dissatisfaction and setting the first quarter of 2013 as the new deadline for the program. "The region is rich in forest, clean water, and minerals. And people in the area of the Baikal-Amur Mainline (BAM) still live in temporary shelters, which cannot even be described as housing."

In recent years, the Kremlin has diverted some serious cash flows to the Far East.

"1.1 trillion rubles ($35.5 billion) were invested in 2010, which is unprecedented," said the minister of Far East development, Viktor Ishayev. The region’s Gross Regional Product (GRP) has even outstripped the national average. This is still not enough, according to Putin. The task of government is to advance other areas of industry and reduce dependency on raw materials in the region.

Referring to the "dilution of responsibility" and "gaps in work," the president even revived the idea of a state corporation to develop the Far East.

"We need some concrete proposals," said Putin. The president himself suggested preferential treatment for business: A zero-rate federal profit tax for the first 10 years for start-ups (industrial enterprises with an investment of at least 500 million rubles). Putin proposed a zero tax for regions, as well, but a one-off "tax stimulus for regional development is not enough," he admitted.

Meanwhile, Viktor Ishayev stated that he had no intention of vacating his post in connection with the president's stinging remarks. When asked by journalists whether he would go as a result of Putin's reproaches (as Minister of Regional Development Igor Govorun had), Ishayev replied that it was all "nonsense" and that his task was to take account of the president's recommendations.

"I think the president said everything right – criticism was in order. He gave us a mechanism to demand that the issues be resolved," said Ishayev.

Ishayev said that the economy of the Far East was losing around 300 billion rubles a year as a result of disorder and corruption.

"Hydrocarbon deposits don't get developed properly, licenses are not fulfilled, funds get creamed off, discrepancies arise in customs duties," said Ishayev at a meeting of the State Council.

Georgy Chizhov, deputy director of the Center for Political Technologies, doubts that Ishayev will lose his ministerial portfolio as Govorun did. Chizhov believes that the situation depends on Ishayev's personal qualities.

"When Oleg Govorun was subjected to similar this criticism, no one imagined that he would resign. Apparently, he insisted on leaving and could not be persuaded to stay," Chizhov told the newspaper Vzglyad.

Chizhov reiterated that Ishayev was a political heavyweight and a survivor.

 "He served as governor of Khabarovsk Territory for a long time. I think it will take more than one presidential rebuke to get rid of him,” he said. “Still, I see a different scenario unfolding. Viktor Ishayev will take note of the criticism and try to get things sorted out; although it has to be said that the job of developing the Far East is a pretty thankless task.”

“And it is by no means certain that he'll have something to boast about in a year's time, even if he gives it everything he's got,” Chizhov added.

Earlier this week, the St. Petersburg Policy Foundation presented a study entitled "The fates of former heads of Russia's regions." The foundation’s president, Mikhail Vinogradov, noted that, in the Khabarovsk region where gubernatorial elections are due to be held next year, there is talk of a possible return by Ishayev, who led the region from 1991 to 2009.

Chizhov estimates that a return to the governor's chair is only a theoretical possibility, saying that "analysts who make such predictions are stuck in the 1990s and early 2000s, when politicians decided for themselves whether or not to run for governor.” According to Chizhov, the current situation is different.

"Nowadays, politicians inside the system with Moscow's blessing are the ones who run for governors; those who try to stand on their own are doomed to failure. Viktor Ishayev will not go against the will of the central government, which is unlikely to solicit his return to a region where he spent so many years and from which he was promoted," said Chizhov.

The article is based on materials from RBC Daily, Forbes, and Vzglyad.

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