The authorities are looking for mechanisms for the development of Siberia and the Far East. The idea of the Ministry of Economic Development to create a state corporation with a wide range of powers has not yet met with support from other departments and businesses operating in the region. Everyone fears that the next monster of state capitalism will become a source of corruption and a mechanism for seizing assets from private structures.

Alexander Gabuev, Vladimir Solovyov

Speaking to State Duma deputies during his confirmation as prime minister, Dmitry Medvedev said that the development of Siberia and the Far East would become one of the main priorities for his government. Since March, without waiting for the cabinet to be formed, on the instructions of Vladimir Putin, work has been underway on the draft federal law “On the development of Siberia and the Far East.” “We have talked before about the need to develop the region, but so far the measures have been limited to programmatic leapfrogs and the injection of budget money without much return,” says a Vlast source in the government. “In 2002, we adopted a strategy for the development of Siberia, in 2009 we approved a strategy for the Far East. East, in July 2010, Putin signed a new Siberian strategy until 2020, but there’s no point.”

According to the official, the main problem is the lack of clear priorities: “The latest version of the Siberian development strategy names “IT, nanoindustry and biotechnology” as the first priority. And infrastructure construction is mentioned in eighth place!” Meanwhile, most companies operating in the region agree that the main problem is infrastructure. “The entire periodic table is buried in Siberia, but we cannot start mining: there are no railways, it is impossible to bring equipment and labor, to transport ore to the ports,” a co-owner of a large industrial group complains to Vlast. Due to the state of the infrastructure on the way to the port, the cost of ore almost doubles, which is why Russia is losing competition in the Asian markets of Australia, Canada and the countries of Central Asia. As a result, deposits are not developed, processing plants are not built, and people flee.

To solve these problems, the authorities intend to create a separate structure. A bill prepared by the Ministry of Economic Development in April provides for the creation of a state corporation for these purposes, the leadership of which will be directly subordinate only to the President of the Russian Federation. It will receive the right to use subsoil and forest resources “without the competitive procedures provided for by current legislation,” the rules of urban planning and land relations will be simplified for it, the tax burden will be eased by analogy with Skolkovo (zero tax rate on profits, on the property of organizations and on land, preferential rate of social contributions and the opportunity not to pay VAT). Citizens of the Russian Federation participating in the projects will be paid for travel to their place of work, given a relocation allowance, compensation for renting housing for up to a year, foreigners with the necessary specialties will receive preferential procedures for registering work, living and obtaining citizenship.

According to the Ministry of Economic Development, within ten years the company will receive income from managing the funds of the national welfare fund (about $22 billion), as well as state shares in Russian Railways, ALROSA, Inter RAO and a number of other companies amounting to more than 500 billion rubles. Officials interviewed by Vlast called the state corporation a new edition of the Far Eastern Republic, since this manual control regime should operate on 60% of Russia's territory for 25 years.

Sergei Shoigu is considered the author of the idea of the state corporation: it was he who first presented it publicly in January at a meeting with Vladimir Putin, and then wrote him a letter with detailed proposals. Shoigu happily discussed how exactly Eastern Siberia and the Far East should be developed, even when his name appeared on the list of candidates for the post of governor of the Moscow region. At the same time, he was sincerely offended by publications that stated his refusal to lead the project. “How can we talk about refusing to lead something that hasn’t even been created yet?” he was indignant in a conversation with Vlast. “When we figure out where to get resources for the project, then we can talk about who will lead this whole story.”

A few days after this conversation, it became clear that the head of the Ministry of Emergency Situations was destined for another front of work - the Moscow region. But even after this, he did not lose interest in the Siberian topic. In an interview with the Kommersant newspaper, published on April 23, Shoigu spoke more about the development of Siberia than about plans for the inevitable governorship. During the interview, he willingly showed off the Atlas of Asian Russia, published in 1914 by the Resettlement Directorate of the Main Directorate of Land Management and Agriculture. It contained statistical calculations on the development of Siberia and the Far East with tables illustrating the growth in the number of immigrants, the issuance of loans to them, schedules for the supply of raw materials and a detailed indication of mineral deposits. Sergei Shoigu’s mood deteriorated as soon as the conversation turned to affairs near Moscow and the problems that he now had to solve. One got the impression that the former head of the Ministry of Emergency Situations was removed from the management of Siberia not of his own free will.

Vlast's interlocutors close to Shoigu claim that he plans to participate in the creation of a state corporation in his new capacity. True, it is not yet very clear how he will combine this activity with the governorship.

Vlast's government sources name another possible co-author of the idea of a state corporation - Oleg Deripaska. According to officials, many proposals were developed within the Deripaska-owned En+ group (which has projects worth $5 billion in the region), which formed the basis of the bill on the state corporation. Deripaska presented his main theses in September 2011 in a speech at the Baikal Economic Forum (BEF). “We at En+ carried out analytical work, prepared our proposals to stimulate the development of Siberia and the Far East,” Managing Director of En+ Alexander Sergeev told Vlast. According to him, the company’s proposals were included in the recommendations of the analytical report “Development Scenarios for Eastern Siberia and the Far East”, prepared for the BEF by a team of scientists led by Academician Andrei Kokoshin. True, Sergeev notes that “in addition to En+, other structures also provided their proposals, including Metalloinvest, Polyus Gold and Sberbank.”

However, after the project of the Ministry of Economic Development became public due to publication in the Kommersant newspaper, the idea of a state corporation came under powerful attack from both other departments and private structures. Former Finance Minister Alexei Kudrin called the project a threat to the investment climate in Siberia and the Far East, and his position was publicly supported by the Ministry of Finance. According to Vlast's sources, some large businessmen also brought their negative remarks to the attention of officials. “The new structure will create scope for corruption, but that’s not so bad. It will begin to develop according to the logic of a state corporation like Russian Technologies: first it will consolidate state shares in assets, and then it will begin to squeeze out private owners. And then you can forget about some kind of investment efficiency,”— says the co-owner of a large logistics company.

As a result, Vlast’s high-ranking source in the Kremlin assures, the sensational bill will be subject to significant editorial changes - the powers of the mega-corporation will have to be seriously reduced. Putin's representative Dmitry Peskov told Vlast that the issue of the mechanism for the development of Siberia and the Far East will be resolved after the formation of the government, and it is not a fact that a state corporation will be created at all. According to officials, a meeting on priority projects will be held on May 29 in Khabarovsk at the presidential envoy to the Far East Viktor Ishaev, and the final discussion will take place in Siberia in June. So far, an option is being actively discussed in which the functions of the state corporation will be transferred to the Development Fund of the Far East and the Baikal Region, created in November by VEB, which can finance up to 20% of the cost of the investment project (the total resource limit is 70 billion rubles until 2015). “VEB has all the functionality for developing projects in the region. It is completely unclear why create another expensive bureaucratic superstructure,” says an official participating in the discussion.

But business is asking that some norms from the Ministry of Economic Development’s bill be preserved. “It would be good if the final version of the law included some key provisions: a special tax regime for a certain class of projects, incentives to attract qualified labor to the region. Projects for the production of higher value-added products should receive greater preferences,” says Alexander Sergeev . According to him, it is also necessary for the state to co-finance infrastructure projects in the amount of “1 ruble of budget money for 1 ruble of private money,” as well as the provision of long-term money and the creation of conditions for their emergence: long-term tariffs and stable pricing formulas.

The new structure should also have project coordination functions, a senior government official believes. The current development programs for Siberia and the Far East are made up of proposals from governors, which are poorly linked to each other and do not go beyond the region. This was precisely the main complaint, for example, about the program of regional cooperation between Russia and China, recalls Deputy Foreign Minister of the Russian Federation Igor Morgulov, who oversees relations with Asia.

Operation "State Corporation"