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The Vancouver Sun: Putin’s plan to host APEC coming apart at the seams

EXTRACT: A test of wills is going on between two huge Russian state-controlled operations, the GazProm energy company and the Rosneft oil company. At issue is whether the pipeline and gas should come from GazProm’s Sakhalin-2 project or from the Sakhalin-1 site in which Rosneft has a 20-per-cent share with principal owner ExxonMobil.

Jonathan Manthorpe, Vancouver Sun
Published: Monday, February 18, 2008

Russia’s president-in-waiting Dmitry Medvedev came close to losing his cool a few days ago as he listened to a seemingly endless catalogue of excuses for why preparations to host the Asia-Pacific Economic Co-operation forum in 2012 are behind schedule.

Russky Island, a 98-square-kilometre outcrop of evil reputation in the Sea of Japan several kilometers offshore from Russia’s Pacific port of Vladivostok, has been hand-picked by President Vladimir Putin as the site for the 25-nation APEC leaders summit.

Putin has a vision of turning the island, until recently a secret military facility, into a massive resort complex whose construction, together with the international attention of the APEC summit, will help spark investment in and development of the entire Russian Far East.

Moscow sees this as an urgent issue as neighbouring and booming China takes an ever-increasing interest in the region’s massive reserves of natural resources. Illegal Chinese immigration to the Russian Far East and cross-border smuggling are almost out of control.

So the Putin government has earmarked about $5 billion for investment in various infrastructure and construction projects focused on the APEC summit, but which will also bring long-term benefit to this neglected region.

But getting the various bureaucrats and state-owned companies involved to attack the agenda with the same sense of purpose felt by Putin has not been easy.

Thus it was that Medvedev, currently first deputy prime minister but sure to be elected president in two weeks time, was dispatched to the regional city of Khabarovsk to knock heads.

And there are plenty of heads that need knocking, from a Moscow point of view. The local daily newspaper commented that “it seemed at times that Medvedev was on the verge of losing his patience.”

Another newspaper report tells of Medvedev trying to get some explanation from a local bureaucrat and a representative of the state-owned pipeline construction company Transneft about the progress of a pipeline from the Baikal oil and gas producing region to Kazmino near Vladivostok. The line is only 46-per-cent complete when 67 per cent of the project should have been finished by this time.

Medvedev was not impressed when the officials mumbled on about the need for various appraisals.

“This project is crucial for the Far East,” Medvedev interjected. “All this talk about why and where and what’s happening to the paperwork is just pathetic.”

Medvedev’s patience was tested equally on the question of delays in reaching an agreement to build a natural gas pipeline to Vladivostok from production facilities on Sakhalin Island off Russia’s Pacific coast.

A test of wills is going on between two huge Russian state-controlled operations, the GazProm energy company and the Rosneft oil company.

At issue is whether the pipeline and gas should come from GazProm’s Sakhalin-2 project or from the Sakhalin-1 site in which Rosneft has a 20-per-cent share with principal owner ExxonMobil.

What is clear is that neither GazProm nor Rosneft are keen to shoulder the task of getting gas to Vladivostok, certain they will lose money on the deal. They have been taking every opportunity to delay making a joint-venture agreement.

Medvedev’s irritation was evident when he told them “get on with completing your negotiations. Agree a commercial solution — and build.”

And despite Putin’s declaration that he wants to see Russky island as the site of the 2012 APEC summit, it remains uncertain that this will be possible or, indeed, sensible.

Moscow has its own share of guilt in this. The island is still owned by the ministry of defence and arrangements have yet to be made to transfer title to Vladivostok so APEC construction projects can start.

And there are reports that people living on the island — it’s unclear exactly how many there are — are not at all happy about the APEC-associated development.

They say the island already has a serious litter problem because of visitors from Vladivostok. They expect this problem will increase once the planned bridge to the island is built and they fear being evicted to make way for APEC projects.

But the bridge appears to be a big concern. It is noticeable in local newspaper reports that both Putin and Medvedev have been unable to get straight answers from local officials about whether a bridge to Russky Island can be built in time or is feasible at all.

Reports have begun to de-emphasize the island and stress that it is Vladivostok that is hosting APEC, so it may be that the Russky islanders will be left in happy seclusion.

[email protected]

Read Jonathan Manthorpe’s blog at

http://communities.canada.com/vancouversun/blogs/dispatches/default. aspx

© The Vancouver Sun 2008

http://www.canada.com/vancouversun/news/business/story.html?id=6d00274b-5300-47af-a580-d83037a7214d

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