Russian Far Eastern Development Agency Comes Under Fire

By Sergei Blagov

It took the Kremlin little more than six months to realize that its earlier move to form a new regional development agency required some second thoughts.

On November 29, Russia’s President Vladimir Putin strongly criticized the Far Eastern development ministry, stating that its management system was not efficient. The ministry is yet to fulfill its goals; there were failures and a lack of responsibility in its operations, he said. Putin criticized the ministry’s officials for their inability to finalize the regional development blueprint that was supposed to be approved by July 1, 2012, and ordered that the draft be finalized in the first quarter of next year. In response to Putin's criticism, the Far Eastern Development Minister Viktor Ishayev argued that the ministry took over the regional development blueprint only on November 13, implying that officials were short of time to finalize the draft in the first quarter of 2013. Putin suggested reviving an earlier idea to create a state corporation tasked with developing Russia’s Far East and Siberia. Putin also told a meeting of the State Council at his Novo-Ogarevo residence outside Moscow that he was prepared to discuss other types of management solution aimed to expedite the development of the Far Eastern (The Presidential Press-Service, RG daily, November 29).

The creation of the Far Eastern development ministry came as an immediate by-product of Putin’s return to the Kremlin. On May 21, Russia’s freshly re-minted President Putin signed a decree to reform the cabinet. The reformed government included the Far Eastern development ministry that was due to coordinate the implementation of regional development programs and manage state-owned assets. The new federal ministry was specifically designed to oversee the country’s efforts to develop Far Eastern regions (Interfax, RIA-Novosti, May 21).

Ishayev, the presidential envoy to the Far East since 2009, was appointed to head the new ministry. In recent years, Ishayev has repeatedly advocated new measures to encourage economic development in the region. Putin’s suggestion to consider the creation of a special-purpose state corporation also hardly comes as a novelty. Last year and earlier this year, Russia’s government officials repeatedly advocated plans to create a state corporation tasked with developing the country’s Far East and Siberia.

In April 2012, first Deputy Prime Minister Igor Shuvalov argued the corporation could have been created as a subsidiary of the state-run Vnesheconombank (VEB). However, other state corporations have been subject to criticism for inefficient performance.

Therefore, the Kremlin appears to be running out of managerial options in the Far East: the federal agency already failed to fulfill its goals, while the efficiency of the proposed state corporation remains a matter of debate.