COMMENT: Russia’s pivot to Asia is not going to work

By bne IntelliNews September 10, 2014

Mark Adomanis in Washington -


The ongoing fiasco in Ukraine, for which there is more than enough blame to go around, and the escalating standoff with the EU and Nato have convinced quite a lot of people in the Russian government and in Russian society as a whole that the country’s future lies in Asia.

At a time when the US and Europe are introducing ever more serious sanctions against Russia and its largest companies such as Sberbank and Rosneft, the contrast with the enormous $400bn natural gas contract recently signed with China could not be more stark. Many think that Russia should respond to the West’s attempt to isolate it by focusing ever more closely on building relations with China, India, Vietnam and other high-growth countries in the Pacific Rim. It is a straightforward line of thought: “The Europeans and the Americans have proven they don’t want to do business with us, and Asia is growing much more quickly anyway. Let’s re-orient the economy towards the east.” It’s a Russian version of the“pivot to Asia” being pursued by the Obama administration. 

There’s a big problem with this idea, though, that can be distilled down to a single word: demography. It is hardly a secret but Russia is a European country in the sense that most Russians live in Europe. The country’s historical roots lie in Europe, and the population has been concentrated far to the west of the Urals for its entire history as a state. What is less well known, though, is that, demographically, Russia has become a substantially more European country over the past 20 years. 

During the 1990s Russia experienced a simultaneous collapse in fertility and explosion in mortality, a “Russian cross” which drove the country into a terrifyingly rapid natural population decline. This decline, however, was not evenly distributed: it was felt much more acutely in the Far East and Eastern Siberia than it ever was in Moscow, St Petersburg, Krasnodar or Rostov on the Don. 

From 1991-2013, Russia's total population shrank by roughly 3.5%, from 148.2m to 143.3m. A few regions (such as the Central okrug and the North Caucasus) actually grew over this timeframe. Meanwhile, the population of the Far Eastern Federal okrug has cumulatively declined by more than 23%, and the Siberian okrug suffered a 9% decline. Depopulation was thus substantially more intense in the east than it was in other, European, parts of Russia. 

And while Russia's population has started to grow over the past few years, as the economy has stabilised and basic living standards have boomed, the Far East's population has continued its relentless downward march. The Far East was the only federal okrug to lose population from 2012-2013. Given the favourable structural dynamics currently influencing Russia’s population (those born in the mini baby boom of the 1980s are now entering their prime reproductive years) if the Far East cannot grow now, it will never be able to grow. 

Interestingly, the Far East’s natural demography is better than other traditionally Russian regions: people, on average, live a little bit longer and have more children. Over the past several years, then, almost all of the region’s loss in population can be traced not to an excess of births over deaths, but to internal migration. The data shows that, when given the choice, Russians clearly prefer to live in the big cities of European Russia than in the far smaller and more isolated settlements of the east. This movement has been relentless and long-lasting. And who can blame them? If given a choice between Komsomolsk-on-Amur and the far more temperate climate of Krasnodar, how many people would opt for the terrifying cold of a winter where temperatures hit an average low of -27° Celsius? The movement of people out of Eastern Siberia doesn’t reflect any defect in government planning but the simple reality that the area’s climate is one of the least hospitable on earth. It’s not even a purely Russian problem. The Chinese regions bordering Russia are not yet shrinking, though they are likely to start in the next three to four years, but they are growing far, far more slowly than the Chinese average.  

Does this mean that Russia cannot trade with China, that it cannot sell weapons to Vietnam and India, that it cannot work out some sort of free trade agreement with Indonesia, that it cannot create partnerships with leading Korean manufacturers? Of course not. Russia should trade to the greatest extent possible with every economy in Asia. Russia should trade to the greatest extent possible with everyone. But while it might be able to marginally increase its trade turnovers with leading Asean economies, there is no getting around the fact that Russians live in Europe and have shown no desire to inhabit the parts of Russia that lie most fully in Asia. 


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