N o V a s c I e n c e p u b L i s h e r s, I n c

part of the indigenous population There are also some businessmen
coming from South Korea. In August 1992, the Hyundai» Company
deputed 100 specialists to begin joint prospecting and mining tin with
the «Dalgeologia» amalgamation. The South Korean company will invest
$1 billion, expecting this venture to pay back in some 9 10 years Experts
expect that by 1993 the world price of tin will nse from todays (August
1992) $6.6 thousand to $8.3 thousand per tonne.
A great deal changed in the Far East in 1992 with the lift of restric
tions for entry of foreigners. Vladivostok has now become one of three
Russian cities (the other two being Yekatennburg and Novosibirsk) where
France has opened her Trade Representation In Vladivostok there is a US
Consulate, an Australian trade mission, a South Korean Trade Promotion
Corporation. Vladivostok may be the first city in Russia where traffic of
the left side of the road should be introduced:  streets are filled with so
many used cars imported from Japan, that our «LADA» look totally out of
place. And the people are clad from head to foot in clothes made in China.
After the division of the property of the former USSR the most up to
date ships remained in the Baltic and the Black Seas .The principal
shipbuilding yards and specialized ports are there too. Now, 200 years
after the Emperor Peter the Great, we shall have to cut a northern win
dow  not to Europe, but, in the first place, to countries of Asia and the
Pacific area.
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George Vachnadze

It is quite possible that we shall have to set up another free econom
ic zone Primorski region littoral with civilian ports Vanino and
Sovetskaya Gavan and with Postovaya and Zapadnaya bays which are
now being handed over by naval units stationed there to the civilian
authorities. There is enough load to be rolled to Europe by the Amur
Baikal Railway, and our clients from Europe and Asia wish to ship their
stuff in containers from Primorye, and the infrastructure of ports is not
bad, and foreign investors are swarming up with ready money. But
everything is at a standstill.
Russian authorities cannot as yet provide legal guarantees for pro
tecting foreign investments, whereas they eagerly take from our own
entrepreneurs and state organizations the greater part of the foreign
exchange they earn.
The balance of forces between the Kremlin centre and the Russian
province is being tipped in favour of the latter. And the Far East can
scarcely be described as a province. The great majority of economic ties
and promising interests of the. Far Eastern region and Siberia are with
in the Pacific area. With opening our borders to foreign contracts, many
previous connections (when, e.g. fresh tomatoes and preserved vegeta
bles were shipped to Vladivostok from Bulgaria) with Europe became
unprofitable, because they had been maintained by Moscow artificially.
In 1992 Far Eastern economic cooperation association was formed
to cover a lot of other territories, such as Buryatia, Yakutia, the
Kamchatka and Sakhalin regions, the Jewish Autonomous Region and
the Chukotka autonomous district. It may well be that Kazakhstan and
other Central Asian republics will join in Under such pressure the
Centre will have to give in and concede to anything. The notion of a sep
arate Russian Far Eastern state is no chimera.
In the 1920s there was a republic with such a name In 1992 four
areas Khabarovsk, Vladivostok, the Kamchatka peninsula and the
Island of Sakhalin claim the name The latter is on the very outskirts of
Russia, and yet the press devotes more attention to it than to any other
province of the federation.
Following St Petersburg, Sakhalin in spnng 1992 and with the help
of Americans obtained an autonomous space telephone station which
now connects the island with the rest of the world, and it is at the time
when practically every trunk call from Russia with any foreign country
(except those making up the Commonwealth of Independent States) has
to be channelled through Moscow.
The 15 of March 1993 is the deadline for opening in Yuzhno
Sakhalinsk (the island’s centre) the first m Siberia and the Far East an
international 4 star hotel to accommodate 200 guests. The deal with the
Japanese company (that is building the hotel) has already brought
Sakhalin’ s mayor s office $20 million for the land sold to build the hotel on.
Surprisingly, the biggest and most modern building in Yuzhno
Sakhalinsk houses, since 1992, not the local authorities but represen
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Russia’s Hotbeds of Tension

tative offices of indigenous and foreign entrepreneurial structures All
the companies have the computer communication with their counter
parts in Moscow (the Centre of International Trade) and m the rest of the
world.
Sakhalin has embarked upon the path to free market And at the
same time its authorities threaten to secede from Moscow, should the
Kremlin decide to give over to Japan the Southern Kuril Islands, stretch
ing from the Japanese island of Hokkaido to the huge Kamchatka penin
sula.
Artyom Tarasov, Russian MP stated in early 1991 that the USSR
President M Gorbachev had agreed to hand over to Japan four disputed
islands for $200 billion Gorbachev was appalled and the procurator
general (Attorney general) of the USSR demanded that the MP be sued
for insulting the honour and dignity of the President.
However, 1992 already witnessed senous discussions in Moscow of
compromises in the dispute with Japan about the islands vis a vis $2.5
billion credit that Tokyo would grant Russia.
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George Vachnadze

A ridiculous drop from 200 billion to 2 5 billion dollars!? Returning
the islands annexed by force to their onginal and legitimate owner is to
make a compromise with the demands of morality and justice: it is nit
fortuitous that the Japanese were so insistent in their claims for their
«Northern Temtones».
Kurils, Shakhalin and Kamchatka Are Invaluable. For Russia the
loss of four southern Kuril Islands would, economically, mean a reduc
tion of fish catch by one third all over the Far East. Together with Iturup
and the Habomais Japan may acquire a 200 mile zone in the sea of
Okhotsk and the Pacific Ocean.
The South Kunl fishing area annually yields 1.5 million tonnes of
walleye (Alaska) pollack, iwashi sardines, all varieties of salmon, crab,
mackarel, scomber, Pacific skipper, shnmp and laminaria (cf all the
Baltic states catch 350 tonnes). All this wealth is worth not less than $2
million annually The Kunl Islands give Russia half the amount of lami
naria it uses as a raw matenal for obtaining drugs for the radiation dis
ease. The biological and mineral reserves of the islands proper are esti
mated to cost $44 billion Properly developed, the South Kunl Islands
can bnng trillions of dollars income. The islands are on the migration
route of salmon and other kinds of fish and the loss of the islands will
mean uncountable and irreparable losses to affect the entire Far
Eastern area.
The South Kunl shelf situated on the faults of earth crust whence
streams of gases and various salts surface up to mix with coastal waters,
thus activating the productivity of microorganisms. This accounts for
the fact that though millions of tonnes of fish are caught here, yet the
amount of it is not depleted. Before long tidal power plants will be built
in the straits between the Kunl Islands Besides in the southernmost
part of the Southern Kurils navigation is feasible all the year round,
since one of the straits never freezes This is extremely important for
Russia because if she loses the islands she will have to pay hard curren
cy for the passage of the ships through these straits.
The handing over to Japan her so called «Northern Territories» may
become a bargain of the century in the field of real estate. But these
beautiful, though remote, islands in the Northwestern part of the Pacific
Ocean cannot fetch a good enough pnce, and, therefore cannot be sold
because nobody can pay us the actual price. These islands have gold,
silver and other noble metals and plenty of volcanoes (19 on the island of
Iturup alone), hot geysers and sandy beaches «We just can’t give away
this wealth», said Russia’s president Yeltsin after visiting the islands. On
the whole Yeltsin is believed to be inclined to pass on this cumbersome
problem to be decided by the next generation of Russia’s leaders.
Another leader that we had Mr.. Nikita Khrushchev, back in 1956
was apparently prepared to return to the Japanese the coveted temtones
by saying: «These islands were forsaken and were used only by fisher
men and by our armed forces».
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Russia’s Hotbeds of Tension

The Southern Kuril Islands used to be Russian until 1855, when
they went over to Japan, and after World War II, according to the Yalta
arid Potsdam agreements, Japanese lost them to Russia again. There
are grounds for endless arguments in this case, but there is the princi
ple of inviolability of borders which is equally important for the whole
world. We may deeply mourn the facts that the Emperor Nicholas I has
sold Alaska to the USA and Khrushchev has made a present of the
Crimea to the Ukraine, but that is all we can possibly permit ourselves to
do. if Japanese are so fervently insistent and cannot help it, we may
lease these islands and even other territories to them for a long period of
time without officially altering the state borders of Russia.
If this were done, the life of the population (47000) who now have to
live in delapidated wooden barracks and stone houses would magically
change. The islands have no aborigines: the local aina and 17000
Japanese were deported to Japan by Soviet military command bark in
1948. Under Gorbachev, Japan was several times offered a compromise:
turning four South Kuril islands into an international wildlife preserve
with a national park and recreation area attached to it. Larger and, all
the more so, smaller islands and islets, uninhabited today are the mat
ing places for seals and the most valuable fur bearing sea otters. They
also house large and clamorous colonies of birds.
The Japanese used to possess Southern Kurils close to 100 years
and Southern Sakhalin 40 years. They wired electricity all over the town
of Yuzhno Kurilsk and all the other townships and settlements on the
island of Kunashir, and maintained in an excellent shape its ramified
network of dirt roads, airstrips, the railroad, the wharves and piers, the
collieries with coal washeries, the logging areas and fish canneries.
During perestroika, i.e. at the end of the 1980s even frozen fish
could be obtained in Sakhalin shops only for special food coupons. Even
now the huge island has not a single fish market. During the entire peri
od of Soviet power only fish canneries have been built on the island,
while the private entrepreneurs using their savings and credits have
built 30 such only in 1991. Now Sakhalin has 200 private shops. Non
professional fishing and sale of the fish to the population by profession
al fishermen were prohibited until 1992. Practically all the food is
imported here from the mainland.
The Governor of the Sakhalin oblast, Valentin Fyodorov, a former
professor of economics in Moscow, having lost all hopes to build capital
ism in a separate area, suggests setting up a joint Russian Japanese
«special economic zone» involving the Southern Kuril Islands, the Island
of Sakhalin and a portion of a Japanese island of Hokkaido without,
however, altering the state borders. And as the first step he suggests
establishing free entry into either country in that area without a visa.
However, both in Russia and Japan these appeals fall on deaf ears.
Prof. V.Fyodorov compares the potentials of Sakhalin with those of
Taiwan with regards to the prospects of developing the beautiful shelf of
70
George Vachnadze

the Pacific shores of Sakhalin. The reserves of oil and gas only at Piltun
Astokh and Lunsk are about 100 million tonnes and 400 billion cubic
metres, respectively, and these two fields account only for one tenth of
the shelf territory. The federal government of the new Russia is ctically
powerless to radically help the 700000 population of Sakhalin in their
struggle to survive.
In early 1992 in Moscow winners emerged in an international com
petition among companies who desired to develop the Sakhalin Shelff
with an area of 17000 sq.km. The indisputable winners were the
«Mitshui» Company with their money and the «Marathon» and
«McDermott» companies of the USA with their oil extracting technology.
International bargaining concerning the running of the Sakhalin shelf
has been under way for two decades at least and is still in the works. The
most salient point of controversy is that some influential parties in
Sakhalin would like to keep all the income from developing the shelf and
channel it to meet the needs of the island, while Russia insists on retain
ing her own control over all the mineral reserves all over the Federation.
Especially so in view of the fact that the Khabarovsk area and the whole
of the Primorye area are virtually suffocating in the grip of the fuel and
the power supply crisis: in winter houses are not heated.
The spring of 1992 was the time when demilitarization began on
Sakhalin and the Southern Kuril Islands. Only from the latter a
machine gun artillery division is to be relocated together with a fighter
aircraft regiment numbering 28 MIG 23.
The top secret Kamchatka peninsula has ceased being a closed fron
tier area. Here the military have three aerodromes, a flotilla of atomic
powered submarines, a huge testing ground where blank metal warheads
fell during training launches of ICBMs. The peninsula’s population is
under half a million. It has promising gold deposits, a lot of game and pre
cious salmon, active volcanoes and warm springs, unique geysers, relict
ferns and other exotic plants. In Magadan, beyond the Sea of Okhotsk
gold reserves have already been depleted and in the years to come they
will be completely exhausted. And that’s when the Kamchatka gold will
be tapped. If they use the open cast method, and rip the ground with
excavators it will be a death sentence to all varieties of salmon keta or
chum salmon, soho silver salmon, sock eyed salmon and king or chinook
salmon who come upstream to spawn in brooks near gold deposits.
Mother nature is extremely vulnerable in the Far North. An aban
doned path or car tracks get overgrown with grass only in 15 20 years.
The air in Kamchatka is so clean that from the top of the volcano one can
see the landscape 200 km away. The primeval nature of Kamchatka is of
a much greater value than the momentary profits from gold drenched
out from the earth so barbarically. Quite a stream of American and
Japanese tourists who first appeared here in 1991 provides ample proof
that reasonable civilized tourism and disciplined tourism can bring
more income than gold mines.
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Russia’s Hotbeds of Tension

The USA, Japan and Russia share one ocean, same varieties of fish
their indigenous populations are alike  Aleutians, Itelmen, Indians. And
severe living conditions in the far north are similar, too. It is only in such
megapolises as Seatle, Tokyo, Moscow spring time means thawing snow
and clean asphalt covering the streets. In Petropavlovsk. Kamchatskiy
spring snow storms destroy houses. And in summer there are the tsuna
mi
Japan occupies the first place as an exporter to Kamchatka, while
the USA exports ten times less Quite current now is the idea of reviving
the old Russian American company, which in tsarist time was a decisive
force in the vast region from Anchorage to the Hawaii.
Currently containers for shipping personal belongings and furni
ture are an item of the shortest supply in Kamchatka and Sakhalin
People are fleeing these places making for the European part of Russia,
though they do have a vivid example of how things can be set straight
there is a joint venture which has been supplying Petropavlovsk
Kamchatskiy with lavish amounts of food and other stuff The above city
has a Soviet Dutch «Holkam» supermarket where goods are sold for rou
bles and twice as cheap as one can buy them in private shops in Moscow.
And it should be remembered that in Kamchatka people get almost dou
ble pay as they will in the north.
Grand Robbery. The chanty actions of the Holkam store are easily
explained this joint venture gets the bulk of profits from the sale of fish
and sea foods to Japan at dumping pnces Likewise, hundreds of fishing
vessels of Russia, instead of delivering the catch to the home shores, go
directly to Japanese ports or sell fish to foreign vessels in the sea.
The Russian government has lost interest in the Maritime Territory
and the army It has become profitable for the frontier guards to say that
they have no fuel for their ships, which have allegedly low power
engines. Poachers, both Russian and Japanese, have become the mas
ters of the sea. They violate Russian state borders, the terms and fishing
technologies, and intrude into preserve areas.
The revenues of Russia from fishing exports plummeted after pnces
of our fish sold abroad fell. According to official data, the catch itself
diminished too But as the newspaper Rossia  (Aug.26, 1992) wrote, the
sales of fish abroad run into one billion dollars.
This is depnving the state of even the theoretical possibility to retool
the fishing fleet and fish processing enterpnses. In 1989 hundreds of
thousands of tons of luxury fish were buned in Sakhalin because they
could not be processed In the next one or two years we will scrap more
than a half of fishing and nearly all processing vessels in the Far East
which is great pity because the processing vessels of Dalmoreprodukt
company produce the world s best crab preserves. There is a way out to
build oyster and fish growing farms in ecologically safe regions Money
has already been allocated for the creation of mussel farms in Krasnodar
Territory and on the shores of the White Sea.
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George Vachnadze

Russia is dropping out of the club of sea powers. Under an agreement
wit the USA, which has not yet been ratified by Russia the USA will get an
area of over 16,000 square kilometres in the centre of the Benng Sea
where our fishermen used to catch up to 150,000 tons offish annually.
The situation in the Okhotsk Sea 97% of which is a part of Russia s
200 mile economic zone, has long been dramatic for us Only 3% of the
sea are open for foreign fishermen, which officially catch up to 200,000
tons of fish there, but the fish inspection bodies of the Russian Far East
believe that the actual figure is several times larger.
Formally, Russia and Japan have not signed a peace treaty, although
the Second World War ended 47 years ago. Japan will hardly return to
Russia the 22 crates with gold coins from the treasury of the last Russian
tzar, Nicholas II, which the White Army gave to Japan for safe keeping at
the Manchuria station in November 1920. Together with interest, the
crates now cost about 700 800 million dollars in current prices. Trying to
save the Russian State Treasury from the Bolsheviks, the White Guards
transported thousands of standard crates with gold from Petrograd (St.
Petersburg] to Kazan, then further on to Samara, Chelyabinsk and the
Far East. The gold was used to buy weapons and to maintain the army of
Admiral Kolchak during the Civil War Regrettably, the bulk of Russia s
gold fund (up to 10,000 tons of gold) were stolen from the Russian people
in the first decade of this century and in the late 1980s.
We can provide quite a few arguments from Russia s recent past to
prove that Russians have a right to the Japanese island of Hokkaido and
the US Hawaii But in practice it s the other way round Japan and China
openly state that the Russian presence in Siberia and Maritime Territory
is colonialist and imperialist Many Tokyo experts on Russia forecast that
a new state, Eastern Russia, will appear before the end of this century. It
will follow the lead of Japan and, like China and Korea, become a part of
the economic zone of the Sea of Japan.
So far it is obvious that the Sakhalin authorities are more resolute
than the Moscow ones in trying to keep the Kunle islands. The same con
cerns the operation of South Korean fellers in Mantime Territory The few
local residents, Udegei hunters and Cossacks, are accusing the South
Korean Hyundai of felling trees, including the valuable firs and cedars,
indiscriminately. The Koreans leave behind them a lifeless desert, from
which animals flee and where nvers die. But the contract was signed
with Hyundai for 30 years, under which the Koreans will Produce one
million cubic metres a year.
The international ecological organisation Greenpeace more than
once accused Hyundai of indiscriminate tree felling in other countries.
Now Hyundai is vivisecting the 300,000 hectares of unique Ussun taiga,
with tigers, ginseng, very expensive kinds of fish, etc. The Russian
Ministry of Ecology and Natural resources and the Maritime Territory
Soviet recommended creating a preserve in the region under control of
the Udegei. In October 1992 it was announced that the Supreme Court
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Russia’s Hotbeds of Tension

of Russia would hear the complaint of the territorial Soviet of People’s
Deputies and the Maritime administration on the illegal nature of felling
by the joint venture Svetlaya and the South Korean Hyundai in the upper
reachers of river Bikin. Greenpeace supported the demand for reviewing
the terms of the contract with the South Korean concern.
In general, the nch South Korea feels at home in the Russian Far
East and intends to compete with Japan and the USA for the nght to pro
duce oil and gas on the Sakhalin shelf There are over 40,000 Korean cit
izens of Russia living in Sakhalin, which is a point to remember.
Russia ceded 4,000 islets on the Amur to China. The Sino Soviet
agreement to this affect was ratified by the Russian Parliament in 1992.
It is possible that in the near future China will move the state border
tends of kilometres inside the Russian territory by reviewing in its favour
the peculiarities of the flow of the border nvers Amur and Ussun.
The helplessness of the Russian authorities became flagrant in the
case of Vietnamese hired workers, which we had the imprudence to invite
to this country. The Vietnamese government appropnated their salaries
leaving them only a few crumbs for survival. The hungry and dissatisfied
Vietnamese turned into a criminal mob, bribing Russian customs officers
and economic managers into letting them export large batches of pre
cious metals and goods to Vietnam. The Russian authorities lose hun
dreds of millions of dollars annually, while the smart Vietnamese are
playing on the great difference between the Russian and world pnces.
The problem is complicated by the fact that the Vietnamese remem
ber only too well who helped their country to build socialism and later
incited the war with the USA. I can imagine how Koreans thank us for
exporting socialism to their country and dividing it into two states as
well as for downing the ill fated passenger liner in 1983. The Japanese
used to fight with Russia bitterly, and were the masters of the Russian
Far East until 1945.
This inheritance is the high wall of misunderstanding that divides
business partners in the Far East. Besides, Moscow is to blame for many
blunders. Here are some of them.
The residents of Maritime Territory are dissatisfied that the military
authorities don t want to raise 80 tons of yperite, buned in ordinary steel
barrels 200 kilometres off Vladivostok in July 1941.
In May 1992 all munitions depots of the Navy situated on the out
skirts of Vladivostok burned for several days, as a result of which nearly
a half of the city residents had to be evacuated.
Or take the idea of wizards from the Moscow Kurchatov Institute of
Nuclear Energy, who advised President Yeltsin to build a nuclear power sta
tion on the Kunles. They think nothing about our incomparably low tech
nical standards in this sphere and the threat of local quakes and typhoons.
The Moscow authorities had the danng to proclaim invalid the
results of the international competition for the nght to operate on the
Sakhalin shelf, won by the Japanese and Americans, and to announce a
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George Vachnadze

new winner, the MMM consortium in October 1992. The consortium has
commissioned the construction of the necessary technology at Russian
defence plants, which means that all mountain overs and the shores of
the Okhotsk sea will be polluted with oil and gas condensate. inhere are
300 kinds of fish there, a third of them endemic, which means hat they
can live only there and nowhere else.
The life span in the Far East is four  five years shorter than the aver
age for Russia. For decades the USSR ministries did what they wanted
there. As a result, Amur, which used to have the world s richest fish
reserves and which provided food and water to a vast region, was pollut
ed by industrial wastes and cannot be used for drinking even after
purification. The mining and dressing combine, the pulp and paper mill
and the bio chemical factory, the steel mill and dozens of other ecologi
cally hostile enterprises are discharging their poisonous wastes into the
river.
It is strange, but Jews, isolated there by Stalin, continue to live in
that outlying region ill suited for normal life Only after the USSR col
lapsed were Hebrew and Yiddish allowed to be taught in the schools of
the Jewish Autonomous Region, bordenng on China.
Only those who have something to sell can live in the Russian Far
East. The personnel of the aircraft making factory in Komsomolsk on
the Amur survive by producing for China the Su 27 fighters, which were
put on active duty in the Soviet Army only in 1986.
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Russia’s Hotbeds of Tension