March 9, 2023 Special Dispatch No. 10517

Russian Oligarch Deripaska: Free Enterprise Must Be Unshackled To Develop Siberia Because State Intervention Is A Proven Failure, And Government Money Will Not Be Available

March 9, 2023
Russia | Special Dispatch No. 10517

At the Krasnoyarsk Economic Forum that convened on March 1-3, the speakers were united in their belief that Siberia's vast potential is not being exploited, leading to a population outflow, and even threatening Russia's hold on the area. For some, the problem is in the extensive bureaucratic deliberations that unreasonably stretch out implementation of projects. For Oleg Deripaska, a billionaire who made his fortune in aluminum and energy production sectors, the solution is to rely on free enterprise to develop the region. State intervention has wasted trillions of rubles, but more importantly, there would be no government funds available next year (likely due to military spending on the war in Ukraine that went unmentioned). Siberia has to attract private foreign investors and these, in turn, want assurances that they would enjoy an equal playing field. According to the billionaire, reducing the number of state bureaucrats by 50 percent or more is desirable.

MEMRI presents Nezavisimaya Gazeta's account of the forum's proceedings, including Deripaska's comments, below:[1]

Oleg Deripaska at the forum (Source:

"For many centuries Russian power has been expanding by virtue of Siberia, but this region's potential, according to popular opinion, is still not used effectively.  Recently, this problem came into the spotlight again. After all, Russia's proverbial 'pivot to the East' is, in fact, a pivot to its eastern regions, including Siberia.

"The organizers of the Krasnoyarsk Economic Forum somewhat provocatively prefaced the discussion of this topic by quoting Pyotr Stolypin [Prime Minister of Czar Nicholas II] – 'If we sleep in lethargic slumber, a foreigner will seep into here, the region will be saturated with foreign juices and when we wake up, it may be Russian in name only.' Such fears were not shared by the panelists. However, as Oleg Deripaska, founder of the 'Volnoe Delo' Foundation, and the 'En+' and 'RUSAL' enterprises, noted, the situation is complicated and unpredictable.

'We thought we were a European country, but in the next 25 years we will be recalling the Asian part of our past,' he confidently declared. The challenge for the economy is to 'break' into new markets in Asia itself. That is extremely difficult. Sanctions will cause problems with payments, and, provided Russian business is not protected by WTO norms, we will have to switch to bilateral trade agreements, the entrepreneur warned. We will have to deal systematically with an issue of low speed of transporting freight by building deep-water ports, railway networks, new crossings to Mongolia and China, and achieving a prompt processing of paperwork through digitalization. What's more, the region also needs a North-South corridor towards the Caspian Sea, to Azerbaijan, Iran, and India, i.e., it needs access to a market of two billion people.

"According to Deripaska, Siberia's development is based primarily on education, applied sciences, and the mobility of human resources. He shared his experience: 'We have tried to develop several territories at an accelerated pace. It is a very difficult task. Roads, medicine, education, sports, leisure – it all requires serious investments. But it has to be done.'

"At the same time, it's important not to forget the general principles of the economy, the entrepreneur stressed. 'State capitalism, "GosGasMyas" [an invented derogatory acronym for state enterprises] is a road that leads nowhere. I am horrified to see the volume of resources wasted in this way. I believe the amount is already in the trillions. Therefore, only a market-based economy, only a competitive environment [will help],' stressed Deripaska. This requires, among other things, decriminalization of business activity, rule of law, predictable rules of the game.

"According to the businessman, there is no other choice, 'Already next year there will be no money. We will need foreign investors, and they will be looking at the conditions that Russian business operates in. If we don't ensure that our market is attractive, we will just keep dreaming [of a prosperous economy].'

"Chekhov once noted that if it were not for the cold weather and the bureaucrats, Siberia would be the richest and happiest land in the world. At least one of these problems can be resolved. 'It's time to cut the number of officials by a factor of two or three,' urged Deripaska, 'It is a serious drag on the economy, which is already weighed down by sanctions. We have an excess of government apparatus and state capitalism, and what we need is more freedom and competition.'

"Alexander Uss, Governor of the Krasnoyarsk Region, emphasized that while Siberia is expected to develop explosively, this isn't a regional task but a national one. He recalled that historically this had once occurred under Stolypin: 'The Trans-Siberian Railway brought Russia to Siberia, with no transportation tariffs, by the way.' According to the region's head, the time has come for infrastructure projects of a comparable scale.  But deliberations take an unreasonably long time. For instance, Siberian regions rich in methane have been waiting for gasification for a long time. The promising 'Sila Sibiri-2' pipeline could budge the matter from its present impasse, hopes Uss.

"Or take the construction of new railways. 'The Kyzyl-Kuragino branch of the railway needs to be completed to create modern timber processing facilities. The completion cost is estimated at only five billion rubles. This has already been discussed for five years,' complained Uss.

"'All instructions regarding the railway branch running from Krasnoyarsk to Yemelyanovo airport were given long ago. We are talking not only about passengers, but also about freight traffic. The airport is situated in a unique geographical location. Airline companies are ready to fly from here. But we still think that the residents should come to an open field [an undeveloped plot of land set aside for construction], and then we will build a branch of the railway for them.'

"In terms of investment attractiveness, the Krasnoyarsk Region is among the top five Russian regions and is demonstrating growth, but it is still advancement by inertia. And a breakthrough requires transitioning from an extractive economy to the creation of high-tech manufacturing industries, the governor added.

"The main challenge for Siberia is the demographic problem related to the population outflow from the region, according to Alexander Drozdov, a deputy of the State Duma. 'In order to expand the economy eastwards, we need to reverse the migration flow to the east as well,' he emphasized. 'That means creating [improved] living and working conditions. We can already introduce such tools as preferential mortgages following the example of the Far East and housing certificates with the aim of attracting young, qualified specialists, including doctors and teachers.'

"Alexei Gorensky, a restauranteur and Director at the Institute of Gastronomy at The Siberian Federal University also drew attention to the importance of developing human potential: 'To keep people in Siberia, we need to invest in talent, i.e., young people, entrepreneurs. They need support for their projects more than ever. Instead, there is a total lack of faith in ourselves. Why is it that the Arabs can build islands and hotels on the high seas, and we cannot?'

"Investments in human capital, large infrastructure projects, unshackling private initiative, and creating conditions for business – all these recipes are not new. And the dream of a prosperous Siberia, of a 'blessed land,' as Dostoyevsky put it, does not seem to be getting any closer. 'It is clear to everyone what needs to be done, we have repeated it so many times already. Well, we will fight to make our dreams come true,' concluded Oleg Deripaska."

A panel discussion at the Krasnoyarsk Economic Forum (Source:


[1], March 2, 2023.

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