The 'peace dividend' was supposed to allow for projects with a positive economic future, like this one.
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One of the great American sagas was the pioneering and building of railroads to connect the country from the east coast to the west coast, with branched lines covering points north and south. The population and industry of America blossomed in those regions touched by King Rail, and the many junction points along the lines.
A similar story took place in Russia at about the same time along the vast trans-Siberia line and its many branches between Vladivostok to St. Petersburg. Today the story is repeating with the One Belt, One road effort to interconnect Eurasia that I wrote about last week.
Today, we are chugging along blithely through what can only be called politically schizophrenic times. The loud accusatory bluster and proxy threats we use are serving us as well as shooting ourselves in the foot. With all the conflicting noise, it has become hard to see into the economic crystal ball, and the once cherished dreams for unencumbered trade between nations. Hope and visions for future opportunities may be among the first casualties, and one I want to touch on through this story.
It is about a project that has risen several times, and been quashed for political rather than economic reasons. It is the rail link connecting Alaska and Russia through the Bering Strait. It would be a globally defining infrastructure investment, probably much more productive than any overseas bases, QE, sanctioning or other uses of the taxpayer’s largesse. Simply put, this project would be an economic generator allowing for the creation of directly productive employment and expanding development opportunities throughout several countries.
On maps, the Bering Strait is used as a convenient place to ‘split’ the world. Some maps show Alaska and Russia’s Chukchi Peninsula as if they were distant to each other. In reality, they are only separated by 51 miles with islands in-between. Currently, with advanced engineering, similar projects have already been done, and while challenging, it is fully within our competence to achieve. The map divide also manages to include the International Date Line cutting through the center of the strait where the Russian side is 21 hours ahead of the Alaskan side. Because of this, the islands are sometimes called Tomorrow Island (Big Diomede) and Yesterday Island (Little Diomede) yet they are only about 2.5 kilometers apart.
The Bering Strait became known to the western world in 1648 when Russian explorer Semyon Dezhnev reached the strait and reported on the local peoples and conditions. In 1728, Virus Bering, a Danish navigator, took a Russian expedition to the strait. This expedition gave names to both the strait and the Diomede Islands – named in honor of the Russian Orthodox St. Diomede.
The entire area, originally claimed by Russia (with competing claims by Britain and Spain), was largely ignored politically for a further century while the region got on with business. Then In 1867, during the post-US Civil War era, US President Andrew Johnson’s Secretary of State, William Seward, negotiated a US$7.2 million deal with the Russian Empire to buy Alaska. During World War II, the Bering Strait became a crucial artery for goods traveling by sea and air over Alaska from the United States to the Soviet Union.
At the beginning of friendly relations between Gorbachev and Reagan, it seemed that the Bering Strait might be a concrete symbol of common economic interests between the United States and Russia. It was then that the Bering Strait bridge/tunnel was first proposed as a link, reuniting Asia and the Americas. This, after thousands of years of separation since the ice age that allowed chilly but unhindered movement of people and mammoths between the continents. This refreshing cordiality was welcome as the “cold war” was supposedly settled – yesterday’s news. There were expectations by all to finally have a “peace dividend” to allow investing in projects for a positive economic future, like the land-bridge/tunnel.
As it turns out, the ever-increasing accusatory rhetoric tweeting between nations has re-invented yet another ice age with increasingly accusatory petulance and undiplomatically frosty cold war-ish attitudes from the US towards Russia and increasingly towards China.
Not too long ago, the Chinese reviewed the idea of the Bering Strait as a land bridge to be incorporated into the One Belt, One Road initiative. They propose to build a high-speed rail line connecting China to the United States via Russia and Canada. As recently as May 2016 the rail expert Wang Mengshu, of the Chinese Academy of Engineering, spoke of plans to build a high-speed rail line nicknamed the China-Russia-Canada-America line which Russia had also been thinking about and working on for years.
China needs and buys coal. China’s purchase of Alaskan coal would offset construction costs and that itself could quite possibly pay for the entire railroad and the Strait tunnel, not to mention boosting job creation in both Alaska and Canada. From a Canadian perspective, China could conceivably import up to 3 million barrels of oil per day from Alberta, Canada, which by itself is enough to justify building the rail connection. It has been estimated that a high-speed rail project from Beijing or Moscow to Washington DC would cost at least $2 trillion. The Bering Strait tunnel, which is the keystone that will allow such routes, would cost approximately $35 billion, a small fraction of the total. The returns would be both large and long-term for all the nations involved – it is a world-changing project with global reach.
The collateral damage of this “cold war” attitude is the loss of opportunity for the United States, Canada, Mexico and perhaps even Central America to upgrade and join their rail-freight networks, becoming part of the ongoing Eurasian land link boom. The real economic benefits are apparent to each participating sovereign nation. After all, Russia, China, and a host of countries throughout Eurasia have already agreed and are proceeding quickly to integrate and build advanced land trade routes to include Europe, the Middle East and Africa. It really is high time to re-evaluate, look in the mirror and have a reality check on who is the source of the problems restricting progress, and who offers solutions.
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