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Analysis: Russian waterways may open

The Russian Federation has an intricate network system of more than 62,000 miles of interlinked rivers, canals and waterways that not only link the Black Sea with the Caspian, but with the Baltic and White Seas northwards to the Arctic Ocean.
by John C.K. Daly

Completely unnoticed in the Western media, a Russian transport initiative holds promise to revolutionize the maritime carriage of products throughout Eurasia, including the oil and natural gas so hungrily sought by European consumers.

The good news, according to Russia's Sea and River Transport Federal Agency head Alexandr Davydenko, is the Russian Federation is preparing to open the country's vast network of rivers and canals to foreign shipping.

The bad news is the dilapidated state of many of the facilities.

Davydenko said the projected date for foreign access to Russia's internal waterways was late 2009. International considerations have played a considerable part in the decision, as the access was one of the key conditions for Russia to join the World Trade Organization.

The transport potentials of the Russian offer are staggering as the Russian Federation has an intricate network system of more than 62,000 miles of interlinked rivers, canals and waterways that not only link the Black Sea with the Caspian, but with the Baltic and White Seas northwards to the Arctic Ocean.

The legislation prohibiting foreign shipping on Russian internal waterways is a legacy of the Stalinist era. Even after the Soviet collapse, Moscow imposed specific restrictions in 1994 on foreign vessels sailing the Volga-Don Canal, undoubtedly the waterway of greatest interest to Western energy companies, as it links the Black Sea with the Caspian. Up to now, Russia has only permitted Western companies to ship energy infrastructure material via the Volga-Don Canal on a case-by-case basis, charging exorbitant transit fees.

The United Deep Inland Waterway System of European Russia has suffered from a lack of consistent capital investment since the 1991 Soviet collapse. To give but one example, during the period 1999-2006 the Volga-Baltic Waterway had no systematic dredging, which reduced its navigable depth in some places from 13 to 10 feet, restricting passage to vessels less than 4,000 tons.

The neglect extended to Russia's River Fleet as well. Last week during question time in the Duma, Minister of Transport Igor Levitin said 55 percent to 70 percent of Russia's maritime transport vessels were either obsolescent or in need of upgrades.

The Web site of Russia's Maritime Board: River Transport is blunt about the problems facing the system, noting, "(current) budget financing for transport does not allow the entire network of inland waterways to ensure the necessary conditions for safe navigation," adding that many channels have been heavily used for decades. The Maritime Board further reports that, "The deterioration of the technical state of construction is caused by insufficient budget financing for the restoration and the reconstruction (less than 50 percent of the needed funding) and by the absence of mechanisms to attract supplemental budgetary funds. As a result the operational safety level of these facilities is reduced" before concluding that of 346 facilities only 109, or 31 percent, operate at an acceptable safety level.

Insightful foreigners will have an opportunity to investigate the possibilities by querying Davydenko personally at the 13th international Trans-Russia exhibition being held April 22-25 in Moscow. The event is already well subscribed, with more than 520 companies from 27 countries, including Germany, Finland, Latvia, Lithuania and Estonia, that will set up national booths touting their capabilities. Doubtless many foreigners will flock to Kazakhstan's booth,

Besides Davydenko and Levitin, other Russian high-level officials available at the exhibition will include Duma Transport Committee Chairman Sergei Shishkarev, Russian Railroads JSC First Vice President Vadim Morozov, Federal Service head for transport supervision Gennadi Kurzenkov and Russian Union of Industrialists and Owners Vice President Vladimir Perederii.

As noted earlier, for Western energy companies the economic jewel in the crown of Russia's United Deep Inland Waterway System is undoubtedly the Volga-Don Canal, as it represents the Caspian's sole access to the world's oceans. Furthermore, in providing Caspian access, foreign vessels will be able to access not only Russian ports, but Azeri, Iranian, Kazakh and Turkmen maritime facilities as well.

While few things in Russia are certain, it seems a safe bet that Moscow's proposed access guarantees that the Volga-Don Canal will be the first Russian interior waterway to attract foreign investment and maritime traffic, even if the channel's current limitations restrict it to vessels to 5,000 tons drawing less than 12 feet of water rather than the 250,000-ton Ultra Large Crude Carrier behemoths so beloved by Western oil companies. After all, even if the Volga-Don Canal might not turn into a tanker superhighway, it can certainly transport state-of-the-art Western technology into the Caspian to help exploit its massive energy reserves. With, of course, Moscow collecting transit fees.

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