In investment - a glimmer of hope for the North Caucasus?
A brand new, French-built cable car taking international tourists to the world’s highest-altitude hotel on the ledge of Europe’s tallest mountain, with a serene, yet snowy mountainous backdrop, is not what most people picture when they think of Russia’s Caucasus Mountains, more famous for terrorist bombs and ethnic strife.
Yet this was exactly the image the North Caucasus Development Corporation (NCDC) was trying to project to a small group of journalists attending the unveiling of the LeapRus hotel at an altitude of 3,912 meters on Mt. Elbrus.
Following two brutal wars fought in Chechnya in the 1990s, sectarian violence and an ongoing insurgency spilled over into neighboring regions over the next decade. In 2010, then-President Dmitry Medvedev announced a broad initiative to channel federal funding into mostly tourist projects across the entire scenic North Caucasus Mountains.
Photographs by Artem Zagorodnov
Funds to the tune of $15 billion were earmarked for eight key clusters located in regions like Dagestan and Ingushetia in hopes of creating jobs.
“We’re currently overseeing seven projects in manufacturing, tourism and agriculture, with a total investment of over $200 million. As they near completion, over 5,000 jobs will be directly created, with another 10,000–12,000 in related industries and small and medium businesses,” explained Anton Pak, the NCDC head, when questioned about what had been accomplished over the last three years.
Food for Thought
For a region with a working population of more than four million, this is just one first step toward fighting rampant unemployment. But the NCDC is one of several organizations tasked with channeling investments here.
“Our big break was getting Hong Kong's ADM Capital fund to commit $30 million to the IrriCo agricultural project in the Stavropol Region,” said program director and former Renaissance Capital investment banker Vitaly Buzu in the conference room of the region's Mineralniye Vody airport. “This commitment has already attracted interest from other Asian and American investors.”
The joint project with VTB Capital, Russia's second-largest investment bank, will continue to invest $250 million into about 99 thousand acres (40 thousand hectares) of land, modern machinery, irrigation systems and storage facilities over the next three years located within 250 miles (400 kilometers) of Russia's Black Sea ports, its primary routes for exporting grain. (Russia is currently the world's second largest grain exporter after the United States.)
“[We are] very confident in our ability to continue to grow IrriCo into a significant player in this sector,” Anthony Stalker, ADM's European head, told Agrimoney.com.
“Russia is number three in the world in terms of total amount of arable land – after the U.S. and India – but it is vastly underused. Europe harvests an average of five tons per hectare of produce while the figure for Russia is 2.4 tons,” said Buzu. “The price for land here is cheap compared to other countries and this region is ideal for producing soybeans, corn and potatoes.”
A History of Violence
“It's enough for a glass to fall off a table and break for the media to write about another terrorist attack in the North Caucasus,” Andrei Kataev said over dinner in the nearby town of Essentuki.
To prove his point that the area is ready for tourists, he took reporters up 3,912 meters for the unveiling of the world's highest-altitude hotel in the neighboring republic of Kabardino-Balkaria.
The burly, 30-something Kataev had made a career bringing tourists to Siberia before becoming the Corporation's point man for developing the hospitality industry.
Into Thin Air
On the morning of the unveiling of the LeapRus hotel, a group of reporters spent six hours traveling by bus, cable car, ski lift, foot and, finally, snow caterpillar to reach the resort, which consists of three cylindrical structures designed to house up to 36 guests in bunks and offer amenities like a warm shower, bathroom, wifi, kitchen, dining hall and reception desk. The hotel is designed as a stopover for climbers aiming for the summit of Europe’s tallest mountain.
The solar-powered facility was constructed using the latest Italian technologies in green hospitality. “The investors were enthusiastic about building something that produces virtually no waste or harm to the surrounding environment so high up,” gleamed Kataev.
A Drop in the Bucket
The upcoming 2014 Winter Games in nearby Sochi have acted as a catalyst for federal efforts to stabilize the region before the world's attention is focused here next February.
Following the recent suicide bombing in Volgograd, some experts have warned that Southern Russia is ripe for terrorist attacks ahead of the Games. Overall data for the North Caucasus Federal District are somewhat encouraging however. Reports by the Caucasian Knot information agency show a drop in violence in all but one of the regions. The number of civilian casualties from terrorism decreased to 87 in 2012 from 176 the year before. Statistics for this year so far show a similarly positive trend.
“If there are some positive trends they could be explained by that fact that the federal authorities are not the only ones preparing for the Olympics,” said Alexei Arbatov of the Moscow Carnegie Center.
Kataev countered: “We have to use next year’s Olympics as a catalyst for bringing people here to see the region's beauty and potential.”
The author accepted an invitation by the North Caucasus Development Corporation to attend a press tour visiting the sites described in the story.