Russia to Build World’s Longest Underwater Tunnel to Alaska
Official from the Russian Economy Ministry told reporters on Wednesday, April 18, that Russia plans to build the world’s longest tunnel, a transport and pipeline link under the Bering Strait to Alaska, as part of a $65 billion project to supply the U.S. with oil, natural gas and electricity from Siberia.
The project, which Russia is coordinating with the U.S. and Canada, would take 10 to 15 years to complete, Viktor Razbegin, deputy head of industrial research at the Russian Economy Ministry, said. State organizations and private companies in partnership would build and control the route, known as TKM-World Link, he added.
A 6,000-kilometer (3,700-mile) transport corridor from Siberia into the U.S. will feed into the tunnel, which at 64 miles will be more than twice as long as the underwater section of the Channel Tunnel between the U.K. and France, according to the plan. The tunnel would run in three sections to link the two islands in the Bering Strait between Russia and the U.S.
“This will be a business project, not a political one,†Maxim Bystrov, deputy head of Russia’s agency for special economic zones, was quoted by Bloomberg as telling a media briefing. Russian officials will formally present the plan to the U.S. and Canadian governments next week, Razbegin said.
The Bering Strait tunnel will cost $10 billion to $12 billion, and the rest of the investment will be spent on the entire transport corridor, the plan estimates.
“The project is a monster,†Yevgeny Nadorshin, chief economist with Trust Investment Bank in Moscow, said in an interview with Bloomberg. “The Chinese are crying out for our commodities and willing to finance the transport links, and we’re sending oil to Alaska.â€
The planned undersea tunnel would contain a high-speed railway, highway and pipelines, as well as power and fiber-optic cables, according to TKM-World Link. Investors in the so-called public-private partnership include Russian Railways, national power utility Unified Energy System and state-controlled pipeline operator Transneft. This information was contained in the press release which was handed out at the media briefing and bore the companies’ logos.
Russia and the U.S. may each eventually take 25 percent stakes, with private investors and international finance agencies as other shareholders, Razbegin said. “The governments will act as guarantors for private money,†he said.
The World Link will save North America and Far East Russia $20 billion a year on electricity costs, said Vasily Zubakin, deputy chief executive officer of HydroOGK, Unified Energy’s hydropower unit and a potential investor.
“It’s cheaper to transport electricity east, and with our unique tidal resources, the potential is real,†Zubakin said. By 2020 HydroOGK plans to build the Tugurskaya and Pendzhinskaya tidal plants, each with capacity of as much as 10 gigawatts, in the Okhotsk Sea, close to Sakhalin Island.
The project envisions building high-voltage power lines with a capacity of up to 15 gigawatts to supply the new rail links and also export to North America.
Russian Railways is working on the rail route from Pravaya Lena, south of Yakutsk in the Sakha republic, to Uelen on the Bering Strait, a 3,500 kilometer stretch.
The link could carry commodities from Eastern Siberia and Sakha to North American export markets, said Artur Alexeyev, Sakha’s vice president.
The two regions hold most of Russia’s metal and mineral reserves “and yet only 1.5 percent of it is developed due to lack of infrastructure and tough conditionsâ€, Alexeyev said.
Japan, China and Korea have expressed interest in the project, with Japanese companies offering to burrow the tunnel under the Bering Strait for $60 million a kilometer, half the price set down in the project, Razbegin said.
“This will certainly help to develop Siberia and the Far East, but better port infrastructure would do that too and not cost $65 billion,†Trust’s Nadorshin said. “For all we know, the U.S. doesn’t want to make Alaska a transport hub.â€
The figures for the project come from a preliminary feasibility study. A full study could be funded from Russia’s investment fund, set aside for large infrastructure projects, Bystrov said.
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History provides us with several examples of “monster projects” such as the proposed Bering Straits Tunnel. See the Suez and Panama Canal, and more recently the Channel Tunnel between France and Great Britain, all of which are still going strong and prove extremely useful.
Yet each of these projects proved to be a major disaster for the initial investors, because every time they thought they were buying a right to cash in on the traffic via a particular canal or tunnel they in fact found out they had actually paid for the right to be liable for unknown or misrepresented construction costs which invariably rocketed way over and above what they were gullible enough to believe in the prospectus.
This age-old principle has proved itself time and time again.
Viktor RAZBEGIN of the Russian Economy Ministry tells us not to worry because “the governments will act as guarantors for private money”.
A century ago French households massively invested in Russian government, infrastructure, utilities, and railway bonds.
They all came with a Russian government guarantee.
Not a single one has ever been paid back.
Today the Russian Federation still refuses all form of contact with 400000 present day bondholders.The total amount outstanding is in excess of US$90 billion.
How could anyone trust Mr. RAZBEGIN and his chiefs?
Mr. RAZBEGIN, before issuing yet more worthless Russian government guarantees, please deliver on the outsanding ones.
To avoid losing ALL your investment please read the following INVESTOR ALERT below. This is not rethoric. This is present-day economics.
RUSSIAN INVESTOR ALERT
French holders of Russian government bonds remind investors that the Russian Federation is still in default today (April 2007) on their estimate of some US$ 90 billion owed to them since the Bolshevik, then the Soviet, and now the Russian Federation governments have all unilaterally repudiated Tsarist debt and refused any form of contact or dialogue with their legitimate bona fide creditors.
They also remind investors that in its Sep. 15th 2006 report entitled “Governance matters: a decade of measuring the quality of governance”, the WORLD BANK has rated Russia’s governance comparable to that of Swaziland, Zambia and Kazakhstan. Russia came 151st out of 208 countries in terms of (…) accountability, quality of regulatory bodies, and rule of law, (…). In particular, rule of law (i.e. the courts and the quality of contract enforcement) was judged as effective in Russia as it is in Ecuador, Indonesia, and Bangladesh. Nicaragua, East Timor, and China’s ability to control corruption was judged similar to Russia’s.
On February 26th 2007 the St. Petersburg Times, quoting a report from Vedomosti, wrote that “Surgutneftegaz managers covertly hold 72 % of the secretive oil firm” and that Deutsche UFG had had to “raise its estimate number of outstanding shares from less than 26 billion to (…) 43 billion” which “implies a 40% dilution in the value of the stock”.
In Paris on April 3rd 2007 to launch the merged NYSE-EURONEXT entity Mr. John Thain, the New York Stock Exchange CEO, warned that he was “very concerned about the quality of corporate governance, the transparency of company financials and the protection of minority shareholders. A number of Russian companies raise serious questions around these issues.”
Despite these findings, and the main rating agencies’ knowledge that Russia is in default on US$ 90 billion of Tsarist debt, Russia is rated “INVESTMENT GRADE” whereas it should clearly be in “SELECTIVE DEFAULT”.
French bondholders intend to pursue their claim until full settlement at present value, by any legal means and in any jurisdiction they deem appropriate.
EVERY POTENTIAL INVESTOR IN RUSSIA MUST BE MADE AWARE OF THESE RISKS.
FRENCH CREDITORS OF THE RUSSIAN FEDERATION STRONGLY ADVISE AGAINST ANY FORM OF INVESTMENT IN A COUNTRY WHOSE SOLVENT GOVERNMENT HAS IN THEIR VIEW SYTEMATICALLY REFUSED TO FULFIL ITS NATIONAL AND INTERNATIONAL CONTRACTUAL OBLIGATIONS, REFUSES ALL CONTACT AND DIALOGUE WITH ITS LEGITIMATE BONA FIDE CREDITORS, AND REFUSES TO DISCLOSE LIABILITIES WORTH US$ 90 BILLION.
April 2007
History provides us with several examples of “monster projects” such as the proposed Bering Straits Tunnel. See the Suez and Panama Canal, and more recently the Channel Tunnel between France and Great Britain, all of which are still going strong and prove extremely useful.
Yet each of these projects proved to be a major disaster for the inital investors, because every time they thought they were buying a right to cash in on the traffic via a particular canal or tunnel they in fact found out they had actually paid for the right to be liable for unknown or misrepresented building costs which invariably rocketed way over and above what they were gullible enough to believe in the prospectus.
This age-old principle has proved itself time and time again.
Viktor RAZBEGIN of the Russian Economy Ministry tells us not to worry because “the governments will act as guarantors for private money”.
A century ago more than a million French households massively invested in Russian government, infrastructure, utilities, and railway bonds.
They all came with a Russian government guarantee.
Not a single one has ever been paid back.
Today the Russian Federation still refuses all form of contact with 400000 present day bondholders. The total amount outstanding is in excess of US$80 billion.
How could anyone trust Mr. RAZBEGIN and his chiefs?
Mr. RAZBEGIN, before issuing new worthless Russian government guarantees you must first deliver on the outstanding ones.
To avoid losing ALL your investment please read the following INVESTOR ALERT below. This is not rhetoric. This is present-day economics.
RUSSIAN INVESTOR ALERT
French holders of Russian government bonds remind investors that the Russian Federation is still in default today (April 2007) on their estimate of some US$ 90 billion owed to them since the Bolshevik, then the Soviet, and now the Russian Federation governments have all unilaterally repudiated Tsarist debt and refused any form of contact or dialogue with their legitimate bona fide creditors.
They also remind investors that in its Sep. 15th 2006 report entitled “Governance matters: a decade of measuring the quality of governance”, the WORLD BANK has rated Russia’s governance comparable to that of Swaziland, Zambia and Kazakhstan. Russia came 151st out of 208 countries in terms of (…) accountability, quality of regulatory bodies, and rule of law, (…). In particular, rule of law (i.e. the courts and the quality of contract enforcement) was judged as effective in Russia as it is in Ecuador, Indonesia, and Bangladesh. Nicaragua, East Timor, and China’s ability to control corruption was judged similar to Russia’s.
On February 26th 2007 the St. Petersburg Times, quoting a report from Vedomosti, wrote that “Surgutneftegaz managers covertly hold 72 % of the secretive oil firm” and that Deutsche UFG had had to “raise its estimate number of outstanding shares from less than 26 billion to (…) 43 billion” which “implies a 40% dilution in the value of the stock”.
In Paris on April 3rd 2007 to launch the merged NYSE-EURONEXT entity Mr. John Thain, the New York Stock Exchange CEO, warned that he was “very concerned about the quality of corporate governance, the transparency of company financials and the protection of minority shareholders. A number of Russian companies raise serious questions around these issues.”
Despite these findings, and the main rating agencies’ knowledge that Russia is in default on US$ 90 billion of Tsarist debt, Russia is rated “INVESTMENT GRADE” whereas it should clearly be in “SELECTIVE DEFAULT”.
French bondholders intend to pursue their claim until full settlement at present value, by any legal means and in any jurisdiction they deem appropriate.
EVERY POTENTIAL INVESTOR IN RUSSIA MUST BE MADE AWARE OF THESE RISKS.
FRENCH CREDITORS OF THE RUSSIAN FEDERATION STRONGLY ADVISE AGAINST ANY FORM OF INVESTMENT IN A COUNTRY WHOSE SOLVENT GOVERNMENT HAS IN THEIR VIEW SYTEMATICALLY REFUSED TO FULFIL ITS NATIONAL AND INTERNATIONAL CONTRACTUAL OBLIGATIONS, REFUSES ALL CONTACT AND DIALOGUE WITH ITS LEGITIMATE BONA FIDE CREDITORS, AND REFUSES TO DISCLOSE LIABILITIES WORTH US$ 90 BILLION.
April 2007