Summary. Chukotka Autonomous Region is located in the northeastern-most area of Russia on the Chukotka peninsula and on the adjoining part of the mainland. In 1992, Chukotka was separated from the Magadan Region and is currently one of 89 Russian regions. Chukotka peninsula is separated from the United States by the Bering straight and is the Russian territory closest to the Unites States, both geographically and in its potential economic and business cooperation.

Severe climate conditions have not prevented Chukotka region from developing various branches of its industry - mining, reindeer breeding, hunting, and fur trade; and the economic potential of the region goes even far beyond those industry sectors. Handicraft and distinctive culture create the unique ethnic atmosphere of Chukotka. Chukotka has good potential for long-term investment. Being traditionally a land of reindeer herders and sea mammal hunters, Chukotka is distinguished by gold ore deposits and rich natural resources which form a basis for potential profitable business cooperation with this region of Russia. End Summary.

1. History and Geography. The Chukotka Autonomous Region is one of the 89 regions of the Russian Federation. It is the farthest northeastern part of Russia that borders Alaska via the Bering Straight. The closest to Alaska is the Russian Ratmanov Island which is less than five kilometers from one of the two Diomede Islands belonging to the U.S. In 1643, the explorer and seafarer Semyon Dezhnev reached the Kolyma outfall, and in 1648, he went from the Kolyma outfall to the shore of Chukotka peninsula. Finally, his boat was cast ashore by the severe sea, and in 1648, Semyon Dezhnev reached the Anadyr outfall by land and discovered a straight connecting Asia and North America. Dezhnev's name was given to the farthest northeastern point of Asia at Chukotka.

The Chukotka Region was formed in 1940 as an independent national unit, but later it was included in regions of Kamchatka, Khabarovsk, and since 1953 - in the Magadan Region. In 1980, Chukotka obtained a status of autonomous region within the Magadan Oblast, and in 1992, the region once again became an independent unit of the Russian Federation.

The word "Chukotka" was formed from the Russian name of an ancient tribe, "Chukchi" (they call themselves Lyg'oravetlan). The word "Chukchi", is derived from "Chauchi", that is "rich with reindeers", and is known since the time of Dezhnev's reports 350 years ago. Thus, the name "Chukotka" itself is full of content and means "an area inhabited by reindeer people, Chukchi".

Located on the Chukotka peninsula and on the adjoining part of the mainland, Chukotka region is washed by the Arctic Ocean (the East Siberian Sea and the Chukchi Sea) and by the Pacific Ocean (the White Sea and the Okhotsk Sea). It borders on the Magadan Region and the Koryak Region. Chukotka is located 3,671 miles away from Moscow. The area of Chukotka is 737,000 square kilometers (284,000 square miles), and it is the sixth largest area in Russia. Chukotka Region includes eight administrative divisions, three cities and towns, and 17 urban-type settlements. The major cities are Anadyr (population of 13,000), Bilibino (11,000), and Pevek (9,000). The landscape is mainly plateau and mountainous.

The rivers in the region belong to the Arctic Ocean and the Pacific Ocean basins. The largest is the Anadyr River which flows into the Bering Sea. There is a number of lakes in the region. Permafrost and tundra cover most of Chukotka. During summer months, between May and September, the tundra is vibrant with flowers, shrubs and wild berries. Chukotka has 31,516 square kilometers set aside as protected nature areas, including the Wrangel Island, a 795,000 hectare nature reserve in the Arctic Ocean, which is home to polar bear, walrus and Arctic geese. Fauna includes many types of animals and fish such as arctic fox, squirrel, fox, wolf, bear, white hare, reindeer, seal, walrus, and some others. Currently, several institutions are interested in establishing an international park, Beringia, which would include a large territory in Chukotka.

Chukotka has a severe climate. The geographical location of the Chukotka peninsula between two oceans has resulted in extreme temperatures and complex atmospheric weather patterns. Cyclones and anticyclones are characteristic of Chukotka's weather, which may change several times a day: a strong, cold north wind may suddenly give way to southern winds that bring snowstorms or blizzards. The annual average temperature is always below zero centigrade throughout Chukotka. On average, there are 150 windy days in coastal areas. In winter, polar nights cover half of Chukotka's territory whereupon its towns and villages are plunged into frosty darkness for several months. The sun rises over the horizon for no longer than two or three hours a day. Strong winds (up to 30 meters per second) form big snowdrifts that cover Chukotka from September till May.

2. Population. Chukotka's population is currently 80,000 in comparison with 113,000 in 1995 and it is diminishing rapidly. Urban population represents 71 percent, and rural population - 29 percent. Population density is 0.2 persons per one square kilometer. About two thirds of population have emigrated to the mainland in last five years, 10 percent of them are Chukchi and 60 percent - Russians. In order to attract younger population, Chukotka administration is working closely with Ukrainian and Belorussian governments. Unemployment rate in Chukotka is 3.8-4.5 percent.

The major native populations of Chukotka are Chukchi and Chuvantsy who live in the tundra of Chukotka in iarangas, the reindeer-skin dwellings. Other native populations include Eskimo, Koriak, and Eveny. However, about 65 percent of population came from the mainland and include Russians, Ukrainians and Belorussians. Russians were attracted to Chukotka by high salaries (standard salaries were multiplied by three, and it was a perfect opportunity in Soviet times to work in Chukotka for three to five years and then return to mainland and buy an apartment there) but nowadays salaries in Chukotka are not much higher than in other regions of Russia (average salary is 2,600 rubles, or US$430) while prices are two to three times higher because of transportation and storage expenses.

3. Economy, Industry and Agriculture. Chukotka ranks seventy sixth in Russia in the total industrial output. Chukotka economy is focused on mining as a major industry sector. The region is rich in natural resources represented by deposits of tin ores, mercury ores, gold, coal, natural gas, and building materials. Chukotka has the second largest reserve of gold and tungsten in Russia. Chukotka's economy is based on the mining industry, but its industrial output is declining because of low profitability. The main industrial centers are Pevek and Bilibino.

After separating from the Magadan Region in 1992, Chukotka lost well developed economic infrastructure, and it is now aimed at establishing new economic links.

Gold mining is a leading industry and is centered in Bilibinsky, Smidtovsky, and Chaunsky districts. In 1994, Chukotka produced approximately 10 tons of gold. Tin is mined in the Chaunsky and Iultinsky districts. The steel and metal industry is represented by non-ferrous metallurgy (71 percent of total industrial output). Power and energy industry (19 percent) is based mainly on Bilibino atomic power plant and the Chaun thermal power plant. Currently, a floating atomic power plant is being constructed which will be moved to Pevek and it is expected to make energy less expensive. The fuel industry holds three percent and is represented by coal mining (Anadyr). Fish products and reindeer meat represent the food industry.

The Bilibino nuclear power plant is the closest Russian nuclear power station to the United States. It is located 1,300 kilometers from Nome and 2,200 kilometers from Anchorage. The Bilibino power plant was built in 1973, and it is planned be put out of operation by 2007. Russia plans to build small new-generation floating nuclear reactors for use in electricity production and water desalination. The design has been developed by a Minatom mechanical engineering unit in Nizhny Novgorod and the Kurchatov Atomic Energy Institute in Moscow. Construction of the Pevek floating nuclear power plant is expected to be completed by the end of the century. It will be the first of 15 small floating reactors designed to bring electricity to remote regions of the Arctic.

The advantage of the floating power plants, is that they will not require refueling for up to four years, will operate for up to 40 years, being interrupted every 13 years for a return to Murmansk for maintenance. The power produced by those power plants would be five times cheaper than from other available sources (10 cents/kWh), and reactors will pay for themselves after only 10 years. Two KLT-40 35 Mwe reactors that are presently used in nuclear-powered ice-breakers, will be placed aboard a 160 meter long unpropelled steel barge. As well as the reactors, the barge will have four more units, either power plants or desalination plants, or a combination.

There are no railways and highways in Chukotka. Port service and support is one of Chukotka's main industries. Anadyr, Beringovsky, Egvenkinot, Lavrentiya, Provideniya, Schmidt, and Pevek are seaports on the Northern Sea Route which goes from Murmansk to the Pacific. Major seaports are Anadyr and Pevek. Both cities also have international airports that require modernization. There are three regular flights from Moscow to Anadyr each week and one charter flight from Moscow to Pevek, both from Vnukovo airport. The flight takes about eight hours. Chukotka is nine time zones away from Moscow (+9 hours Moscow time).

Telecommunication system of the region includes:

-- network equipment (automatic communication stations in district and region centers, automatic telephone stations in villages and institutions),
-- a network of ground communication lines which include internal zonal communication lines between communication stations as well as local communications lines,
-- a network of satellite communication lines including point-to-point lines between the regional automatic long-distance telephone stations in Anadyr, and automatic long-distance switching stations in Moscow, Novosibirsk, and Magadan, communication lines with distant communities and between telephone users connected in the network according to the unit principle.

While establishing a unified communications system, Chukotka purchased digital communication equipment S-2000 from Iskratel, Slovenia. The unified satellite communications system will be established by the end of 1998 and will make it possible to call major cities of Chukotka directly using the city code. Communications system will be established using the Russian Gorizont satellite on geostationary orbit.

Currently, only 20 to 25 percent of Chukotka's population and enterprises can make long-distance calls due to the lack of point-to-point communication channels, and low capacity of the long-distance telephone station; and the Chukotka Division of Communications cannot satisfy the high demand in telephones for population due to the lack of telephone capacity. Cellular network is being developed using low orbit satellites via the central station though the demand is relatively low because of low purchasing power of the population.

Chukotka region ranks eighty fourth in Russia in total agriculture production. Green-house cultivation of vegetables is common because of permafrost. Animal husbandry includes reindeer-breeding, fur-farming, and fishing. Throughout the region, some 450,000 reindeer graze each year. Chukotka produces several reindeer products, including meat, skins and hard horn. Chukotka does not export any agricultural products. It imports most of food products either from the other regions of Russia or from abroad. Chukotka officials claim that the United States is the major exporter of food products to the region, including meat, vegetables (mainly potatoes) and fruit that come from Alaska.

4. Science. The Scientific Research Center "Chukotka" (NITs) is a research institute located in Anadyr that is engaged in natural sciences such as geology, permafrost studies, water ecosystems, studies of languages of native population, and ethnographic studies. The institute has arranged a number of expeditions to study the tundra nature and rich natural resources of the region as well as ethnography. Scholars from Japan, the United States and many other countries visit NITs as interns.

The main research issues of NITs are as follows:

-- study of the structure of geospheres and the principles of organization of biosphere and noosphere systems in Western Beringia,
-- biologic cycle characteristic features in the Beringia sector of Arctic and Subarctic zones,
-- study of biological and ecological diversity in Chukotka, estimation of biological resources potential,
-- ecological expertise of realization of technical and other projects,
-- ethnosocial and medico-ecological problems of the region,
-- ecological certification of population centers and enterprises, -- creation of ecological, socio-demographic and mineral data banks of the region, and
- strategy of protection and rational use of nature in Chukotka.

5. Major Cities. The capital city of Chukotka is Anadyr. Its population is 13,000 which is large for an Arctic city. Majority of population are immigrants to the region, mainly Russians and Ukrainians with a small native population. The population has been fluctuating in recent years as people migrate away from Chukotka. In the stores one can find all kinds of imported foods including those from the U.S., priced several times higher than in Central Russia.

Pevek is one of the major industrial cities in the region. Established in 1930-s, Pevek is now the most northern city in Russia and a large seaport. Pevek received city status on April 6, 1967, and became the first city to the North of the Polar Circle. Pevek is the main city of the Chaunsky District of Chukotka. It is situated in latitude 69'40 North and longitude 170'11 East, above the Polar Circle.

The native population are chukchi, though they never inhabited the territory of Pevek because of a strong wind called "yuzhak" (the southerner) which blows from Peekinei mountain that gave a name to the city. The speed of "yuzhak" reached up to 30-40 meters per second with a maximum of 73. Summer in Pevek is short and cold, and snow remains all year round. In winter, the Polar night stays in Pevek for almost three months though auroras are common for the area.

Pevek is accessible by sea 100 days per year, and atomic ice-breakers are needed to enter the port in winter months. Having more than 30 ships a year entering the Pevek seaport ten years ago, Pevek currently has two to three ships arrive at port primarily to deliver food to the city. Some gold and other ore mines have been closed. Nevertheless, industry is still developing in the Chaunsky District. The road from Pevek to Bilibino has been built, and it is currently being expanded further to the east to Egvenkinot to facilitate transportation to and from deposits of natural resources. Mayskoye ore deposit is planned to be developed in 1999-2000.

In January 1999, the tender will be announced for the Mayskoye deposit by the Chukotka administration. There have also been extensive uranium deposits. Between 1942 and 1956, there were a number of camps for political prisoners who worked in uranium deposits in the Chaunsky District. The international airport and the seaport are expected to become international transit points in the North. Given the current economic difficulties, Pevek Administration was the first in Chukotka to open a Center for Social Protection which is a place where aged people can have lunch, medical help, meet, and relax.

6. Investment Opportunities. Chukotka Autonomous Region may become an area of long-term investment for U.S. companies. Due to economic restructuring, there has been an increase in the number of cooperative projects in following: gold and polymetal mining industry, communications, transportation, meat and fish processing industry, and the development of biological resources.

Gold Mining. The Mayskoye golden ore deposit lies 280 kilometers south-east of Pevek. The exploration of the field has been completed. The ores are refractory and are represented by saturated sulfites and dynamometamorphism zones in rock mass of black shales. The average content of gold is 12 g/t. More than 70 percent of the gold is associated with pyrite and arsenopyrite.

Gravity and floatation concentration is considered to be effective, but the extracted concentrate must be specially enriched. Chukotka administration has sent delegations to Canada, Australia and South Africa looking for technology for refractory ore processing. In January 1999, the Chukotka administration plans to announce a tender for supply of technology for gold ore processing in the Mayskoye deposit.

Copper mining (the Peschanka copper field 150 kilometers south of Bilibino), tin reserves (Pyrkakayskoye deposit 80 kilometers east of Pevek), and oil and gas deposits in the Anadyrsky lowlands represent other areas for business cooperation.

Transportation. Due to specific climatic conditions of Chukotka, problems of transportation are considered to be crucial. As there are few roads in the region, air transport is of primary importance. Building of new roads, upgrading outdated aircraft, development of airports and seaports are major economic issues in Chukotka that require investment. Chukotka needs to replace aircraft, the AN-24 and the AN-26, for more modern versions.

Anadyr international terminal is another investment project. Chukotka is also in need of new aircraft and helicopters to operate in the Arctic conditions, and to deliver small and large cargoes. Of particular importance is the development of better motor transportation network for delovery of goods. In the Chukotka Autonomous Region, motor transport deliveries are carried out by ice and dirt roads which are built every year, and in most cases, they do not correspond to the provisions of the safety code. The time has come to build gravel roads which can be used all year round. They will provide access to large mineral deposits in operation, and deliver cargo to areas situated far from the sea.

Reindeer Herding. Since reindeer herding is an important branch of the Chukotka economy, technology for processing of reindeer skins, hard horns, endocrine, and ferments are of an interest to Chukotka. Since it is expensive to transport raw materials from rural communities to Anadyr, Chukotka needs new and small technology and equipment to slaughter and process reindeer, and multi-purpose equipment to dry velvet antlers, to process hard horns, endocrine, ferments, and to produce medical preparational units.

Marine Mammal Hunting. Marine mammal hunting is part of the traditional lifestyle of the indigenous population in coastal Chukotkan communities. Native peoples are provided with an annual quota to procure 169 whales, 10,000 ringed seals, and 3,000 walruses. Marine mammal by-products are used as food in fox ranches. Seal skins and fat may be utilized for consumer food production. Due to lack of funds, Chukchi are unable to buy technology for processing marine mammals and use them for production of consumer goods. Cold storage and processing plants have to be constructed in the region.

Fisheries. A larger part of the eastern coast of Chukotka is washed by the Bering Sea and in the north-west zone, a number of companies fish for more than a million tons of different types of seafood. The region catch is 2,000 tons of pollack and cod. The Chukotka regional administration plans to develop fisheries by setting up a fleet of medium tonnage fishing boats with fish processing technology, and constructing fish processing plants and a cold storage. The goal of the Chukotka administration is to increase the catch in the Anadyrsky Lagoon (present limit 4,000 tons).

The Seaweed Project. Another project planned by the Pevek administration is seaweed cultivation. Seafood has great potential as a food source as well as in the pharmaceutical industry.

Tourism. Tourism is almost non-existent but has a huge economic potential. However, hotels and almost all other branches of service industry are below international standards and require investment. In 1992 and 1993, groups of cruise tourists came from the U.S. city of Nome for "extreme tourism" to explore native culture and the beautiful nature of the region. Pevek administration underlined their interest in developing tourism in their region. Native art of local population could become another attraction to the region. Whale bone carving is a world-famous art of Uelen village in Chukotka, the farthest eastern inhabited point of the region. Whaleboat regatta and whale hunting in July are major attractions in Uelen and Lavrentiya villages. In the Chaunsky District, petroglyphs were discovered dated to 10,000 B.C. Chukotka officials noted that they should have in place, by the end of 1998 a new tourism law that will make this area more attractive to tourists.

However, since 1994, there has been no organized tourism in the area. The major reason for lack of tourism in the region is that tourist infrastructure is under developed, and there is no international class hotels, as mentioned above. However, long-term investments in tourism in Chukotka may represent opportunities for U.S. investors.

Imports of Food Products. There is currently little foreign investment in the region. Foreign trade is developing and includes mainly food and other imports from neighboring Alaska. However, import from the United States is slowly decreasing. Chukotka administration established a representative office in Seattle, WA. They expressed interest in continuing to import potatoes, meat and fruit from the United States as well as many other food products.

Chukotka administration recognizes the high quality of U.S. food products and admits that buying potatoes in Seattle is cheaper than in Vladivostok. Regional officials also mentioned that there are 15 kinds of U.S. potatoes well adapted to northern conditions. However, in 1998, Chukotka will be purchasing potatoes from Holland and other food products from Central Russia because of lack of business relations with U.S. companies.

Pevek administration will be interested in importing fruit juices and baby food from the United States. Pevek administration is not able to do prepayments and would like U.S. supplier to consider two-three month delayed payment upon sale of food products. Pevek officials also stated that they would like to purchase U.S.-made children clothes.

7. Contact Information:

Office of the Governor of the Chukotka Autonomous Region
22 Lenin Street, Anadyr 686710, Russia
Phone (operator assistance is needed): 4-25-49
Fax: 429-19
Alexander Nazarov, Governor of Chukotka
Phone: 4-25-83, 4-47-05
Fax: 4-24-66
Igor Shishkin, Vice Governor
Phone: 4-45-89
Fax: 4-24-66, 4-24-72
Alexander Barsukov, Vice Governor, Head of Real Estate Committee

Chukotka Autonomous Region Representative Office in Moscow
Phone: 7 (095) 925-9513
Fax: 7 (095) 923-8624
Vladimir Vil'diaykin, First Vice Governor, Head of the Chukotka Administration Representative Office at the Government of Russia

The Chukotka Trade and Investment Office in Seattle
(non-profit entity organized to represent Chukotka)
Phone: (206) 624-6539
Fax: (206) 624-7679

Chukotsvyazinform Joint Stock Company (Anadyr)
Phone: 4-25-66, 4-26-41
Fax: 4-01-17
Yuri Tuzov, General Director

Pevek City and the Chaunsky District Administration
29, Obrucheva Ul., Pevek, Chukotka, 686610, Russia
Phone: 7 (42-749) 2-17-83
Fax: 7 (42-749) 2-21-42
Yuri Nikulin, Head of the Chaunsky District and Pevek City Administration

Council of Federation
Committee for the Northern Territories
26, B. Dmitrovka, Moscow, 103426, Russia
Phone: 7 (095) 292-5735
Fax: 7 (095) 926-6951
Maxim Danilov, Assistant to the Committee Chair

Author: Maria Breiter, Comerical Assistant, US & Foreign Commerical ServiceE (US Embassy), Moscow.

International Copyright, U.S. & Foreign Commercial Service AND U.S. Department of State, 1998. All rights reserved outside of the United States.