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Last Updated: Friday, 7 September 2007, 08:53 GMT 09:53 UK
'Pearl of Siberia' draws investors
By Tom Esslemont
BBC News, Baikal region

Rough road near Lake Baikal
The local infrastructure has been neglected for decades
Russia's cherished Lake Baikal in eastern Siberia is becoming a magnet for the tourist industry as energy revenues fuel an economic boom in this neglected region.

The lake, nicknamed "the Pearl of Siberia", is the world's largest body of fresh water. It is already a desirable holiday destination, in many places untouched apart from a few settlements and log cabin resorts.

The infrastructure is currently too poor to support large volumes of traffic. But the pins on Viktor Grigorov's map of Baikal indicate he plans to change that.

Based in the city of Irkutsk, his company Grand Baikal is one of the investors in regional tourism and a partner company of the state electricity firm Irkutsk Energy.

"My conception is that there will be fast roads, hotels and spa complexes here," he says, pointing at the map. "At the south end of the lake I can envisage us one day hosting the Winter Olympics - for the first time in Siberia!"

Grand Baikal plans three new hotels on the west side of the lake, creating 570 jobs.

Economic incentives

Earlier this year the Russian government declared the Baikal region a special economic zone, where financial laws are more liberal than in the rest of the country. The unique ecology of the lake region is nevertheless protected by law.

Lake Baikal
The lake is home to many unique flora and fauna
Regional firms are capitalising on the new investment opportunity. The popular resort of Listvianka is an example, with its new market for tourists and a seven-storey hotel towering above the other buildings in the village.

Hotel Mayak caters for the elite. For $800 (20,540 roubles; 397) per night you can stay in the hotel's own presidential suite.

The lake lies in Buryatia, a region where unemployment is rated the worst in Siberia by the United Nations. Federal subsidies make up some 50% of the republic's budget.

Most local people I met welcomed the new investment. For the first time many have electricity in their homes.

Russia map
The small town of Khougir, on Olkhon island, has just been wired up to the national grid.

Thanks to a ready supply of cheap electricity - costing just over one rouble per kilowatt - privately run business is experiencing its own boom in Khougir.

"I remember a time when ours was the only guest house on the island, but now there are more than thirty," says Natalya Bencharova, who runs a travellers' homestead with her husband Nikita.

She believes the boom is having a positive impact on the local economy.

"It's like civilisation has finally arrived," she tells me.

Hotel Mayak
The glitzy Hotel Mayak dwarfs traditional local buildings
From a clifftop overlooking Lake Baikal I can see seven new hotels along the shore, their wood freshly varnished. Chainsaws whir in the sunset.

Holiday camps, hunting lodges, hotels, saunas and even water-based theme parks are multiplying here.

Regional energy experts expect the development around Lake Baikal to accelerate when more companies learn about the special economic zone.

"Energy companies are aware of the importance of Baikal and that it is a [Unesco] world heritage site. I think 2008 will be the year when we see noticeable investment from such companies," says Dr Alexander Keiko, scientific secretary of the Energy Systems Institute in Irkutsk.

Environmental concerns

Ms Bencharova takes the impact of her business seriously.

"At first I thought it wasn't good to help develop tourism in this way, with many people building houses, but small-scale tourism is at least better than big hotels being put up by multinational companies," she explains.

Omul fish
Omul - a species unique to Baikal - is a tasty local attraction
Across the lake, energy companies are promising to limit the impact of development.

The Russian atomic energy firm Rosatom is planning to construct a laboratory to monitor ecological changes caused by tourism in northern Baikal.

The centre will be built in conjunction with an international uranium enrichment plant they say will allow them to invest $2.5bn in the region and create 2,000 jobs in the city of Angarsk.

Environmentalists say the impact of tourism on the delicate flora and fauna of Lake Baikal and its surroundings is far greater than the wealthy companies care to admit.

Greenpeace and a local NGO, Baikal Environmental Wave, have set up a partnership with other regional ecologists to evaluate the environmental impact of new tourist centres.

Rubbish on Olkhon island
Rubbish is already disfiguring parts of Olkhon island
The organiser, Yana Gerkova, says businessmen are purely interested in rapid investment in the region and neglect the environment.

"At a federal level, we already have plenty of strong environmental laws. The problem is they are not enforced," says Ms Gerkova, who grew up in nearby Irkutsk.

Litter illustrates the point.

On Olkhon, cows wallow among plastic bottles, bags and tins at a rubbish dump the size of a football pitch.

"The problem is that the national park where this part of Baikal is based can afford to pay only meagre salaries. It only employs 200 people and that is not enough to keep the place clean," says Yana.

As the number of tourists rises, so too does the clean-up burden.

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