Conjunction of the EAEU and Silk Road Economic Belt

_ Timofei Bordachev, Director, CCEIS, HSE; Andrey Skriba, Assistant Dean for Research, Faculty of World Economy and International Affairs, Researcher, CCEIS, HSE;  Anastasia Kazakova, Junior Research Fellow, CCEIS. Moscow, 2016.

The conjunction of the Eurasian Economic Union (EAEU) and “Silk Road Economic Belt” has a great potential for Eurasian States’ development. At the same time Russia’s response to the Initiative will demonstrate if it can become a truly attractive destination for both foreign investors and partners.

The “Silk Road Economic Belt” idea was fi rst announced by the President of the PRC Xi Jinping in September 2013.1 It has been focused on attaining China’s domestic policy objectives (industry and infrastructure development, highway and railway construction, creating new workplaces in the western part of the country) and achieving foreign policy goals — to provide regional political and economic stability in neighboring states through large-scale investment projects.

However, in Russian the initial response to the “Silk Road Economic Belt” was mixed. There was a great variety of different opinions on this matter. Thus, Vitaliy Vorobyov stated that the new Initiative should guarantee China a fruitful cooperation with neighboring countries and provide favorable international environment.2 Furthermore, the “Silk Road Economic Belt” allows the Chinese government to mitigate a slowdown in economic growth generating demand for the country’s high-tech goods and services abroad.3 Alexander Lukin thinks that China’s tough position on territorial disputes, which raises many concerns, can constitute a signifi cant obstacle to implementation of the Initiative.4

On the contrary, Sergey Karaganov was deeply convinced that such coordination of Central Asian States offers incredible opportunities for building Central Eurasia as a region developed in an industrial, technological, logistic and socio-cultural way.5

This opinion is shared by Timofei Bordachev who declared that the policy of the Eurasian Economic Union (EAEU) and “Silk Road Economic Belt” conjunction provides tremendous benefits for all sides involved, hence the disputes on potential “China-Russia rivalry” do not have any ground.  According to his opinion, both the EAEU and “Silk Road Economic Belt” would promote further international cooperation in Central Eurasia, realize its transport and logistic potential, build capacity to respond external and internal challenges they face 6 of a new fast-moving world.

Ultimately, in the academic and political community prevailed the opinion that “Silk Road Economic Belt” stated objectives fully conform to Russia’s interests of the Eurasian integration project — one of the fl agship initiatives of Russia’s foreign policy.7 It also perfectly complies with Russia’s turn to the East.8

With the caveat that the EAEU, unlike the Chinese project, is the result of an integration process of fi ve states working together towards creating a common internal market, customs union and ensuring free movement of goods, services, capital and labour within its borders, the “conjunction” policy based on a strong “China-Russia partnership” will help implement many economic programs fostering political stability in the region.

Chinese experts consider that the “Silk Road Economic Belt” has a huge potential, in particular, for maintaining good relations with neighboring countries.

Dr. Feng Shaoleo asserts that the conjunction of the EAEU and “Silk Road Economic Belt” is a good sign 9 that Russian, China and Central Asian States are strategic partners. Therefore, the “One Belt, One Road” initiative would help to resolve the most serious disputes and ease tensions between the countries over the future of their development. However, the “conjunction” policy does not imply a fast-track movement towards establishment of an FTA agreement. As Van Tsinsun notes, most CIS countries’ sensitivity on the issues of national sovereignty remains acute.10 Moreover, their national economies are not still able to compete with major Chinese industries and agriculture.

After many debates the “conjunction” idea fi nally came into force after China and Russia singed a bilateral statement on May 8, 2015.11 This decision primarily aimed at avoiding a competition between the EAEU and “Silk Road Economic Belt” projects. Both countries declared their willingness to cooperate for creating a common economic and political community in Central Eurasia as well as to boost mutual trade between the EAEU countries and China. A special attention was paid to joint work in the framework of the Shanghai Cooperation Organization, Asian Infrastructure Investment Bank and Silk Road Fund.

Nevertheless, despite the initial success, we can note a slowdown in implementation of the agreement. To facilitate the process in October 2015 the Supreme Eurasian Economic Council agreed a Decision to make up a “road map” for the EAEU-China engagement by the end of 2015.12 The Commissioner for Trade13 was assigned the responsibility for negotiations with Chinese partners on trade and economic cooperation conditions.

However, as it becomes clear that there has been very little progress in spite of the parties’ stated conviction of the future benefi ts, questions arise on the reasons of the slowdown. Experts and scholars have taken up the initiative on defi ning the priority actions.

The format of possible expanded agreement between “the EAEU — EAEU members — China” was in the focus of debate as it would facilitate attainments of three tasks:

— expanding cooperation between China and the Union to the spheres beyond the Eurasian Economic Commission’s competencies;

— taking into consideration national interests of the EAEU members;

— ensuring that multilateral cooperation prevails over bilateral negotiaions.

In addition, an institute of permanent EAEU member-states’ representatives or a intergovernmental EAEU agency could steer the process of national interests articulation and brokerage.

The EAEU-China cooperation agenda cannot be confi ned to the trade, as the implementation of infrastructure and investment projects requires approximation of technical regulations with due account of the specifi cs of each commo dity group.

Effective functioning of the institutions is a success factor in implementation of the EAEU-China cooperation agenda. The Eurasian Economic Commission

competencies should be extended to include transport and investment issues by a special decision of the Supreme Council. The Commission must have the capacity to negotiate with China unifi cation of norms and common approaches to technical regulation. However, EAEU-China negotiations on a Free Trade Zone would be premature before the EAEU members establish internal instruments of precise technical control internally.

Creating an effective arbitrage or commercial court whose decisions would authority and trust among all members is another success factor. Insuffi cient legal protection of foreign investors and right for indemnity in the EAEU can be an obstacle for Chinese investments. Equally vital for investors is a free movement of labour, thus social protection and migration issues should also be part of the agenda.

Finally, a special attention needs to be paid to the possibility of creating meridional transportation-logistical corridors and clusters of cross-border cooperation to make sure the participation of the EAEU member states active and profi table.14

In conclusion, success of the EAEU and “Silk Road Economic Belt” conjunction directly depends on willingness of policy makers to promote implementation of the Central Eurasia countries major development initiatives. The EAEU members-states develop shared positions on a wide range of issues to ensure that multilateral cooperation is not substituted by the members-states bilateral engagement with China. Indeed, China’s recent spectacular involvement in Eurasia affairs creates both potential benefi ts and a signifi cant challenge testing the EAEU member states preparedness to act as equal partners in shape the future of the region.

Notes:

1 President Xi Jinping delivers important speech — Ministry of Foreign Affairs of the People’s Republic of China, 2013. http://www.fmprc.gov.cn/mfa_eng/topics_665678/xjpfwzysiesgjtfhshzzfh_665686/t1076334.shtml (accessed 5 February 2016)

2 Vorobyov V. Beijing’s New Foreign Policy — Russia in global affairs 2014. http://eng.globalaffairs.ru/number/Beijings-New-Foreign-Policy-16503 (accessed 5 February 2016)

3 Mikheev V., Lukonin S.. Jeh S. Multivariance: Xi Jinping” big strategic answer. MEMO Journal 2015. Vol. 59. No. 12. pp. 5–14.

4 Lukin A. Idea of the “Silk Road Economic Belt” and Eurasian integration — International affairs, 2014. https://interaffairs.ru/jauthor/material/1101 (accessed 5 February 2016)

5 Karaganov S. The promise of Eurasia — Rossiyskaya gazeta, 2015. http://www.rg.ru/2015/10/26/karaganov.html (accessed 5 February 2016)

6 Bordachev T. Creating Eurasia together — Izvestia, 2015. http://izvestia.ru/news/585463 (accessed 5 February 2016)

7 Bordachev T. New Eurasian Momentum — Russia in global affairs, 2015 http://www.globalaffairs.ru/number/Novoe-evraziistvo-17754 (accessed 5 February 2016)

8 Toward the Great Ocean-3. Creating Central Eurasia — Valdai Discussion Club, 2015. http://vid-1.rian.ru/ig/valdai/Twd_Great_Ocean_2_Rus.pdf (accessed 5 February 2016)

9 Feng S. The background and Prospects of the evolution of China’s foreign strategies in the new century Eurasia — Russia in global affairs, 2015. http://www.globalaffairs.ru/valday/Predposylki-i-perspektivy-razvitiya-vneshnikhstrategii-Kitaya-v-novom-veke–17817 (accessed 5 February 2016)

10 Van T. The highest good is like water – Russia in global affairs, 2016. http://www.globalaffairs.ru/number/Vysshee-blago-podobno-vode-17939 (accessed 5 February 2016

11 Joint declaration of the Russian Federation and China about cooperation and conjunction of the EAEU and “Silk Road Economic Belt” — The Kremlin, 2015. http://kremlin.ru/supplement/4971 (accessed 5 February 2016)

12 About cooperation of the EAEU member states on the conjunction of the EAEU and “Silk Road Economic Belt” Decision No. 58 from 14 October 2015 — Eurasian Economic Commission. https://docs.eaeunion.org/ru-ru/ (accessed 5 February 2016)

13 About questions related to negotiations with China on the trade and economic agreement between the EAEU and China. Decision No. 29 from 02 December 2015 – Eurasian Economic Commission. https://goo.gl/NPgi1K (accessed 5 February 2016).

14 Toward the Great Ocean-3. Creating Central Eurasia. The Silk Road Economic Belt and the Priorities of the Eurasian States’ Joint Development – Valdai Discussion Club, 2015. http://karaganov.ru/content/images/uploaded/7c15ceac311a5c93201dcb2a3c851be4.pdf (accessed 5 February 2016)

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