_ Hendra Manurung, lecturer of International Relations, President University, Cikarang. March 2018.
The study attempts to describe and analyze the effect of the Eurasian Economic Union (EAEU) on global economic integration in Southeast Asia region using qualitative research method. The Eurasian Economic Union (EAEU) was establish on 1 January 2015, and launched a new period of economic integration in the Eurasian region. A Union formed among Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan is not simply a reincarnation of the U.S.S.R. as some politicians would claim. And it is not an attempt to create a certain one-sided economic club. The way the Union is developing is a sign of its potential power, which is quite the opposite the Union is strong due of a full and free dialogue with everyone. Before the establishment of the Union, the Eurasian integration process yielded obvious economic dividends for all its participants. For example, the total trade of Russia with Armenia grew by 64 percent during the last three business years, with Belarus 15 percent, with Kazakhstan 39 percent, and with Kyrgyzstan 31 percent. Even those states that joined the EAEU not long ago have already felt the positive effect. For instance, the inflow of foreign direct investment to the economy of Kyrgyzstan increased 2.3 times from January to June 2015 and amounted to US$498.5 million. Moreover, the volume of investment coming from the Commonwealth of Independent States (CIS) countries and Russia to Kyrgyzstan grew 2.8 times and 7.4 times, respectively. Without a doubt, the effect from being a member of the Union is different in each country, keeping in mind that positive changes are not visible straight away since the level of integration of each economy is different. And this is in line with one of the key principles of the EAEU. It is the principle of multispeed integration, which allows the states to gradually adapt to common laws and regulations as well as find their respective specialization areas.
In the new world of globalization, Russia does not have the global economic reach of China or India. Even though it sprawls over 11 time zones and four major regions which is Europe, Central Asia, the Far East and the Arctic, and borders several others (Pavlovsky 2009), Russia is not a global power.
However, Russia has historically established itself as a regional great power and strives to preserve that position in the new international environment. Until the Bolshevik revolution in the beginning of 20th century Russia had possessed no global ambitions but sought to dominate the Eurasian land mass from the Far East to the Balkans and Eastern Europe. Moreover, after the short-lived global geopolitical struggle with the Western nations during the Cold War, Russia is returning to its national identity as a regional great power. Its priorities once again include security and prosperity in the territories adjacent to its borders, and it increasingly sees itself as a European power with special relations with Asia and the Muslim world (Tsygankov 2007).
Russia is a peculiar regional power. It seeks to remain regional actor in European continent by acting globally. It distinguishes itself from established global powers in the West and rising global powers such as Brazil, China and India. As Stephen Kotkin (2009) puts it, Russia remains a regional power that acts like a global superpower, whereas China has been transformed into a global superpower but still mostly acts like a regional power.
In addition, Russia acts in the way it does because geography and history have taught it the value of staying engaged with the most advanced nations. At least since the emergence of the West as the dominant civilization, Russia has been determined to secure recognition and be considered like the West. If the Western nations are great powers, Russia too aspires to such status. If the West demonstrates accomplishments in institution-building, economic prosperity and human rights protection, Russian leaders are also drawn to these accomplishments and attempt to replicate them at home. Such global engagement has been essential for developing the economic and military capabilities necessary for survival in a region historically populated by some of the most powerful states on earth.
Therefore, to secure borders and meet other influential challenges in Eurasia, Russia has had to develop the capabilities and status of a great power.
Russia still remains a great power or even a regional one as today is a serious challenge to balance U.S rebalance in Asia Pacific under Barrack Obama and China New Silk Road agenda under Xi Jinping. Russia must act in the new international context, which includes preservation of a considerable Western influence and the expansion of Chinese influences in Eurasia. To succeed, Russia has to develop its capacity to be a power by exploiting its global comparative advantages, such as expertise in energy and military affairs and memberships in international organizations.
Such ambitious global engagement is necessary yet again for generating revenue and protecting Russia‘s sovereignty and status. Many Western observers (Menon and Motyl 2007; Wallander 2007) are skeptical that Russia‘s leadership is capable of designing a coherent long-term plan with appropriate institutional, material and intellectual support, and this is in part because the Kremlin is fundamentally weakened by the competition of rival factions.
Russia Great Power Ambitions
Post 911 event Russia has established itself as a great power by engaging more advanced states in projects of common concern or challenging them to recognize Russia‘s ambitions and international claims. In so doing, Russian leaders have sought to preserve limited and regional, rather than global, control, yet they have also recognized the importance of acting globally for achieving what are largely regional objectives. These objectives included defense of its borders and cultural allies, such as Orthodox Christians in 19th century, communists in 20th century and ethnic Russians after the Soviet disintegration. Principally, these objectives required that Russia remain a great power and be recognized as such by the outside world.
Historically, Russia‘s power status was maintained by addressing diverse international challenges. After the fall of Byzantium in 15th century, Russia emerged as the center of Eastern Christianity and fought multiple wars with the Ottoman Empire to defend Orthodox Christians in the Crimea and the Balkans. Russia also challenged European states to recognize its regional ambitions. While in 20th century, the Kremlin followed largely the same logic when it challenged the United States and Britain to recognize the Soviet sphere of influence in Eastern Europe territory.
By the late 20th century, the international context had changed. Ideological confrontation yielded to the logic of economic globalization, and Russia too had to change methods to defend its position as a great power. Russia now had to shift emphasis from defeating its rivals militarily or through counter-intelligence operations to demonstrating its ability to compete and to play role on the global markets.
At least there are three historical forces shaped Russia‘s behaviors in global politics. First, although it has emerged as historically dependent on the West‘s power and recognition, Russia has never been colonized by Western nations and greatly values its political and spiritual independence (Poe 2003). Such independence has kept alive Russia‘s ambitions to preserve its influence in Eurasia and Eastern Europe.
Second, being a continental empire with vast borders made Russia wary of multiple and varied challenges to its security. Russia compensated for this vulnerability by developing a highly centralized political system in order to be able to respond rapidly to threats from abroad. Russia‘s political and economic systems were not principally different from those of Western European states in the early 17th century autocracy had to be transformed to comply with the imperatives of military modernization (Lynch 2005). The highly centralized state also gained an upper hand internally which often by suppressing resistance from commercial classes.
Third, the Soviet Union ideological expansion in Asia Pacific region during Cold War in Vietnam, Cuba, and North Korea has affected its own interest in broadened regional stability. It represents a long experience of great power diplomacy, as well as high levels of trust amongst the Asian powers. Additionally, Russia has the potential to play a significant role in mediating the tectonic geopolitical shifts in the region. Rather than the much touted bridge between
Europe and Asia, Russia could find itself bridging the gap in understanding between the U.S. and China in Asia Pacific region (Manurung 2013).
Therefore, other established and dynamic rising powers face relatively few external threats to their security. Russia, however, remains preoccupied with the security of its borders and natural resources and acts as a concerned regional power. Much of this preoccupation has roots in Russia‘s militarized history and geography of resistance to real and perceived threats from abroad. By contrast, Western states, especially those protected by the oceans from potential invasions, historically have faced fewer security challenges.
The Kremlin has overcome many of its weaknesses of the 1990s and reached consensus on some principal objectives of Russia‘s foreign policy, such as the preservation of Russia‘s global influence and its status as a regional great power.
However, since Putin back to power in 2010, Russia government has consolidated internal power and change in elite belief system (Mankoff 2009; Tsygankov 2010). There is therefore an urgent need that China and the U.S. find a way to co-exist with each other, and with the other powers in this region. Here an opportunity emerges for Russia. Like the U.S., Russia shares a profound interest in preventing regional instability and its leadership should be extremely alarmed at the current arms race on its eastern periphery. However, unlike the U.S. or China, Russia is not viewed as a threat or rival in the region (Manurung 2013).
Russian President Vladimir Putin has stated on several occasions his commitment to make the development of Siberia and the Far East a ―national priority for the entire 21st century‖, including most recently at the Eastern Economic Forum that took place in Vladivostok in September 2016. In many ways, this strategy dovetails with the nation‘s pivot to the East, in the form of stronger trade and economic ties with China and the nations of Southeast Asia. But how realistic are these plans ?
The writer analyze that a number of political and economic factors that are complicating Russia‘s vision to develop its Far East and become a true player in Asia-Pacific, including geopolitical rivalries, historical grudges, the lack of infrastructure in the Far East and the rise of Central Asia. At the heart of all these issues is one central factor, of course, and that‘s energy. In many ways, Russia‘s ability to build ties with Asian powers such as China is based on its capacity to supply enough energy to power these growing nations.
However, that‘s the crux of the matter: Will Russia‘s pivot to the East lead to real economic and technological progress? Or will the focus on the energy relationship just lead to the construction of more pipelines and more dependence on oil and gas as an economic lifeline?
Thus, it outlines that Russia‘s goal should be greater economic integration with Eurasia and the formation of regional trade partnerships with the nations of Asia-Pacific. To help answer these questions, this study includes a viewpoint on the historical development of Vladivostok in the Far East, which some in Russia have conjectured could become the focal point of a robust technological hub similar to Silicon Valley.
Ultimately, Russia‘s ability to develop the Far East will require more than just a fond reminiscence about the past or a doubling down of the nation‘s current energy strategy. It will require real investment in infrastructure and telecommunications networks, and a real focus on diversifying the national economy into innovative new IT products. If that happens, Russia could be positioned far well than its Western rivals to make the pivot to the East.
One year is not a long period of time. Surely, not all mechanisms of economic cooperation between the states have been adjusted. The large-scale work on synchronizing the legislative framework, standardizing technical requirements and eradicating the barriers to external trade among member states is in process.
Since the moment of the establishment of the EAEU, 80 such barriers were erased and it is planned that by 2025, there will be no obstacles in trade whatsoever. The regulations and norms in energy effectiveness, resource saving, machine and equipment production, ecological, sanitary and veterinary control, intellectual property protection and other areas are being harmonized.
A common gas market is being formed, the total effect of which is likely to reach US$4 to 5 billion a year. A common market for pharmacy and medical products is also being created that will increase the quality of products and their accessibility to the population.
Apart from addressing daily matters of economic interaction, the members of the Union are also working on a serious strategy for the future: they are discussing the perspectives of forming a common education area of the EAEU, as well as developing mechanisms for cooperation in nanotechnology and innovation.
Some progress in these areas is being achieved, such as the Eurasian Engineering Center aimed at become a base for science and technology cooperation is being created while a Russian- Kazakh Fund for Nanotechnology, and Kyrgyz-Russian center for innovation in Central Asia have been already set up.
The further extension of the Union is facilitated both by the access of the new member states and by various cooperation carried out with third-party countries, some of whom are significant trade partners.
Tajikistan is on its way to a Union entry decision. In late May 2015, the Union and Vietnam signed a free trade zone agreement, which, according to some experts, might by 2020 allow the increase of the overall trade turnover from the current US$4 billion to US$10 billion.
On Nov. 25, 2015, the first business forum “The Eurasian Economic Union and Vietnam” dedicated to the development of mutual trade was held in Hanoi, Vietnam. The forum brought together more than 150 companies and business associations from both Vietnam and the EAEU. More than 30 countries that are Union trade partners showed interest in the free trade zone.
The end of November 2015 also marked the signing of the memorandum for cooperation between the Eurasian Economic Commission, a permanent regulatory body of the Eurasian Economic Union and the Ministry of Trade, Industry and Energy of the Republic of Korea. The memorandum created the base for bilateral cooperation in a wide range of areas of economic development.
Constructive dialogue has also been established between the Union and Latin American states – namely, Mexico, Chile, Peru and Uruguay.
Eurasian integration is the initial part of the global economy. Today the Eurasian Economic Union is keeping up its dialogue with the Asian-Pacific Economic Cooperation (APEC) forum, the Southern Common Market in Latin America (MERCOSUR), the Association of Southeast Asian Nations (ASEAN), as well as other partners, for example the BRICS countries.
Russian and Chinese leaders discussed the opportunities of cooperation between the Eurasian Economic Union and China during a meeting in Moscow on 8 May 2015. The joint communiqué of Vladimir Putin and Xi Jinping says that Eurasian integration and The Silk Road Economic Belt could be correlated.
It means there is a possibility for a higher level of cooperation, which is a common economic area for all of Eurasia. In effect, Eurasian integration is the integration of other integrated institutions.
The Eurasian Economic Union can easily be and it must be a part of the Greater Europe project which extending from the Atlantic to the Pacific Ocean. And it will never become a part of the closed geopolitical game with specific rules and benefits only for exclusive players.
Today experts are actively discussing the prospects and possible models for cooperation between the EAEU and the newly created Trans-Pacific Partnership (TPP). According to Tatiana Valovaya, Minister in charge of the Development of Integration and Macroeconomics at the Eurasian Economic Commission, said while speaking at the conference at the Cato Institute in Washington, DC on 29 October 2015: ―The formation of mega-regional trade blocs is a positive trend, adding more stability to the development of the global economy‖. (Russia Direct 2016)
A unified toolkit of export, import and investment support is being developed by the Union member states. Russia‘s Vnesheconombank, the Development Bank of Belarus and the Development Bank of Kazakhstan have already signed a Memorandum on Cooperation in investment and the trade and economic spheres. The Memorandum provides a possibility for financial institutions of other member-states to join in.
The Memorandum‘s implementation would promote sustainable economic development and stimulate trade, economic and investment cooperation. The parties agreed to upgrade mechanisms of credit activities between the financial institutions, to cooperate closely upon implementing of joint investment projects and to promote exports of Union member-economies.
A Russian Export Center of Russia‘s Vnesheconombank was created as a basis for further cooperation. It will provide Russian and foreign companies operating in Russia with a wide range of actual support measures, including financing under subsidized interest rates, export insurance and state guarantees.
To sum up, a lot has happened in the Eurasian economic project over the past year. At the same time, we do witness the steady readiness of member states to have a system and open dialogue that allows the Union to move forward and achieve the goals of the Eurasian economic project. Its mission is clear how to create conditions for modernization and further stable development of the economies of the member states in order to improve the living standards of their population.
The Eurasian Economic Union Expansion to Asia Pacific
In late July 2016, the Eurasian Economic Union (EAEU) ratified its first-ever free trade agreement with a country outside of the Union, Vietnam. To see what this development might mean for Russian plans to expand trade with Asia. It outlined what the Union has achieved in terms of cooperation with Asia-Pacific countries.
Recently the EAEU has received around 40 proposals for free trade agreements (FTAs) and quite a few of them from Asia-Pacific countries. Interestingly, practically all the countries of the Asia-Pacific region have FTAs with each other, a fact that encourages them to take a preferential trade regime for granted. Therefore, there is a certain interest of those countries in the EAEU market.
The fact that the EAEU market is not yet as deeply integrated into global economy as many others makes it rather attractive for numerous trade partners across the globe and in the Asia- Pacific region in particular.
Despite no Asia-Pacific country having such a free trade agreement with the EAEU, they are interested in pursuing such an arrangement. If the current rather protectionist regime is replaced with a more liberal one, the EAEU market would have a great potential for trade. This is perhaps what attracts Asia-Pacific countries.
In recent years, the EAEU has been concentrating on integration within its own borders, while integration with third countries was not a priority. The FTA with Vietnam, which was ratified only on 28 July 2016, and will come into effect in October 2016, became the first agreement of its kind for the EAEU with a third country. It characterized such development as a mindset revolution, as now the EAEU has started to change its approach and pay more attention to the markets of third countries.
However, critics of such an approach have been advocating against it even before this free trade agreement was signed. They warned that opening the EAEU market to Vietnamese goods would be a disaster for domestic manufacturers. Understanding such risks, it underlined that the EAEU took necessary measures to minimize them. The Union decided not to cancel duties for commodities that are the most sensitive for EAEU countries. Duties on them either remains the same or is reduced with lengthy transition periods.
Before signing such an FTA with Vietnam, the EAEU had absolutely no competitive advantages on the Vietnamese market because other key trade partners, such as: China, India, the U.S. and others had signed similar agreements with Vietnam before the Union. Once the FTA comes into
force, the average level of duties on EAEU goods will drop from 10 to 1 percent. Thus, the Union goods will enjoy terms on the Vietnamese market that put us on par with our competitors.
In particular, Vietnam has reduced or eliminated its import duties for the EAEU on 91 percent of its goods. Zero duties will apply to beef, dairy products, tinned fish, flour, cereals as well as to rolled steel, pipes, asbestos, ships, petroleum products and many other categories of goods. The duty on petrol will be reduced from 19 to 0 percent with a transition period; on cables, from 20 to 0 percent over a period of 10 years; for large goods and vehicles, from 17 to 0 percent.
Vietnam has also agreed to partially liberalize access to its market for tobacco products from the EAEU, while automobile industry companies will be given exclusive access to the Vietnamese market.
In return, the Eurasian Union will eliminate its import duties on 88 percent of goods immediately or with a transition period of 5 to 10 years. Thus, Vietnamese producers will get preferential access to many consumer goods markets of the EAEU including clothes, shoes, fish, rice, fruits, vegetables, and consumer electronics.
After signing the FTA with Vietnam, the EAEU is looking forward to expand its ties with other Asia-Pacific countries. It is developing its integration roadmap and prioritizing potential partners guided by its advantages and risks and also with a view to smoothly adapt their countries‘ industries to a new foreign trade regime. Thus, the Union has no intention of integrating for integration‘s sake or doing it in retaliation for the establishment of regional trade blocs. As for the next countries on the list, this year the Union has signed memoranda of cooperation with Cambodia and Singapore.
Looking at the ASEAN as a potential economic partner, EAEU wants to extend its cooperation to its member states. With that in mind Eurasian Union sent an offer to sign a memorandum on cooperation to the ASEAN Secretariat but so far it found such a proposal not interesting.
The EAEU is currently carefully identifying individual countries, a set of bilateral agreements, which in the future might lead to a multilateral agreement.
With regard to Singapore, the EAEU intends to launch a joint feasibility study group before the end of this year in order to identify potential benefits for both sides. Under the EAEU rules, before starting negotiations on a free trade zone, the results of this group‘s work have to be presented to the leaders of the five EAEU member states and receive a mandate for further talks.
Although there are good prospects for cooperation with Singapore there are certain peculiarities that come along with it. The bulk of the EAEU member states‘ relations with Singapore are based not in the transfer of goods but in services and investment. That is why a simple reduction of duties with Singapore will not benefit EAEU countries.
The EAEU‘s exports to Singapore mainly consist of energy goods, and duties in Singapore either already amount to zero or are very low. That is why there are actually no tariff barriers for the EAEU‘s goods; there is nothing for Singapore to reduce any further. Talking about Singaporean goods albeit they are not very numerous on the EAEU market, they do need to have duties on them reduced.
Thus, the Union would be more interested in a free trade agreement with Singapore to include in addition to duties, such as provisions on services and investment. However, under EAEU rules, services and investment fall under the competence of member states and the EAEU does not have a mandate for holding these talks.
It is probably the right time for the EAEU to evolve and to ask the leaders of the five member states whether they consider it possible to expand the EAEU mandate, perhaps not systemically but for individual cases, like with Singapore.
During Vladimir Putin‘s visit to China in June 2016, the EAEU signed a cooperation agreement with Beijing. China, as the biggest economy and market on the Asian continent, is a very important economic partner for the Union.
At this stage the EAEU is preparing an economic cooperation agreement with China, not an FTA. The writer argues that the EAEU member states are not yet in a position for a deep market opening, so better starting positions must be created first, including greater transparency, and mechanisms to tackle high non-tariff barriers that are currently affecting EAEU exports.
In fact, the EAEU did not have any regulatory relations with China since each member state resolved such issues individually, so the simple streamlining of dialogue with China will be a huge step forward. First, the Union needs to understand its differences with China when it comes to non-tariff regulations, and then find access routes and only then start discussing a free trade agreement.
In terms of technical regulations, the issue is that Union standards and procedures significantly differ and for the Union producers it happens to be a challenge to meet all the regulations of the Chinese market. Yet the Union still lacks a developed mechanism for trade facilitation in this regard. In order to address this problem, the Union will explore possibilities to elaborate on its standards and procedures in order to facilitate trade flows. Therefore, only after such mechanisms will be developed, the EAEU and China could start discussing a reduction in duties, otherwise it would be pointless.
Russia – the European Union (E.U): Pursuing Dynamics Relations
Those who argue that it is not in Russia‘s interest to distance itself from the EU, which especially over the long term, are probably right. Russia can certainly show more pragmatism in its relations with the EU, as the latter can help it in resolving certain problems such as the terrorist threat and economic recession. One example of this pragmatism is the recent meeting of the “Normandy Four” in Berlin, which showed that Russia still views dialogue with its European partners as constructive.
Yet, it remains to be seen if both partners can find a way out of their now well-entrenched misunderstanding. At least, there are 3 (three) important reasons why relations between the EU and Russia might remain in their current unsatisfactory form.
First, there is the question of whether Russia can really afford to distance itself from the EU. This is not just a matter of economic sustainability, but also a matter of political will. German sociologist Max Weber long ago noted, ―A nation will forgive damage to its interest, but not an injury to its honor‖. Thus, in purely rational economic terms, any split with Europe does not make sense for Russia. But it is all the intangible issues, such as honor and national pride that matter for Russia.
Unfortunately, during the last quarter of the century, relations between the EU and Russia have steadily deteriorated – from condescension to incomprehension, and then to the current level of tension that characterizes this relationship between the two neighboring geopolitical entities.
For some time to come, it is highly possible that the level of distrust will remain at these elevated levels. As both partners cannot change the past, they can only limit the negative effects of previous policies and current positions on Syria, Ukraine and elsewhere. The reestablishment of Russian prestige through highly visible international actions may come at a high cost. Nevertheless, Moscow‘s leadership seems ready to pay it.
Second, given current trends, Russia is implementing a wait-and-see policy vis-à-vis the post- Brexit EU. This, too, does not favor a rapprochement. If one assumes that the EU is not going to exist forever, then the costs of alienating the EU could be bearable. But the EU is likely to persist, and that changes the cost-benefit tradeoffs considerably.
Even though Russian President Vladimir Putin had not taken a side before or during the British vote to leave the EU and unlike U.S. President Barack Obama, Russian diplomacy has proven to be very interested in the situation created by the results of the referendum. In short, what happens in Europe still matters for Russia.
The post-British Exit (Brexit) political situation offers Russia a renewed opportunity for applying its ―divide-and-rule‖ policy, when it comes to influencing the European decision- making process. Undeniably, from a geostrategic standpoint, Russia appears to be a challenge to the cohesion of the European Union. Various EU member states have neither the same interests, nor the same expectations with regard to Russia. In the next few years, the EU will be more inward looking as it will likely concentrate on its own internal developments.
Meetings about the future of Europe will take place under several formats. Some will include the founding members of the EU (Belgium, France, Germany, Italy, the Netherlands and Luxembourg) and others will include the Visegrad group (Poland, Hungary, Czech Republic and Slovakia), in order to focus on the following issue: What‘s next for the EU after Brexit?
The United Kingdom, which has often been the EU member state most critical of Russia, might be willing to make some conciliatory moves, as it has to find a new place in the international arena. In such circumstances, Russia is not very different from China or the U.S., and probably even not so much different from a post-Brexit UK.
Yet, Russian policy towards the EU is exacerbated by the fact that there is no long-term objective or outlook between Russia and Europe any more, even in some kind of idealized form. For several reasons, an idea of the ―common European home‖ or the ―Greater Europe‖ offered by the last Soviet leader, Mikhail Gorbachev, receives very limited attention today as the majority of Europeans simply see it as incongruous or devoid of any significant practical scope.
The absence of prospects, even on a theoretical level of a regrouping between Europe and Russia under a shared roof, is further proof that the gap between the two is likely to be a lasting one. The ideological gap between Europe‘s rule of law, liberal democratic values and Putin‘s concept of sovereign democracy or illiberal democracy, has seemingly widened over the last few years.
The situation does not exist without obvious contradictions. Russia may be perceived as an authoritarian regime that shows little concern for human rights or democratic values. Yet, nevertheless, the existing leadership in Moscow regrets its marginalization by Europeans. It seeks to stand out and offer some sort of competing vision for the future, but needs the acceptance of Europe to do so.
Third, Russia might be under the illusion that it may find a lasting alternative to Europe in Asia. The current misunderstanding between the EU and Russia may be encouraged by a shared belief that the interdependency between the two might decrease in the years to come, given the appearance of new alternatives both political and economic in the world.
In the energy sphere, several EU members have started to elaborate strategies to diversify gas supplies, with the aim of reducing their dependency on Russia. Others tend to think that blocking the Nord Stream, the South Stream or other gas pipeline projects is a sufficient guarantee for European energy security, even before thinking about cooperation or EU market integration.
Similarly, Russia has strengthened its economic cooperation with China, creating a real partnership after the two nations signed an important gas agreement in March 2014. As Russia pivots to the East, European sanctions may ultimately lose their effectiveness. Plans for the inclusion of the Russian-led Eurasian Economic Union within the Chinese New Silk Road project has finally been accepted by Putin, who praised a ―Great Eurasian Partnership‖ during the St. Petersburg International Economic Forum in June 2016.
Economic integration is the area where the EU possesses the best experience and practices. If Russia and China were able to find a common ground for economic cooperation, then why can the EU and Russia not agree on a shared perspective for the future?
In the end, the combination of all three of these factors, an inward-looking Europe, a patient Russian leadership and an opportunistic China may well help Moscow to distance itself from the EU. But will such a move really be in Moscow‘s best interests ?
Russia’s Pivot to the East: Closer to China
With Russian President Vladimir Putin going to visit China in late June 2016, the leading Moscow-based think tanks are considering the future trajectory of Russia-China relations. To what extent has Russia‘s ―pivot to the East‖ actually taken place ? Despite a lot of buzz about the Kremlin‘s turn to the East in Russian political and media circles, there are some important challenges that would appear to hinder the future development of Russian-Chinese relations.
While some experts argue that the pivot to China is in full swing, there are a lot of skeptics who think otherwise. According to them, Russia has failed to complete the turn to the East. The main factor they cite is that economic cooperation between Moscow and Beijing is not advancing as quickly as originally projected, evidenced by the lack of Chinese investment in Russia and the significant decrease of the trade turnover between the two countries.
In 2016, Russia and China celebrate the 15th anniversary of the conclusion of the bilateral Treaty of Good-Neighborliness and Friendly Cooperation. Russia and China’s relations have transformed into a comprehensive partnership and strategic cooperation, the two states have increased their mutual support at leading international platforms and have come up with new instruments of multilateral cooperation in the framework of SCO, BRICS, and other global governance institutions.
Today the alignment of the Eurasian Economic Union (EEU) and the Silk Road Economic Belt (SREB) is high on the agenda. Connecting the two strategic initiatives provides optimal conditions for a new economic and political environment in Eurasia.
However, imbalances in the global economic system and Russia’s and China’s recent economic troubles pose serious threats to the implementation of large-scale development projects and demand innovational approaches to the collaboration. On May 30-31 2016, prior to the visit of the President of Russia Vladimir Putin to the People’s Republic of China, Russian International Affairs Council (RIAC) holds the Second International Conference “Russia and China: Taking on a New Quality of Bilateral Relations”. (Russian Council 2016).
In fact, Russia-China trade dropped from about US$88 billion to almost US$64 billion between 2014 and 2015. It underlines the common trend: Russian-Chinese trade turnover plummeted from US$95 billion to US$68 billion over the same period of time.
In comparison, China‘s trade with Europe and the U.S has been robustly increasing for the last three years (2012-2015). In 2015, it reached about US$590 billion with the EU and almost US$660 billion with the U.S. That‘s why, economically, Russia‘s pivot to the East has failed to take place. While Russian-Chinese trade has decreased by 30 percent, Beijing‘s trade with Washington has been steadily rising despite geopolitical differences.
The writer question how Russia approaches of doing business. Russia and China are lacking cooperation in the field of small and medium-sized business, which is overshadowed by the robust collaboration between the state gas monopolies of the two countries.
Moreover, the model of China-Russia cooperation is outdated, with Russia exporting raw materials like gas and oil and China providing manufactured goods. China‘s level of investment is not increasing because of China‘s tough manner of negotiating and its tenacity in promoting its national interests. The Chinese companies offer very tough conditions that Russians cannot accept, which accounts for the lack of Chinese foreign investment in Russian territory (Kommersant 2008).
Therefore, without economic collaboration, there won‘t be the social foundation for robust political relations. However, at the same time he admits that, politically and strategically, China
and Russia see each other as close and friendly partners, as indicated by the number of their joint bilateral summits, readiness to cooperate in the field of security and frequent meetings between top Russian and Chinese diplomats and political leaders (Kommersant 2008).
In fact, today Russia sees China as an alternative to the West and its pivot to the East is a result of the deterioration of its relations with the U.S. and Europe, which stemmed from the Ukrainian crisis. Such an approach hinders any reorientation to the East and reveals the fact that Russia has not until recently viewed the Asian vector of its foreign policy as self-sufficient and full-fledged. In this regard, the turn to the East hasn‘t so far happened, there are just some shifts.
Thus, to maintain their sustainable relations on a respectable level, Moscow and Beijing have to be mindful about both opportunities and obstacles for their cooperation and look at the situation realistically.
Russia and China have to understand not only where they agree, but also where they disagree. What is most important for the two countries is to prevent their different approaches from turning into political contradictions.
That‘s why Moscow and Beijing should be more rigorous in coming up with a strategic long- term framework. However, the absence of strategic depth is still a problem for them. The two countries have to participate actively in different integration projects.
One of them is the widely publicized linking of the Russia-initiated Eurasian Economic Union (EAEU) and the Silk Road Economic Belt (SREB), China‘s attempt to integrate with Central Asia, and expand economic cooperation in the region. Ostensibly, the integration of these two ambitious projects deal with economy and trade, however some Russian and Chinese tend to see it as a political tool, aiming at alleviating the Russian-Chinese rivalry in Central Asia and nipping the potential conflict between them in the bud.
That integration between the two countries could become a good response and an alternative to the U.S. initiated Trans Pacific Partnership (TPP). However, currently there is no clarity what will be the foundation of such a project. So far, pundits agree that the Shanghai Cooperation Organization (SCO), the EAEU and the Association for Southeast Asian Nations (ASEAN) might serve as a potential platform of potential integration between Russia and China.
If the entire world prefers to integrate in different organizations and Russia‘s EAEU is too small and too weak to compete with the Trans Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP), another U.S. regional free trade agreement with Europe, Russia and China will have to be involved in a bigger economic group.
The writer skeptical about the nature of Russia-China relations, still there are some risks over the long run that the interests of Moscow and Beijing might collide. In international Politics, it is quite difficult to secure and maintain good relations continuously. Perhaps in long term, tensions might rise between China and Russia due to legitimate strategic interests in Central Asian countries. It is not always easy to reconcile these political economy interests.
The Eurasian Economic Union (EAEU) Development
The Eurasian Economic Union (EAEU) is an economic union of states located primarily in northern Eurasia. A treaty aiming for the establishment of the EAEU was signed on 29 May 2014 by the leaders of Belarus, Kazakhstan and Russia, and came into force on 1 January 2015. Treaties aiming for Armenia’s and Kyrgyzstan’s accession to the Eurasian Economic Union were signed on 9 October and 23 December 2014, respectively. Armenia’s accession treaty came into force on 2 January 2015. Kyrgyzstan’s accession treaty came into effect on 6 August 2015. It participated in the EAEU from the day of its establishment as an acceding state.
In 1994, the President of Kazakhstan, Nursultan Nazarbayev, first suggested the idea of creating a “Eurasian Union” during a speech at Moscow State University. Numerous treaties were subsequently signed to establish the trading bloc gradually. Many politicians, philosophers and political scientists have since called for further integration towards a monetary, political, military and cultural union. However the member states decided to seek a purely economic union, having concerns about keeping its independence and sovereignty intact.
The Eurasian Economic Union has an integrated single market of 183 million people and a gross domestic product of over 4 trillion U.S. dollars (PPP). The EAEU introduces the free movement of goods, capital, services and people and provides for common policies in macroeconomic sphere, transport, industry and agriculture, energy, foreign trade and investment, customs, technical regulation, competition and antitrust regulation. Provisions for a single currency and greater integration are envisioned in future. The Union operates through supranational and intergovernmental institutions. The Supreme Eurasian Economic Council is the “Supreme Body” of the Union, consisting of the Heads of the Member States. The second level of intergovernmental institutions is represented by the Eurasian Intergovernmental Council, which consisting of the Prime Ministers of member states. The day-to-day work of the EAEU is done through the Eurasian Economic Commission (the executive body), which is a supranational body similar to European Commission. There is also a judicial body, the Court of the EAEU.
In May 2015, Kyrgyzstan joined the Eurasian Economic Union (EAEU), which is currently comprised of Russia, Belarus, Kazakhstan and Armenia. The union itself became operational on January 1, 2015, and welcomed Armenia as the fourth member country one day later on 2 January 2015.
While, Tajikistan is also showing interest in the EAEC, and on 10 December 2015, during a meeting between the presidents of Russia and Uzbekistan in Tashkent, the parties expressed their desire to hold consultations on the creation of a free trade zone between Uzbekistan and the EAEC. Although one month later President Islam Karimov stated that his country would not join the EAEC or any other organization reminiscent of the former Soviet Union. Today the EAEC unites 180 million people within a common market, making it the largest integration union in the world (Russia Direct 2016).
But anti-Russian sanctions and the economic slump in Russia have raised doubts in Kazakhstan and Belarus about the sustainability of the new union. In potential member countries, where prior to Russia‘s crisis the arguments in favor of joining were overwhelming, the disputes between Moscow, Minsk and Astana over organizational mechanisms have prompted a new wave of discussion.
However, the backlash over Moscow‘s annexation of Crimea was the first serious test for the EAEC integration process. The divisions inside the EAEC in the wake of events in Ukraine and anti-Russian sanctions have strengthened Kazakhstan‘s sense of national sovereignty.
The measures being discussed in the country, which include banning the import of goods from Russia, show that each country in the EAEC intends to put its own interests first. Now is a natural bedding-in period and an opportunity to draw the boundaries of the Union. Any integration project is a constant search for compromise, and for Kazakhstan the process is beneficial.
The EAEC can help solve Central Asia‘s interregional problems. The resumption of supplies of Uzbek gas to southern Kyrgyzstan in late December 2014 after Russian President Vladimir Putin‘s visit to Tashkent confirms Moscow‘s constructive role as a solicitor between EAEC member countries.
The Central Asian republics are traversed by roads and pipelines connecting Europe and China. The discrepancies between the republics are hindering the implementation of Chinese projects in the region. Awareness of this should make the region‘s politics more flexible and compromising. In other words, the principle of ―don‟t anger the Chinese‖ can simultaneously draw the republics closer together and determine the general prospects of the EAEC project.
Moreover, for Minsk, the EAEC means access for Belarusian goods to the Russian market and the markets of Kazakhstan, Armenia and other potential members of the union. The EAEC can facilitate economic growth in Belarus. Another motive for Minsk‘s integration with the EAEC is access to energy resources, the price of which is set to be the same for all participating countries.
In ratifying the EAEC, Belarus stated that it would comply with the obligations only if trade exemptions and restrictions were removed. The experience so far of EAEC integration shows that many obstacles need to be overcome, often artificial and politically motivated ones. If all trade restrictions are removed and movement of goods, capital, people and services within the EAEC becomes genuinely free, such integration will do doubt promote economic growth in member countries.
All the Central Asian republics have a large domestic market, which the EAEC can help to develop. But in any economic union, the winner is always the country where the economy is more developed and technology-savvy, and where production costs are lower. Those Central Asian countries able to compete with other members of the EAEC have a good chance of solving their problems through expanding their products and services markets. Uncompetitive countries, however, risk even worse economic hardship than before.
Economic interdependence inside the EAEC has yet to result in assistance for economically weaker members. On joining the union, Kyrgyzstan will be even less willing to shoulder responsibility for others‘ economic weaknesses. There is debate in Bishkek about the requirement to share member countries‘ politically induced economic woes.
As long as the risk of disintegration hangs in the air, and the economic benefits of membership remain unclear, any talk of the EAEC‘s future must come with caveats. Much will depend on the ability of the most influential country, Russia, to take account of the economic and political interests of its fellow EAEC members.
Armenia was the first country where Russia applied the safety factor to keep it inside Moscow‘s zone of influence. The reason for joining the EAEC lies in Armenia‘s traditional security problems and complex regional surroundings.
The frequent violations of the ceasefire in the disputed region of Nagorno-Karabakh and on the Armenian-Azerbaijani border, coupled with Azerbaijan‘s increased military spending in excess of Armenia‘s national budget, have restricted our options.
Turkey‘s refusal to establish diplomatic relations with Armenia and lift the blockade in place on Europe‘s last remaining closed border which is also a customs border of the EU, and Armenia‘s exclusion from regional energy and communications projects, all played a part in the country‘s decision to join the EAEC.
Armenia‘s economic troubles were another reason for joining the EAEC. Yerevan was seeking a short-term and tangible opportunity to improve the country‘s economy. The choice was made in favor of EAEC membership, which in contrast to the long-term benefits of the EU could help solve the economic problems in the short term.
The third reason was Yerevan‘s dependence on Russian energy. Under the ―assets for debt‖ scheme, a number of strategic assets in Armenia were transferred to Russian companies in lieu of $93 million owed to Russia. Armenia‘s gas industry became the property of Gazprom. In exchange for control of the Armenian gas sector, Russia reduced gas prices from $270 per thousand cubic meters to $189.
A little known reason for Armenia‘s predisposition to EAEC integration is the role played by Armenians in Russia. A large percentage of 29 percent of investors in the Armenian economy are members of Russia‘s Armenian Diaspora. But the economic slowdown in Russia is lowering demand for Armenian exports and migrant laborers.
The Eurasian space is a huge market in which Tajik products — fruit, vegetables, cotton, textiles, energy, non-ferrous and precious metals — are in high demand.
If the country joins the EAEC, economists and businessmen expect to see an influx of investment in the hydropower sector and lower prices on hydrocarbon imports from Russia and Kazakhstan.
Another benefit of EAEC membership for Tajikistan could also be the common labor market. Tajik migrants would be able to work in Russia free of the current immigration restrictions.
Tajikistan‘s WTO membership would be a sticking point if it were to join the EAEC. The WTO forbids members from joining customs unions that include non-members of the organization without revising the terms of WTO membership. Integration into the EAEC may also restrict Tajikistan‘s maneuverability on foreign policy in relations with the EU and the U.S.
On the other hand, the EAEC would be a counterweight to China, allowing Tajikistan to avoid excessive dependence on the economy of the ―Celestial Empire.‖ In the ideal scenario, Tajikistan could become a gateway to the huge EAEC market for goods from China, India and Pakistan. It is not ruled out that inside the EAEC the country will become the principal model for CIS integration over the next decade.
Uzbekistan currently views the EAEC as politically motivated and is not looking to join the union. EAEC membership would require some major legislative changes that Tashkent cannot make at present. Another reason is that the country‘s diversified foreign economic relations make it infeasible to adopt all the rules of the game as prescribed by the EAEC. But it should not be ruled out that Tashkent might just be waiting and watching to see how events unfold before making a final decision.
In my view, the issue of regional integration is of greater relevance to Central Asia. Pointing to the flimsiness of such integration, people cite the fact that the Central Asian republics have built different economic and political models. But if this assertion is correct, the differences will manifest themselves even more markedly within the EAEC. The organization will be hounded by crises in member countries with weak economies, but there will be no joint effort to help each other overcome the risks.
Generally speaking, there are two essential dimensions to the integration processes taking place in the post-Soviet space. The first is whether or not Russia can become the center of gravity of the former Soviet republics, and not just economically. The second pertains to the ability of the republics to make their own choices based on their national interests. The future of the EAEC depends on a combination of these two dimensions.
Russia New National Security Strategy 2015
At the end of December 2015, Russian President Vladimir Putin signed the executive order on ―Russia‘s National Security Strategy‖, which overrides the former National Security Strategy approved in May 2009 and effective until 2020.
The new National Security Strategy contains 116 clauses that identify major threats and spell out possible solutions. It is important to point out that even though the Strategy is a very broad document, it lays the foundation for specific measures meant to enhance Russia’s national security across the board. Essentially, it is a road map, and a close analysis of it shows how the Kremlin perceives the situation within Russia and abroad.
The National Security Strategy is not the first core document that had to be updated due to the rapid changes in global politics in 2014. On Dec. 30, 2014, Putin approved the new edition of Russia’s Military Doctrine, which constitutes “a system of official state adopted views on the preparation for the armed protection and defense of the Russian Federation.” As for the Strategy, it does not just cover military defense issues, but is much more comprehensive, even though it reiterates many Doctrine clauses, such as the development and strengthening of the collective security system.
At the same time, the Strategy approved on 31 December 2015 is a lot more specific than the Doctrine in its description of external threats to Russian national security. For example, only one clause of the Doctrine discusses the threat of NATO expansion and the Alliance getting closer to Russian borders. The Strategy openly states that the U.S. and its allies are hampering Russia’s independent foreign policy and that Washington and Brussels are responsible for supporting the unconstitutional coup in Ukraine, which created military conflicts close to Russian borders.
Similarly, according to the Strategy, the formation and strengthening of the Islamic State of Iraq and the Greater Syria (ISIS) would not have happened had it not been for the policy of double standards, which is a clear reference to U.S. involvement in the region.
Naturally, the new Strategy was widely discussed in the West. It claimed that the U.S. did not see Russia as a threat in spite of the lack of agreement on a number of issues. On 5 January 2016, Oana Lungescu, the principal spokesperson for the North Atlantic Alliance, also stated that NATO was not acting against Russia’s interests (Russia Direct 2016). Simultaneously, Brussels and Washington both officials and experts started pointing out that analogous U.S. and NATO strategies did not so much as mention “the Russian military threat‖.
However, neither does Russia’s Strategy, which does not refer to NATO and the U.S. as “possible adversaries” and does not imply the possibility of military confrontation. For example, Section II Clause 12 of the Strategy states that Washington uses various methods to put pressure on Russia, and Western politicians have repeatedly professed the necessity of exerting pressure on Moscow through various means (Itar-Tass 2010). Thus, it is difficult to pretend that no such pressure exists.
Section II Clause 15 is dedicated to relations with NATO and speaks of the disruption of the balance of power due to the Alliance’s expansion and NATO‘s attempts to defy international law. Of course, the degree to which NATO breaks the law is debatable, but the Alliance is never referred to as the aggressor directly (Itar-Tass 2010).
It is necessary to point out that the administration of U.S. President Barack Obama passed two documents analogous to the Russian Strategy, the U.S. National Security Strategy in February 2015 and the U.S. Military Doctrine in June 2015. Many experts believe that the Obama administration developed and approved these documents in an attempt to avoid accusations of implementing rash and inconsistent foreign and domestic policies. (Russia Direct 2016)
Still, the U.S. updates its strategic documents quite often, and it is rather remarkable that these core U.S. security documents feature bolder claims than their Russian counterparts.
Washington essentially states that it is the world leader, means to maintain its status, and if it comes to it, will propagate its values from a position of strength. Since the U.S. claims that Russia is responsible for violating the sovereignty of Ukraine and actively speaks of the need to ensure the energy security of Europe, Russian Security Council experts state that, “The U.S. Doctrine and Strategy are anti-Russian‖. (Russia Direct 2016)
American core security documents approved in 2015 appear to be a lot more vague and imprecise compared with their Russian counterparts. Analysis of the U.S. Strategy and Doctrine indicates that Washington is trying to impress upon the world its readiness to assume a stronger role and Obama’s success in resolving multiple issues ranging from the American economy to the promotion of democracy and stability throughout the world.
Another important contributing factor is the significance that both the White House and the Kremlin attribute to cooperation with countries of the Asia-Pacific region. By the way, the U.S. Strategy has already translated into a major breakthrough: the Trans-Pacific Partnership (TPP) agreement was signed, though it has not yet taken effect.
Russia also emphasizes the development of cooperation with China, which is perceived as the key player for maintaining stability in the region and worldwide, an opinion shared by a leading Chinese media source, the People’s Daily newspaper. Actually, American and Russian strategies only make clear that in the near future Moscow and Washington will be competing for influence in India and the Far East. For Russia, after its partial economic break with the EU, U.S., and Canada, this region is of paramount importance.
Russia also talks about its values, but in a tone that is dramatically different from that of Washington. First and foremost, the Kremlin focuses on supporting the Russian language and acting against the falsification of history. Moscow is not intending on spreading its way of life, while the propagation of the American way is what is implied under values in the American documents.
Still, what will Russia actually gain from adopting a new Strategy? It deems the Strategy isolationist and say that it is nothing but useless self-promotion and a series of slogans. At the same time, the Strategy contains instructions for the Russian political establishment. The carefully crafted document sets state priorities straight and provides a detailed analysis of threats to Russian national security and preferred solutions.
Even though the Strategy does not list specific people or organizations responsible for certain areas, Russian federal and affiliated agencies are used to reading between the lines and will adjust their plans rather quickly, if necessary.
At the same time, the Strategy sends a clear message to the global community and explains the Kremlin’s stance on the issues that are of interest to Russia. It is necessary to point out that a large part of the document is dedicated to further cooperation with the U.S. and NATO in various areas. Under the circumstances, it is hardly a self-isolationist document. The Kremlin is ready for dialogue, but only if Russia’s interests are taken into account.
Russia Interest in Far East: Economic Development
Russia has proposed a number of energy projects in the Far East that could lead to a greater presence in the important East Asian market, as well as improved ties with neighbors such as China and Japan.
The EAEU is one of the world‘s centers of economic development and the countries of the Union consider the TPP not as a competitor or foe, but as a potential partner and an extra opportunity to extend the limits of cooperation and a next step towards global economic integration.
The Union currently offers to its partner‘s entry to the market of an area of approximately 20,000,000 square kilometers of the world’s land surface, encompassing 180 million people, as well as access to affordable energy, skilled labor, extensive transportation infrastructure and the unique geographic location of the countries that strengthen the ties between West and East. The Union is number one in the world in production of oil, natural gas and gas condensate, number one in the world‘s production of potash fertilizers and number two for length of railway connections.
Rising and falling Russian-Chinese cooperation efforts underpin the development of resources and investment in infrastructure in Russia‘s Far East. A standard-bearer is the Power of Siberia pipeline, which shook the energy world when it was announced in May 2014. It was slated to export 38 billion cubic meters (bcm) of natural gas from eastern Siberia to northeast China, and 23 more bcm onward to the terminals of liquefied natural gas (LNG) in Vladivostok.
This massive project had the potential to tap new Siberian resources, fuel Chinese manufacturing, and possibly even lead to the link of Gazprom‘s western and eastern resource bases, allowing unprecedented arbitrage in oil prices from Sakhalin to Europe.
Of course, things have not worked out as planners intended. While the deal was still in its infancy, China‘s economy was slowing and oil prices were crashing, which has complicated the figures involved. Since then, the 23 bcm for LNG exports was cancelled, and references to the date of first deliveries (2018) have been softened to 2019 or just “on schedule”.
Despite other, smaller regional cooperation announcements, such as a memorandum of understanding between Gazprom and China National Petroleum Corporation (CNPC) about constructing underground gas storage facilities and gas-fired power plants, clearly regional gas development has failed to meet the promise of early 2014.
In today‘s increasingly carbon-conscious world, the slowing down of these giant fossil fuel developments might be viewed as a good thing in many circles. East Asian energy cooperation difficulties, however, affect projects of all types.
Another example, also massive in impact, scale, and difficulty, is the ‖energy super ring.‖ This idea, sometimes referred to as the Asian Super Grid, is the latest in a long series of proposals to build a huge electricity transmission grid in northeast Asia. The latest development is the signing of a a memorandum of understanding on March 30, 2016 between China‘s State Grid Corporation, Korea‘s state-backed nuclear firm KEPCO, Russia‘s power giant Rossetti, and Japan‘s Softbank Group. There are plans to integrate Mongolia as well.
Within the energy world, intermittent power issues and baseload requirements are some of the largest problems for the widespread implementation of wind and solar energy projects. Barring massive progress in electricity storage technology, wind and solar cannot handle sudden increases in demand. A grid spanning the immense distances from Japan to deep Siberia could alleviate the issue by evening out these supply and demand spikes. Over distances like these, the wind is always blowing somewhere.
Should this project gain traction, it could unlock a wave of new opportunities and investments in the relevant countries, connecting companies with new, distant markets. A recent Eastern Economic Forum in Vladivostok was attended by Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin, highlighting Japan‘s interest in developing energy ties throughout the region. Japan, China and Korea were involved in many of the 200 agreements worth 1.7 trillion rubles ($26 billion) signed there, with European players represented as well.
Unfortunately, though, while the energy super ring does not have the demand problem of the Power of Siberia pipeline, it still faces substantial challenges. While cross-border pipelines are common around the world, an international electricity grid of this scale is maybe only comparable to that of the European Union.
In fact, some sort of greater union of legal frameworks, at the minimum, may be required in order for such a project to succeed. This is a test case, and, given the failure of previous projects such as DESERTEC, which aimed at creating a global renewable energy network in the Sahara Desert, investors have reason to be hesitant. The project must overcome questions of ownership (both of infrastructure and of the electricity), transmission regulations, standards, and confidence in both prices and the stability of the region.
Given the well-publicized disputes between Japan and China over islands in the East China Sea, and between Japan and Russia over the Kuril Islands, regional stability is definitely a factor investors must consider. Ultimately, the ―energy super ring‖ would need an unprecedented amount of coordination between often-stubborn governments, and, unless events lead to a surge of Russian-Chinese-Japanese cooperation, this project is likely to remain on the drawing board.
To conclude, one must consider the role of renewable and climate change when discussing regional energy initiatives. While most energy analysis of Russia‘s Far East relates to its mineral and fossil fuel wealth, the region has renewable promise as well. Wind is ample along the coasts, southern Siberia has solar potential, and even geothermal could be implemented around Kamchatka and the aforementioned Kuril Islands. Development is obviously difficult, however, with long-distance transmission a requirement to reach substantial customer bases.
The potential of the region is still significant, particularly regarding China‘s demand possibilities compared to flat European consumption. Given the above problems faced by large-scale projects, however, investors need to be cautious. So far, political tensions and underlying economic uncertainties have hampered the Power of Siberia line, the New Silk Road, and precluded any regional electricity grid initiative, with only occasional signs that this will change in the near future.
Russia still continues to seek the strengthening of principles of multilateralism in international affairs, development of architecture of international relations that would be based on the recognition by the international community of the principles of security indivisibility in the modern world and would reflect its diversity. Russia will become a strategic partner for Asia Pacific regional countries in pursuing world peace, stability, and global prosperity.
To be concluded, Russia‘s objective is to recover the capabilities of a regional great power. Concern for continued economic recovery and greater international economic integration are likely to affect Russia‘s foreign policy more than international security issues, such as Iran‘s suspected nuclear weapons program, will. The paradox is that in order to remain a regional great power, Russia must act globally by exploiting its energy clout and entering soft security coalitions in Europe and Eurasia. Due to internal weaknesses and the rapid development of other middle-ranked great powers, such as China and India, however, Russia may struggle to retain its status in world politics. The Kremlin is likely to continue to be assertive in trying to prevent such an outcome.
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