European interest in the Chinese Belt and Road Initiative grows

A round table dedicated to the development of cooperation between the European Union, the Eurasian Economic Union, Russia and the countries of Central Asia in the context of the Belt and Road Initiative (BRI) implementation was held at the Higher School of Economics on July 18, 2018. The event was organized by the Austrian non-profit organization We Build Europe with the assistance of the Institute of Oriental Studies of the Russian Academy of Sciences and the analytical center Eurasian Studies. Experts and political scientists, heads and representatives of Russian and foreign companies, non-profit organizations, mass media, as well as representatives of diplomatic missions of Kazakhstan and Uzbekistan took part in the round table.

Elena Kuzmina, the head of the Center for Post-Soviet Studies at the Institute of World Economy and International Relations of the Russian Academy of Sciences, noted in her speech that the BRI is a dynamic, evolving project that is constantly changing. Transport and infrastructure are only one of the areas of cooperation. Beijing is working to unite the economic space and develop coordination in finance. There are several routes within the BRI: northern and more southern branches. Several routes pass through Central Asia. Therefore the leadership of Kazakhstan pays so much attention to the connection of various transport routes. However, other Eurasian states have their own – different from the Chinese – views on the development of cooperation. Potential recipients of China’s investment in the BRI framework are also not always ready to accept financing from Beijing: due to lack of staff, disagreement on the political, economic and other conditions put forward by Beijing. There are also significant mental differences between China and the societies of Central Asia, Kuzmina said.

Yuri Kofner, the head of the Eurasian sector of the Centre for Comprehensive European and International Studies of the Higher School of Economics, IIASA research associate, notes with reference to a study by the National Bank of Austria that the active participation of the EU in the BRI can lead to an increase in the GDP of the EU by 6%. The Eurasian Economic Union may also become a bridge between China and Europe by 2030 and earn on transit. The expert drew attention to the fact that the Brussels’ attitude towards Beijing’s investment activity is ambiguous, fearing the possible strengthening of competition from the PRC in Central Asia and South-Eastern Europe. However, the EU’s passivity with regard to the BRI can lead to the fact that the EU instead of being “a role maker” will be only “a role taker” – the less advanced position. According to Kofner, it is necessary to develop within the framework of the BRI not only a hard infrastructure – transport and logistics. It is also important to pay due attention to the development of soft infrastructure: increasing transparency, tariff harmonization, etc.

Julia Nikitina, the associate professor of the Chair of World Political Processes at the Center for Post-Soviet Studies at MGIMO, believes that the difference in perceptions is a difficulty in the EU relation towards the BRI. The EU have become accustomed to the system but the BRI is a network. Also European initiatives often develop in a “bottom-up” paradigm, while the Chinese initiative is rather a “top-down” policy strategy. Russia also hasn’t got coherent strategy on how integration in the framework of the Eurasian Economic Union and the BRI should really be combined. According to the expert, it is important for Russia and neighboring countries to develop not only ties with China, but also horizontal links among themselves: for example, on the CIS platform.

Executive secretary of the SCO Business Council Sergey Kanavsky noted that the BRI is a platform for China’s negotiations with other states: during the negotiations Beijing studies the needs of other countries. At the same time the Chinese leadership is ready to take into account the national strategies of other countries since it already has a negative experience of unilateral promotion of its position. The expert drew attention to the fact that the development of the BRI in fact is fully engaged in only two departments – the Ministry of Commerce of the PRC and the Ministry of Regional Development. Kanavsky pointed out that working in a multilateral format is not as effective as bilateral cooperation: it is the latter scheme that operates the business.

According to Oleg Preksin, the vice-president of the Association of Russian Banks, the High Commissioner for Investments and Finance of the Eurasian Economic Cooperation Organization, the BRI is a mono-centric project, which, to a certain extent, is a deterrent to its development. The basis on which to base cooperation of states in Eurasia within the framework of the BRI and other projects is cooperation in transport and logistics. At the same time, according to Preksin, it would be useful to complement the dialogue on the BRI with other venues and tools: such as coordinating positions within the SCO framework, dialogue within the framework of the Big Eurasia project, which is part of the UN program until 2030 (sustainable development agenda). An effective tool for developing cooperation, according to the expert, is the establishment of international duty-free trade centers, such as Khorgos, operating on the border of China and Kazakhstan. Similar centers could be established in other parts of Eurasia: for example on the border of Russia and Finland.

The adviser-envoy of the Embassy of the Republic of Kazakhstan in Russia Nurlan Kadzhiakbarov pointed out that the same transport routes can be a part of different transport corridors: their opposition does not have much practical sense. The key criterion in the implementation of various projects within the BRI should be mutual benefit, the diplomat believes, indicating that the leadership of Kazakhstan acts on the basis of this approach.

Zakir Zaitov, the policy adviser of the Embassy of the Republic of Uzbekistan in Russia, believes that the deterrent for economic cooperation in Eurasia is the presence of “bottlenecks” – checkpoints, tax and tariff inconsistencies, and insufficient capacity of the railways. It is necessary to facilitate the terms of goods access to new markets, Zaitov believes. According to the head of the Eurasian Analytical Club Nikita Mendkovich, security issues are also important for the implementation of the BRI. The expert notes that the northern branch of the route – through Kazakhstan, Russia and Belarus – is safe. At the same time, the security of the southern directions passing through Turkmenistan towards Iran and Turkey is not so undeniable. Leonid Gusev, Senior Researcher at the Institute of International Studies of the Moscow State Institute of International Relations, in his report draws attention to the fact that the goals of the European Union in Central Asia have always been much less ambitious than in the countries of the Eastern Partnership. The EU Strategy for Central Asia, adopted in 2007 and updated in 2015, has been successful in the humanitarian and some other areas.

Anna Tangayeva, deputy head of the ITI Trade Analysis Department, Research Center for International Trade and Economic Integration, pointed out that, starting July 1, 2018, China started liberalizing tariffs. As part of the liberalization policy, import duties on 1,600 items of goods are reduced, as a result of which the weighted average customs tariff is reduced from 9.5% to 8%. At the same time, Beijing introduces additional duties for goods from the United States at a rate of plus 25% to the rate. Liberalization of tariffs promises benefits to Russia and the European Union, the expert said. According to preliminary estimates, the annual amount saved by the Chinese customs for the EU is 4.5 billion dollars, and for Russia – 49 million dollars. China has about 37 barriers to goods from Russia. Among them (in terms of decreasing) are sanitary and phytosanitary restrictions, technical barriers, bans and quotas, taxes, subsidies, restrictions on public procurement. Similar restrictions apply to goods from other countries, including EU states. In general, the degree of harmonization of Chinese national standards with international standards is about 43%. However, both European and Russian suppliers have problems with access to information, which is often not duplicated from Chinese to English.

The head of the company Eurasia Global Connecting GmbH Gerd Slapke said that the BRI, in which transport and logistics occupy an important place – still not about transport and logistics. First of all, the BRI is a tool for activating the supply of Chinese goods to foreign markets. This moment should be taken into account by other players, Slapke believes. Speaking about the issues of technical regulation, the expert points to the key difficulty – the EU, Russia, China have their own systems of standardization and certification. The problem is that there is no mutual recognition between these systems. At the same time, it is optimal not to harmonize on a bilateral basis, but to develop joint approaches and mutual recognition of standards. Slapke points out that in the EU and the states of the Eurasian Economic Union not national agencies, but supranational bodies, are responsible for technical access today. Slapke pointed out that Brussels actually recognizes the supranational bodies of the Eurasian Economic Union on issues of technical regulation. It is possible that during the presidency of Austria in the European Union the dialogue between the EU and the EEU can move forward.

Text by Alexander Vorobyev.

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