Russia Briefing News

Russia Prepares for 5G Digital and OBOR – EU Connectivity

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5g-russiaRussia has approved a rolling, three year plan worth US$1.6 billion per annum to upgrade its digital network and to bring it in line with Chinese developments in e-commerce and trade. The ongoing investment – equivalent to about a third of China’s total spend per head of population over the next decade – also accounts for the fact that many of Russia’s citizens live in relatively easier to access cities than China’s. Further, Russia already possesses superior satellite technologies with craft already operational and in orbit. Moscow expects to be one of the first global cities to be 5G by 2020, a task that will rank it ahead of cities such as London, and made somewhat easier due to the upgrade in communications currently taking place to prepare the nation for next year’s FIFA World Cup finals that is expected to feature a pilot 5G zone. By 2020, Russia plans to roll out 5G networks in eight cities.

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Leningrad Oblast Looking to Legalize Bitcoin for Estonian, Finnish Trade

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Leningrad Oblast in Western Russia, a region that has significant borders with EU nations, has asked the Russian Federal Bank to legalize the use of the cryptocurrency – bitcoin. Cryptocurrency is a type of digital currency in which encryption techniques regulate the generation of units of currency and verify the transfer of funds, which operate independently of a central bank.

The request to legalize bitcoin use in Leningrad Oblast has been made to specifically permit the use of bitcoin in trading with Estonia and Finland. The oblast is bordered by Finland to the northwest and Estonia to the west, as well as five federal subjects of Russia: the Republic of Karelia in the northeast, Volgoda Oblast in the east, Novgorod Oblast in the south, Pskov Oblast in the southwest, and the federal city of Saint Petersburg in the west.

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Russia Agrees to Significant Silk Road Projects with China

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chinarussiaAs predicted, a significant array of economic cooperation agreements were signed between Russia and China during President Xi Jinping’s recent visit to Moscow.

The deals include the creation of the new US$10 billion China-Russia RMB Investment Cooperation Fund, which provides access to RMB financing for Russian projects, including under the One Belt, One Road and Eurasian Economic Union initiatives. China was recently given permission to offer settlement services in RMB in Moscow through the ICBC.

Other deals include commitments from China Development Bank, China National Petroleum Corporation, the Silk Road Fund, China Investment Corporation, the Russian Direct Investment Fund, and from the Russia-China Investment Fund. These are examined as follows:

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Russia & China Agree to US$10 Billion OBOR Fund

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rmb_rubbleRussia and China have agreed to establish a US$10 Billion Russia-China RMB Cooperation Fund following last week’s meetings between the two leaders in Moscow.

Both the China Development Bank and the Russian Direct Investment Fund have signed an agreement to establish a joint investment worth 68 billion yuan (US$10 billion). The fund will invest in projects related to China’s Belt and Road initiative as well as the Russia-led Eurasian Economic Union initiative.

The new fund will make ruble and yuan settlements, with Beijing expecting it to help boost the yuan’s international standing. Continue reading…

Establishing a Foreign Business in Russia – New Issue of Russia Briefing Out Now

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The new issue of Russia Briefing magazine, titled “Establishing a Foreign Business in Russia“, is out now and available as a complimentary download in the Asia Briefing Publications Store.

In this issue:Establishing a Foreign Company in Russia

  • Registering a Foreign Owned Trademark in Russia
  • Setting Up a Representative Office in Russia
  • Setting Up a Branch Office in Russia
  • Setting up a Limited Liability Foreign Owned Company in Russia

Foreign investment in Russia has undergone a metamorphosis over the past few years, from the tit-for-tat placing of sanctions upon Russia by the West, to the alternative development of trade and supply routes with the East. China’s King Long now provides the Scania buses that used to ply the roads of St. Petersburg and Moscow, but there are many other examples of Russia’s changing trade patterns.

At the recent St. Petersburg International Investment Forum, the number of delegates and deals signed hit record highs, showing that Russia’s decision to look East has been entirely justified. The waves of investment coming from China – which is seeking to secure long-term energy, commodities, agriculture, and trade routes to keep its economy on track – are having a highly positive knock-on effect on Russia. Russia also hosts the 2018 FIFA World Cup next year – this new edition of Russia Briefing is a timely one as investors scramble to get into a country that is benefiting from both China’s own One Belt, One Road (OBOR) ambitions and the World Cup.

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EU Extends Russia Sanctions Until 31st January 2018

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eu-sanctionsThe European Union has extended and enhanced economic sanctions against Russia effective until the end of January next year. Speaking at a cabinet session, Russian Prime Minister Dmitri Medvedev expressed regret that “our European partners continue this not very constructive line with regard to our state. Once again, politics takes over the economy and by and large over common sense in general.”

Konstantin Voronov, director of European Political Studies at the Russian Institute of World Economy and International Relations, has said that there are several layers to the EU’s latest sanctions. “I think this is a sort of ‘layer cake.’ Firstly, there is certainly a large ideological component in the foreign policy course of our European neighbors and partners. Continue reading…

Advancing Russian Free Trade with Asia, China, & the Pacific

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With the United States moving away from free trade with Asia, following Donald Trump’s scrapping of the Trans-Pacific Partnership (TPP), Asia Pacific nations have begun to examine alternatives. Japan and Australia, especially, have been vocal about continuing the TPP without the United States, with calls for that agreement to now include China.

Other alternatives include the Regional Comprehensive Economic Partnership (RCEP), which would bring together the members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and the six countries with which ASEAN has existing free trade agreements – Australia, China, India, Japan, New Zealand, and South Korea.

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Daimler Invests €280 Million in Moscow Mercedes-Benz Plant

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dartz-red-russianIn additional signs that show the Russian economy is rapidly recovering from the sanctions imposed upon it by the West, Daimler is localizing its production of Mercedes-Benz SUVs and sedans due to strong sales and the growth potential of the Russian market.

As we noted last week, Russian domestic auto sales are up 15 percent on the year with “pent up luxury demand”, according to the industry analysts Autostat. The Russian automotive sector has also been boosted by government support measures: comprising 7.5 billion rubles in budget subsidies, these are expected to provide additional momentum. The Russian market is expected to develop and provide sustainable long term growth.

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Russia-United Kingdom 2017 Trade Up 28%

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uk-russia-bahaiDespite sanctions placed upon Russia by the EU, British-Russian trade has increased significantly in the first six months of 2017 in items permitted under the sanctions measures.

Russian exports to the United Kingdom increased by 20.7 percent in January and February, and accounted for US$1.16 billion, whereas imports from the United Kingdom rose by 27.9 percent, and amounted to US$515 billion. In 2016, the volume of trade between the countries fell by 7.3 percent compared to 2015, with the export and imports dropping by 7.1 and 7.8 percent, respectively.
The Russian Trade Mission to the United Kingdom has seen a noticeable increase in trade between the two countries over the course of this year, as Russia’s Trade Envoy Boris Abramov said last week.

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Russia Considers Bridge/Tunnel Connection To Sakhalin Island

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sea_of_japan_map_enRussian authorities are discussing the possibility of constructing a bridge to Sakhalin Island, with estimated costs amounting to about US$5 billion. Russian President Vladimir Putin said during his annual “Direct Line” Q&A session yesterday that “Such ideas existed as long ago as in 1930s-1950s, and even respective plans were developed. But those plans were never implemented. We are currently working on revival of those plans and considering the issue. There were ideas, and we are currently considering them as well, to build a tunnel instead of a bridge, which is possible too,” Putin said, before adding that the decision had not yet been finalized.

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