Russia Looks to Link EAEU with OBOR

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Russian Prime Minister Dmitry Medvedev has stated in an interview on Chinese State TV that both the Chinese and Russian governments are looking at ways to link the Eurasian Economic Union (EAEU) with China’s One Belt, One Road (OBOR) initiative. 

Medvedev stated “If we are talking about linking these two approaches, the direct manifestation of this may be projects connected with transporting cargoes via the territory of the EAEU, and via the Russian territory from China to western Europe. These transport corridors and building logistics represent a very important and interesting topic in our view, and several very interesting ideas are being considered now in this regard. There are also other directions, including using possibilities of national markets, preparing proposals in the sphere of hi-tech and setting up production, as well as a number of other projects which we will try to implement together with our colleagues”.

The EAEU is a free trade bloc currently consisting of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan, and has several other countries clamoring to sign FTA, notably China, India, Iran and Singapore. Vietnam already has an FTA with the EAEU.

 

China’s OBOR, meanwhile, is an initiative covering 60 countries across the Eurasian land mass, and is a project based facility mainly seeking to install infrastructure developments across the entire region. Although much of this is related to exporting Chinese technologies, large amounts will rely on foreign investment and cooperation. An estimated US$957 billion dollars, or 26 percent of China’s annual trade volume, was spent along the OBOR routes last year.

Medvedev continued that the leaders of Russia and China had agreed on linking the OBOR project with the EAEU. He said, “We are currently working at the government level on how to bring together the advantages of both models. I think it is quite realistic. I think that this is a good idea that may obtain a normal, comprehensive economic development, especially in the conditions when several other countries are trying to create large economic alliances.”

The alliances Medvedev refers to are agreements such as the RCEP and FTAAP Asia-Pacific trade negotiations that are currently on-going.

Medvedev summarized the linking of the EAEU and OBOR schemes by stating, “this linkage may in the end transform in the project of full-scale trade and economic partnership between the People’s Republic of China and Eurasian Economic Union, with establishment of free trade zones and some other elements of economic cooperation, on which we are working as well.”

Chris Devonshire-Ellis of Dezan Shira & Associates comments, “China cannot create the OBOR all by itself. It needs a huge diplomatic efforts, and considerable financial and political support from Moscow. The linking together of the OBOR and the participation of the EAEU within this may yet harbor some interesting tax incentives in terms of importing infrastructure related goods and services into the EAEU, this facilitating trade via infrastructure development within the region. Both domestic and foreign suppliers of Chinese and Russian MNC’s involved in such works will be interested to learn of these developments. It is an area to watch.”

Russia Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, the Silk Road & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Eurasian region. We maintain offices in Moscow and St.Petersburg through our Russian partner firm, as well as our own offices in China, South-East Asia and India. For assistance with Russian issues or investments into Russia and Asia, please contact us at russia@dezshira.com or visit us at www.dezshira.com

 

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