Far Eastern Economic Forum To Kick Off In Vladivostok – Discussing A Common Economic Space from the Atlantic to the Pacific

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Op/Ed by Chris Devonshire-Ellis

Russia’s Infrastructure Development With China, Japan, South Korea, Mongolia, India & Malaysia On The Agenda

The fifth Far Eastern Economic Forum is to be held this week, starting on Wednesday (4th September). Concentrating on the somewhat forgotten corner of North-East Asia, this years event sees Russian President Vladimir Putin joined by India’s Prime Minister Narendra Modi, Japanese Prime Minister Shinzo Abe, Mongolian President Battulga Khaltmaa and Malaysian Prime Minister Dr. Mahathir Mohamad are the principal guests of honour at this years event. It has special significance for me as I served as the UNDP Greater Tumen Initiative as Vice-President of Commerce for five years from 2008- 2013. The GTI has special responsibility for the same region.

The host city, Vladivostok, is developing as Russia’s Far East equivalent of San Francisco (anyone who has been here will say the same) with the huge Golden Horn Bay linked by impressive suspension bridges reminiscent of those in Hong Kong leading to the main Russky Islands, which is being developed as a quasi offshore financial and free trade centre. Vladivostok is also the eastern Terminus of the Trans-Siberian Railway, leading to Moscow, and from there onto Europe. The recently dubbed Trans-Siberian Land Bridge is the fastest route, overland, to get goods from Japan and South Korea to the EU. Vladivostok is the recipient port from which goods are then transported overland – taking 20 days and cutting the usual journey time by 50%. We wrote about this route – and the twenty other important logistics city hubs it connects with – in the article The Trans-Siberian Land Bridge – The Top 20 Cities Linking Vladivostok To Europe

Given its location on the Pacific Ocean, some may question why the Indian Prime Minister is so important to the region. In fact, Russian-India bilateral trade has been targeted by both Governments as one ripe for exploitation, and have made a target to increase bilateral trade to US$30 billion within the next five years. There are some natural commercial routes between the two countries that are a complete fit – India is the worlds largest cutter of gem stones, while Siberia is the worlds largest producer of diamonds. That has lead to significant Indian investment in the Eurasian Diamond Exchange – sited in Vladivostok. India is also looking to Russia for energy supplies and has taken delivery of Russian LNG from the Arctic. India, along with China, is also developing the Klyuchevskoye Gold Mines in Siberia. Russia, for its part, is looking for Indian labour to help with development of Siberia and the Russian Far East – it views the Indians as less likely to colonize than the Chinese.

Japan’s interest lies in trade ties, as mentioned Vladivostok is a major artery for Japanese goods bound for Russian markets and further afield to Europe. Vladivostok has significant ferry and air connections with Japan, while Japan also wishes to keep an eye on developments in the Kuril Islands group, part of which it claims. Tokyo will also be keen to match Chinese interest in the city.

Mongolia lies between Russia and China, and has a marginally uneasy relationship with both. However, it needs to develop its bilateral trade ties, and does not have either a Double Tax, or Free Trade Agreement with its neighbors, although it does have one with Japan. There has been talk of Mongolia joining the Eurasian Economic Union, (EAEU) however this will require some shift away from its current stance of balancing Russia against China. The EAEU is a Free Trade bloc similar to ASEAN, and comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia and essentially sits between China and the European Union. China has signed off a Free Trade Agreement with the bloc, although at present this is non-preferential and does not cite any products, although this is currently under negotiation. Vietnam, and more recently Iran and Serbia have FTA with the EAEU.

The involvement of Malaysian Prime Minister Mahatir is more surprising, although he will see himself as an elder statesman on the platform. But then again, Malaysia has expressed interest in joining the Eurasian Economic Union, and will be keen to examine Russian energy supplies.

The key theme for discussion at this years event is ‘A Common Economic Space from the Atlantic to the Pacific: The Greater Eurasian Partnership’

The Greater Eurasian Partnership is a concept developed by Presidents Putin and Xi that effectively look at combining the Eurasian Economic Union with China’s Belt & Road Initiative. This essentially looks to link countries via FTA with China and the EAEU, and would create a trade body that looks like this:

belt-road-africa-eaeu-pacific

We have also written extensively about the Greater Eurasian Partnership, as can be seen in the articles Great Eurasian Partnership Back On Track as Xi & Putin Commit, A Brave New World – China, Russia & ASEAN Lead Eurasian Free Trade and Trump Blinks In US-China Trade War – But The New World Order Is Already Here

Most of the discussions will focus on the infrastructure build, diplomatic and financial efforts needed to pull the Greater Eurasian Partnership together, while there will also be discussions on developing a region that has built-in protection against current US policies. There is particular resonance in this as China is now looking to move the global supply chain and concentrate more on developing it with Russia, ASEAN and the Belt & Road nations. I wrote about this trend in the recent article China Imposes New Tariffs On US Goods – ASEAN And Belt & Road Suppliers Now Preferred.

The Forum’s business programme has been split into four tracks.

‘New Solutions to Accelerate Economic Growth’ will be devoted to a discussion of the mechanisms that should ensure increased growth rates in the Far East economy in the period until 2025 as well as improvements in the quality of life of local residents. In particular, it will focus on improving such preferential regimes as advanced special economic zones and the Free Port of Vladivostok, the development of the Far Eastern Hectare programme, the future of the Arctic, and prospects for creating new transport infrastructure. In addition, the session participants will discuss the development of key sectors such as agriculture, fisheries, and the timber industry.

‘Creating Conditions for Business’ will feature discussions on ways to support investors, including the availability of financial services, the development of transport infrastructure, the transition to project financing in construction, and the protection of investors’ rights.

The ‘Far East and the Asia-Pacific Region: Creating Opportunities for Cooperation’ will focus on the Far East’s integration into the economies of Asia Pacific Region countries, the development of the Northern Sea Route, the environment, international scientific and technical cooperation, and customs administration.

The ‘New Solutions for Improving the Quality of Life’ will be dedicated to the theme of social development in the Far East. Participants will discuss such issues as healthcare, education, housing and utilities, the urban environment as well as mechanisms to improve the labour market in the Far East.

China will send a large business delegation, as will South Korea and most other Asian countries. Both myself and Maria Kotova, from Dezan Shira & Associates Russian desk will be attending – reports will follow on both Russia Briefing on Russia issues and on Silk Road Briefing for more Belt & Road Initiative geopolitical and multi-lateral trade topics.

 

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