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Trends To Watch In Russia In 2013

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It began with a roar and it ended with a whimper.As 2012 wound down in Russia, the soaring expectations for change that accompanied the civic awakening and mass protests at the year’s dawn had clearly faded.

But the social, economic, and political forces that spawned them will continue to shape the landscape well into the new year.
A fledgling middle class remains hungry for political change, splits still plague the ruling elite over the way forward, and a fractious opposition movement continues to struggle to find its voice.

With the Kremlin unable to decisively squelch the mounting dissent and the opposition unable to topple President Vladimir Putin, Russia has entered an uneasy holding pattern that has the feel of an interlude between two epochs.

“I don’t think we are at the end of the Putin era, but we are at the beginning of the end,” says longtime Russia-watcher Edward Lucas, international editor of the British weekly “The Economist” and author of the recently published book “Deception.”

With economic headwinds on the horizon, generational conflict brewing, and new political forces developing, Russian society is changing — and changing rapidly. But the political system remains ossified.

So what can we expect in 2013? Below are several trends and issues to keep an eye on in the coming year.

The Oil Curse: Energy Prices And The Creaking Welfare State

If 2012 was all about politics, 2013 will also be about economics.

The Russian economy, the cliche goes, rests on two pillars — oil and gas. And both will come under increasing pressure as the year unfolds.

World oil prices, currently hovering between $90 and $100 per barrel, are expected to be volatile for the foreseeable future. And any sharp drop could prove catastrophic for the Russian economy.

Energy experts and economists say Russia’s budget will only stay balanced if oil prices remain between $100 and $110 per barrel. Five years ago, the figure needed for a balanced budget was $50 to $55.

Meanwhile, Moscow’s dominance of the natural gas market is being challenged by the development of new energy sources like shale gas and liquefied natural gas.

“The Russians are going to have to face, just as the Saudis did in the 1980s, the possibility of dropping energy prices,” says Nikolas Gvosdev, a professor of national security studies at the U.S. Naval War College.

The flush days when petrodollars could power Russia’s economy and lubricate Putin’s political machine are coming to a close.

How the political system responds to these challenges will be a key question in 2013.Leading Russian economists like Deputy Prime Minister Arkady Dvorkovich and former Finance Minister Aleksei Kudrin have stressed the need to diversify the economy away from its dangerous dependence on nonrenewable energy. Both Putin and Prime Minister Dmitry Medvedev have likewise made calls for diversification.

But despite all the rhetoric, there has been little real action.

Part of this is due to fierce resistance from powerful figures in the Russian elite with ties to the energy industry, like Rosneft CEO Igor Sechin, a longtime Putin crony.

But the reasons for inaction are actually much more fundamental. Diversifying and modernizing Russia’s economy would entail a degree of decentralization and the subsequent development of alternative centers of economic power. This, in turn, would eventually lead to new centers of political power with more independence from the Kremlin than Putin appears willing to tolerate.

“The decoupling of gas and oil prices, the large quantities of liquefied natural gas on world markets, the growth of shale gas have all [diminished the regime’s] ability to collect natural-resource rents,” Edward Lucas says. “And the collection and distribution of those rents is central to its model.”

With resources declining and no economic diversification program in sight, the authorities appear to have concluded that they need to reform the country’s creaking social-welfare system. But such a move is certain to be politically volatile, especially since Putin’s main base of support is now the rural poor and the working classes.

The Kremlin is still haunted by the protests that broke out in 2005 when the government attempted reforms to the social safety net.

Fathers And Children: The Looming Generational Conflict

When Putin took power in 2000, the 40-something former spy looked like an energetic young leader, especially compared to his geriatric predecessor, Boris Yeltsin.

But more than a decade later, he and his team are aging together. And by most accounts, they intend to remain in office at least until 2018 — and possibly until 2024. By that time, much of his ruling circle will be in their 70s.

The comparisons to Leonid Brezhnev that accompanied Putin’s return to the Kremlin were not superfluous. In addition to the fears of stagnation, the graying of Team Putin also sets the stage for a generational conflict within the elite.

“The lack of institutional mechanisms for promotion and rotation is a problem because, when you don’t have that, it leads the younger generations to get frustrated if they don’t believe there is a way to advance within the system,” Gvosdev says. “If everything is blocked off it creates tension. You can’t just freeze the government establishment because the energy of people is going to be directed toward breaking into it or replacing it, and that becomes a danger.”

How this generational discord develops will be one of the key underlying trends to watch in 2013. This is especially true since a whole new cohort entered the elite over the past four years.

During his presidency, Dmitry Medvedev made a concerted effort to bring younger cadres into the Kremlin, which analysts say added a political element to the generation gap.

“Real fragmentation is taking place by age because Medvedev rejuvenated the system of administration,” prominent Moscow-based sociologist Olga Kryshtanovskaya told the daily “Nezavisimaya gazeta” this summer. “The more conservative older part of the elite was irritated by this and moved toward Putin. And those who were younger moved toward Medvedev in hopes of a quick career if Medvedev remained for a second term.”

The young guns who came in with Medvedev are also ideologically inclined toward greater pluralism. “Many observers are convinced that these leaders are giving financial support to the opposition,” Kryshtanovskaya said.

The generational gap in the elite is mirrored by a similar one in society as the cohort born after the fall of the Soviet Union — and which has only faint memories of the chaos of the 1990s — comes of age.

“This group of citizens sees itself as not only post-Soviet, but non-Soviet,” says Masha Lipman of the Moscow Carnegie Center. “They don’t consider themselves to be vassals of the state. They are more free-thinking.”

Lipman adds that this younger generation is helping fuel Russia’s civic awakening. “This process is irreversible,” she says. “And as Russia continues to urbanize and cities become centers for younger people, this process will only accelerate.”

Strange Bedfellows: When Aleksei Meets Aleksei

When speculation emerged that anticorruption blogger Aleksei Navalny and former Finance Minister Aleksei Kudrin may be cooperating politically, it raised eyebrows among Kremlin-watchers.

And the reason for the interest goes much deeper than an abiding fascination with these two emerging players on the political scene.

An alliance of the Alekseis would have pointed to one of the key developments analysts have been watching for since mass protests broke out a year ago: collaboration between the technocratic wing of the elite and moderate elements in the opposition.

Such a marriage makes sense in many ways. Elite technocrats understand that Russia is dangerously dependent on energy exports, that current levels of corruption are unsustainable, and that in order for the economy to diversify and modernize, the political system will need to become more pluralistic.

Moreover, as moderate opposition activists come to understand that a colored revolution in Russia is unlikely, they are more likely to place their hopes in evolutionary change.

And in the event that the Putin regime begins to look dangerously shaky, overtures from inside the halls of power to the opposition will become more likely.

“We are going to see more people toying with defection to the opposition, people opening up back channels,” says Mark Galeotti, the author of the blog “In Moscow’s Shadows” and a professor at New York University. “We’re going to see the economic elite trying to reach out [to the opposition] and this is going to be very dangerous for the state.”

On the opposition’s Coordinating Council, a bloc is already emerging that seeks to negotiate political change with willing elements in the Kremlin, rather than trying to topple the regime, according to press reports.

The faction apparently includes 16 members of the 45-seat council. In addition to Navalny and his backers, it reportedly includes socialite-turned-activist Ksenia Sobchak and her supporters, as well as longtime opposition figure Ilya Yashin and entrepreneur Aleksandr Vinokurov, the co-owner of Dozhd-TV.

For his part, Kudrin has been trying to position himself as a bridge between the opposition and the authorities to foster what he calls “evolutionary change” toward greater pluralism. So has billionaire oligarch and former presidential candidate Mikhail Prokhorov.

If a bridge is ultimately built between the opposition and the technocratic wing of the elite, it could result in negotiated political reforms, in the co-opting of a vital wing of the Kremlin’s opponents — or a measure of both.

“I think it is more likely that as we see divisions within the regime that one faction tries to exploit public discontent,” Lucas says. “It will still be kind of ‘inside baseball’ rather than a 1917-style change.”

Beyond The Street: Will The Opposition Mature?

Bouts of soul searching are an inevitable ritual after the past few opposition demonstrations.

The heady days of December 2011 and January 2012, when dissenters found their voice and discovered they were not alone, are a fading memory. Likewise, the period from the beginning of the year until Putin’s return to the Kremlin in May, when the opposition seemed to control the national conversation, is also over.

And opposition leaders look increasingly uncertain about what to do next.

“They’re focusing on the glory days, the revolutionary days of December through May. But nobody is thinking about what happened after May, when they lost control of the agenda,” says Sean Guillory, a fellow at the University of Pittsburgh’s Center for Russian and Eastern European Studies. “How are they going to recapture the agenda and how are they going to really start making connections with society?”

The opposition, of course, is not a unified movement. It comprises nationalists, leftists, and liberals, united only by their opposition to Putin.

Will a single leader emerge in the coming year? Will the Coordinating Council, an elected body designed to bridge the divides in the opposition and establish a bond with civil society, prove an effective form of collective leadership?

“A process we are going to see is the opposition actually beginning to fragment,” Galeotti says. “You will begin to see ideological blocs, real opposition movements rather than just the generic ‘we want Russia without Putin’ thing. But it will be a painful process.”

What happens with the opposition, whether it is able to move beyond the street and develop into a potent political force, is a trend to watch because there is a deep well of discontent in society to potentially tap.

“They have this feeling of stagnation,” Lucas says. “Of institutions that don’t work, of a public life plagued by lies, evasions, and propaganda. They want more decent behavior by public officials and public institutions and they aren’t getting it.”

Copyright (c) 2013. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036

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Russia and Japan: Inseparable Partners

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By all accounts, Japan with its strong economy and many high-quality manufactured brands is practically searching to expand into foreign markets. Japan, with an estimated population of 126 million, has a small territory. According to UN’s assessment report on global population in 2019, Japan was the world’s tenth-most populous country. That compared with Russia, its vast territory and approximately 145 million, Japan’s investment is fast growing in the Russian Federation.

Despite its large investment and admirable brands from automobiles through mega-shops to healthcare and beauty, and to social service sector, Japan is consistently looking to expand its business tentacles. Without doubt, at the St. Petersburg International Economic Forum held under the theme: “Together Again – Economy of New Reality” early June, Russia-Japan business session attracted unprecedented large number of participants.

While noting the fact that the coronavirus pandemic did not and will not hinder economic cooperation between Russia and Japan, Minister of Economic Development of the Russian Federation Maxim Reshetnikov, noted in his speech at the session, further reviewed some significant aspects of the Russia-Japanese economic cooperation, and finally painted the broad outlook for the future.

“Despite a difficult year, we managed not only to continue existing projects but were even able to launch new ones. An express test for coronavirus was created, and a container train with Japanese goods was launched for the first time on the Trans-Siberian Railway. Construction began on a centre for preventive medicine in Khabarovsk. The Japanese company Fanuc opened an engineering centre in Skolkovo,” he told the gathering.

According to Maxim Reshetnikov, the plans for cooperation with Japan include the creation of liquefied natural gas trans-shipment complexes in Kamchatka and Murmansk region and the construction of an ion therapy centre for cancer treatment in Obninsk. Both countries are preparing to enter new and promising tracks in hydrogen energy, climate change, the creative economy, and e-commerce.

That however, Russia has encouraged potential foreign investors to venture into the regions. For example, Kaluga, which is provincial city and stands on the famous Oka river about 150 kilometers southwest of Moscow, has adopted few favourable measures, among others, and as a result has attracted five foreign automobile manufacturing companies including Japanese Nissan.

Governor of the Kaluga Region Vladislav Shapshа took part in the discussion. “Japan has been and remains our most reliable partner, a partner in a variety of areas. In terms of investments, this of course includes, the development of projects with Mitsubishi and Toyota Tsusho. Mitsubishi has placed its headquarters in Kaluga this year, and together with Peugeot Citroën has been working with us since 2009. Along with Volkswagen and Volvo, it makes up the core of the automotive cluster, which accounts for 12% of the automobiles produced in the country today,” Governor Shapshа said, giving a full business profile in his region.

The Autonomous Republic of Tatarstan also attracts foreign investors and business people. As part of the Volga federal district, its capital and largest city is Kazan, one of the most important cultural cities in the Russian Federation. “We operate a wonderful plant built in Tatarstan by Mitsubishi and Sojitz. I must say that Japanese equipment has proved its reliability. We are very pleased with this plant. Its capacity is 720 thousand tonnes of ammonia and methanol. We are grateful for this contribution,” Founder and Chairman of the Board of Directors of the AEON Corporation, Roman Trotsenko.

Japanese manufacturing stories are exceptionally useful and needed to be shared among business leaders. In his contribution, General Director of Sollers Group Vadim Shvetsov told the attentive gathering: “We launched a machine shop for Mazda engine parts. It was a very difficult at first, given that cooperation was interrupted, and we could not communicate directly. On the other hand, however, we have introduced a lot of interesting digital communication methods. Thanks to such mobile cooperation and even VR technologies, we still managed to launch production.”

The new environment has pushed the countries to seek new resolutions to overcome challenges. “The coronavirus pandemic has forced us into many challenges. At the same time, it has highlighted, illuminated in a new way some of the problems that we had seen and been aware of even before the epidemic. These are the problems of healthcare, energy, and digitalization. It seems to me that now is the moment for us to start new cooperation in these areas, especially in healthcare,” emphasized the Minister of Economy, Trade and Industry of Japan Hiroshi Kajiyama.

“Our trade and economic work together probably suffered a little from that period of forced isolation. Nevertheless, I certainly believe that the crisis is pushing us to search for new ways to create benefits for our consumers,” remarked Chairman of Delovaya Rossiya (Business Russia) and Chairman of the Board of the Group R-Pharm Alexey Repik.

The speakers have acknowledged that Russia and Japan face similar environmental challenges while developing economic cooperation. “Amid the growing trend of decarbonization, in October of last year, Japanese Prime Minister Yoshihide Suga announced a goal aimed at achieving carbon neutrality by 2050. Moreover, the goal is to reduce 2013 levels of greenhouse gas emissions by 46% by 2030. Achieving these targets will require that Japanese industry be heavily involved and adaptable,” according to President of the Japan Association for Trade with Russia, and Special Advisor of Kawasaki Heavy Industries, Ltd. Shigeru Murayama.

Chairman of Delovaya Rossiya (Business Russia) and Chairman of the Board of the Group R-Pharm, Alexey Repik, reminded that it is of great significance that President Vladimir Putin in his address to the Federal Assembly set the task of significantly limiting the accumulated volume of carbon emissions in our country just as similar goals were set by the Prime Minister of Japan, Yoshihide Suga, for the Japanese economy.

For the Minister of Economy, Trade and Industry of Japan Hiroshi Kajiyama, natural gas, which can reduce carbon emissions, is a very important resource, and Russia is a leader. Thus the unification of these Russian resources and the Asian market could be highly promising area for cooperation.

Russian business needs to attract investment. “The demand for equipment and the demand for capital both remain in Russia. Russia’s capitalism, in the positive sense of the word, is young and there is little national capital in the country. Interest rates on loans remain very high, and the requirements of the national bank, the Central Bank of the Russian Federation, to credit policy remain stringent,” observes Founder and Chairman of the Board of Directors of the AEON Corporation Roman Trotsenko.

“There are forecasts that the Russian economy will resume growth this year and ultimately grow by more than 3%. Japan also aims to recover as soon as possible from pandemic-related failure. For this, of course, the primary and first step to build a healthy and sustainable post-covid society across the globe, will be to work together with Russian partners on the basis of the eight-point plan,” Director of Mitsui and Co. Ltd., Masami Iijima, informed the gathering.

Avoiding sanction-related restrictions is a key for business. “The challenge is to move the financing relationship between Japan and Russia outside of these sanctions. For example, financing in euros or in yen. This would be very positive and would allow us to take advantage of the cheap rates on loans in Japan and in Russia,” Founder and Chairman of the Board of Directors of the AEON Corporation Roman Trotsenko.

Healthcare and energy partnership also remain significant for both and, need not be overlooked. “New areas are emerging. For us it is hydrogen and ammonia; it is the capture and storage of carbon, carbon dioxide, and its use as a resource. Here, it seems to me, we must increase our work together,” according the Minister of Economy, Trade and Industry of Japan Hiroshi Kajiyama.

“The health sector is the first item in the eight-point economic cooperation plan. I think that our countries should increase cooperation in this area,” added the President of the Japan Association for Trade with Russia and Special Advisor of Kawasaki Heavy Industries, Ltd. Shigeru Murayama.

“We believe that Japan can help achieve the goal of increasing healthy life expectancy set by the government of the Russian Federation,” suggested Chairman of the Japan-Russian Committee for Economic Cooperation and the Federation of Economic Organisations Keidanren and Chairman of the Board of Directors of the Marubeni Corporation Fumiya Kokubu.

Ahead of St Petersburg forum, Japanese Ambassador in the Russian Federation, Toyohisa Kozuki gave an interview to Interfax News Agency, listed a wide-range of concrete and significant projects as part of efforts toward strengthening Russian-Japanese economic cooperation. According to the ambassador, widening economic cooperation between Japan and Russia is primarily part of the current eight-point strategic cooperation plan.

Within this plan, the Okura Hotel project in Vladivostok is an example of progress in urban development in 2020. This will be the first Japanese hotel in Russia. The Okura Hotel’s refined services will make Vladivostok more comfortable and accessible not only to its residents but also businessmen and tourists visiting this international city. Vladivostok catches the attention of the Japanese as the nearest ‘European’ city, it can be reached from Tokyo by air in 2.5 hours. That is why the opening of the Hotel Okura Vladivostok will definitely make the city more attractive to Japanese tourists.

As part of cooperation, Japan is also making an effort to develop postal services in Russia, and some results in this sphere have already been reached, the efficiency of postal deliveries was increased thanks to the use of Japanese-made sorting machines at international postal exchange centers in Moscow. Cooperation between postal services of both countries is growing stronger also through the exploration of e-commerce opportunities on both sides. In the future, it is anticipated that a system will be in place, thanks to which Japanese consumers can order Russian goods online and the EMS postal service will deliver them to Japan.

In December 2020, Japanese entertainment center Round One, which brings together arcade games, bowling and other amusements, opened at the Yevropeisky shopping mall in Moscow. Round One is the most popular closed amusement parks chain in Japan. The new venue is a unique leisure venue for Moscow residents, in the sense, that they can get acquainted with Japanese culture without leaving their native city.

There is progress in promoting the use of the Trans-Siberian Railway as far as cooperation in the Far East, primarily in transport and infrastructure, is concerned. In particular, the Ministry of Land, Infrastructure, Transport and Tourism of Japan in cooperation with the Russian Railways is implementing a pilot project to promote the use of the Trans-Siberian Railway.

The first container train carrying cargo from Japan to Europe was dispatched in 2020. And those were not individual containers as before but a whole container train. This was done in the expectation that it will make it possible to ship freight more cost effectively compared to container transportation, and many Japanese companies showed an interest and took part in the pilot project.

The companies that participated in the pilot project said that against the backdrop of destabilized logistics between Japan and Europe amid the coronavirus pandemic, the use of the Trans-Siberian Railway can be seen as a third option in addition to sea and air transport.

As an example of such expectations, Ambassador Toyohisa Kozuki informed that Japan’s logistics company Toyo Trans started regular container shipping services with consolidated freight to Europe, to the Polish city of Poznan, along the Trans-Siberian Railway in February. This service provides for regular shipments every Thursday from a Japanese port. The cargo reaches Poznan in 22 days. Transit time decreases by about half compared to sea routes. We hope that the transit along the Trans-Siberian Railway will give a boost to logistics between Japan, Russia and Europe and lead to the further development of economic cooperation.

Next, regarding agriculture, forestry and fisheries, the relevant agencies of Japan and Russia in January 2020 signed a memorandum of cooperation on a joint Japanese-Russian project to increase the efficiency of agriculture and fish production in Russia’s Far East. Current projects are now getting support, and the search is on for new projects in three areas that provide for the use of technologies and know-how of Japanese private companies.

These include, firstly, increasing the productivity and export potential of soya, corn and other crops; secondly, expanding production of vegetables through expanding vegetable greenhouses in Yakutsk and other cities; and thirdly, increasing production and deliveries of fish and seafood inside and outside Russia. Greenhouse vegetable growing in Yakutsk is a particularly large project in this sphere. Greenhouses allowing fresh vegetables to be grown all year long in severe climates and permafrost have been built in the framework of this project. Construction began in 2016, it continued in 2020, and should be completed this year, 2021.

Due to the coronavirus pandemic, the forum this year was held, a combination of off-line and online format, with all epidemiological precautions observed. The Saint Petersburg International Economic Forum (SPIEF), often dubbed the Russian Davos, is the country’s main showcase for investors, attracting political and business leaders from around the world. The SPIEF is held annually, and since 2006 it has been held under the patronage and with the participation of the President of the Russian Federation.

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Putin and Biden meeting – a chance for a better world

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The whole world is looking forward to the meeting of the new US President Joe Biden with his Russian counterpart, Vladimir Putin. Although the Kremlin and the White House urge people not to expect too much from the June 16 summit, one still wants to believe that a personal meeting by the leaders of the two rival powers will lead to a thaw in bilateral relations and help defuse global tensions. At the same time, statements coming from the White House about negotiation plans sound rather vague. The bottom line is about “understanding Russia’s position and its aspirations.” The impression is that hundreds of Russologists working for the State Department, NSA, CIA and other agencies are unable to provide a definitive answer to this question, and the not very young 46th President of the United States has been forced to personally go for information. Moscow makes it clear that negotiations are a good thing, but the initiative comes from the United States, so the agenda will largely be agreed right on the spot.

At the same time, there are a number of key topics that the leaders of the two countries simply can’t ignore. Of course, there will be questions about human rights that Biden wants to ask Putin so badly, but the Russian leader too may want to ask about certain “inconvenient” things. First of all, about the United States participation in conflicts in the Middle East, where the “liberation movements,” indirectly supported by  Washington continue to attack Russian and Syrian government forces. In fact, the parts of Syria and Iraq controlled by the Americans and their allies have become areas where there is no effective conflict against terrorists. The militants from that area are killing people in Germany and France, and spreading the ideas of extremism and radical Islam throughout Europe.

The United States has every right to defend its interests in the oil-producing regions, but such methods are hardly acceptable. The Kremlin apparently has obtained enough evidence of the “dirty methods” of warfare practiced by the United States in the Middle East. The spare parts for the numerous drones shot down over the Khmeimim airbase alone prove beyond any doubt the American involvement in organizing aerial attacks on the Russian military. However, a dialogue between Russia and the United States could quickly extinguish the flames of war in Syria and, more importantly, help ensure Europe’s security against terrorist attacks. So, Putin has a very important trump card up his sleeve, which he can’t fail to play. The only question is how Biden will react to this win-win move by Moscow.

As to the question about human rights, it may prove rather unpleasant for Biden. During preparations for the summit, the Swiss government pointedly indicated (apparently at the suggestion of the White House) that the vaccine race continues. Geneva is ready to accredit, without PCR tests, journalists who have been vaccinated with Western vaccines, but not with Sputnik, which has already proven its effectiveness. Needless to say, the Russian negotiators also used their own country’s vaccine. However, such a move, designed to show once again who is the “boss” in the upcoming meeting, only reflects a complete disregard for the European`s right to vaccination, and this is only the beginning. And the demonstrative support and financing of the Russian opposition – hardly gives Biden any reason for accusing Russia of human rights violations.

Even the case of the Belarusian oppositionist Protasevich, who was taken from  the plane which grounded in Minsk due to a terrorist threat immediately brings to mind the “arrest“ of the plane of Bolivian leader Morales, or the US-approved extrajudicial detention of Russian sociologist Shugalei in Libya. In addition, the long history of the Guantanamo detention center hardly gives US officials any moral grounds to lecture anyone about human rights.

If, during the Geneva summit the United States and Russia can heal the festering wound of the Middle East conflict, this would be a giant step forward in the war on terror. The question is whether Biden will try to turn the dialogue with Putin into a series of accusations to increase his approval rating back home. A similar incident has already taken place and made the 46th President of the United States to look not so good. That being said, we can hope that in Geneva Joe Biden will lean back on his many years of experience and good knowledge of Russia, and emotions will not prevent him from achieving a breakthrough in relations with Moscow and mending bilateral ties, thus easing tensions in Europe and allaying peoples fear of a new global conflict.

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Russia, Europe Discuss Prospects for Cooperation at SPIEF’21

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Despite the deep-seated disagreements between Russia and the European Union, Kremlin is indiscriminately courting European business leaders. Ahead of the 24th St. Petersburg International Economic Forum [SPIEF’21] on June 2-5, President Vladimir Putin, in an official message, emphasized Moscow would forge a closer economic cooperation with its foreign partners and ready to share experience in various areas and further called for building constructive partnerships between members of the global community and expand business ties to effectively tackle the current critical global challenges and achieve sustainable development.

“We are ready to share our experience in areas such as healthcare and digitalization, and to work with partners to build better telecommunications, energy, and transport infrastructure. We also recognize the importance of addressing key issues facing the environment and climate,” according to the president’s message released on the official website.

Later at the plenary session held under the theme A Collective Reckoning of the New Global Economic Reality, Putin said, particularly about energy connectivity between Russia and Europe – “that Gazprom is ready to fill Nord Stream 2 with gas. This route will create direct links between the Russian and German systems and will ensure energy security and reliable gas supplies for the Europeans, like Nord Stream 1” and, in addition, emphasized readiness to implement similar high-tech projects with European and other partners in the future, despite all sorts of artificial barriers in the current political environment.

That, however, during the business discussion exclusively devoted to Russia-Europe, leaders of European business noted that strategies are needed for the improvement of relations between Russia and the European Union, and the necessity to develop a consolidated response to global challenges.

“In 2020, Russia faced four challenges. First, the pandemic, second, the collapse of oil prices, third, the devaluation of the Russian local currency the rouble, and the fourth, which is an ongoing challenge, the geopolitical context that does not make things easier. At the same time, Russia demonstrated good economic indicators. The global challenges are so disruptive that we need to come up with a joint approach and cooperate in fighting the pandemic,” according to objective views of Johan Vanderplaetse, Chairman of the Association of European Businesses (AEB) and President for Russia and the CIS, Schneider Electric.

Taking his turn during the discussions, Maksim Reshetnikov, Minister of Economic Development of the Russian Federation explained that the ultimate goal is to combat greenhouse gas emissions. In this context, technological neutrality, mutual recognition, and implementation of projects aimed to reduce carbon dioxide emissions are crucial. Building these mechanisms is a subject for strong international discussion, and there are high hopes for the climate conference in Glasgow this November.

Development of 5G networks can become a new touch point for Russia and Europe. But, no country, and no government can cope with all the tasks on their own. For example, 5G requires joint efforts, so European Union and Russia must work together to deploy this technology. Now both need to work together on 5G technologies in Russia and in Europe, suggested Arun Bansal, Executive Vice-president, Head of Market Area Europe and Latin America, Ericsson.

“Russia has amazing technological capabilities, and there are great companies. If we compare them with Western companies, if we join forces [connecting to 5G], we will all benefit from this,” added Johan Vanderplaetse, Chairman, Association of European Businesses.

During the discussions, the participants acknowledged that existing problems, especially the need to achieve international agreements. “We are now probably at the most difficult point in the development of our relations since the end of the Cold War. I think both sides value our relationship. Why are we at this negative point in our development? Of course, there are territorial and geopolitical issues, issues of human rights violations. I believe that all these problems contributed to the suspension of our political dialogue, which is now affected by uncertainty. In this atmosphere it is difficult to go back to the normalization of these relations,” according to Markus Ederer, Ambassador of the European Union to the Russian Federation.

Vladimir Chizhov, Ambassador Extraordinary and Plenipotentiary, Permanent Representative of the Russian Federation to the European Union (EU) explained that most of the effective formats available for the members of the European Union and the Russian Federation for interaction are currently on hold. On the other hand, Russia has not closed a single door neither has it imposed restrictions for Europe. All suspensions were initiated by the European Union.

Some believe that there should be solutions, suggested expanding the list of green projects and finding a compromise between government and business. “We categorized nuclear energy as a green project, and this was a crucial decision. We believe that, based on the criterion of greenhouse gas emissions, based on the principles of technological neutrality, nuclear power should be seen as clean energy. And secondly, we have developed a number of transitional projects that may not meet some highest standards, but for many industries in our country this is a big step forward,” says Maksim Reshetnikov, Minister of Economic Development of the Russian Federation.

For Markus Ederer, Ambassador of the European Union to the Russian Federation, it is necessary to use the opportunity to strengthen relationship in the context of green transformation and creation of green economy, as it will be a new field for cooperation that is of high interest for representatives of European business community. The more policy becomes oriented towards the development of a green economy, the more seriously moving towards stabilizing relations between Russia and Europe.

Regional experiments that allow to introduce a system of emission quotas in the regions. “We are working on a soft regulatory framework that will allow us to implement climate projects, take into account the carbon footprint of products that will make our entire system more transparent, while at the same time we are launching a system of more stringent regulation based on regional experiments. Many countries have followed this path. We are currently in the final stage of the Sakhalin experiment, which will enable individual regions, at their will and in agreement with the business, to declare the goal of carbon neutrality and introduce a system of emission quotas with the trading system, and so on,” stressed Maksim Reshetnikov, Minister of Economic Development of the Russian Federation.

“We need to focus on reducing carbon emissions and strengthening other areas. The Sakhalin project is also a great example of enhancing our cooperation, including in the future. These are efforts that we should focus on, excluding the political context. We must work on issues of compliance with the obligations of WTO member countries. The obligations of all WTO members must correspond,” concluded Markus Ederer, Ambassador of the European Union to the Russian Federation.

The St. Petersburg International Economic Forum, popularly referred to as SPIEF, brings together international business leaders, government officials and representatives of expert and media communities to discuss various topics and jointly search for effective solutions to the most pressing challenges in Russian and global economies. The SPIEF is held annually, and since 2006 it has been held under the patronage and with the participation of the President of the Russian Federation.

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To Protect Democracies, Digital Resiliency Efforts Are Needed Now

Across the globe, more than three billion people have no internet access. But with the increased availability of smart phones...

Human Rights2 hours ago

Philippines: Investing in Nutrition Can Eradicate the “Silent Pandemic”

The Philippines needs to invest more in programs tackling childhood undernutrition to eliminate what is long considered a “silent pandemic”...

Africa Today4 hours ago

Sierra Leone Receives World Bank Support to Strengthen Education Service Delivery

Sierra Leone will receive $6.85 million in additional financing to support the COVID-19 education response in the country. Funded by...

Reports8 hours ago

Critical Reforms Needed to Reduce Inflation and Accelerate the Recovery

While the government took measures to protect the economy against a much deeper recession, it would be essential to set...

Finance10 hours ago

Uzbekistan Continues to Modernize its Tax Administration System

 The World Bank’s Board of Executive Directors approved today the Tax Administration Reform Project in Uzbekistan, which is designed to...

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Reports12 hours ago

Indonesia: How to Boost the Economic Recovery

Indonesia’s economy is projected to rebound from the 2020 recession with 4.4 percent growth in 2021. The rebound is predicated...

Multimedia12 hours ago

Swiss authorities restrict and mistreat international and local media at Biden-Putin summit

The Biden-Putin meeting is over and one of the highlights that got a good run on Twitter was the Russian...

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