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Member States of the Eurasian Economic Union Concerned Over Anti-Russian Sanctions of the USA

Uran Botobekov

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The confrontation between Russia and the West has had a negative impact on the closest partners of Moscow that share in the trade and economic market with Russia. Thus, the member states of the Eurasian Economic Union (EAEU), including Russia, Belorussia, Kazakhstan, Armenia and Kyrgyzstan, have been concerned over the new law on sanctions against Russia, Iran and North Korea signed by U.S. President Donald Trump (www.whitehouse.gov, August 02).

President of Kazakhstan Nursultan Nazarbayev during the working meeting with Prime Minister Bakytzhan Sagintayev emphasized that a new wave of U.S. sanctions against Russia may have impact on the economy of Kazakhstan. “I address everyone, before the year is out; we have to work hard to finish the year in an orderly way. There is a substantial risk. There are price fluctuations for our energy carriers and raw materials. It might be the influence of sanctions against Russia. That fact must be taken into account,” Nazarbayev said (http://www.akorda.kz, August 07).

It should be emphasized that a new package of U.S. economic sanctions against Russia is the response of the U.S. to the Russian interference into the American presidential elections, annexation of Crimea, and the support of armed separatists in eastern Ukraine. The package imposes restrictions on Russian energy companies such as Gazprom, Rosneft, Lukoil, which are actively operating in Central Asian states. The U.S. president may not curtail or lift sanctions without congressional approval.

The market of Kazakhstan has responded nervously to the new list of sanctions. In early August, the national currency of Kazakhstan depreciated by 15 points against the U.S. dollar, i.e. the Kazakh tenge depreciated by 3.5%. If before the American sanctions, one USD was equal to KZT 334.5, after August 2, the USD exchange rate jumped as high as KZT 343. The currency market of Kazakhstan faced the devaluation with hysteria and panic. In this regard, the National Bank of Kazakhstan had to make an official statement where it condemned the speculative actions of some commercial banks and called on the population to stay calm. However, the National Bank honestly claimed that “the current dynamics of the tenge rate is explained first by the expected negative impact of additional sanctions of the USA against the Russian Federation, the uncertain further development of the situation, as well as the respective dynamics of the Russian ruble. Certain speculative comments in the media fuel the panic buying of US dollars” (www.zakon.kz, August 2).

Such explanations by the national bank of the country expectedly caused the discontent of the Kazakh society about the dependence of the tenge rate on the fluctuations in the Russian ruble and the ups and downs of the Kremlin’s foreign policy. Due to the increased volatility of the tenge to dollar rate in the domestic currency market, the National Bank of Kazakhstan has decided to decrease the reference rate to 10.25% (www.nationalbank.kz, August 21).

After the introduction of anti-Russian sanctions, the markets of other member states of EAEU – Belorussia and Kyrgyzstan – have faced reduced economic performance and a nervous environment in the financial sector. The American sanctions against Russia have already had a negative impact on the economy of Belorussia, which is closely connected with the Russian market. In particular, restrictive measures have affected the performance of Belorussian banks, many of which are the subsidiaries to the Russian banks. According to Alpari Forex Broker analyst Vadim Iosub, “U.S. sanctions have shortened the period of loans granted to Russian banks. Now these banks may not attract long-terms loans on western markets. Respectively, the subsidiaries of these banks in Belorussia will need to adjust their plans” (www.naviny.by, July 29).

The U.S. sanctions against Russia have the same negative impact on the Kyrgyz economy, too. In the interview with the Kyrgyz analyst, Arslan Kapai, he said, “in the long term, the anti-Russian sanctions may damage the economic growth rate of Kyrgyzstan given that Moscow is a key trade and economic and investment partner of Bishkek.” Therefore, it should be noted that Kyrgyzstan remains the most vulnerable and poor state among other EAEU members. The Eurasian Economic Union is known to be established at the initiative of Russia and it is the main instrument to get the states of former USSR back under the influence of Moscow. It is the political and economic dependence on the Kremlin that has forced President of Kyrgyzstan Almazbek Atambayev to sign the Agreement on the Eurasian Economic Union (www.eaeunion.org, August 12, 2015).

It should be noted that after Atambayev came to power, he not only bound the Kyrgyz economy to the financial system of Russia, but he was also actively pursuing an anti-American policy for 7 years. Based on the “recommendation” of the Kremlin, he forced the US airbase to leave Kyrgyzstan that participated in the Operation Enduring Freedom – Afghanistan against the international terrorism. (www.ria.ru, June 03, 2014).  

One year later Atambayev defiantly denounced the Agreement Between the Governments of the United States of America and the Government of the Kyrgyz Republic Regarding Cooperation, which was the basis of the bilateral cooperation (www.24.kg, July 21, 2015). And this summer the Kyrgyz president blamed the Government of the United States for pushing Uzbekistan for the conflict with Kyrgyzstan. He claimed he had no warm sentiments about the policy pursued by the U.S. State Department run by Democrats. Atambayev openly blamed the United States for the interventions into his national affairs reminding that Americans “actually pushed for, encouraged the conflict between the two fraternal peoples – the Kyrgyz and the Uzbeks” (www.sputnik.kg, July 24, 2017).

The result of the unilateral pro-Russian policy of the Atambayev’s Government was full dependence of the Kyrgyz national economy on the Russian economy. In 2013, the strategic gas industry of the republic was sold just for $1 to the Russian Gazprom, which is now under the Western sanctions (www.fergananews.com, July 29, 2013). Oil products and fuel and lubricants are 100% imported to Kyrgyzstan from Russia, where the main supplier is Rosneft, which is also under the sanction imposed by the Government of the United States. After the accession to the Eurasian Economic Union, Kyrgyzstan has lost its transit corridor for the transit of the Chinese goods to other CIS states, which brought multimillion profit to the public treasury. According to Minister of Finance Adylbek Kasymaliev, as a result, the government debt of Kyrgyzstan is $4 billion 243 million, which is approximately the annual budget of the country (www.azattyk.org, July 22, 2017). After the accession to the EAEU, no particular breakthroughs in the development of the industrial production have occurred, as was promised by Atambayev. All these indicators show that the economy of Kyrgyzstan may suffer from the anti-Russian sanctions more than others.

Armenia, a member to EAEU since January 2015, is seriously concerned over the new package of American sanctions against Russia. The Armenian Minister of Finance, Vardan Aramyan, noted that “American sanctions against Russia and Iran will damage the economy of Armenia” (www.regnum.ru, August 5, 2015). This concern is caused by the fact that the new sanctions of the United States are mainly against the Russian oil and gas sector. Today the Russian Gazprom fully provides Armenia and Kyrgyzstan with natural gas. Due to the sanctions, Gazprom may raise the natural gas prices for Armenia and Kyrgyzstan. This can lead to the growing prices of electricity, food and oil products, which will cause a wave of discontent.

Migrant workers from Central Asia and Caucasus working in Russia are also seriously concerned about the anti-Russian sanctions imposed by the United States. In particular, the authorities of Uzbekistan, Tajikistan, Turkmenistan, Kazakhstan, Kyrgyzstan, Armenia and Azerbaijan expect the massive return of their citizens from Russia, if sanctions lead to certain job cuts in Russia. According to the Main Directorate for Migration Affairs of the Ministry of Internal Affairs of Russia, today about half a million citizens of Armenia, 600,000 citizens of Azerbaijan, over 2 million citizens of Uzbekistan, over 2 million citizens of Ukraine, one million citizens of Tajikistan and Kyrgyzstan, 500,000 citizens of Kazakhstan work in Russia. Deterioration in the economic situation in Russia may reduce the amount of money transferred by migrants to their homeland. Today transfers from Russia constitute the major part of all transfers to Armenia, Uzbekistan, Kyrgyzstan and Tajikistan. For example, last year Kyrgyz migrants in Russia transferred $2.4 billion home, which is one half of the national GDP. A possible reduction of money transfers from Russia and a massive return of Kyrgyz migrant workers back home may lead to another color revolution in Kyrgyzstan.

Thus, the inclusion of Russia into the list of rogue states along with Iran and North Korea has expectedly caused concern of the political leaders of post-Soviet countries that have Moscow as their main trade and economic partner. It has become obvious that Russia cannot symmetrically respond to the American sanctions. Instead, the Kremlin applies its favorite method of causing anti-American mood in the authoritarian leaders and residents of CIS.

However, the anti-Russian sanctions of the West may give a good chance to Central Asian and Caucasian states to reduce the imperial influence of Moscow on their national economies. “The current American sanctions package is a step toward removing Russia from the world globalization process,” outstanding political expert Lilia Shevtsova concluded (www.svoboda.org, August 1, 2017). It remains to be seen whether the CIS states will use this opportunity.

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St. Petersburg International Economic Forum 2018

Kester Kenn Klomegah

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The St. Petersburg International Economic Forum 2018, one of the annual international platforms that brings together political, industry and business leaders to discuss the most pressing issues affecting global economics, development and finance, will take place on May 24 to 26 in St. Petersburg.

Ahead of the forum, the official website of the President of the Russian Federation has published his welcome greetings to participants, organisers and guests. In his greetings, Putin expressed his confidence that ideas and initiatives to be developed during the forum would facilitate the recovery and growth of the world economy.

“By harnessing the wealth of scientific and technological potential which is rapidly expanding in digital and other areas today, we can improve quality of life and boost stable and harmonious development in all nations and across the world as a whole,” he stressed in his message.

“And it is crucial that we strive towards increasing mutual trust, promoting wide-ranging integration processes, realising large-scale and promising projects. Russia is always open to this kind of partnership and cooperation,” Putin said.

According to RosCongress, the event organiser, about 15,000 guests from more than 140 countries expected to participate in the forum. France, China, India and Japan as guests of the forum will have their own exhibition pavilions on site, which will house a presentation area and a business space for delegations and representatives to interact with business partners from other countries.

Delegations from Germany, Switzerland, Sweden, Greece, Italy, India, Saudi Arabia, Qatar, Israel, Vietnam, USA, Canada, African countries and others will participate in various business events. BRICS member states (Brazil, India, China and South Africa) have been prominently represented there.

For foreign participants, including Africans, the forum is very useful for networking and discussing business strategies, and serves as an important study platform for deepening knowledge about the economy and possible ways of transacting business in Russia.

Series of official speeches and panel discussions will undoubtedly dominate the three-day event. The special sessions on business and investment opportunities will include the “Russia – Africa Business Dialogue” that has generated increasing interests among Russian and African businesses, international companies, African governments and institutions.

According to Anton Kobyakov, Adviser to the President of the Russian Federation and Executive Secretary of the SPIEF Organising Committee, the upcoming forum will hold two special celebrations marking the occasions related to the continent: Africa Day and the 55th anniversary of the African Union.

“Economic cooperation between Russia and Africa has been developing rapidly during recent years. We have seen a positive dynamic in trade with Ethiopia, Cameroon, Angola, Sudan, Zimbabwe and other countries”, says Kobyakov. “I strongly believe that Russian-African cooperation at SPIEF, Russia’s largest forum will stimulate trade and economic ties, as well as investment activity.”

Kobyakov further disclosed that during the event, experts will share best practices and discuss new opportunities for implementing joint projects in the BRICS countries. Sergey Katyrin, the President of the Chamber of Commerce and Industry of the Russian Federation, will moderate the session.

“The paramount task for BRICS is to continue strengthening efforts aimed at solving international issues in the spirit of unity, mutual understanding and trust. The prospects for cooperation and joint efforts of the BRICS member states will be discussed at the SPIEF 2018. I am confident that this will give momentum to further development of a fruitful dialogue on key world issues,” Kobyakov says.

Over the past few years, Russian authorities have made relentless efforts toward raising Russia’s political influence and economic cooperation in some African countries. Thus, discussions at the forthcoming forum will undoubtedly focus on reviewing the past and the present as well as proposing practical and the most effective ways to facilitate investment activities and that might include promising areas such as infrastructure, energy and many other sectors in Africa.

On her part, Alexandra Arkhangelskaya, a Senior Researcher at the Institute of African Studies and a Senior Lecturer at the Moscow High School of Economics said in an interview with me that Russia and Africa needed each other – “Russia is a vast market not only for African minerals, but for various other goods and products produced by African countries.”

Currently, the signs for Russian-African relations are impressive – declarations of intentions have been made, important bilateral agreements signed – now it remains to be seen how these intentions and agreements will be implemented in practice, she pointed out in the interview.

The revival of Russia-African relations have be enhanced in all fields. Obstacles to the broadening of Russian-Africa relations have be addressed more vigorously. These include, in particular, the lack of knowledge or information in Russia about the situation in Africa, and vice versa, suggested Arkhangelskaya.

“What seems to irk the Russians, in particular, is that very few initiatives go beyond the symbolism, pomp and circumstance of high level opening moves. It is also still not clear how South Africa sees Russia’s willingness (and intention) to step up its role in Africa, especially with China becoming more visible and assertive on the continent,” said Professor Gerrit Olivier from the Department of Political Science, University of Pretoria, in South Africa.

Today, Russian influence in Africa, despite efforts towards resuscitation, remains marginal. Given its global status, Russia has to be more active in Africa, as Western Europe, the European Union, America and China are, but Russia is partially absent and playing a negligible role, according to the views of the retired  diplomat who served previously as South African Ambassador to the Russian Federation.

“Russia, of course, is not satisfied with this state of affairs. At present diplomacy dominates its approach: plethora of agreements entered into with South Africa and various other states in Africa, official visits from Moscow proliferate apace, but the outcomes remain hardly discernible,” he said.

“The Kremlin has revived its interest on the African continent and it will be realistic to expect that the spade work it is putting in now will at some stage show more tangible results,” Professor Olivier wrote in an email query from Pretoria, South Africa.

Last June 2017, the African representatives including heads of state, deputy president, ministers or their deputies, entrepreneurs and diplomats came to the St. Petersburg forum from Angola, Algeria, Burundi, Egypt, Gabon, Guinea, Morocco, Mozambique, Namibia, South Africa and Zimbabwe.

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Social protection for Filipino workers in the Russian Federation

Kester Kenn Klomegah

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Foreign Minister Sergey Lavrov with Philippines’ Secretary of Foreign Affairs Alan Peter Cayetano

The Philippines and Russia get closer to signing an agreement that would protect Filipino workers in the Russian Federation. As the number of migrant Filipino workers increases, Moscow and Manila are busy negotiating a bilateral labour agreement that could allow thousands more overseas workers into various sectors of the Russian economy.

On May 15, formal discussions were held by Foreign Minister Sergey Lavrov with Philippines’ Secretary of Foreign Affairs Alan Peter Cayetano in Moscow.

Sergey Lavrov noted: “We are interested in ensuring that Filipino workers, who work in the Russian Federation, are socially protected. Many of them were here through private companies, often without the necessary licenses.”

“All this does not provide social protection for Filipino citizens working in the Russian Federation. With the conclusion of the agreement, the beginning of preparation of which we have agreed today, we will solve these issues. We have such agreements with a number of other countries, including ASEAN member States,” he promisingly added.

Earlier, a Regional Migration Specialist at the International Labour Organisation (ILO)’s Regional Office for Asia-Pacific in Bangkok (Thailand), explained in an interview with me that a comprehensive labour agreement between Russia and the Philippines could be positive, if it established procedures and standards for the recruitment, employment and subsequent return of migrant workers.

According to the Philippines Overseas Employment Administration (POEA), Russia officially registered nearly 15, 000. Consequently, such an agreement (could) guarantee the labour rights of migrant workers and eliminate or limit recruitment costs. It will further provide Filipino workers with access to emerging labour market there.

The Federal Migration Service (FMS) office in Moscow has also explained that “official” Filipino workers are entering the country on tourist or business visas, assisted by middlemen and local licensed agencies that often act as migrants’ direct employers and channel them straight into labour market.

The Philippine government has been negotiating for better regulations and working conditions for its citizens for the past several years with little or no conclusive results.

In March 2012, for instance, the then Philippine Secretary of Foreign Affairs, Albert Del Rosario held an official discussion in Moscow with Minister Sergey Lavrov on the possibility of sealing a bilateral labour agreement.

Besides, a string of events and conferences over the years have highlighted renewed interests in developing the market of overseas Filipino workers, who are believed to be one of many solutions to Russia’s human resource needs.

Many experts believe that economic modernisation in Russia depends heavily on skilled foreign labour, limited to certain specific sectors like domestic work, finance, and construction.

The fact that Russia willingly entered into the negotiations implies not only that it has an urgent need for the services of foreign workers but also that it is fully aware of the benefits of such an agreement.

Experts have pointed to the Philippine government’s success in deploying its workforce abroad, in many foreign countries. About 10 percent of The Philippines’ population of 90 million people works abroad, with regular remittances accounting for up to 25 percent of the country’s gross domestic product (GDP).

Some estimates put the total contribution to the Philippine economy by specialists working abroad at $50 billion last year.

The Philippine Overseas Labour Office in Rome (Italy), explained to me that the Philippine government has an official policy of deploying Filipino workers only to countries that guarantee protection and promotion of their rights, welfare and interests.

Under a recently enacted law, the Philippine government banned its nationals from seeking employment in countries that do not guarantee the rights and welfare of foreign workers, or whose local labour and social legislation does not cover migrant workers.

Quite recent, the Philippines government and the Kuwaiti government signed an agreement on the recruitment, use and protection of Filipino workers after a diplomatic row over abuse and inhuman treatment of working Filipinos.

It therefore implies that The Philippines and Russian authorities have to work on effective ways to establish and improve the bilateral legal framework for mutual benefit for both countries. *This special report from Kester Kenn Klomegah, an independent researcher and policy consultant, in Moscow.

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The Russian strategy towards North Africa

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As John Mearsheimer quote “The ideal situation for any state is to experience sharp economic growth while its rivals’ economies grow slowly or hardly at all”. Russia paves the way to tighten its economic and military cooperation’s with Egypt as one of the main North African allies so far.

Russian keen interest in Africa, particularly North Africa, began in the 18th century, with benefits and incentives in the Mediterranean bowl as part of an expansion strategy that was based on economic, political and military estimation.

Africa changed between east and west in terms of alliances which helped form its, economic, cultural, political and militarily balance. Like now, after changes in the status of relationships among alliances, and after structures of the region shifted with a picture that is different to the previous one that had seen over the era of the alliances of the former Soviet Union during the Cold War, Russia is back again after the removal of the Americans. This time, Russia came to the region with the notion of regional rivalry, after a long time, which could make it a key actor until the US resets its position. Russia has put all its power and influence on playing a role in which it would take back its position in North Africa towards enlarging and deepening the economic and investment cooperation as well mutual relations that back to the 1960s.

Due to this, Russia has taken many steps that show its mutual incentive and awareness in North Africa with the main interest in Egypt. This came after the decline of Egyptian-American relations, so Russia and Egypt signed many political agreements, including one of the important agreement which is modernized Egyptian air defense system. This step is advised a Russian warning to the Americans that it is on its way to subjoin one of its significant allies in the region, which used to experienced strategic and military cooperation depend on mutual interests. American vessels used to be the first one when crossing the Suez Canal and could use its air zone in interchange for annual military aid equivalent to $1.3 billion in 2013, which America froze in protest upon the displace of the first democratic regime in Egypt that came after the January 25th Revolution and the coup d’état against legitimacy.

The objective of Russian return to the region is not incomparably limited to economic arbitrations; there are mainly arms contracts, security exchange in fighting terrorism and upgrading trade process. Other than Egypt, there are also other promising destinations which began with diplomatic visits, such as Morocco and Algeria. The significant aspect of returning of Russia to North Africa at this time is the lack of any ideological agenda in the new agreements and cooperation plans.

Currently, Russia embarks to Egypt; the foremost step reaches several targets. Basically, Egypt is seen as geo-strategic access and convenient gateway through Africa, and sub-Saharan Africa where the natural resources wealth of uranium, gold, oil and maritime exist. These natural resources might be a rational reason for future dispute between Russia and America, especially after US withdrawal from North Africa, but only after having strengthened its presence in sub-Saharan Africa and safeguards Maritime roads for Gulf oil through the region.

As long as the two superpowers competing, North Africa is the free land of future investment that requires an agreement between the Russia and America, especially as other powers, such as China, are present and access Africa from its center. China was involved and engaged in exploring and manufacturing Sudan’s oil, before the division of the state of South Sudan in 2011. Today China is growing its activities after most oil fields became part of South Sudan. In addition to the new state, China has other markets in central Africa and the east. It only collaborates and participates in economic and trade sectors and infrastructure construction in Sudan.

The Russian president Putin embark to Cairo last Monday after a concise and unpublished visit to a Russian military air base in Syria. The air base has offered the main ledge for the air campaign Russia has undertaken since September 2015 under the backing of Syrian President Basher Assad.

Egypt’s constantly close ties with Russia get back to the 1950s and 1960s when Egypt became a close Russian ally at the height of the cold war. Therefore, Egypt changed sides in the 1970s under the late President Anwar Sadat, who replaced Moscow with Washington as his country’s chief economic and military backer following the signing of a U.S.-fund peace treaty with Israel in 1979. Egypt has since become an important successor of American. aid. Under el-Sisi, Egypt has been able to sustain close relations with both Russia and the United States.

In term of Military Cooperation, Sisi and Putin also tackled about Syria and mutual rejection of U.S. President Donald Trump’s decision to recognize Jerusalem as the capital of Israel, a move that has sparked protests across the region and from European capitals as well. The high-level Russian visit comes after the U.S. government in August decided to deny Egypt $95.7 million in aid and to delay another $195 million because of its full failure to make progress on human rights and democratic norms.

Russia started a military operation to back and support Syrian President Bashar al-Assad in September 2015, and there are clues Moscow is keen to enlarge its military existence in the region.

To sum, Russia chose Egypt for its geopolitical and strategically partner combining three continents. Therefore, let’s see how Russia could maintain its presence in the region showing off its ability to promote economic interests, especially with African partners. So will Africa be for Russia alone?

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