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

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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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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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