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The geopolitics of sanctions against Russia

Giancarlo Elia Valori

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The US and EU sanctions currently operating against the Russian Federation were imposed following the Russian support for the “separatists” of the Eastern areas of Donetsk and Lugansk, Ukraine, namely ethnically Russian areas, which wanted to separate – or more likely to become autonomous – from the rest of the country.

It is hard to say whether the Ukrainian conflict was started   at first by the Euromaidan‘s pro-Western militants or if either one or the former used violent ways and means  because, as usual, the issue of sanctions is mainly political: to force – with mandatory commercial limitations extra omnes or, in any case, for the countries adhering to the primary international organizations – to reduce the political, economic, financial and hence military potential of a target country.

With four executive orders, the United States has imposed a sequence of sanctions against Russia, while it is still unclear whether the sanction regime always fully hits the target country or if it manages to direct its negative repercussions only to the geopolitical sector to be targeted.

In the long history of sanctions the excess of punishments towards the target country has always been a classic strategy, which later succeeds inadvertently to create mass support for the “bad” leader or the “dangerous” party, regardless of its being populist, sovereignist, “racist” or otherwise.

Today the old ideologies of Evil do not apply any longer – hence we need to invent a new labelling for global defamation, well beyond the usual totalitarianism. Or we need to artfully create many media opportunities that often –  if photographed – have no actual relationship with the crimes perpetrated by the target State.

In a way, sanctions are essentially the planned exclusion of the target country from the world market: in the case of Russia, the US sanctions are aimed at restricting the Russian access to the international financial services, to the US energy industry and obviously to the military industry.

These goals purpose are attainable both by reporting and blocking the personal and financial movements of specific personalities, such as entrepreneurs, financiers and managers of the target State placed in specific lists, now often public.

Or goods and capital are blocked.

Or again, always according to the American operating tradition, the potential for debt of an enterprise of the enemy State may be reduced significantly, but only on the international market. Or there may be the prohibition of making certain goods, services and technologies available to the “target country”.

In essence, for the Russian Federation this still regards the extraction and refining of natural gas and oil.

Furthermore, the US sanctions against Russia are aimed at restricting the export of Russian military products and, in any case, imposing the block for spare parts or the construction of weapon systems that can ultimately be used in Russia as well.

In the United States the economic sanctions are administered by OFAC and export controls are managed by the US Department of Commerce, Bureau of Industry and Security, in addition to the US Department of State, Directorate of Defense Trade Controls.

Without further complicating the framework, Directive No. 1 of OFAC regards the financial and service sectors of the Russian economy.

It prohibits any transaction longer than thirty days with all the subjects included in the lists regarding people of Russian origin or, in any case, operating in favour of the Russian government.

Directive No. 2 prevents any type of economic or financial transaction for individuals and entities dealing with, offering or carrying out transactions, on behalf of the Russian system, relating to natural gas and oil coming from the Russian territory.

Following the same procedure of the above mentioned transactions, Directive No. 3 deals with control and exclusion of the Russian Federation from the global market of military technologies.

Finally, Directive No. 4 regards the ban on normal commercial relations with Russia regarding the oil and gas from the Arctic and the unspecified “neighbouring areas”.

In 2014, by imposing measures “against the Russian industrial sector”,   the above mentioned Bureau of Industry and Security (BIS) implemented and improved the sanctions imposing a specific license on Russia for some commercial products, especially if the exporters “know whether what they sell to Russia can be used, directly or indirectly, for gas and oil extraction or whether these exports can be used for deepwater exploration in Russia or anyway in the Arctic.

Furthermore, the aforementioned BIS blocks any export of products that may anyway contain parts which can be used in the current weapon systems.

After the “events” occurred in Crimea, the EU sanctions against Russia are quite different from the US ones, although they may often overlap.

This is the sign of a political and strategic overlapping that cannot takes us a long way and that, indeed, many military elites, including NATO’s, consider obsolete.

This is certainly not due to anti-Americanism, but to a complex assessment of the EU and US strategic and commercial goals.

Overlapping of new areas of influence or their natural future divergence? Naturally different interests between the EU and the United States in Africa and the Middle East or not?

The issue is complex and not well-defined yet.

Europe, however, has imposed more traditional sanctions  against the Russian Federation, regarding individuals and implying travel bans or freezing of funds.

Furthermore, measures are envisaged in the EU limiting the access to financial capital for specific Russian financial and defence institutions.

There are also restrictions on the export of dual-use goods and technologies that may somehow refer to war operations, as well as other restrictions relating to the technologies included in the Common Military List, and obviously other restrictions on oil technologies.

There are many differences between the two sanction regimes.

The United States scrutinizes both oil and those working in this industry, while Europe only oil.

With specific reference to the EU sanctions, however, the Duma proposes to block the “commercial paper” issued by GAZPROM, which would imply that the European oil companies could be sanctioned if they bought GAZPROM payment notes which, however, are extraterritorial.

For the EU, currently the companies Rosneft, Transneft and Gazpromneft are the only ones that have been sanctioned.

None of the two sanction regimes, however, makes explicit references to “natural gas” – only oil is always mentioned.

Moreover the EU legislation is not extraterritorial while, in case of suspicious dollar “transactions” through American  banks, the US legislation can manage these transactions as if they were made on its national territory.

Has the United States probably built the complex web of anti-Russian sanctions since 2004 with a view to weakening the European competition?

As we will see later on, this is another possible hypothesis.

Besides seriously harming the European economy, which some important media sources estimate at over 100 billion euro for the whole EU, as well as two million jobs lost, we must consider that the effects are even more complex for the United States.

For the Russian Federation, however, the sanction effects are quite complex, even though it is a simple “target country”.

In 2009 the Russian economy shrank immediately by 2.8%, following the classic rule whereby the economies subjected to sanctions are more sensitive to the asymmetric shocks coming from outside.

The following year, however, Russia grew by 4.5%, thus showing signs of recovery indicating a centralized and planned reaction to both the global crisis and the economic war operations, namely the sanctions against it.

Foreign investment in Russia is still falling and, according to the latest data of the Bank for International Settlements, loans from abroad have fallen from 225 to 103 billion euro.

Hence not many dangerous effects, except for the magnification of the negative fluctuations on international markets.

So far Russia has reacted to the closure of some Western markets with a brilliant and unexpected geopolitical move for the United States, namely the rapprochement with China.

In this regard, the effects are clear: the rapprochement has favoured the block of the Ukrainian crisis, which becomes secondary in the Kremlin scenario. It has also facilitated the entry – even informally – of a large mass of Chinese capital into Russia and has finally added strategic value to the economic relationship between Russia and China.

The rapprochement has favoured not only the commercial flows between the two countries, which had been falling since 2015, but has mainly given rise to old and new bilateral projects: a pipeline, other infrastructural networks and cross-border free trade areas.

Furthermore, Russia and China, which are alien and even opposed to the logic of sanctions, are creating financial and commercial institutions according to their autonomous criteria, which will certainly be immune from US and EU sanctions.

As Putin knows all too well, the problem is that the relationship with China is fully asymmetric and runs the risk of generating Russian dependence on China.

Furthermore Russia is not interested in the tension between China and the United States and does not want to be “involved” in the bilateral trade competition between China and the United States.

The positive aspects for Russia are the following: Russian weapons are particularly suitable for the Chinese market and the plans for the Siberian pipeline between Russia and China are still in place; Shanghai and Hong Kong will soon become the financial bases for many Russian companies; the vast commercial area thus created between South Korea, Vietnam and Taiwan already establishes a small Asian “EU system” that can act as an important stimulus for reviving the Russian economy.

On the other hand, China has never appreciated the Russian move on Crimea, even though it has never officially pronounced itself in this regard.

Never “make a sound in the East, then strike in the West”. Currently there are not the conditions for China to require – at  military and strategic levels – what the “Western devils” can already provide at economic level.

Moreover, the strategic suicide of the West is already fine as it is.

And again, the US and EU sanctions have enabled China to prevent its worst-case scenario in the Heartland, namely the final economic and political integration between Russia and Eastern Europe in the EU.

Moreover, this expansion east of the Russian Federation corresponds to a series of counter-sanctions  culminating, for Russia, in the ban on European fruit and vegetables. The agricultural sector has been systematically brought to its knees by the Russian policies, which have created farmers’ strong political pressure to lift the sanctions against the Russian Federation.

Political use of an economic choice, namely counter-sanctions where the European “enemy” is weaker,  that is in the protected and subsidized economy of the European agribusiness sector.

The Russian response has been the expansion of domestic production, with the strong help of Belarus supporting the “missing share” of the new “internal production”.

The countermeasures of Russian consumers are as follows: certainly prices have risen, but they buy less and even fish consumption is falling.

Nevertheless, if we go back to the general architecture of  sanctions against the Russian Federation, we can note many other facts.

For example, we can note that – apart from the weak traditional and media justification, with many “violent acts” artfully caused by militants of uncertain nature – the oil sanctions are designed to reach one single purpose, namely to make Europeans – who for too long have not “resorted to” the US producers – buy the shale oil and gas they are finally able to produce, indeed already in a situation of almost full energy self-sufficiency.

Hence sanctions decided in the United States to compete with the North Stream 2 between Russia and Germany, crossing the Baltic and cutting the cost of natural gas to such levels that only dumping from the United States can be  carried out to impose its gas against the one which can be found closer to our countries.

Dumping is useless: we can build an integrated economy between the United States, the EU and Russia, with new geopolitical “rules of engagement”.

Hence the US sanctions are sanctions against Europe to rebuild manu militari the transatlantic market that could not be put back together elsewhere, not even in the agri-food sector where, in fact, the laws  are already so differentiated between the United States and the EU to make any exchange impossible.

Economic war through rules and regulations.

However, while the dollar has risen to 76% against the ruble since the beginning of sanctions in 2014, it remains anyway excluded from the Russian domestic market – hence it is a Pyrrhic victory.

In short, the Russian Foreign Minister, Sergei Lavrov, is right when he says that “sanctions are used to impose a regime change in Russia”.

Between 2014 and 2017, some studies ascertained that there was a fall in the Russian GDP and some damage to its economy worth at least 170 billion US dollars.

Italy alone lost at least 1.25 billion euros, especially in the agri-food and small craft sectors.

However, let us revert to Lavrov: he is the right mediator and broker to gradually and reasonably put an end to the sanction regime imposed by the United States and the EU against the Russian Federation, of which he has been the Minister for Foreign Affairs since 2004.

Lavrov, who knows that “there are no alternatives to dialogue”, also knows that Russia has not well clarified the situation of Crimea – beyond the objective truth which is hard to verify.

In this case it is not a matter of discussing the right of the Russian-speaking populations in the region to join the motherland. The issue lies in finding how to create a united Ukraine, really respectful of its minorities and, above all, as autonomous from Russia as from the European and NATO designs.

A trilateral treaty between the EU, the United States and  Russia could be a good starting point.

Lavrov has the mediation skills and long experience needed for the job.

At strategic level, it must be clear that NATO no longer expands itself towards the Donbass area and the Ukrainian-Georgian region, while the Russian influence operations – either covert or not – on those countries’ governments will be prohibited.

Obviously old wounds and new appetites return: Poland’s  desire to regain Ukraine it misses; the US and NATO passion for encircling the Russian Federation which, however, has already emerged from this encirclement with a clear victory in Syria, which proves its great strategic wisdom.

The encirclement of Russia with the NATO and US autonomous power is fully irrational.

The US bases encircle also Iran, another Russian inevitable ally: but what is the US strategic logic?

Hence a mediation will be needed, implying to reassure the United States that in Ukraine and Georgia there will never be “anti-Western” regimes, but Russia must be sure that all EU, Polish, US and other countries’ operations will not be such as to try to convince Ukrainians and Georgians to let  Russia down in the region.

Moreover Russia shall make it clear that – after years of disastrous legacy of the “Cold War” – its policy is trying to let the United States enter again new and old regions. These regions, however, must not be thought as no longer being in a situation of equilibrium – as we could reason at the time of the “Cold War” and of the unfortunate post-Cold War period – since said equilibrium does no longer rely on strategic thinking, but on small territorial or positional conquests.

Furthermore, the United States could de-escalate tension with China through its new relations with Russia, which would act as an effective mediator and broker just because Russia has not – and will never have – common strategic and geopolitical interests with China.

If we begin to think in multipolar terms – where the United States has often developed its longest and most brilliant  geopolitical projects – everything gets clearer.

This could be Lavrov’s new job to be performed along with his US counterpart Tillerson.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Is Israel Taking Advantage of a Longtime Strategic Partner for Russia?

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In February, Israeli Prime Minister, Benjamin Netanyahu met with his Russian counterpart, President Vladimir Putin. In what can only be described as a bravado attempt to flaunt the strength of the ties between the two countries, Netanyahu pointed out that, “tourism is at an all-time high, with 400,000 Russians visiting Israel every year and about 200,000 Israelis visiting Moscow every year,” adding that, “(he has) the honor to contribute somewhat to this statistic.” The first part of that statement is accurate; yet, the latter part is far from the truth. Russo-Israeli relations had been improving for decades before Netanyahu entered the Israeli political scene.

Primakov’s Mission: Laying the Foundations for Russo-Israeli Relations

The “founder” of improving Russo-Israeli relations, Yevgeny Primakov, made a point (almost a mission) of maintaining some type of relationship between the two countries. Since the 1967 Arab-Israeli War all the way up to the latter years of Secretary General Mikhail Gorbachev’s leadership, Moscow officially considered Israel a “pariah state.” However, in the 1970s, during the “Brezhnev Years,” Primakov, a Jewish-born Soviet, was a key member of Soviet delegations that held several rounds of secret talks with the Israelis (usually in hotel rooms from Vienna to Tel Aviv) despite Moscow breaking off diplomatic relations with Israel.

Following Brezhnev’s death, Primakov continued his “mission” by maintaining correspondence with his Israeli counterparts while serving in various capacities within the Soviet establishment in order to preserve communications between the two countries. When Gorbachev began his perestroika and glasnost policy, relations between the Soviet Union and Israel slowly began to improve. Gorbachev’s policies allowed Soviet Jewish “refuseniks” to immigrate to Israel, which eventually led to the resumption of diplomatic relations with Israel in October of 1991—two months before the breakup of the Soviet Union. In December of that same year, Gorbachev announced the breakup of the Soviet Union but relations between the newly formed Russian Federation and Israel continued.

The 1990s were a tough decade for the newly formed Russia. The breakup of the Soviet Union saw the end of a social, cultural, economic, and political lineage that lasted for roughly seventy years dissolve overnight, thereby sending the citizens into dearth and poverty at unimaginable levels. As a result, Russia was a very weak state and did not have much leverage in the international arena. It did not help that the Yeltsin government implemented an American-backed “shock therapy” economic policy that de-modernized the country several decades and left the vast majority of the state in calamitous conditions.

Under the Yeltsin presidency, Russia was destabilized to a high degree (some would argue that it was worse than the years of the Great Depression in the 1930s), crushing their economy. Russians often term the “Yeltsin years” or the decade following the breakup of the Soviet Union as smutnoe vremya (time of troubles), or smutnoe for short, in reference to political crises caused by tumultuous transition periods. The term was most notably used following the demise of the Rurik dynasty, which eventually saw the establishment of the Romanov dynasty. It was also used, to a lesser extent, during the years of the Russian Revolution—the transition from the Russian Empire to Soviet Russia.

Similar to the “Brezhnev years” of stagnation in the 1970s, Israel proved to be a sanctuary for many Russian Jews during this chaotic period. Russian Jews (and other Jewish citizens from former Soviet satellite states) were no exception to this smutnoe of the 1990s, and as a result, Soviet and Russian Jews chose to immigrate to Israel in large numbers.

Despite the tough economic times in Russia, the Russian political elite, which included the then-Russian Foreign Minister (and eventual Prime Minister) Yevgeny Primakov, did its best to preserve its relations with Israel, while maintaining its longstanding foreign policy principle of a two-state solution regarding the Israeli-Palestinian conflict. This was consistent with its overall foreign policy of stability in the region. In the 1990s, Russia (similar to the Gorbachev era of the Soviet Union) maintained a balanced approach when it came to the Middle East, ensuring its national interests were preserved.

The Putin Era: Advancing Interactions, Strategic Engagement, and Navigating the Palestinian Question

Relations between Israel and Russia significantly improved under Russia’s current leader, Vladimir Putin. Throughout his nineteen years in office, since being elected in 2000, President (and Prime Minister) Putin has often received many Israeli Prime Ministers along with other Israeli officials. Putin and others have also visited Israel on many occasions. Both Israeli and Russian officials often cite the size of the Jewish community in Russia and the Russian diaspora in Israel as proof of warming relations. In fact, today the Russian Jewry often claim that the community has it better under the current leader than at any other point in Russian history. And, there is a reason for that. The extent of anti-Semitism in Russia is minimal in comparison to the past. This increased acceptance is reinforced by President Putin. The Kremlin often speaks kindly of the Jewish community in Russia, and Putin has even taken it a step further by stating that Israel and Russia have common histories – namely that the two despise fascism and Nazism of any kind. In addition, the Russian Jewry now has the freedom to practice its religion with no fear of retribution today and can travel to Israel freely—a right greatly curtailed in the Soviet Union.

Despite being political rivals, President Putin, like others, sought Primakov’s advice when it came to the Middle East. Being an Arabist and an expert on the Middle East, Primakov felt (and wrote extensively) that Russia’s main challenge in the 21st century was to fight international terrorism—something that the new President agreed with (and still agrees with to this day). The President has long sought better relations with the Zionist entity as a result of his belief that one of Russia’s main national interests in the region is reducing international terrorism. President Putin believes, for better or worse, that Israel can be a strategic partner in fighting international terrorism. However, President Putin and the entire policy class also believe in a two-state solution along the 1967 borders (in reference to the land Israel captured in the 1967 Arab-Israeli War) to allow for a future Palestinian state to exist alongside Israel. Furthermore, the Russian policy class believes that state sovereignty must be respected. On the former, Israel has made little to no effort and, on the latter, Israel has consistently overstepped its bounds with regards to state sovereignty, often pushing hard enough to destabilize the region.

A policy reversal by the Israelis on the Palestinian question – that is to disengage from the West Bank and East Jerusalem, as well as fully withdrawing from Gaza – seems highly unlikely. Moreover, it also seems unlikely that Israel will cease its illegal excursions in other countries, such as what it is doing in the Syrian arena. This begs some fundamental questions: is Israel’s belligerence putting its citizens in harm’s way and, more importantly, is it risking losing Russia as a national security partner, with its fifty years of unofficial relations and twenty-plus years of official relations? If this is the case, then Israel will be putting itself in a very dangerous conundrum.

The United States, Russia, & Israel: Is it a Triangle?

It is true that Israel, for decades, has relied on the United States for military aid and moral support in the international community in times of war. However, since the fallout of Hurricane Katrina in 2005, the United States has been slowly (but surely) leaving the scene. American citizens do not want their country to be extensively engaged in the Middle East or elsewhere. They would rather the exorbitant amount of money spent on these commitments abroad be invested in improving lives of American citizens through domestic programs, like healthcare, education, and increased job security. The direct lineage between the elections of candidates Barack Obama and Donald Trump (not John McCain, Mitt Romney, or Hillary Clinton) proves this to be the case. We are seeing further evidence of this as politicians vie for control of the Democratic Party. Voices within the party are justifiably asking questions out loud that have been asked behind closed doors for years. Questions like: why is it that a foreign country receives so much financial support from the United States when many of its own citizens still struggle to survive? As a result, support for Israel in the American political scene is waning, despite the Israeli lobby’s claim. Today, only a certain portion of the Republican Party blindly supports Israel wholeheartedly. At some point, those voices will grow quieter and quieter or, at the very least, become less influential.

When America leaves the scene and becomes less influential on the international stage, Israel will be left alone. Yet, Israel can move eastward in pursuit of securing its national interests, creating a new alliance with Russia, a country that is more invested in the region today. This can be beneficial to Israel’s national security but, for that to happen, Israel will need to change its course on both the Palestinian question and its excursions in the region. The decision is a “no-brainer” given that the current course is creating an outcome where Israeli citizens are endangered from rockets as well as stabbings, shootings, and car-ramming attacks.

Russia, who seems to be invested in the region for the long haul, has been a willing partner thus far. Most recently this was evident when Russia –– in coordination with its military and the Syrians –– cooperated with Israel to help return the body of the fallen Israeli soldier, Zachary Baumel, who was killed in the 1982 “Lebanon War.” However, the Israeli establishment cannot take its Russian counterparts for granted forever. While the vast majority of the Russian policy class and President Putin still seem to want better relations with Israel and are willing to give it the benefit of the doubt, this is not guaranteed going forward. The policy class is not homogenous and some within it can override the Russian President when they deem Russia’s national interests are being jeopardized, as we saw when Russia finally decided to deliver its S300 surface-to-air missile systems to Syria. Thus, if Israel continues its confrontational activity in the region and prolongs its actions towards the Palestinians, Russia has cards at its disposal that will be unfavorable to Israel—leaving Israel isolated and weaker.

The ball is in Israel’s court. It must decide if it wants better relations with Russia or not. For the moment, the Russian policy class desires this; there is no doubt. However, at some point, Russian patience might run out. With the United States slowly leaving the scene, Israel would be wise to move closer to Russia. However, for that to happen, it needs to seriously consider changing its policy towards the Palestinians and cease its military excursions in the region. Israel should not test Russia’s resolve like it has done in the past, because the consequences for the Zionist entity could prove to be existentially dire.

First published in our partner RIAC

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Russian- Arab Cooperation Forum

Kester Kenn Klomegah

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On April 16, Moscow hosted the 5th Russian-Arab Cooperation Forum to review comprehensively its strategic goals and achievements, challenges and layout plans for the future. The Fifth Ministerial Session of the Russian-Arab Cooperation Forum, for the first time, attracted 14 ministers from the League of Arab States (LAS), and representatives from north Africa (Maghreb) and from the Arab world. It was also attended by the three foreign office representatives of the Council of the Arab League (Iraq, Sudan and Somalia), as well as Tunisia (as current Arab League Summit chair) and the Arab League Secretary General.

Foreign Minister Sergey Lavrov agreed, in an opening remarks at a news conference, to continue joint work in the interest of a Libyan settlement, supported the UN Secretary-General Special Representative in Libya Ghassan Salame’s efforts to implement the road map he developed to normalise the situation in Libya.

“We have a common goal which is to help the Libyans overcome their current differences and reach a stable agreement on national reconciliation. To this end, Russia is working with all the political forces of Libya, without exception,” he said.

“We discussed various situations in the Middle East and North Africa, including Sudan, Somalia, Yemen and Iraq. We supported the decisions adopted at the recent Arab League summit in Tunisia, the documents that capture the commitment to increase the role of the League in the region’s affairs. We strongly welcome such decisions,” the Minister added.

Lavrov further referred to the 12th session of the Russian-Arab Business Council and the 4th Arabia-Expo International Exhibition as significant events that enormously contributed to creating additional opportunities in the interest of promoting business cooperation between Russian and Arab organisations.

Earlier, Russian President Vladimir Putin sent a message of greetings to the participants and guests of the 12th session of the Russian-Arab Business Council and the 4th Arabia-EXPO International Exhibition, held from April 8 to 10.

The message reads, in part:“Over the years of its work, the Russian-Arab Business Council has fully proved its relevance and effectiveness and contributed to promoting direct dialogue and practical interaction between the business communities of Russia and the countries of the Middle East and North Africa.

The council’s energetic efforts serve to expand and diversify trade, to increase mutual investment and implement promising joint projects in the manufacturing industry and agriculture, energy and high technologies, transport and infrastructure.

Large-scale Arabia-EXPO exhibitions are an essential area of the council’s activities. They introduce the latest economic, scientific and technological achievements of the Arab states to the Russian people and offer an opportunity for entrepreneurs to exchange business proposals and innovative ideas.

I hope the current session of the council will be substantive and will make it possible to outline new forms and mechanisms for equitable cooperation, as well as to strengthen friendship and mutual understanding between our nations.”

The Russian-Arab Cooperation Forum was officially launched in 2009 with the signing of a memorandum between the Russian Federation and the Arab League. Since then it has proved its importance as a mechanism of a regular exchange of opinion and coordination of positions on major regional and international issues. 

An in-depth exchange of views were held during the meeting on the situation in the Middle East and North Africa, particular attention was paid to coordinating practical steps to further enhance the whole range of relations between Russia and Arab countries, primarily trade and economic relations, investment, culture, education and people-to-people ties. At the end of the Forum, a joint declaration adopted as well as an action plan to implement the principles, objectives and tasks of Russian-Arab cooperation for 2019-2021.

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The Results of the Azerbaijan- Russia Industrial Cooperation Forum

Asim Suleymanov

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On April 4, the Azerbaijan-Russia Industrial Cooperation Forum was held in Baku with the participation of representatives of relevant government agencies and entrepreneurs. Speaking at the forum, Azerbaijan’s Minister of Economy Shahin Mustafayev noted that the political will and joint efforts of the presidents of Azerbaijan and Russia laid a solid foundation for expanding economic cooperation between two countries. The relations between Azerbaijan and Russia, which are developing in all areas, are at a strategic level.

Within the framework of the forum, three Russian companies – Rostselmash, Transmashholding and Service Invest – signed the cooperation agreements with Azerbaijani partners. State Duma Deputy Dmitry Savelyev, commenting on the results of the event, noted that Russia and Azerbaijan had obviously moved from the initial steps in building economic partnership to a normal working process.
The result is visible to the naked eye: last year’s trade turnover amounted to $ 2.5 billion, exceeding the figure for 2017 by 19%. It shows the great interest of companies in joint projects.

According to the parliamentarian the countries have long-term successful experience in opening joint ventures in the industrial sector, and not only in the oil and gas sector. Industrial cooperation is developing at full speed.
The real examples of mutual investment were the SOCAR Polymer project, the construction of a pharmaceutical enterprise in the Pirallahi industrial park, and the cooperation of the Ganja car plant with the Russian enterprises KamAZ and Ural. A service center that would make maintenance and repair of Mi helicopters in Azerbaijan is supposed to be opened.

Moreover, at this stage of cooperation we can talk about readiness for cooperation in the international arena. The Ministry of Industry and Trade of Russia and the Russian Export Center (REC) are launching the Unified Export Support System. Regional hubs will be formed in 19 countries (including China, Turkey, Germany, Vietnam, Uzbekistan and Singapore).

Moreover, the creation of joint assembly plants considers promising point of economic growth. Such a joint project will expand the market for engineering represented by Middle East and Southeast Asia countries. An important role in this regard should be played by agreements at the level of state corporations.

“This year, President Ilham Aliyev signed a decree establishing the Azercelli company. This company will be engaged in the development of the non-oil sector, the production of defense and import-substituting industrial products. In cooperation with Rostec that is among the ten largest industrial corporations in the world in terms of revenues Azercelli can begin its expansion into the huge markets in Africa and the Middle East.”

The long-term friendly relations of two states, based on good-neighborliness and taking into account the national interests of a partner, the Russian parliamentarian considers the main trump card in the joint entry into international markets. “If there is a conflict of interests in some areas of activity, then in order to pass events like the Russian-Azerbaijani forum of industrial cooperation, where both parties can always sit at the negotiating table and find mutually acceptable solutions, as was done throughout the history of the relations.

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