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The Eurasian Economic Union: The Core of Continental Integration

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Photo: © Artyom Korotayev/TASS

The chairmanship in the (EAEU) in 2018 was passed to Russia from Kyrgyzstan. The presidency includes the Supreme Eurasian Economic Council (president level) the Eurasian Intergovernmental Council (prime minister level) and the Council of the Eurasian Economic Commission (EEC). Among the main expectations and plans for the year there are:

  • The admission of new countries.
  • Digital economy development.
  • Strengthening of national currencies as a way of de-dollarization.
  • Working on conclusion of the agreement on free trade zone with the Association of   Southeast Asian Nations (ASEAN).

Among the highlights of  the year there are :

– approval of the Customs Code by all country-members of the EAEU;

– coordination of the digital agenda by the member countries of the Union;

– systematic removal of barriers and restrictions in the EAEU markets and

– development of cooperation with other countries.

The year 2017 for the EAEU was marked by positive dynamics in different sectors: on the whole industrial production growth in the Union amounted to 3.6 %,  in agriculture – 1.5 %, in freight and passenger turnover – to approximately 7 %. In 2017 the volume of bilateral trade in the Union increased by more than a quarter. Since the beginning of 2017 foreign direct investment (FDI) in the EAEU has almost doubled.

An important line of action of the EAEC, in which significant success has also been achieved, is the establishment of relations with the European Union. As stated by Tigran Sargsyan, Chairman of the Board of Eurasian Economic Commission: “We note that in this year «the ice was broken». This is an important point. Previously, the EU was forced to follow closely what is happening in the EAEU, what institutions we set up and how we adhere to the declared standards. By now the contacts between the EAEC and the EU-level departments of the two commissions have started to develop”. According to the Eurasian Economic Commission, the main buyer of exported goods of the EAEU is the European Union: 50.3 % (of total exports), among them, the main buyers are the Netherlands (10,9 %), Germany (7.3 %), Italy (6,3 %), Poland (3.4 %). It is obvious that sanctions and the food embargo has not prevented the increase in turnover of bilateral trade. According to some experts, there has recently been some positive signals in the launching of the industry dialogue between the EAEU and the EU. Regarding cooperation between the EU and the EAEU in the energy sector, it is important to understand that in the near future the share of the Eurasian continent will account for more than half of the total world electricity demand, and therefore it will have a significant impact on the development of global energy. Note that the planned reforms of the EACE energy market (in 2019-2025) are being developed on the basis of the WTO regulatory framework. This increases the level of compatibility of European and Eurasian energy unions. The Director of the EAEC Integration Development Department, Sergey Shukhno said: “In the foreseeable future the EAEC expects to establish a full-scale dialogue in its relations with the EU.” Business, particularly in Europe, actively promotes contacts between the two unions and, in fact, is a kind of catalyst for the establishment of relations.

New members

Iran plans to join the Union in February 2018. The Iranian market after the lifting of sanctions begins to open up to external players and is very interesting for companies of the countries-members of the Union. In addition, on the list to sign economic and trade agreements with the Eurasian economic Union there are such countries as India, Egypt, Israel, Serbia and Singapore. At present EAEC has been in  intensive dialogue with these countries. About 50 countries have expressed a desire to cooperate with the Eurasian Economic Union (EAEC), as stated in one of his speeches of Russian Foreign Minister Sergey Lavrov.

National currencies and de-dollarization

At present about 70 % of payments for exports in the EAEC are made in national currencies. The use of the national currencies by the members of the Union in mutual transactions helps the business – it reduces currency risks and removes various economic and regulatory barriers. In addition, it helps the EAEC economies to strengthen the macro-economy and to develop local financial markets.

According to a report published by the EDB Centre for Integration Studies the share of Russian ruble in the currency structure of payments in the EAEU has increased over the last six years from 56% to 75%, while the dollar’s share during the same period decreased from 35 % to 19 %. According to their data, the settlements between the countries in rubles make up more than 69 billion dollars, in U.S. dollars – about 18 billion dollars, in Euro – about 5 billion dollars. Strange as it may sound, but the policy to reduce dependence on the dollar was also helped by the economic sanctions imposed by Western countries against Russia in 2014. It should be noted that the Euro is also gradually being pushed out of payments inside the EAEU: if in 2013 the share of Euro settlements was 8%, then in 2017 it was reduced to 6%. According to analysts’ forecasts, if the growth of the ruble’s share continues to grow at the same rate, then the countries of the EAEU can completely switch to trading in rubles by 2023-2025. Of course, much depends on the stability of the world economy.

According to expert assessments, the history of the EAEU began not from the moment of the formation of the Union in 2015, but from the collapse of the USSR. The Eurasian Union began its development under the influence of various factors and not as an attempt to create the USSR 2.0, but as a reaction to global macroeconomic processes. Some western experts point out that this is a Moscow project aimed at strengthening Russia’s geopolitical influence. Moreover, Moscow is called the initiator and the progenitor of new integration in the post-Soviet space. However, the historical fact is that the President of Kazakhstan Nursultan Nazarbayev presented the project of the Eurasian Union in March 1994.

To date, the EAEU model is characterized by a market economy and an institutional arrangement in accordance with democratic systems. It is important to note that the decisions, directives and recommendations of the EAEC Council are taken by consensus, which indicates full equality of the participating countries. The EAEU agenda  is deliberately limited to economic cooperation. And no matter how Western critics tried, political issues are not within the competence of the EAEU, but are resolved in the formats of bilateral interaction, for example, the Union State of Russia and Belarus, the CSTO and the CIS.

First published in our partner International Affairs

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Russia

Russia: Highlights of the XII BRICS Summit

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On November 17, under Russia’s BRICS Chairmanship, Vladimir Putin hosted the 12th BRICS Summit via videoconference. The leaders of Brazil, India, China and South Africa participated to discuss the state and prospects of cooperation within BRICS, discussed the global stability and security, and most importantly exchanged views on joint efforts to halt the spread of coronavirus pandemic.

As the Chair of BRICS 2020, President Vladimir Putin reviewed BRICS activities since Russia took over from Brazil, highlighted achievements and set the challenges for the future of BRICS. During the Russia’s Chairmanship the BRICS, Russia has held 130 events, including some 25 ministerial meetings, many of them online.

Within the context of the current global health situation, Putin pointed to the subject of medical cooperation among BRICS, and reminded the Ufa Declaration which was adopted five years ago included an agreement to work together to prevent the spread of infectious diseases.

Pursuant to that agreement, the BRICS countries created an early warning system for infectious disease outbreaks, which could be used during the COVID-19 pandemic. The BRICS countries promptly responded to the disease outbreak and took practical measures to combat the pandemic.

He said that the Russian Direct Investment Fund (RDIF) has signed agreements with Indian and Brazilian partners on clinical tests of the Sputnik V vaccine and with pharmaceutical companies in China and India on the production of this vaccine not only for own use, but also for third countries. There are Russian vaccines, and they are effective and safe. The next task is to launch large-scale production. It is very important to join forces for the large-scale manufacturing of this product for public use.

Besides this, it important to accelerate the establishment of the BRICS Vaccine Research and Development Centre, as agreed at the Johannesburg summit two years ago at the initiative of South African.

Due to the pandemic, many countries have taken emergency measures to support national industries, finance and the social sphere, to revive their economies and return them to a trajectory of sustainable growth. This is the goal of the Strategy for BRICS Economic Partnership for the period until 2025, prepared for this summit.

The New Development Bank is in great demand in the current situation. The Bank has reserved $10 billion to combat the pandemic, while its overall portfolio of investment projects now exceeds $20 billion. As many as 62 large projects are being implemented in the BRICS countries. Incidentally, a regional branch of the bank will soon open in Moscow to implement lending programs across the Eurasian space. The BRICS countries have a special insurance tool in case of a crisis in the financial markets: the BRICS Contingent Reserve Arrangement, with a $100 billion fund.

The BRICS Interbank Cooperation Mechanism is important in the parties’ cooperation on credit and investment policy. This year, they have agreed on the rules and principles of responsible financing of development institutions within its framework.

The five countries are enhancing cooperation in science, technology, and innovation. Intensive contacts have been underway between our academic and scientific centers. Their coverage is truly impressive – from ocean and polar research to astronomy and artificial intelligence. Experts from the five countries carry out joint energy research: reports have been prepared on the projected development of the fuel and energy sectors in the BRICS countries until 2040.

Putin further highlighted the challenging global and regional security environment. International terrorism and drug trafficking continue to pose serious threats, and cybercrime has greatly expanded its reach.

“We are witnessing dangerous destabilizing trends in the Middle East and North Africa. The armed conflicts in Libya and Yemen are continuing. There is still a lot to be done to bring about a political settlement in Syria, and the risks of escalation persist in Iraq, Lebanon, Afghanistan, and in the Persian Gulf,” he told the gathering.

It is highly satisfying that the BRICS countries have been closely coordinating their efforts on current international and regional matters. A policy document, the BRICS Counter-Terrorism Strategy, drafted for the summit. The BRICS countries are expanding their cooperation on combating drug trafficking and corruption, as well as on international information security.

During the meeting, the leaders of the BRICS member countries heard reports from other speakers who have overseen the work on each track of the association’s activity.

Secretary of the Russian Security Council Nikolai Patrushev spoke about cooperation in the coronavirus pandemic response, in combating terrorism and cybercrime.

President of the New Development Bank Marcos Troyjo cited the financial institution’s performance data and plans for next year.

President of the Russian Chamber of Commerce and Industry Sergei Katyrin spoke about the Business Council events, while Chairman of VEB RF Igor Shuvalov covered the BRICS Interbank Cooperation Mechanism.

The report by Chair of the Board of Directors of Global Rus Trade Anna Nesterova addressed the establishment of the BRICS Women’s Business Alliance.

President of Brazil Jair Bolsonaro, Prime Minister of India Narendra Modi, President of China Xi Jinping and President of South Africa Cyril Ramaphosa, during the meeting, exchanged views on the state and prospects of the five-sided cooperation.

The 12th BRICS Summit Moscow Declaration was adopted which reflects the five countries’ consolidated approach to the further development of the association, as well as the Strategy for the BRICS Economic Partnership until 2025 and the BRICS Anti-Terrorism Strategy.

“India, China, South Africa and Brazil commend Russian BRICS Chairmanship in 2020 and express their gratitude to the government and people of Russia for holding the XII BRICS Summit,” the adopted document says. Besides that, Brazil, Russia, China and South Africa extended full support to India for its BRICS Chairmanship in 2021 and the holding of the 13th BRICS Summit.

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Exchange of Information and Communication Key to Boosting Russian-African Partnership

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Image source: Valdai Discussion Club

On November 5 to 6, Moscow hosted the Second Russia-Africa Public Forum organized jointly by the World Association of Foreign Alumni of Russian Universities and African Business Initiative Union.

It was held within the framework of Russia’s strategy for the development and strengthening of trade, economic, social and cultural relations with the countries of the African continent, as well as building a stronger institutional foundation for Russian-African cooperation.

Since its creation in October 2018, it has become a platform for discussing ways of interaction between Russia and African countries on a wide range of issues, with special attention to the development of socio-cultural, humanitarian, trade and economic cooperation.

This month, prominent political and public officials, representatives of academic circles, the business community, and student and youth organizations were brought to the forum, which organizers believe provides a platform to exchange views on current issues of developing multifaceted relations between Russia and African countries.

Greeting the participants, Foreign Minister Sergey Lavrov reiterated that Russian-African cooperation, which is rooted in the period of the joint struggle against colonialism, is based on the principles of equality and mutual respect.

“Russia’s relations with African countries have always been friendly and multifaceted. However, it is necessary to adjust them to modern realities. We proceed from the assumption that the impetus of the Russia-Africa Summit held in Sochi in October 2019 can help us take our interaction to a fundamentally new level,” he stressed with optimism.

Lavrov said: “I believe that our public and the academic community can do a great deal to help choose methods of boosting Russian-African partnership. There is no doubt that the forum will provide a useful platform for developing innovative ideas and proposals in this sphere, and that it will help the Russian public learn more and understand better the needs of Africa, which is a geographically remote but spiritually close continent.”

The two-day forum focused on the modernization of education in the context of globalization and the scientific and technological revolutions.

It reviewed the strategy of economic cooperation in modern conditions, the development and implementation of new effective institutions and mechanisms of interaction.

It discussed, at length, the problems of international cultural cooperation in the context of modern threats and challenges.

It looked at the ever-growing role of public organizations in various aspects of society’s life and the interaction in the field of healthcare as one of the most pressing issues of the Russian-African dialogue. There were plenary sessions.

Plenary Session 1: Russia – Africa: Dialogue of Civil Societies as the Main Driver of the Future World Order and Sustainable Development.

Plenary session 2: Youth of Russia and Africa: a path towards rapprochement

Plenary session 3: Graduates of Russia as a unique human capital. Export of Russian education to Africa. Personnel training: what kind of specialists does the African continent need today?

Panel session 4: Business and Civil Society Institutions. Innovative technologies of Russian companies for the benefit of sustainable development of the African continent.

Panel session 5: Africa: pressing health issues. Public health and welfare. Pandemic shock.

Speakers and participants have, however, acknowledged the significance of the public forum and stressed that it would be impossible to elevate the entire range of relations between Russia and African countries to an entirely new level unless the public at large takes the most energetic part in these efforts.

It is hard to overestimate the role of this in strengthening friendship, trust and mutual understanding between the two parties without adequate and consistent exchange of information. It is necessary to maximize the potential of public, cultural and business diplomacy using the basic instrument of the media, according to the Chairman of the Board of the Valdai International Discussion Club’s Development and Support Foundation Andrei Bystritsky, speaking at the plenary meeting of the Second Russia-Africa Public Forum.

“On the one hand, the Russian public knows little about Africa. And I guess people in Africa know little about Russia,” he noted, and explained that Russia and Africa need to communicate more. Creating necessary conditions for conversation is important, as communication is the foundation of development, and will help strengthen the mutually beneficial ties between Russia and Africa.

As already known, Africa is an important partner for Russia. This fact was highly re-echoed throughout the forum. Speakers and participants explicitly expressed the need to strengthen relations in various fields. Further, most of the issues and diverse opinions expressed there have to improve the current level of relationship. Russia and Africa have to make that mutual desire, in practical terms, to step up cooperation in all areas including social spheres.

In this connection, it requires complete understanding, support for new initiatives and, commitment to expand friendly relations with Africa. These efforts directed not only at consolidating cooperation with the African countries but also at resolving key African problems such as overcoming social inequality and the involvement of young Africans in sustainable economic development.

Despite the challenges, Moscow plans to boost its presence on the continent in the coming years and, as outlined in the Russia-Africa Summit declaration, both Russia and Africa have to begin pursuing targeted goals, continue encouraging exchanges between Russia and African countries.

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Russia Readies to Host XII BRICS Summit

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Under Russia’s BRICS Chairmanship 2020, President Vladimir Putin will host Heads of State of Brazil, China, India and South Africa via videoconference on 17 November. Initially planned to take place in St. Petersburg in July, it was cancelled due to current coronavirus pandemic.

The leaders will discuss the strengthening and further development of cooperation within the framework of BRICS, including in the context of the global political and socioeconomic consequences of the COVID-19 pandemic.

In addition, the leaders will focus on significant and complicated issues or questions relating to geopolitical to socioeconomic spheres, transformations on the global landscapes in the 21st century. The meeting will adopt a working document that will further reinforce the position and development of the group.

As stipulated by the guidelines, Russia took over the rotating presidency of the BRICS from Brazil. Since its establishment, BRICS has come a long way from an informal venue for exchanging views on current issues on the international agenda to an absolutely mature and stable network of multilateral interaction on diverse issues on international and domestic agenda of the five BRICS countries.

Now BRICS has a multilateral structure, and become an association pushing for fair, democratic and multipolar world order. Russia has agreed to strengthen and promote strategic partnership in all key areas of BRICS activities, such as politics and security, the economy and finance, educational and cultural ties.

The theme of the Meeting of the Leaders of BRICS is “BRICS Partnership for Global Stability, Shared Security and Innovative Growth.” They will discuss the enhancement of their countries’ trade and economic collaboration and coordination at international stage or platforms.

It plans to end its chairmanship with a strong set of new agreements, including the already agreed upon BRICS Anti-Terrorism Strategy and the updated Strategy for Economic Partnership to 2025. This document defines guidelines and priorities of cooperation and gives a new impetus to development of trade and investment cooperation among the five countries.

It further provides a number of initiatives to strengthen sector-specific cooperation among the members. The people-to-people and cultural ties, as well as contacts between experts and civil society representatives are already expanding.

Despite the current global situation due to the spread of the coronavirus infection, the activities under the Russian BRICS Chairmanship in 2020 have been carried out in a consistent manner. Since January 2020, a number of events have already been organized, including via videoconferencing.

Russia’s Foreign Minister Sergei Lavrov has reiterated that deepening the strategic partnership in BRICS is one of Russia’s foreign policy priorities.

Over the past decade, the group has proved to be a relevant and well-respected format of cooperation. The BRICS countries maintain solidarity in strengthening collective principles in global affairs; they advocate respect for the sovereignty and sovereign equality of all states, and are deeply convinced that any conflicts should be resolved by peaceful means only.

The group collectively defends the principles of a more just world order based on respect for the norms and principles of international law and the United Nations Charter.

According to procedure, each BRICS member takes over the chairmanship for a year. Russia last chaired BRICS in 2015, held a summit in the provincial city of Ufa. Russia also presided over the group back in 2009, before BRIC turned into BRICS following South Africa’s accession. The five BRICS countries together represent over 3.1 billion people, or about 40 percent of the world population.

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