In its relations with Africa, Russia – which operates on global markets especially in the field of oil and non-oil raw materials – does not use the same logic as the Western countries’. The latter have always looked only for materials to be processed and turned into finished products within their factories.
In fact – according to the most authoritative scholars and experts – in Africa, Russia seeks above all the human capital, i.e. the human capital to be developed, the ruling classes to be educated, as well as the masses to be trained and made productive, always in an integrated vision of development between the great continental Eurasia and Africa.
The Russian relations with Africa are only synergistic, as they are two large reserves of raw materials and this makes their geo-economic situation in this respect very similar. However, as often reiterated by Russian experts, these are always operations that take long time and have a strong geopolitical and strategic dimension.
Hence, again according to Russian analysts, the logic underlying the relations between Russia and Africa is the union of their best practices so as to create a synergy that, in the future, will have a global geopolitical and economic impact.
Westerners want to look for goods and resources which are essential for their technological and industrial survival, while Russia wants to support Africa to take it away from the US and EU influence and use it as the pivot of Russia’s future development as a global, economic and strategic power.
However, the economic and political relations following the USSR collapse were the first ones to be sacrificed on the altar of the very severe Russian economic crisis of the time.
The current Russian establishment interpreted that crisis as an ill-managed colonization of the great Russian reservoir of raw materials. Exactly the same paradigm that is currently applied to the wide African region.
Later we witnessed the complex turn – ordered by Vladimir Putin since his official rise to power on May 7, 2000 – from a Russian GDP of only 764 million US dollars in 2006 to 2,096.8 million US dollars in 2014 up to 1,248.55 US dollars in 2016.
Moreover, the International Monetary Fund foresees that the future increases of the Russian GDP will result almost exclusively from the expansion of the internal market.
This is the example given by the Sochi Olympic Winter Games and by Russia’s international initiatives.
Hence – as Keynes explained in his old, albeit always valid, General Theory -if economic growth and the capitalistic or non-capitalistic industrialization depend on the secondary processing of raw materials and on the market-driven innovation, generated by the market and its demand, obviously the West must expand itself – in a new way – where these raw materials are found, namely Africa, Asia and Latin America – and obviously the new geopolitics will repeat the one analysed by Georg Wilhelm Pahl in the 1930s: the war for primary raw materials.
Unlike technologies, said raw materials are not reproducible.
Hence, in terms of basic productive structure, the Russian Federation is homogeneous and similar to many of the countries rich in raw materials which, like Russia, make up the so-called BRICS group.
In fact, if we read the Russian Federation’s “Concept of Foreign Policy” adopted by President Medvedev in July 2008, we can see that the issue of collaboration between Russia and the African countries- as well as an enhanced dialogue with the G-20 and the G-8 -are some of the fundamental issues of the Russian power projection throughout the world.
Moreover, in the 2017 “Concept”, it is made clear that “Russia intends to strengthen its position in global economic relations and prevent any discrimination against Russian assets, services and investments”.
It is worth keeping in mind that, altogether, Africa and the Russian Federation hold 60% of the world’s natural resources.
Hence the fundamental problem for Russia is to be so strong at international, legal and financial levels to avoid the fast and ferocious exploitation of its own natural resources – as well as of its friendly African countries – at low prices and without any political and military compensation in return.
Although many people think the opposite, imagining an impossible “tertiary society” -of “services” or, even more humorously, of “knowledge” -the “resource factor” is essential to analyse the current state of the world market.
Between 1960 and 2009 the world population grew from 2.5 to 6.6 billion people and currently, based on the 2017 data, we see the undoubtedly shocking forecasts of world population reaching as many as 7.6 billion people in 2018.
A 400% increase of the world’s population recorded throughout the twentieth century. According to UN data, between 2018 and 2100 the world population will rise approximately to 10 billion people.
Oil extraction – the axis of Russia’s current economy, which will also be diversified through these new relations between Russian and African raw materials-has risen from 2.5 million barrels per day in 1960 to 4 million barrels in 2009 up to 6.9 million barrels per day this year, with a forecast of stable global growth in oil consumption of 1.2 million barrels per day.
Global natural gas production has risen from 190 million in 1960 to approximately 3,900 in 2018, with a consumption outlook predicting significant growth of global consumption, higher than the oil one.
The fact is that these growth trends in raw material consumption apply not only to energy products, but also to all types of minerals and non-food raw materials.
Hence there is no monetary crisis – occurring by chance or artfully created – which can manoeuvre this stable condition of the markets and the allocation of raw materials. Any manipulation with derivatives or other financial formulas will never be able of changing the material equilibria on the planet.
It is worth noting, however, that 16% of the world population lives in developed countries, even though in these countries the social gap between rich and poor is increasingly widening.
The “Gini coefficient”, which is a commonly used measure of inequality of income or wealth, is currently optimal in the North European countries, while it is very low in Bolivia, Colombia and generally in Latin America.
However, it is also very low in Gambia, Namibia and South Africa, ranging between 0.66 and 0.50, in a context in which the maximum income equality is 0.50, considering that 0 means complete income equality.
The United States, Russia and China range between 0.40 and 0.45, with China following closely.
Nevertheless 10% of the richest population owns 37% of wealth in Europe, 47% in North America, 46% in Russia and 41% in China, but with 55% of wealth in Brazil, sub-Saharan Africa, India and even 61% throughout the Middle East – obviously excluding Israel.
This make us predict a future scenario that reminds us of Mao Zedong’s “Three Worlds Theory”, which proposed three political-economic worlds: the First world consisting of superpowers, the Second World of developing powers and the Third World of exploited nations.
The First World was composed of the USA and the Soviet Union, which engaged in imperialism and social imperialism and featured a “capitalist” country and a “revisionist” country (i.e. the USSR which, at the time, was consumed in the madness of the Cold War and in the economic and military confrontation between East and West). Japan and Canada, Europe and the countries of the global North-South divide composed the Second World, while the countries of Africa, Latin America and Asia (except Japan) composed the Third World, which would be unified and led by Red China.
Hence 16% of the population lives in the First World, which organizes the production and consumption of raw materials, while as much as 53% of the world population lives in developing countries.
With their 16% of population, however, the developed countries consume 52% of all the raw materials extracted.
This is the profound meaning of the “war for Africa” that everyone is currently waging with both conventional means and indirect or influence strategies.
Africa is the primary area for the extraction of manganese, chromium, bauxite, gold, platinum, cobalt – 94% of which is currently extracted indirectly by Chinese companies operating in the Black Continent – vanadium, diamonds, phosphorite and fluorite.
Africa is also the second region of extraction for copper, asbestos, uranium, antimony, beryllium and graphite, as well as the third region in the world for oil, natural gas, mercury and iron ore reserves.
Africa, however, also possesses significant deposits of titanium, nickel, bismuth, lithium, tantalum, niobium, aluminium salts, tungsten and precious stones.
In short, the Black Continent is strategic for all the raw materials characterizing the technologies of the future scientific and industrial revolution, which is currently typical of the First World’s economies.
Finally, another factor of geoeconomic similarity between Russia and Africa is that they are two great global regions in which the fast and often unreasonable exploitation of natural resources has not occurred yet. Political and military difficulties of ancient and now outdated colonial hegemonies.
As, indeed, it has already happened in Brazil and in some Asian areas.
The depletion of natural resources in Latin America is older and more profound than the one already underway in some regions of sub-Saharan Africa.
We must not forget, however, that in mid-21st century the demand for raw materials will grow by 50% or 60% while, again according to Russian statistics – mostly confirmed also by the United States – the oil demand is expected to grow by 113 million barrels per day until 2030.
Another important fact, however, is that every year the United States is increasing its imports from Africa – and this has been going on since 2005, with a yearly 10% increase of North American imports from Africa.
Over the same 2001-2015 period, the European Union has instead reduced its imports from Africa by 2.5%.
Nevertheless, over 70% of imports to the USA is only for oil products, while minerals and other African non-food raw materials only account for 14-15% of the US total imports.
Hence the African Growth and Opportunity Act (AGOA) – the Treaty that since 2000 has been regulating US and African trade -lays down that 6,400 products of 40 African countries will enter the USA duty free. This has indirectly created a million new jobs in Africa but, as always happens with mere free-trade treaties, they do not lead to investment, but only to the expansion of African imports which, although important, is not enough.
Currently, however, the US direct investment in Africa is on the wane: lately the US exports to sub-Saharan Africa have been worth 19 billion US dollars, while bilateral trade fell from 100 billion US dollars in 2008 to 39 billion US dollars in 2017 – a fall in North American imports mainly due to the increase in US energy independence and autonomy.
China has already funded 3,000 infrastructures in Africa in various ways and has granted 86 billion dollars of commercial credits to African governments. It has also invested 6 billion dollars a year throughout the Continent until 2025.
In 2015, during the Forum on China-Africa Cooperation Conference (FOCAC), President Xi Jinping granted a further multi-year commercial fund to the tune of 60 billion dollars, to which another 20 will be added at the end of the mandate in 2025.
Hence China is already Africa’s first creditor, with 14% of the entire sub-Saharan debt stock.
China’s Foreign Direct Investment in Africa, however, is still low, considering that it accounts for 5% of all the FDI in the Continent, while there are currently 10,000 China-owned companies – mainly private ones – operating in Africa.
Furthermore, in 2007 the EU launched the Africa-EU Strategic Partnership, operating between EU-27 and 54 African countries.
The fifth Partnership Summit held in Abidjan in 2017 reaffirmed the main assumption underlying the agreement, namely mutual trade, in a situation in which trade between Africa (i.e. the 54 countries adhering to the Africa-EU Strategic Partnership) and the European Union is worth approximately 300 billion euro a year, while the European Union has guaranteed additional 54 billion euro for “sustainable development” – whatever this may mean in Africa.
Following the non-brilliant concept of “equalitarian” trade typical of the USA, the EU has established a series of Economic Partnership Agreements (EPAs) with 40 other sub-Saharan African countries of the Strategic Partnership, with bilateral treaties envisaging preferential access to European companies in those areas, while imports will be liberalized over a period of 20 years.
Too late, too little.
Nigeria is opposed to the EPA since it maintains it is an obstacle stopping its industrialization, while Brexit has greatly weakened the EU ability to penetrate the African markets and ruling classes.
Finally, the USA has recently invested 6.5 billion US dollars in 14 African countries through the Millennium Challenge Corporation alone – funds aimed at fostering inter-African economic integration (a sort of future African EU) and to create the best conditions for standard private North American investment.
Moreover, in February 2018, the US government established the BUILD Act, i.e. the rules on Better Utilization of Investment Leading to Development, a new federal agency that will put together some functions of the Overseas Private Investment Corporation and of USAID, which will mainly deal with equity investment in Sub-Saharan countries.
However, let us revert to the Russian Federation.
Building on a strong bilateral relationship with Abdel Fattah al-Sisi’s Egypt, Russia currently plans to develop a series of relations – always and especially at bilateral level – with many African countries, particularly those having a more difficult relationship with the EU and the USA.
At the inauguration of Vladimir Putin’s current Presidency there were people of great strategic importance for Africa: Cyril Ramaphosa, President of the South African Republic; obviously Abdel Fattah al-Sisi from Egypt; Emmerson Mnangawa from Zimbabwe; Joao Laurenco, President of Angola; Hage Geincob from Namibia and finally Omar al Bashir, military and political leader of South Sudan.
With regard to Egypt, Putin is working on a nuclear power plant and a special industrial zone, as well as on a package of aid and investment amounting to approximately 32 million US dollars.
An operation that is supposed to be completed in 2022.
For Zimbabwe – currently a political pariah for the whole West – the relationship with Russia and China is fundamental for the steady flow of economic aid from the two Asian countries. This aid will soon be turned into bilateral trade and into the creation of an autonomous Russian economic zone in the Southern part of the country, in addition to the modernization of agriculture and the creation of some industrial sectors mainly linked to agricultural by-products.
Russia, however, has also invested 3 billion US dollars in a large platinum mine.
Alrosa, Russia’s major State-owned company in the diamond sector, will operate in Angola where it will exploit one of the largest diamond deposits in the world, namely Luaxe. The Russian Federation is also planning to make additional infrastructure investment in South Sudan, very different from the investment planned by Europe and the United States there.
Russia, however, plans to develop – above all – the vast oil fields that Al Bashir’s regime of South Sudan has on the borders of the country. As to South Africa, we will see what results the South African Presidency of the BRICS groups on July 25-27, 2018 will achieve in terms of bilateral relations.
It is worth recalling that the BRICS countries account for 26% of the world surface and 42% of the world population.
In the Third World population is growing, while the population decline in Europe and North America makes us fear the worst for our rates of development and the unsustainable costs of welfare and pension systems while, for obvious reasons, the average factor productivity is decreasing throughout the West.
With a view to underlining again the importance of relations between the Russian Federation and the African countries, there is a clear link between Russia’s trading partners in Africa and the States participating in the bilateral joint manoeuvres put in place ever more often by Russia in Africa.
Moreover, the Russian peacekeepers in Africa often outnumber those coming from France, Great Britain and the United States. In Africa the Russian “green helmets” often outnumber those of the other Western powers altogether.
Furthermore – according to Standard & Poor’s, but also to data from other financial research companies-to some extents, sub-Saharan Africa is more attractive for business than other areas of the world, i.e. the Frontier Emerging Markets – 37 countries in total, including Slovakia, Slovenia, Kazakhstan, Cyprus, Estonia and the United Arab Emirates.
Considering these areas, the US military imports over 50% of the minerals needed for the construction of long-range bombers from sub-Saharan Africa only, while the US military imports of cobalt from the countries of that region account for 75%.
Furthermore, Africa will be a land of conquest for the Russian Federation, together with the People’s Republic of China, inasmuch as the investment of major countries will be infrastructural, lasting and based on the training of the local ruling classes and, above all, of their local labour forces.
Russian Authorities Going Forth and Back with Migration Policy
Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Vladimir Efimov, in an interview published this mid-September in the newspaper Izvestia, a widely circulated and reputable Russian media, lamented that Moscow is still experiencing a shortage of labor migrants at various construction sites, now there is a shortage of about 200 thousand people.
“This problem remains today Moscow lacks about 200 thousand migrants. And we hope that in the near future the restrictions on their entry into the country will be softened,” Yefimov said, answering the question of the publication whether the issue of the shortage of migrant workers for construction sites in Moscow.
According to him, “the lack of labor resources leads to the fact that employers, primarily developers, outbid employees from each other, which increases the cost of their services. If we talk about the period before the pandemic, for several years, housing prices in Moscow have hardly grown. Against the background of the pandemic, the cost of housing has increased, actually catching up with inflation in previous years,” said the Vice Mayor of Moscow.
The announcement simply highlighted the inconsistency dealing with migrant policy and complete lack of foresight, especially what to do with migrants from the former Soviet republics. Thanks to these migrants, mostly employed in the construction fields and (cleaning, sewage disposal or removal services) in various neighborhood or districts, Moscow has won awards for being modern and clean smart-city in Europe. These migrants play an important role, most often underestimated, in building infrastructure and in general development of the society.
According to a survey of Promsvyazbank (PSB), Opora Rossii and Magram Market Research conducted in June 2021 found out that 45% of small and medium-sized businesses in Russia need new employees. Entrepreneurs still consider the unfavorable economic conditions caused by the pandemic to be the main obstacle to business expansion, and employing new staff requires extra cost for training in the social services sector.
Opora Rossii, an organization bringing together Russian small-and medium-sized enterprises (SMEs), and the Institute for Social Analysis and Forecasting of the Russian Presidential Academy of National Economy and Public Administration (RANEPA), among other business organizations and institutions, have been very instrumental on the significant role by migrant force, its combined objective and beneficial impact on the economy of Russia.
Several experts, in addition, have explained that migrants from the former Soviet republics could be useful or resourceful for developing the economy, especially on various infrastructure projects planned for the country. These huge human resources could be used in the vast agricultural fields to boost domestic agricultural production. On the contrary, the Federal Migration Service indiscriminately deports them from Russia.
Within the long-term sustainable development program, Russia has multibillion-dollar plans to address its infrastructure deficit especially in the provinces, and undertake mega projects across its vast territory, and migrant labor could be useful here. The government can ensure steady improvements are consistently made with the strategy of legalizing (regulating legal status) and redeploying the available foreign labor, the majority from the former Soviet republics rather than deporting back to their countries of origin.
Moscow Mayor Sergei Sobyanin has been credited for transforming the city into a very neat and smart modern one, thanks partly to foreign labor – invaluable reliable asset – performing excellently in maintaining cleanliness and on the large-scale construction sites, and in various micro-regions on the edge or outskirts of Moscow.
With its accumulated experience, the Moscow City Hall has now started hosting the Smart Cities Moscow, an international forum dedicated to the development of smart cities and for discussing changes in development strategies, infrastructure challenges and adaptation of the urban environment to the realities of the new normal society.
Kremlin Spokesman Dmitry Peskov has acknowledged that Russia lacks a sufficient number of migrants to fulfil its ambitious development plans. He further underscored the fact that the number of migrants in Russia has declined significantly, and now their numbers are not sufficient to implement ambitious projects in the country.
“I can only speak about the real state of affairs, which suggests that, in fact, we have very few migrants remaining over the past year. Actually, we have a severe dearth of these migrants to implement our ambitious plans,” the Kremlin spokesman pointed out.
In particular, it concerns projects in the agricultural and construction sectors. “We need to build more than we are building now. It should be more tangible, and this requires working hands. There is certainly a shortage of migrants. Now there are few of them due to the pandemic,” Peskov said.
The labor shortage is not only in Moscow but it applies to many regions including the Far East. During the 6th edition of the Eastern Economic Forum (EEF), the demography decline and labor shortage have been identified as factors affecting the development of the vast region. With plans to build residential blocks, establish industrial hubs and fix businesses, these depend largely on the working labor force.
The Russian government continues discussing a wide range of re-population program, hoping to attract in particular Russians there, even incentives such double income, mortgage system, early retirement and free plots of land, but little results have been achieved. Russia’s population is noticeably falling, and now stands at 146 million.
The Far East is almost the size of Canada with its current population (a mixture of natives plus legalized immigrants) more than 38 million. That compared, the Far East with estimated 6.3 million is one of the most sparsely populated areas in the world.
Kremlin has made this its absolute long-term priority, and the challenging task is to create an environment for investment and attract people. President Vladimir Putin acknowledged, at a meeting on the socio-economic development of the Far East, that the speedy outflow of the population from the Far East suggests that the region has not yet received enough support measures. “A lot is being done, but it is still not enough if we observe an outflow of the population.”
President Vladimir Putin has already approved a list of instructions aimed at reforming the migration requirements and the institution of citizenship in Russia, based on the proposals drafted by the working group for implementation of the State Migration Policy Concept of the Russian Federation for 2019-2025.
“Within the framework of the working group for implementation of the State Migration Policy Concept of the Russian Federation for 2019-2025, the Presidential Executive Office of the Russian Federation shall organize work aimed at reforming the migration requirements and the institution of citizenship of the Russian Federation,” an official statement posted to Kremlin website.
In addition, the president ordered the Government, the Interior and Foreign Ministries, the Federal Security Service (FSB), and the Justice Ministry alongside the Presidential Executive Office to make amendments to the plan of action for 2019-2021, aimed at implementing the State Migration Policy Concept of the Russian Federation for 2019-2025.
Russia’s Far East: Transforming the Space into Modern Habitable Region
Early September the 6th edition of the Eastern Economic Forum (EEF) under the theme “New Opportunities for the Far East in a Changed World” was held and considered as vital for strengthening especially economic ties among Asia-Pacific countries and the Far East region of Russia. What is known as the Far East covers approximately 40% of Russia’s territory.
The Far East is almost the size of Canada with its current population (a mixture of natives plus legalized immigrants) more than 38 million. That compared, the Far East with estimated 6.3 million is one of the most sparsely populated areas in the world. The Russian government continues discussing a wide range of re-population programmes, hoping to attract in particular Russians there, even incentives such double income, mortgage system, early retirement and free plots of land, but little results have been recorded.
The September forum, and all the previous ones, focused on raising sustainable development that primarily includes infrastructure, business investment and people. The question is on human habitation and sustenance, but this vast region of the country is sparsely inhabited. Kremlin has made this its absolute long-term priority, and the challenging task is to create an environment for investment and attract people.
President Vladimir Putin acknowledged, at a meeting on the socio-economic development of the Far East, that the speedy outflow of the population from the Far East suggests that the region has not yet received enough support measures. “A lot is being done, but it is still not enough if we observe an outflow of the population.”
“Our historical task is not only to keep people in the territories that were mastered by our ancestors for centuries, but to increase the population,” the Russian leader said. Putin stated that the rate of the outflow of people had decreased, but had not stopped. He called the growth of the population in the Russian Far East a “historical task.”
For this purpose, it is necessary to develop production capacities, create jobs, and ensure people’s incomes. At the same time, Putin also called on using the resources that have already been allocated to the region. “Considerable resources have been allocated and they need to be used effectively,” he suggested, addressing the opening of the Far East Economic Forum.
The September gathering brought together Russian and foreign entrepreneurs, politicians, experts, and representatives of the media as well as public organizations to exchange experiences and ideas, discuss the most pressing business and development issues and map out useful joint projects and initiatives for the region. Many of the speakers were very frank and objective in speeches, highlighted ways for developing the region.
The average Far Eastern city fares about 10% worse than the Russian average in terms of housing provision and quality of medical services. “We need intensive breakthrough development. Master plans involving the integrated development of the region could provide the key to this development. What is required is a resource center for urban development covering the Far Eastern Federal District. Secondly, the region is facing a severe shortage of highly skilled workers, especially in architecture and urban planning,” Architect and Partner at KB Strelka, Alexey Muratov told the session on Urban Planning.
The Far Eastern Federal District has significant economic potential and is of interest to both local and foreign business, but there is an imbalance between investment and economic potential in the region. For Artem Dovlatov, Deputy Chairman and Member of the Management Board of VEB of the Russian Federation, “the Far East is a very interesting region and of particular importance to the government. This is why the Russian President Vladimir Putin has declared that the Far East will be a priority region for Russia in the 21st century. From the perspective of investors, the region is of serious interest. It benefits from vast resources, proximity to the Asia-Pacific region, and diverse scientific and technological potential.”
“There are certain barriers, of course, and investors still approach investing in the region with a degree of caution, since the barriers are objective. They are associated with the population (a lack of staff) and there are costs related to construction… The Far East is a highly urbanized region. This presents a huge challenge because we need to increase quality of life in the cities in order to prevent outward migration or attract new residents. Strategic planning in cities is needed here,” added Dovlatov.
Further at the different session, Alexey Muratov, Architect and Partner at KB Strelka, simply puts it, “there aren’t enough people in the Far East. The region accounts for 40% of the country’s land mass but only 5.5% of its inhabitants. How can we solve the central challenge, which is to say the imbalance of economic and investment potential? The first and most obvious solution relates to rotation work. Modern workers’ settlements are in no way inferior to cities in terms of comfort. The second option is to attract residents to cities in order to create new jobs. The issue of the urban environment and quality of life is relevant here. According to all polls, quality of life is the key factor behind outward migration.”
Nikolay Kharitonov, Chairman of the Committee for Regional Policy and Issues of the North and Far East, State Duma of the Federal Assembly of the Russian Federation, has, however, expressed worries about to curb migration from the Far East. “Getting a Far Eastern hectare helps people to get settled here [in the Far East] instead of leaving for the south or elsewhere,” he said, adding that for transforming the region, it need transportation network, good infrastructure and social facilities, employment opportunities and conditions for habitation.
Admittedly, lack of social infrastructure constitutes a big hinderance to many projects. “Social infrastructure is of vital importance to the Far East. If people are fleeing the region, how can we motivate them to stay here? They need the right social infrastructure: health care, education, and everything in between,” according to the views of the Chief Executive Officer of VTB Infrastructure Holding Oleg Pankratov.
The Far East offers a platform for Russia’s entry into global markets and attracting international investment. Russia is seeking to take its place in the global system of division of labor, so it’s concentrating on projects with high added value. “Russia currently has the best conditions in the world to attract human resources and financial resources and take the next technological step. Why would you just come to the Russian market? Let’s manufacture things here for the whole world to compete with other centres of power, relatively speaking. The Russian government has to provide the best conditions for this,” pointed out Arnika Holding President Alexander Generalov.
Some foreign participants say it is necessary to expand support measures for business startups, consistently attempt to identify and remove development obstacles. “The Chinese experience is that high technologies and companies always play a very important role in the development of the local economy. We help them with resources, we allocate resources, and you do that too. The tech park should be connected to all resources and the international market. And human resources are very important. If you don’t have a good team to help startups, nothing will happen,” says International Association of Science Parks and Areas of Innovation Vice Chairman Chen Herbert.
On one hand, entrepreneurs have little trust in the government due to its excessive control and supervision. There are still many problems including bureaucracy and red tape. On the other hand, based on the tasks defined by the country’s leadership, a set of measures is being implemented to enhance the business climate.
The regulatory framework is being improved in the most important and problematic areas of government regulation. Institutions and infrastructure are being created for the development of investment activity. The best practices to support entrepreneurship are being introduced, including mechanisms for direct financial assistance, concessional lending, tax incentives, and moratorium on government inspections.
Developing the transport and logistics infrastructure. The carrying capacity of the railways needs to be increased, to develop and upgrade the Trans-Siberian Railway. “Russia’s leadership also has concerns regarding the opportunities offered by the Trans-Siberian Railway. It is indeed a problem, because it is a major factor hindering economic growth in Russia, both in terms of foreign trade, and in terms of domestic transportation. We expect carrying capacity to be expanded in the near future,” believes Sergey Katyrin, President, Chamber of Commerce and Industry of the Russian Federation.
The potential exists for Russia and South Korea to cooperate across a broad range of areas, including industry, energy, and the environment. “We particularly want to highlight the cooperation that has taken shape in relation to smart city projects, industrial parks, and multimodal terminals for shipping in Primorye Territory. One of our assets is a joint venture with the Zvezda Shipbuilding Complex. We have also acquired a grain terminal and are developing this business in Primorye Territory. Collaboration between our two nations is increasing in energy, fishing, and other areas,” Christopher Koo, Chairman, Korea International Trade Association (KITA).
“South Korea has traversed a fairly long path in relation to the creation of a waste management system in the early 1990s. Since that time, the system has come to closely reflect our own targets in terms of waste disposal. At the start of this journey, virtually 80% of waste in South Korea went to landfill sites. Today, more than 60% is recycled. In Russia, the President has set the objective of processing – i.e., sorting – 100% of waste, and utilizing 50% of it by 2030. Naturally, we would be delighted to employ technological solutions in this area which have been implemented in South Korea,” added Denis Butsayev, General Director, Russian Environmental Operator Public Law Company.
Besides South Korea, a number foreign countries strike deals at the forum, most of from the Asian Pacific region. Russia and Japan signed deals. China also signed several deals there as Russia has fast developing bilateral relations and both are members of BRICS. For instance, China has the following from the documents:
China Railway International Group and Primorye Territory signed a statement of mutual interest and intent to implement an investment project for the Construction of Vladivostok ring road in Primorye Territory. Stage 1: Russky Island – Yelena Island – Ulitsa Kazanskaya in Primorye Territory. Investment volume: RUB 75 billion.
VEB.RF and the ZED Development project company (part of Region Group) signed a cooperation agreement for the construction of an aerial lift across the Amur river at the section of the Russian-Chinese national border linking the cities of Blagoveshchensk (Russia) and Heihe (China). The construction project is being implemented jointly by the Russian investor and its Chinese partner, the China Railway Construction Corporation. VEB.RF will invest RUB 2 billion.
The Ministry of Labour and Social Protection of the Russian Federation and the Ministry of Human Resources and Social Security of the People’s Republic of China signed a memorandum of understanding with the aim of establishing and strengthening cooperation on labour and social security issues of mutual interest.
Pharmeco and the Union of Chinese Entrepreneurs in Russia signed a partnership agreement with the aim of developing cooperation between Russian and Chinese organizations and Asia-Pacific countries in the field of pharmacology and the construction of healthcare facilities.
Zeleny Bulvar and KitayStroy signed a cooperation agreement on the construction of residential real estate in Vladivostok. Two 25-floor apartment buildings are set to be built in the Zeleny Ugol neighbourhood of Vladivostok by 2025.
Stroytransgaz and KitayStroy signed an agreement on the implementation of a project to build a museum and accompanying educational and cultural centre in Vladivostok.
The Ministry for the Development of the Russian Far East and Arctic, VEB.RF, ECN Group and Marubeni Corporation signed an agreement to implement a project to produce ships using methanol fuel at the Zvezda shipyard.
GTLK and Mitsui O.S.K. Lines signed an agreement for Mitsui O.S.K. Lines to make an equity investment in GTLK Asia Maritime.
The Ministry of Energy of the Russian Federation and the Ministry of Economy, Trade and Industry of Japan signed a bilateral agreement on the supply of LNG and gas condensate.
Novatek and the Japan Bank for International Cooperation (JBIC) signed an agreement on strategic cooperation on low-carbon projects.
The Europlast Primorsky Plant and Ryozai Kaihatsu signed a memorandum of cooperation on the expansion of exports to Japan between the parties.
The Europlast Primorsky Plant and Ryozai Kaihatsu signed a contract on the sale and purchase of PET preforms.
It is expected that the Far East will continue attracting investments, both Russian and foreign. “We will continue to try to constantly create new development opportunities, thus securing for the Far East this status of a testing ground for management technologies associated with the development of the region,” Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev said at the conference following the forum.
According to the official forum documents: “More than 380 agreements were signed at the forum. International and foreign companies, organizations, ministries and departments have signed 24 documents – 9 with China, 6 with Japan, 3 with Kazakhstan, by one agreement each with Austria, Vietnam, Canada, Serbia and Ethiopia.” And that agreements totaling 3.6 trillion rubles (US$49 billion) were signed at the Eastern Economic Forum (including agreements, the amount of which is not a commercial secret).
Until 2000, the Russian Far East lacked officially defined boundaries, according to historical archival documents. A single term “Siberia and the Far East” often referred to the regions east of the Urals without drawing a clear distinction between “Siberia” and “the Far East” on the territory of Russia. That however, the Far East is generally considered as the easternmost territory of Russia, between Lake Baikal in Eastern Siberia and the Pacific Ocean.
The Fall of Kabul and the Balance of Power in Greater Eurasia
The uniqueness of historical events is determined by the conditions in which they occur. States always act in the same way — what changes is the conditions that force them to act in one way or another, but, most importantly, any change in context leads to fundamentally different consequences of similar events. The withdrawal of Soviet troops from Afghanistan in February 1989 became possible precisely on the eve of truly global political changes — the end of the Cold War as a result of the de facto defeat of the USSR and its subsequent collapse.
Likewise, the disastrous end of 20 years’ of the US and allies’ presence in Afghanistan is of fundamental importance not in itself, but in the context of a changing global balance of power and a general reduction in the ability of Western countries to play a decisive role in international politics and the world economy. What matters is not the fact of another defeat of the United States — there have been and will be many victories and failures in the military history of this power, but in what circumstances this happens. Now the events in Afghanistan are unfolding amid the growth of the Chinese power and, at the same time, the ability of Moscow and Beijing to coordinate their actions on the most important issues for the state of affairs in Eurasia.
The effects of important events equally depend on the circumstances — short-term or strategic ones. The coming to power of a radical religious movement in Afghanistan in the mid-1990s prompted an attempt by the United States to consolidate its ability to determine the development of world politics. Then any actions of the Taliban on the sovereign territory of Afghanistan became a legitimate reason for international attention and, most often, condemnation. The military intervention of Western countries in Afghanistan received almost the same support as the international operation to liberate Kuwait in 1991.
In the longer term, the establishment in 1996 of a radical regime in Kabul created conditions for the expansion of the presence of the United States and states close to it in central Eurasia. The vulnerability of the Central Asian countries to influence from Washington has significantly increased. But also in Tashkent or Astana there were own efforts to balance Russian and growing Chinese influence in the region with reliance on the West. Until 2014, the United States maintained a direct military presence in the region in the form of bases and logistics centres where the American military was stationed.
But in 2021, the return of the Taliban to Kabul, following the sudden fall of the republican government of Ashraf Ghani, will have very different consequences. First of all, it leads to the further strengthening of China, to better conditions for Russia and a weakening of the West in its fierce competition with Moscow and Beijing. What the Taliban are doing or can do inside the country is not a reason for the general denial of their right to exist. The international context has changed, including in terms of the value dimension of politics and its role in making the most important decisions. Strategically, the return of the radicals to power could lead to the stabilisation of the region, a significant decrease in the United States’ ability to influence its countries and the relative isolation of India, as the country that most closely connects its future with the West.
We do not know if peace in Afghanistan becomes a reality. However, right now, for the first time in the past 40 years, internal political stabilisation in this country has the most solid foundation. First, it is a military victory for a relatively consolidated political movement with a unified leadership and control system. Second, the agreement of the leading regional powers like Russia and China that the Taliban movement should be given a chance to show prudent behaviour inside and outside. For China, this is cooperation in the implementation of major economic projects and refusal to support those religious groups that pose a threat to the security on the Chinese territory. For Russia, this means the absence of aggressive intentions towards the countries of Central Asia. To independently ensure its security, Moscow cannot have complete confidence, as well as a reduction in the flow of drugs coming from Afghanistan.
We have reason to expect that the stabilisation of the military situation in Afghanistan will lead to a revitalisation of Chinese efforts to rebuild the country economically. In the event that expectations become reality, and the United States and the European Union do not find opportunities to make Afghanistan back to the chaotic state of “war of all against all”, it can be expected that the “arc of instability” that girdles Eurasia will be broken. This will be an important geostrategic change in the region, which since the second half of the 19th century has been a field of rivalry between mainland Russia and the Anglo-Saxon powers — first Britain and later the United States.
But what is happening and will continue to happen in Afghanistan may have more varied consequences. With a high degree of probability, it will strengthen the position of Pakistan, which already closely cooperates with China and relies on its economic opportunities. India will feel more insecure — this country already estimates the fall of the republican government in Kabul as a serious blow to its strategic interests. It is likely that the US and its allies’ attempts to establish a dialogue with Iran will become more active — despite the fact that the current regime in this country is not friendly to the West, the internal situation there may be susceptible to external influence.
For Russia, it matters how the reduced US presence in Eurasia affects Turkey’s position. While this country is trying to behave confidently, it is still closely tied to the United States and Europe economically. In the event of strengthening Sino-Russian control over the space of their common neighbourhood, Ankara may have to restore relations with its NATO allies. Also, one cannot exclude Turkey’s chaotic attempts to restore relations with the countries of Central Asia that are close in language, which will also require some Russian attention.
In general, for Russia, the defeat of the United States in Afghanistan means not only a decrease in the capabilities of the main opponent in international affairs, but also a general change in the strategic situation. In particular, we cannot now exclude the possibility that under the new conditions Russia’s policy towards the countries of Central Asia may change.
Most of them are in one way or another connected with Russia by allied relations, but bilateral cooperation does not always develop smoothly. After the United States has lost an important part of the resources to interfere in the regional affairs, Moscow may even face increasing responsibility for its internal stability.
But the United States itself will be looking for ways to return to the central part of Eurasia in one form or another. The defeat in Afghanistan did not have a serious impact on the military and economic capabilities of this power. After the initial shock wears off, we must be prepared for a new round of regional clout. Now, in this struggle, the objective interests of China are on the side of Russia, and this greatly facilitates the situation in comparison with all previous episodes.
The fall of Kabul on August 15, 2021, was an important historical event because it meant the actual end of the US attempts to exert a determining influence on international politics. Such efforts will continue, albeit under new ideological slogans, and the United States has long since abandoned attempts to create a truly holistic order under its leadership. In fact, we are dealing with yet another change in the dynamic balance of power that is now defining the nature of international relations. And, as in any case, this change brings new opportunities and new questions for Russia, which will need to answer in the very near future.
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