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Pandemic Recovery: Economic Developments and Future of Work

Marc Chagall, 1964

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Today, world economies are passing through the eye of the needle; the economic development leaderships of some nations figuring out how to cope with ‘workless’ futurism. Other leaderships are balancing new global age expansion of entrepreneurialism for selective groups and special regions. There is a full range from nightmares scenarios to carnival times. Future of work becomes increasingly darker when placed amongst old mental-blocks. New circus acts demands new Maestros and Ringleaders for the performance to harness the recovery.

Futurism is workless; as robotized and artificially driven technologies will cunningly steal most “human-powering”, the laborious-routine work and displace up to billion workers. The “mental-powering” considered, as untouchable high value contributions of human intelligence will remain intact. The futurism of productivity, performance and profitability now belongs to “creative and critical thinking, complex problem solving, and global age understanding of collaborations, all with diversity, tolerance and mental endurance to manage as tactical designs of an entrepreneurial warrior” The Masters of robots are new-global-age-learners. The Slaves of robots are deniers of change.

The Dreamers; of the long awaited smoggy Fourth Industrial Revolution now awakening to bright First Mental Revolution of Platform Economies; it is the small medium enterprises sprouting all across nations with micro-manufacturing and highly complex global marketing and exportability on digital platforms, which will grow as pulse of the national economy. This subject is still at infancy at major global forums and only whispered at selected podiums for being too revolutionary.

Cold facts and warm realities: Today, at times, a USD$100,000 investment in technology may replace some 100,000 jobs, decade ago it needed a billion dollars to achieve this. Only the most skilled citizenry capable of withstanding emotional endurance on complex and critical thinking will make their nations shine. The abundance of national resources or existing industrial base, without entrepreneurialism and value added creativity only stay as abandoned commodities and without intelligent commercialization, while super-expensive innovation stays rolled up as Intellectual Property archives. Upskilling should become mandatory agenda of national mobilization of entrepreneurialism and not just more universities.

When the march of the billion? Come next 1000 days the global economic stress levels may force such crowding of billion on boulevards of the world. Workless, jobless, and officeless, tired they march…never ever in the history of mankind assembled such number of once mighty, highly skilled, educated and experienced subjected to replacements by their own technological advances.

The humanistic inter-phase with cyber-electro-ergonomics opens a new world: How to nurture human developments and create vibrant healthy working models for billion remote workers. Managing re-training and re-grouping of the hidden entrepreneurial talents are new challenges. Retaining loyalty, rewarding upskilling on performance of productivity and profitability, are new demands.   

Understanding a new business models: Futurism of ‘creating local grassroots prosperity’ bifurcates into two distinct national mobilizations.  Firstly, creating skilled citizenry capable to swing with global-age demands and secondly, creating massive digitization of midsize economy to enable global-speed-performance to match trading with 100-200 nations. Nations with acquired mastery will thrive and lead; generational transformation at magical speed with full deployments of platform economy is a prerequisite. Unfortunately, the Public Sector across the world is mostly decade behind on such affairs and desperately needs upskilling itself.

Is there any more time, left? No, best suggestion is to bring all trade groups like Chambers of Commerce, National Trade Associations under and Export bodies under large umbrellas of digital platforms?  Most importantly, what is stopping to create fast-track intense upskilling of “trade groups” itself and their senior management on operational and digitization aspects? Identifications of such blockades are the initial major steps. 

Imagine Upskilling of working citizenry in the next 1000 days: Identify 1000 to 1,000,000 SME in a region in need of global exposure or exportability. Start national mobilization of entrepreneurialism on digital platforms to expand globally. Start discussions with authoritative knowledge and solutions. Such concepts are not new funding dependent, but deployment hungry and execution starved.

Are these the right solutions?
Downtown office can become free boarding on education low cost housing
Downtown retail shops may change into low cost goods and services centers
Downtown become green, solar-lit sustainable highly affordable communities

Are these the right actions?
Plan hardcore authoritative debates on city-planning and global age realities
Conduct new programs on fast track learning before cores destroyed like Detroit 
Diversity, tolerance and equality the cements to hold before it turn into ghettos

Are these the right timelines?
The world economies to wait and do nothing until the US elections or new vaccine
The opening and reopening will eventually find its own answers and new life
The world has the greatest opportunities, bring best minds now and optimize human talents

Debate and demand action; follow the trail of silence, and what else would you like to add?

The rest is easy

Naseem Javed is a corporate philosopher, Chairman of Expothon Worldwide; a Canadian Think tank focused on National Mobilization of Entrepreneurialism Protocols on Platform Economy and exportability solutions now gaining global attention. His latest book; Alpha Dreamers; the five billions connected who will change the world.

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Biden’s shift from neo-liberal economic model

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Mercantilism; which was the ‘Hall of Fame’ from 15th-18th Century had emerged from the decaying of feudal economic system in Europe.  It was initially started from the Mediterranean trade in bullion on the cities like Venice, Genoa and Pisa. In the course of history, this idea was challenged by the writings of John Lock’s Second Treatise of Government and A Letter Concerning Toleration with larger than life of Adam Smith’s, The Wealth of Nations of 1776—gave rise to Classical Liberalism. This idea also even started shaking during the 1930s followed by the Great Depression. The Keynesian economic model came to escape the consequences of this Great economic shortfall till 1970s. Afterwards, Neo-liberalism was the ‘lifeline of the global economy’. Soon, this also diminished from the rapid financialization and globalization process of 1990s. The financialization, which was the ‘Heart of the Town’ till 2008; devastated by the 2008 financial crisis. The US government rescued this crisis via Dodd-Frank Act and greater stimulus package to economy. And, lastly current COVID-19 pandemic crisis is much more powerful than that of 1930’s Great Depression or any other crisis in observable history. To cope of with this crisis, Biden administration is rescuing the economy with comprehensive stimulus package by challenging the internationally accepted  fundamental economic model.

Today, Keynesian economic model is taking shape in the US. The central theme of Keynesian theory —measured as the sum of the spending by households, business, and the government; which Biden is doing so by $640 billion housing plans over 10 years to provide affordable, safe housing for all individuals, by increasing tax for corporations and high-income filers by $3.3 trillion. In addition to this, he is creating massive government spending ($2trillion) on infrastructure for job creation, spending on public goods( health care, education, job, security, child care), and less interested in fiscal deficits and his more critical view on an unregulated market controlled by big corporations.  These steps of Biden correlated with that of the Keynesian economic model (the model which remained ‘talk of the town’ from WWII to the 1970s).  Following this, new Washington Consensus is born against the low levels of government spending, minimizing fiscal deficits, nonintervention, and deregulation in the market, and liberations of trade and foreign investment.  All these ‘values’ are undermined by the current Biden administration.

The world economy is in the same historical place as that of WWII followed by the great depression comparing today of the COVID-19 pandemic. So, whenever there is an unprecedented shock on capitalism; it has always transformed itself within. From the Mercantilism(16th-18th Century), Classical liberalism, Keynesian/ neoliberalism, and financialization–capitalism has survived astonishingly. This new ‘Bidenomics’ will behave as an influential replica in the other parts of the world as the land, labor, capital, and productivity is impacted immensely by the COVID-19 pandemic. This succeeding market intervention by the US government could replicate in other international liberalism followers nations of the world. The era of government-led intervention in the market started.

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Covid-19 and Liberal World Order

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The liberal international order (sometimes referred to as the rules-based international order or the US-led liberal international order) involves international cooperation through multilateral institutions like the UN and World Trade Organization (WTO), and is constituted by human equality (freedom, human rights and rule of law), open markets, security cooperation and promotion of liberal democracy. The US military and economic might was the custodian of the liberal world order, a network of alliances across Europe and Asia and nuclear weapons, which helped to deter the aggression of the illiberal states like the Union of Soviet Socialist Republic (USSR).

The liberal international order is the product of centuries and unrelenting innovations. It is highly integrated, developed, organized, institutionalized and deeply rooted in the societies and economies of both western and non-western countries.  It is the product of two phases of history: (1) the Westphalian project dating back to 1648, (2) the construction of liberal order led by the United Kingdom and later by the United States. The Westphalian system enunciated the principles of state sovereignty and norms of great-power conduct. While the construction of liberal-order-building project has been possible only, just after the relations of the great powers became stabilized.

After the Second World War, the United Nations (UN) along with the bipolar system were the defining features of the world order. At the end of the Cold War with the disintegration of (USSR), the U.S. was the indispensable power in the global order.

All mainstream theories of International Relations (IR) concur that the age of the liberal world order is over, a rare moment of consensus in the field of IR. Though liberal world order was already in decay, Covid-19 accelerates the process and profoundly reshapes the geoeconomics and geopolitical configuration of the world.

The Liberal world order is in a state of disrepair. There appear several reasons why this is happening. Since the global financial crisis of 2008, talk of order has given way to talk of disruption: the end of unipolar world; rising nationalism in the heart of the West; lack of proper handling of Syrian crisis among P5in the UN Security Council, rising protectionism, depleting credibility of democracy and fragmented response of UN bodies like WHO in the Covid-19 crisis.

America’s reluctance to abide by the liberal rules it has nurtured in the global system for more than seven decades thus marks a turning point. The present transition to the new world order has some differentiating characteristics compared to the liberal world order. One of the most important factors is the attitude of the US. Under President Donald Trump, the US backtracked against joining the Trans Pacific Partnership (TPP) and to withdraw from the Paris Climate Agreement. The US also quitted the Iran nuclear deal signed by the major powers and threatened to leave the North America Free Trade Agreement (NAFTA).  It has unilaterally introduced the trade tariffs repugnant to the liberal economic system and introduced the policy of “America First” incompatible to the liberal world ideals.

The rise of China will certainly be the greatest phenomenon of the twenty -first century. China’s extraordinary economic expansion and vigorous diplomacy are transforming the dynamics of the international politics.  Propelled by the rapid economic growth, China is extending its political influence as well as military capabilities and reach. Despite its engagement with the liberal world order, China is concerned about this order’s ability to protect its national interests.

But what are the long-term impacts of Covid-19 on liberal world order? The emerging world order, in the context of decaying liberal order, looks very different. First, a more fragmented world order in which “great power competition” will be intense and pervasive. Escalating tensions between the United States and China are the hallmark of this emerging world order.

Second, the emergence of new geopolitical environment indicates that there will be multi poles in the international politics. No single country can dictate the world in the direction of its will. Third, the economic effects of Covid-19 will certainly reduce the defense budgets, more spending on health care, infrastructure development and people-oriented government spending. Fourth, the credibility of the world governance system is strongly depleting in the context of very weak response to the Covid-19 crisis. Five, China’s successful response to Covid-19 raises the questions on the credibility and efficiency of the democratic system of government.

With the shifting economic power from west to east, the liberal world order faces multiple challenges. Already in the process of decay, Covid-19 has also some special meanings for the liberal world order. In the words of Dr Kissinger, “the coronavirus pandemic will forever alter the world order”. With the passage of time after Covid-19 pandemic, the emerging geopolitical and geoeconomics realities of the world are testimony to this changing world order.

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The European Green Deal: Risks and Opportunities for the EU and Russia

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The European Green Deal approved by the EU in 2019 is an economic development strategy for decoupling and for carbon neutrality by 2050 [1]. The plan is to reduce greenhouse gas emissions by at least 55% by 2030. In pursuit of this policy, the EU is setting the goals of increasing resource use efficiency and of advancing toward a circular economy, restoring biodiversity and curbing pollution.

While obviously having an impact on the EU economy, the implementation of the Deal will also concern the economies and foreign commerce of its trading partners through the anticipated re-structuring of energy markets and reduced carbon-intensive imports. In the next decade, the European Green Deal will mostly affect coal imports, possibly followed by oil and gas imports after 2030. By 2030, coal imports are expected to reduce by 71–77% of the 2015 level, coupled with a 23–25% decrease for oil imports and a 13–19% decrease for imports natural gas. Post-2030 plans envision a virtually complete abandonment of coal and significant reductions in the EU’s oil and gas imports—by 78–79% and 58–67% of the 2015 level, respectively.

The border carbon tax (BCT) is one of the mechanisms envisioned by the European Green Deal with a view to covering the expenses of European manufacturers in their commitment to reduce emissions. The tax will be based on the carbon-intensity of a particular product and its foreign trade share in EU market sales.

Why does the EU want The European Green Deal?

The EU and Russia offer quite different reasoning for the European Green Deal and the ВСT.

European regulators believe the European Green Deal and the ВСТ will help “force” the nations (primarily the EU’s partners) trying not hard enough to reduce their emissions and to mount a stronger climate policy. The EU has declared its historical responsibility for the accumulation of greenhouse gases in the atmosphere, while believing that it will not be able to resolve the issue of global climate changes on its own.

Along with enhancing supply security by making the EU less dependent on imports of a vast number of raw materials from one single country, other arguments suggest boosting the efficiency of resource use and curbing pollution. The EU is largely dependent on the deliveries of several natural resources, since it imports 87% of the oil it consumes and 74% of the natural gas. Proponents also note greater dependence on deliveries from a limited number of countries, including Russia. In 2019 and the first half of 2020, Russia’s share in the value of natural gas supplies to the EU was 44.7% and 39.3%, respectively. Norway, the second biggest supplier, had a share of some 20%, or about half of Russia’s. In reality, the degree of dependence is even greater, since long-term contracts are commonplace in this field and no allowances for delivery route flexibility are made as shipments are transported by pipeline. In 2019 and the first half of 2020, dependence on oil imports from Russia was less pronounced and amounted to 28% and 26.4%, while still being way higher than the share of the second biggest supplier, the U.S. (9.2%).

COVID-19 and the subsequent 6.2% contraction of the EU’s economy were additional factors weighing with the European Green Deal. Economic recovery has come to be considered in connection with achieving carbon neutrality. The 2020 global economic meltdown has become a driver for stepping up the environmental—and climate, in particular—ingredient in the aid packages offered by many developed and a number of developing countries.

From Russia’s perspective, the new deal is intended primarily for preemptively boosting competitiveness on global markets through advancing new technological sectors, which is mainly justified as a solution to the climate problem. Moreover, Russia believes that the deal is driven by political considerations that, among other things, have to do with reducing the EU’s dependence on imported raw materials. The environmental sector in the EU economy is already a global leader. According to Eurostat, the environmental goods and services sector grew by 2.3% already in 2017, while its gross added value amounted to $287bn, or 2.2% of the EU-27’s GDP.

Another proof that the task of making Europe-made goods more competitive is high on the agenda lies in the fact that the ВСТ will be based on the foreign trade share of carbon-intensive products, which will help stimulate sales of Europe-made goods. At the same time, European officials acknowledge that no significant carbon leakages have so far occurred; however, they cannot be ruled out in the future. Russia believes that exporters from other countries will hardly be able to compete once the tax is introduced.

Like the EU, Russia presumes that the BCT is an additional source of revenue for the European treasury amid the crisis brought about by the pandemic as well as a way to cover the significant expenses involved in implementing the new deal.

From Russia’s standpoint, one of the “unfair” aspects of levying such a tax is the fact that the EU’s policy-makers are playing up the advantage of the Union’s higher level of economic and technological development, making particular use of the historically broad resource base and the accumulated volume of greenhouse gas emissions. The EU-28’s Accumulated Emissions for 1751–2017 were estimated at 22% of global emissions, which makes the EU the next to largest emitter after the US (25%), while Russia accounts for only 6%.

Both parties concur that the main goal of the European Green Deal is to maintain the EU’s competitiveness amid the radical restructuring of the global economy. It is claimed that the ВСТ could prompt a shift of manufacturing into the countries with less stringent carbon emission standards (“carbon leakage”) due to the fact that outlays on de-carbonizing businesses in several carbon-intensive sectors will significantly increase.

For the EU and Russia, the European Green Deal carries both risks and rewards

The main risks for the EU lie in the high costs of making the European Green Deal a reality as well as in the fact that some manufacturers being tipped into unfavorable conditions, all of which is coupled with a price hike for consumers, retaliatory measures to be undertaken by other countries and energy security risks. Apart from some technological difficulties in introducing the BCT, other challenges include the tax’s ineffectiveness in resolving the climate change problem, since the BCT is non-existent in other countries.

The European Commission estimates the additional annual investment required to achieve these goals by 2030 at €260bn. Yet the unprecedented funding envisioned by the new deal for the purpose is not enough to achieve these goals. The roadmap entails allocating at least €1 trillion for “sustainable” investment. Besides, the Next Generation EU fund, established to boost the recovery of the European economy after COVID-19, earmarks another €750bn for this purpose. A staggering €600bn shall be provided for climate action funding alone, as stipulated by the Green Deal and the pertinent part of the recovery plan. Additional investment is expected to come from companies, households and national governments.

Ultimately, the ВСТ will have a negative impact on the competitive edge of all European manufacturers, concerning, above all, those sectors where imported raw materials with a high carbon footprint account for a significant chunk of the costs.

Transitioning to new power sources will require higher carbon prices, which might ultimately result in a hike in consumer prices and a drop in the quality of life across the EU.

The European Green Deal might result in new threats to the EU’s energy security, since a significant import expansion of metals and minerals—used in manufacturing solar panels, wind turbines, ion-lithium batteries, fuel cells and electric cars—is needed for a large-scale de-carbonization of the economy. As of now, no substitutes for these raw materials are to be found.

Should the ВСТ be introduced, the EU’s trade partners may well, contingent on specific policies, initiate trade disputes. The European Commission has to ensure that the BCT is compliant with the WTO’s rules, which, however, does not eliminate the risk of retaliation on the part of other countries, which may take the shape of their mounting resistance to the adoption of the tax. In 2012, the plans to introduce the ВСТ for foreign air transport companies encountered particular pushback from other states, such as the US, China, India, Japan or Russia, which forced the EU to abandon the idea.

Several experts point out that this tax is ineffective in resolving the global climate change issue, since it does not exist in other countries.

There are also technical difficulties in introducing the tax. These have to do, in particular, with calculating the carbon component in imported goods in consideration of greenhouse gas emissions along the entire value chain of the product.

At the same time, the European Green Deal could benefit the European companies that bear the high costs in de-carbonizing their manufacturing. The tax will allow production to be expanded in energy-intensive sectors as well as in sectors with high-intensity trade, as about 20% of the drop in manufacturing will be offset by payments for CO2 emissions.

Russia, in turn, may face the dire prospect of losing its energy and carbon-intensive markets as well as encounter challenged posed by the BCT. Most of the profound consequences will stem from a gradual loss of oil and gas markets following a drop in demand and prices, which may additionally be exacerbated by the carbon tax. Oil and gas revenues play a key role in the Russian budget, with their share being in the ballpark of a third and a half of it. In 2018 and 2019, the figures stood at 46% and 39% respectively. In 2020, they fell to 28% owing to the slumping demand and prices amid the pandemic and OPEC agreements.

No significant drop in oil and gas imports is expected before 2030. However, in the longer run, the EU aspires to significantly reduce its supplies from Russia. In the meantime, 45% of Russia’s fossil fuel exports go to the EU. Russia might lose a significant chunk of the EU market to European manufacturers or foreign competitors whose oil production has a smaller carbon footprint: take Saudi Arabia, for instance.

The ВСТ will be conducive to the EU’s demand for Russia’s finished products falling as well, primarily when it comes to a number of steels manufactured with carbon-intensive technologies. The BCG company estimates Russian exporters’ losses, once the tax is introduced, to be some $3–5 bn annually; KPMG’s estimates are somewhat higher.

De-carbonization practices in other countries will also inform the demand for Russian fuels and carbons. Many countries have set the goal of radically reducing greenhouse gas emissions. Some countries plan to introduce a ВСТ, while the US, China and the EU are now discussing possible cooperation in this field. It is worth noting that the global pace of de-carbonization and ВСТ introduction is hard to predict, but this should not justify a setback in Russia pursuing a more active climate policy.

At the same time, Russia could stand to benefit from the European Green Deal. Before 2030, a significant reduction of emissions will demand that the use of coal be rapidly phased out, which will result in an increased demand for natural gas, as the latter is seen as a “transition fuel” on the way to a low-carbon economy. This will allow Russia to expand its short-term and medium-term gas exports.

Technological restructuring of the economy and export diversification might emerge as the main potentially positive outcomes for Russia. The point at issue has ultimately to do with transforming the energy industry towards greater use of renewable energy sources (RES), whose cost tends to gradually decrease, as well as towards enhanced reliance on the new types of energy, such as hydrogen, which may, at the very least, partially replace fossil fuels and be exported to foreign markets.

Timely introduction of climate regulations will allow Russia to avoid having the ВСТ applied to its products. It remains unclear what kind of regulations could help resolve this matter, though.

Russian companies, now transitioning to low- and zero-carbon technologies, will be able to benefit from the price to be put on carbon and avoid paying the special tax, much as able to engage in trading quotas, depending on the instrument to be potentially used at the state level. They will likely be required to monitor greenhouse gas emissions along the entire product value chain.

The European Green Deal and the pertinent part of the EU’s economic post-pandemic recovery plan earmark about 10% of the climate action funding for “internationalizing” the Deal, which effectively means providing aid to trade partners in the form of grants, loans and guarantees for transitioning to “sustainable” energy industries and restructuring their economies and exports. Therefore, there is a theoretical possibility that some of the investment will be channeled into joint “green” projects.

The ‘green’ avenues for fostering EU–Russia bilateral relations

The European Green Deal affords opportunities for the parties to cooperate. This should not be limited to climate issues alone, although restructuring the energy sector remains a priority. Such cooperation should also include addressing the whole set of measures needed to transition to a “green economy”, with circular economy being one of its ingredients. The latter’s share in the global economy is estimated at some 9%.

Investment cooperation might become a key area, primarily encompassing investment in research, manufacturing and infrastructure, since restructuring the economy means taking it to a new technological level. Amid falling oil and gas revenues, Russia needs to explore new areas. Legally, there are no sanctions-related restrictions in climate matters.

The world already possesses a large number of the technologies to facilitate transitioning to a zero-carbon development track. Above all, these are the RES, “green” hydrogen and state-of-the-art bioenergy. Combining these sources will help implement this development track. Additional academic assessments are required to identify the efficiency and environmental acceptability of specific technologies to be used in joint projects, while taking the entire value chain into account.

Investment in hydrogen energy might become an important cooperation avenue, since its global market share is pegged at $2.28 trillion already by 2027. The International Renewable Energy Agency (IRENA) predicts that hydrogen will account for 12% of global energy consumption by 2050. Other experts put hydrogen’s share in global final energy consumption at 18%.

Hydrogen energy is seen as an important element in achieving the EU’s carbon neutrality, as the hydrogen’s share in Europe’s energy balance might reach 14% by 2050. Gazprom estimates Europe’s hydrogen market at $153bn as of 2050, while the Ministry of Energy suggests it will amount to $32–164bn. The Hydrogen Strategy approved by the European Commission in 2020 as part of the European Green Deal encourages the development of hydrogen energy. In Russia, it may be driven by the Strategy for Hydrogen Energy Development, which is currently being drafted. This strategy provides for collaboration with other states, including the EU. Plans for 2021 include presenting incentive measures for hydrogen exporters and consumers.

Supplies of “blue” and “turquoise” hydrogen could be a promising cooperation area. This hydrogen is produced from natural gas and it might be a particularly viable option, since this is generally perceived as being profitable economically and having the smallest negative environmental impact. Another prospective area is to encourage “green” hydrogen projects [2]. Hydrogen cooperation is of interest to both Russian and European companies, including Gazprom, Rosatom and NOVATEK. Rosnano and Enel Russia plan to jointly produce “green” hydrogen at the Enel Russia wind power plant, which is currently under construction in the Murmansk Region, and subsequently export the hydrogen of some $55m worth to the EU. Besides, NOVATEK signals its intentions to commence production of “blue” and “green” hydrogen together with Germany’s Uniper.

Another potentially conducive to cooperation factor is that, as far as the EU is concerned, Russia has a competitive edge in its geographical proximity, large gas deposits, production facilities and robust infrastructure. Small-scale pilot projects may become the first step to determine their benefits and costs for both parties. Building business partnerships may be another prospective path.

Cooperation is also promising in the areas of increasing energy efficiency, reducing methane leaks, supplying electricity, adapting to climate change, preserving biodiversity as well as in the fields of waste management, sustainable agriculture and forestry, electric car manufacturing, introduction of trading quotas, etc. The big take-off of digital technologies makes it possible to create databases in order to transparently select the most promising projects, boost their efficiency and achieve positive outcomes, and improve management systems.

Predicted development of EU-Russia economic and political relations amid Europe’s increasingly stringent environmental standards

The BCT tax will clearly have a negative impact on the bilateral relations and, most importantly, serve to breed deeper distrust between the parties, triggering a further re-orientation toward enhancing economic links with Asian nations, primarily China, for whom Russia, along with Saudi Arabia, is one of the biggest suppliers of oil and where Russia is stepping up its natural gas exports.

To avoid a deterioration in relations, it would be preferable for the parties to engage in constructive cooperation in their mutual interests, especially since the framework for this is already in place. In 2021, Russia intends to adopt its own Climate Strategy as well as a number of environmental laws in other areas. In order to facilitate Sakhalin’s path to carbon neutrality, there has been proposed a bill introducing a mechanism for selling greenhouse gases emission quotas on the island. Russia’s leading energy companies have already embarked on climate-related plans, with some companies devising climate strategies of their own.

In fact, the European Green Deal is an issue where Russia and the EU have common approaches as much as differences of opinion. At the same time, divergent opinions are no crucial obstacle to environmental cooperation between the parties.

The implementation of the European Green Deal is fraught with major risks for both parties, the principal ones for the EU being the high costs of the strategy and retaliatory steps to be undertaken by other countries. Russia faces the dire prospect of losing markets and lagging behind in re-structuring the energy industry, its key economic sector. At the same time, new opportunities are opening up, such as bolstering the parties’ global competitiveness by entering new markets.

Environmental cooperation between the two parties could be mutually beneficial to become one of the principal areas for negotiation and implementation. In order to fulfil this potential, dialogue—based on an open and balanced approach to assessing areas for collaboration and possible rapprochement—is needed. As a first step, the EU and Russia could develop a roadmap outlining every step of such cooperation and the parties’ commitments as well as specifying the market segments where projects could be carried out.

  1. Breaking down the proportionate relations between development and resource consumption.
  2. Produced by using RES to power water electrolysis.

From our partner RIAC

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