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"Our philosophy of relations with the most important regional partners in the East is changing"
The turn of Russia to the East, the intermediate results and the problems that need to be solved, Timofey Bordachev, the Director of the Eurasian program of the International Discussion Club "Valdai", the director of the Central Research Institute of Higher School of Economics
"Turning to the East" is a large-scale project of diversifying foreign economic relations towards the growing economies of Asia and increasing participation in regional affairs of the APR.
The most important part of the "turn" and the national task is to stabilize the course towards raising the economic and political significance of Siberia and the Far East. The whole philosophy of relations with the most important regional partners is changing. China, Russia and other states of the region have initiated the creation of a number of new institutions of international economic management (Asian Infrastructure Investment Bank, BRICS Development Bank, Silk Road Fund). So over the past 2 - 3 years, relations between China and Russia have acquired a fundamentally new quality. Their distinctive features are trust, an attentive attitude to the interests of a partner, and an ever-increasing economic openness.
But other regional partners are not lagging behind either. Although their capabilities are significantly less than in China. Republic of Korea is active. At the end of last year, Seoul hosted 2-e a meeting of "high-level dialogue" within the framework of the consortium to promote the development of Siberia and the Far East, scientific institutes and universities in Russia, Singapore, China, South Korea, Norway. The purpose of the dialogue was to clarify the positions of key regional partners on the "turn of Russia to the East", current relations between Russia and the West, progress in measures to attract foreign investors to Siberia and the Far East. In general, foreign participants, especially from Asian countries, confirmed their interest in enhancing the Russian presence in the APR, intensifying economic relations and dialogue at the expert level.
As for the prospects for the development of Asian countries, now many point to the possibility of changing the demographic situation in the future not in favor of the leading states of the Asia-Pacific region (China, Japan, South Korea), population aging and its relative decline in comparison with the projected population growth as an important factor. in the USA. Attention is also drawn to the existence in the region of several varieties of the market capitalist model, depending on the greater (China) or lesser (medium and small states) state intervention in the economy and the direct management of large enterprises. It can also stimulate intra-regional differences in the rate of economic development.
For their part, the representatives of South Korea point to the DPRK authorities as the main obstacle to the implementation of joint transport and energy projects with China and Russia, South Korea's cooperation with the Eurasian Economic Union (EAEU) and the Silk Road Economic Belt (SREB) project. The topic of the role of the South Korean authorities in restraining the most promising transit projects with the participation of North Korea is naturally not raised. Chinese experts, on the other hand, often draw attention to a whole range of problems related to the "conjugation" of the EAEU and the SREB. In particular, they are increasingly calling for increased participation in the dialogue between Russia's partners in the EAEU and the Eurasian Economic Commission (EEC), the need to create joint working bodies of China and the EAEU (joint commission) and other permanent institutions.
It is recognized at different levels that certain problems in the development of interaction between the EAEU and the SREB are associated with the economic crisis in Russia and problems in China. At the same time, Chinese experts agreed with the Russian concept of strengthening the bilateral cooperation between the EAEU and the SREB, as well as giving a new dimension to the SCO as, potentially, the main institution for security and development in Eurasia. In the meantime, the SCO development plan is not obvious to the Chinese. Korean colleagues are also showing an interest in joining the SCO. They believe that within the framework of the SCO it will be possible to balance the power of China with other strong powers - Russia, as well as India and Iran.
The issues of regional financial institutions (AIIB, ADB, the Silk Road Fund, the new BRICS Development Bank) and cooperation in the energy sector are discussed separately. The Chinese participants emphasized that all these institutions are aimed at improving the system of international economic governance, but do not represent a tough alternative to long-standing organizations (the World Bank, IMF and WTO). At the same time, the Chinese emphasize the need to reform the voting quotas in the IMF and the World Bank in favor of new growing economies. Experts also drew attention to the emergence of the Asian market as more independent and less susceptible to possible global shocks.
However, the United States, for its part, is actually questioning the viability of universal institutions, primarily the WTO, and is leading the way to the creation of new regional associations (the Trans-Pacific Partnership), which should actually replace failing universal organizations and impose the rules of the game on other states. ... American representatives are already talking about this quite openly at other expert platforms.
As far as energy is concerned, Russia's full-fledged entry into the Asian gas market could lead to a change in the entire balance of power, increased competition and lower prices. In particular, the attractiveness of supplies of liquefied natural gas to the APR market from other suppliers will decrease. Regional experts draw attention to the ongoing changes in the regional energy balance in favor of Russia. Over the past ten years, the export of energy resources to the countries of the Asia-Pacific region from Russia has grown 15 times, and the share of the countries of the Asia-Pacific region in the total Russian energy exports has reached 24%. Crude oil and petroleum products prevail in the structure of Russian energy exports to the Asia-Pacific region - they account for 64 and 21%, respectively.
Energy resources of Eastern Siberia and the Far East will be of key importance for export. More than 13% of Russian oil reserves (about 4 billion tons) and 16,2% of natural gas (42 trillion cubic meters) are concentrated in these regions. (According to the Ministry of Energy, the geological exploration of resources in these regions on land is 8%, and on the shelf only 6%. In this regard, the forecasted volume of oil and gas production at old and new fields by 2035 will amount to 118 million tons, and 135 billion cubic meters, respectively.)
However, so far Russia is far behind the countries of the Middle East as a supplier of oil and gas to the Asian market. They provide 46% of Chinese oil imports, 58 - Indian, 83 - Japanese and more than 80% - Korean. In Chinese gas imports, one country (Turkmenistan) accounts for 46% of supplies, and in Indian - 85% (Qatar). Japan and the Republic of Korea, the world's largest gas importers, have a more diversified supply structure.
There are also objective factors contributing to a more active entry of Russia into the energy market of the APR - stagnation of the European economy, EU plans to diversify suppliers, and growing demand in Asia. Japan also demonstrates its readiness to invest in projects for the extraction and distribution of natural resources in Siberia and the Far East, if political relations allow it. It was noted that Japan is already increasing imports of Russian coal. In 2014, it grew by 20% and reached 9,66 million tons. Japan is dependent on coal imports from Australia (this country accounts for 74% of Japanese imports) and would like to diversify sources of supply. However, Russian coal supplies to China in the first months of 2015 decreased by more than 40%. The reason was that since January 2015, China has banned imports of coal with an ash content of more than 40% and a sulfur content of more than 3%, as well as brown coal with an ash content of more than 30% and a sulfur content of more than 1,5%.
At the same time, in the long term, gas demand in Europe will not be subject to significant fluctuations, and growth will be observed in China and a number of other Asian countries - as a result of economic growth and the increased use of gas in power generation instead of coal. For China itself, it will be economically efficient to buy gas abroad, rather than invest in the production of its own shale gas.
At the same time, the seriousness of the US intentions to enter the Asian LNG market cannot be underestimated. It is known that six LNG plants are already under construction on the west coast of the United States, and in 6-2017. it is planned to launch construction of 2018 more similar enterprises. All of them are located on the west coast and are focused on the Asian market. The first deliveries are due to start in 3. At the same time, in the European direction, a similar infrastructure has not yet been created at all.
The issues of attracting Asian investments to Siberia and the Far East deserve special attention, provided that the sanctions pressure on the Russian Federation from the United States and its allies continues. How big is the threat from sanctions?
Based on the experience of communicating with representatives of regional business circles, we can safely assume that if the conditions for activity in the Far East and Siberia for small and medium-sized enterprises are noticeably improved, then Asian business will find a way to bypass American "radars". Also, ideas are often expressed that an increase in the volume of Russian investments in Siberia and the Far East will also be viewed by companies from the Asia-Pacific region as a positive sign.
At the same time, experts admit that the US sanctions policy against Russia cannot be viewed only from a political point of view. They apply to all energy activities and should limit Russia's ability to enter regional energy markets and compete with the United States there. If sanctions persist, gas and LNG production in Russia will fall.
There are, however, other hidden dangers associated with the prolongation of the sanctions regime. First of all, this concerns small and medium-sized businesses, which, unable to raise funds in the international financial markets, are gradually phasing out their activities in "sanctioned countries." With the prospect that the cost of returning to these markets will be higher for them than the potential benefits. The likelihood that the sanctions would lead to a situation in which cross-border investment would be increasingly restricted was emphasized. This may pose a threat to attracting medium and small investors from Asian countries to the Russian Advanced Development Territories.
And, quite restrainedly, the region is still assessing the development potential at the present stage of the Northern Sea Route. Many believe that the "northern" transit has good long-term prospects, but so far the use of the NSR is associated with large energy projects that have been suspended due to sanctions pressure on Russia. However, business representatives note a strategic interest in participating in the development of the Russian North.
Summing up this review, we can say that the very idea of "turning Russia to the East" has already taken root in the perception and discussions of regional experts and businessmen. Now it is necessary to work long and painstakingly on its practical content. And this can become the subject of joint concern and cooperation between Russia and its leading regional partners.