Posted: Tuesday 20th December, 2016
Devaluated ruble turned out to be a blessing for Russia in 2016, making it possible for the country to start earning more on food products than on weapon sales. The devaluation has also helped Russia diversify trade with Asian countries and led to a more proactive foreign policy in the continent.
While there were mixed results for Russia in Asia in 2015, this year witnessed several positive trends that are likely to continue until the end of the decade.
Russia is shifting its focus away from China in an effort to diversify its range of partners, and is exporting more food and technology to Asia. Moscow is also setting its sights on ASEAN, India and Japan.
The year of ASEAN
2016 witnessed a long-awaited breakthrough for Russia in Southeast Asia, with ASEAN being given high priority in the updated Russian Foreign Policy Concept.
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Just as Thai Prime minister Prayuth Chan-ocha predicted in his interview to RBTH, the third Russia-ASEAN summit in Sochi in May paved the way for the Russia-ASEAN partnership to become strategic and gain more economic substance.
There were also many substantial achievements in military and defense ties.
The agreements that Prayuth Chan-ocha signed in St. Petersburg this May includes, among other projects, a $1 billion full cycle dairy farm in the Ryazan Region, which will be built by Thailand’s CP Group. Vietnam is investing around $1 billion in a similar project in the Moscow Region.
Vietnam ratified the free trade agreement with the Eurasian Economic Union (EAEU), which gives Russia the kind of access to the Vietnamese market that it never had before. Negotiations with Singapore are underway, and countries like Thailand and Indonesia are showing some interest.
Russia plans to increase its food and technology exports to Asian countries. It also plans to export pork to Vietnam and poultry to Singapore.
This has been a good year for people-to-people contact and cultural ties as well. Southeast Asian countries launched a new tradition of organizing festivals in Moscow’s most popular venues. On the sidelines of the Eastern Economic Forum in Vladivostok in September experts from Russia and Southeast Asia organized the Russia-ASEAN University Forum to launch a new track II diplomacy initiative.
Another major event that failed to grab headlines but is worth mentioning is the 4th Russia-ASEAN Youth summit, which was held in Siem Reap, Cambodia.
Despite the fact that Russia-China relations are sometimes described as a semi-alliance and that Moscow and Beijing have set a $200 billion trade target, Russia developed a more pragmatic approach towards China in 2016.
This new pragmatism is clearly seen in how scrupulously the EAEU is discussing a trade agreement with China. The negotiators want to get China to discuss non-tariff barriers that come in the way of exports from the EAEU.
The new approach seems to be paying off with Chinese businesses intensifying investments.
Russia should avoid bilateral military drills with Pakistan – expert
According to Russian Far East Development Minister Alexander Galushka, China is providing 90 percent of the finance for the Russia-China Agricultural Fund projects on Russian territory, on terms set by the Russian side.
Moving away from a Sino-centric Asia policy, Russia now tries to reach out to as many countries in the region as possible. The second half of the year showed, that apart from China, Russia is now focusing on Japan, Vietnam, ASEAN and India.
As for South Korea, which was overwhelmed by a political crisis towards the end of the year, Russian experts and officials have been skeptical about the prospects of joint business projects.
Ahead of the Eastern Economic Forum in Vladivostok, Yuri Trutnev, the Russian presidential envoy for the Far East, told RBTH, that Seoul is supporting Western sanctions imposed on Russia in 2014, which is in contrast to what South Korea has been promising.
Building trust with Japan
Since Vladimir Putin made it abundantly clear on several occasions before his long-awaited summit with Shinzo Abe on Dec.15-16, that Russia “is not trading its trading its territories” and that the country sees only “its national interests” as a base for any joint cooperation, the general fear was that the summit would end with no substantial results.
However, the summit is seen as a success since the leaders agreed to implement “a special economic regime” for the Southern Kuril Islands, which Japan claims as its territory.
While the finer details are not clear at the moment, there are plans to have a visa-free regime for citizens of Russia’s Sakhalin Region and Japan’s Hokkaido Prefecture.
The countries are also looking to allow both Russian and Japanese citizens to live on the Southern Kuril Islands. If implemented, such agreements present a win-win situation for Russia and Japan.
New strategy for South Asia
This year, Russia was seen as trying to formulate a new policy in South Asia, which pays attention to both its Cold war foe Pakistan and longtime friend India.
The strategy had an unfortunate start, when Moscow held its first-ever military drills with Islamabad just a few days after terrorists from Pakistan attacked a military camp in India’s state of Jammu and Kashmir.
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Russian’s justification for holding the drills was that they would help make antiterrorism activities in Central Asia more effective with the help of Pakistan, which has leverage over the Taliban in Afghanistan.
While some analysts bat for such a strategy, especially given the fact that both India and Pakistan will become full members of the Shanghai Cooperation Organization (SCO) next year, the timing of the drills was widely criticized since Russia did not keep Indian sensitivities over the Kashmir attack in mind.
The fact that the drills were not mentioned publicly at the Russia-India summit in Goa, and a number of major deals were signed, including for the sale of S-400 air defense systems, could mean that Putin and Narenda Modi, who is actively building ties with the U.S., agreed to not view the Russia-India relationship through the prism of third parties.
Development of the Russian Far East
This year has also shown that Moscow’s attention to the Russian Far East will not dry up as quickly as it did in 2012, when Vladivostok hosted the APEC summit.
The Eastern Economic Forum, which was held this September for the second time, is seen as a major event to showcase the region and attract investment. Shinzo Abe was among first world leaders who suggested Vladivostok should become Russia’s gateway to Asia. His eight-point plan mentions the Russian Far East several times.
In 2015, more than 300 projects were launched in the region, which attracted over 1 trillion rubles ($15.35 billion) in investment. Although the figures for 2016 are yet to be calculated, it’s clear that expectations will be exceeded, even if there is still a lot to do to lure more investors to the region.
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