• All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out.

  • I.F. Stone

zondag 26 juni 2016

Eurasian Integration



PEPE ESCOBAR | 23.06.2016 | OPINION

It’s All About Eurasia Integration


The key takeaway of the 20th St. Petersburg International Economic Forum (SPIEF) – 30 ministers from 21 nations and 880 CEOs attending – predictably was all about the key socioeconomic story of the 21st century: Eurasia integration. 
President Putin put it quite mildly, actually, when he said that, «with our partners, we believe the Eurasian Economic Union may be one of the centers of broader integration [with Asia]». The EEU, as we speak, unites Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan, with Tajikistan as a prospective member.
But then came the kicker: «We are suggesting the creation of a larger Eurasian partnership involving the Eurasian Economic Union and countries with which we have already had a close relationship: China, India, Pakistan, Iran».
That accounts for no less than the intersection of the EEU with the Chinese-driven One Belt, One Road (OBOR); the Shanghai Cooperation Organization (SCO); the Asian Infrastructure Investment Bank (AIIB); the BRICS’s New Development Bank (NDB); and of course all this part of the Big Picture footprint of the Russia-China strategic partnership.
It naturally mergers the desire expressed by Putin years ago of a free trade zone «from Lisbon to Vladivostok» with the Chinese vision of OBOR as total Eurasia integration. The West’s competing project, meanwhile, barely ventures beyond NATO expansion; make fear, not business. So Putin once again was forced to repeat the obvious; NATO «needs a foreign enemy, otherwise what would be the reason for the existence of such an organization».
The facts are on the table concerning the relentless advance of a Beltway-deployed Hybrid War against Russia. Apart, and beyond, an eventual Russian counterpunch, what really matters is business.
Thus Putin’s pledge to support «Russian export-orientated companies, strengthening our positions in the international market».
Kazakh President Nursultan Nazarbayev added, «disintegration and economic isolationism will not solve any internal problems; it will be only a self-deception. The Eurasian Economic Union is interested in an efficient and stable European Union… Similarly, it’s advantageous for a United Europe to cooperate with our union».
Meanwhile, cooperation inside the SCO is also advancing. India and Pakistan are joining as full members, and Iran’s turn is practically certain in 2017. Nazarbayev: «This organization that will unite three billion people is becoming very powerful. Isn’t it profitable to anyone to cooperate with such an organization?»
The OBOR-EEU-SCO interpenetration, on an economic level, portends the development of an astonishingly ample economic bloc that will position itself as a counterpoint to the Obama administration-peddled Trans-Pacific Partnership (TPP). Moscow is not only driving the EEU closer to all SCO members but also is keen to expand it to the 10-member Association of Southeast Asian Nations (ASEAN). Putin framed the initial phase of the partnership as based on investment protection; trade facilitation; joint development of standards for the production of next-generation technology; and better access to services and capital markets.
Business as usual
On the Western front Italy, via Prime Minister Matteo Renzi, made it clear the continued automatic extension of EU sanctions on Russia is counterproductive. Italian and Russian companies clinched $1.7 billion in deals at SPIEF. Royal Dutch/Shell signed a deal with Gazprom to be part of a $10 billion LNG project on the Baltic Sea. Rosneft and BP signed a binding deal for a joint venture, Ermak Neftegaz, exploring oil in Siberia.
All this happened even after Washington applied trademark relentless pressure over a string of European governments trying to block businessmen from attending SPIEF. Compare it to Gazprombank’s First Vice President, Oleg Vaksman, noting that foreign investors badly want to buy Russian stocks and bonds, but not enough are available.
Any CEO with sound judgment across the eurozone knows that Moscow is not exactly desperate for Western investment. They just need to look at the myriad aspects of the Russia-China partnership.
China will be extremely active improving Russian connectivity for years to come. The key example concerns the superfast Hyperloop technology – high-speed in tubes with capsules propelled by linear induction motors and air compressors. Hyperloop is projected to be in use along a 70-kilometer strip of Russia’s first super high-speed transport system to its Pacific port of Zarubino, in the Far East. Chinese investors will inevitably come up with the up to $600 million financing. The high-speed rail project between Moscow and Kazan is also advancing.
These projects are of course closely tied with OBOR – the categorical imperative of building myriad land bridges across Eurasia. And that also ties in with internal BRICS cooperation. Three months ago Rosneft sold stakes in two top eastern Siberian oil fields to three Indian companies. India’s Oil and Natural Gas Corporation (ONGC) signed an agreement to buy a 23.9 percent stake in the Vankor oil field in East Siberia (Russia’s second largest by production) from Rosneft for about $2.1 billion. ONGC signed deals worth $5 billion during SPIEF.
Investment funds from the United Arab Emirates are also creeping in, having done business through the Russian Direct Investment Fund, particularly in agriculture. And Middle East investment funds are also about to access the Russian military-industrial complex.
In a two-way street mode, Moscow’s strategy relies on boosting all sorts of Russian exports – energy, engineering, educational, medical and tourist services – to the whole Asia-Pacific. And Putin wants Russia to become the world’s biggest exporter of non-GMO food.
«Why are you enduring this?»
So what will happen with those EU sanctions? Putin made it clear that Russia might even unilaterally lift its own sanctions; «If at some stage we see that almost everything [to solve the Ukrainian crisis] has been fulfilled, then we will be ready to make the first step, including [sorting out] various restrictions in the sphere of trade and economics». But there’s got to be reciprocity; or, in Putin’s words, «this cannot be a one-way street».
Renzi promised he will urge the EU to «thoroughly discuss» their next move. European CEOs for their part now openly discuss the need of a new Ostpolitik. At the same time, they well know that what really matters are US sanctions, and these are not going anywhere. It was left to Putin to joke about it with Renzi: «Matteo, why? Why are you enduring this?»
And that brings us to the by now famous admission by Putin – with a key conditionality: «The US is the only superpower and we accept that fact. The world needs a country as strong as the US but we don’t need them to interfere in our affairs, to instruct us how to live, to prevent Europe to work with us».
As there are no signs this state of affairs is about to change amid the dying embers of the Obama administration, what’s certain is that Russia will be far from «isolated». Shell companies not listed by the sanctions mechanism will continue to do business with Europe. And in another facet of the Russia-China strategic partnership, China’s Union Pay credit card system as well as its Russian equivalent will be even more ubiquitous.  
Sanctions are downright silly. Sanctions could not and will not corner Iran or Russia. Washington’s leverage is minimal; at best it extends to coercing European nations to bend to its foreign policy designs. The breakneck-speed expansion of the Great Eurasian Corridor is unstoppable. And with Russia matching its land and wealth of natural resources with China’s population and virtually unlimited funds, there’s nothing Hybrid Wars can do to divert Russia’s own pivot to Asia.


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