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EM COMMENT
Russia and Eastern Economic Forum 2022: A sturdy Far East
By Padmashree Anandhan
About the Eastern Economic Forum 2022
On 07 September, Russia’s President Vladimir Putin gave an address at the 7th Eastern Economic Forum held in Vladivostok. The forum was conducted from 05 to 08 September under the theme “Towards a multipolar world,” focusing on areas of cooperation in the Far-East regions of Russia, especially the Asia-Pacific, ASEAN countries, and international investment companies to boost economic growth.
Two major deals signed by Russia were between Mongolia and Myanmar. First, Mongolia’s “Policy of new revival” where the goal is to strike cooperation in 50 projects under six areas such as border checkpoints, energy, industry, green development, and enhancing state operations. This development goal will incorporate Russia and China’s programme to involve its investors and high-performing companies. The end goal is to make Mongolia a leading country in Asia in societal, economic, and security factors. Second, Russia and Myanmar signed nuclear cooperation roadmap for 2022 to 2023. Under the agreement, Rosatom and the Ministry of Electric Power of the Republic of the Union of Myanmar will draft the lines of cooperation in the nuclear sector and produce a legal framework for establishing modular reactor projects in Myanmar.
Putin’s Statement: Three Takeaways
First, warning over grain deal. Putin highlighted the unresolved food crisis problem. Where out of the 87-grain export ships only two had been transported to Africa, comprising three per cent of 60000 tonnes, whereas the remaining were sent to European countries. Although sanctions on Russia’s food and fertilizers have been removed by the West as per the deal, the restrictions over logistics, transit, money transfer, and insurance still exist challenging Russia’s exports to the rest of the world. Another drawback for Russia pointed out by Putin was the missing regulations in the grain deal over destinations of the exports. Putin stressed that, in the upcoming November negotiation where parties will get back for discussing the extension, Russia is expected to bargain on exporting to the poorest countries to prevent the rise in food prices and famine.
Second, a stable economy and an advantageous Asia-Pacific. With the widening crunch in terms of economic, financial, and technology, Putin assured Russia’s stability in the market and indicated decreasing inflation. He said that despite the lowest employment rate, issues in industries, and individual industries' impact due to the withdrawal of western companies, several countermeasures have been taken to stabilize its economy. Another advantage Russia holds is the Asia-Pacific cooperation, where many states have been excluded from following the Western sanctions benefitting both economies. Some of the significant project collaborations between Russia and the Asia-Pacific have been in modern technologies, infrastructure developments, oil, natural gas, mining, geological exploration of raw materials, logistics, and the development of north-south and sea corridors. On the question of whether Russia has lost as a state in the Ukraine war and if it could still afford its expenses. Putin said: “I am sure that we have not lost anything and will not lose anything.” He added that Russia will aim to reinforce its sovereignty and Russia’s position at the domestic and foreign policy levels.
Third, criticism against the West. Putin accused the West of imposing its own “models of behaviour,” and the dominance of the US to influence the world’s economy and politics. He pointed out that despite, Asia-Pacific countries becoming the center for technological, economic, capital, and personnel, the interference from the West has led to global inflation. Mainly through sanctions, norms, Euro-Atlantic unity, short-sighted decisions, and lack of vision of the Western elites have pushed the European economy into a troubled sphere, pushed down the quality of life for Europeans, dropdown in competitive business enterprises, and thereby price rise of food and energy products.
Who else took part in the EEF 2022
Leaders from Myanmar, Armenia, Mongolia, China, India, Malaysia, and Vietnam participated in the forum. Apart from the leaders, delegations from South Korea, Japan, Kazakhstan, diplomatic corps from 25 countries, international business personnel, and experts around the world took part in the discussion.
The key address was provided by the Prime Minister of the Interim Government and the Commander-in-Chief of the Armed Forces of Myanmar Min Aung Hlain, Prime Minister of Armenia Nikol Pashinyan, Prime Minister of Mongolia Luvsannamsrein Oyuun-Erdene, and Chairman of the Standing Committee of the National People's Congress of China Li Zhanshu. While the virtual address was provided by Prime Minister of India Narendra Modi, Prime Minister of Malaysia Ismail Sabri Yacob, and Prime Minister of Vietnam Pham Minh Tinh.
Min Aung highlighted the brewing issues of Myanmar in food insecurity, fuel, and agricultural products and how the financial challenges faced by developing countries can be met through the use of rubles, yuan, and rupee currencies. He called for investors to increase their investments to push up the partnership amongst the eastern countries to avoid western influence and promote the development of ASEAN.
Oyuun-Erdene spoke on Mongolia’s problem in accessing the sea and the land-locked positions which have led to many border checks and conditions limiting its economic growth. He proposed three areas of collaboration. First, the construction of a gas pipeline from Russia to China via Mongolia to keep the economies “united.” Second, more investments towards establishing an eastern vertical railway line linking Russia, China, and Mongolia. Third, energy project partnership for meeting domestic needs, exporting electricity and producing green energy through partners from Russia and China.
The representative from China agreed on the growing Sino-Russia relations and Russia’s support for Xi Jinping's global development and global security initiatives. He highlighted the key economic cooperation over the Northern Sea Route which is expected to boost cooperation between Chinese firms and Russia’s Far East in terms of maritime transport. Providing the trade value between China and Russia's Far Eastern Federal District, Northeast Asia has become a prime region for cooperation between both.
IN BRIEF
By Sai Pranav
ITALY
Industrial compound outside Milan catches fire
On 07 September, a massive fire broke out at the Nitrolchimica company, a chemical plant outside of Milan. The company deals with solvent recovery and hazardous waste disposal and has liquid solvents in large quantities, which is suspected to be the fire's origin. Three people were seriously injured, and 15 suffered minor injuries. The smoke emerging from the fire could be seen 10 kilometers away from the burnt site. Fire brigades were called to the area. During the initial investigation, there were no signs of environmental hazard but the situation is expected to change depending on the speed of the clean-up and the weather. (Elizabeth Schumacher, “Italy: Major fire, injuries at chemical plant outside Milan,” Deutsche Welle, 07 September 2022)
THE UK
Government plans to hand out North Sea oil and gas exploration licenses
On 07 September, according to two sources, the UK government is expected to announce the issuance of dozens of North Sea gas and exploration licenses to increase domestic energy production. One source could not confirm the number of licenses, while the other speculated the total to be around 130. Liz Truss, the UK’s newly appointed Prime Minister, had said in the leadership campaign that the solution to the rising energy prices was to boost domestic production. The decision to issue licences will be taken on 08 September 2022. The exploration will span around five to 10 years before the production starts, which does not seem to be a immediate relief to the rising energy prices. (“Exclusive: UK to announce dozens of new North Sea oil and gas licences -sources,” Reuters, 08 September 2022)
Energy subsidy plan introduced by Liz Truss
On 07 September, Prime Minister Liz Truss, announced the final details of her plan to tackle rising energy bills. The new plan is likely to cool the inflation but would increase the borrowing of the country up to GBP 100 billion. Her plan to ease the economic conditions of households and businesses that are likely to face a recession next year will make the UK take a loan. The tax cut promised is deemed to cost the UK government around GBP 179 billion. But Truss remains firmly against windfall taxes from profiting energy companies. The Sterling dropped down for the first time since 1985 due to economic hardships in the country. (Alistair Smout and David Milliken, “New UK leader Liz Truss finalizes huge power subsidy plan,” Reuters, 08 September 2022)
CLIMATE CHANGE
Wildfires contribute to degrading air quality says WMO
On 07 September, Deutsche Welle explained a new report by the World Meteorological Organization (WMO) on wildfires. The report mentions that wildfires worsen air quality, and the consequences for human health and the ecosystem were labeled as "climate penalty." Phenomenon of climate penalties is declining air quality due to the wildfires caused by prolonged and intense heatwaves and drought. The WMO report focused on wildfire smoke in 2021 when wildfires across western North America and Siberia increased the particulate matter, which is harmful to humans. According to the report, climate change has caused the degradation of air quality by the emission of greenhouse gases during wildfires. It also suggested that the key to reducing heatwaves and wildfires is through worldwide carbon neutrality and urged the developed countries to fund better air quality than having large budgets for fossil fuels. (“Stuart Braun, “Extreme wildfires pollute the air people breathe,” Deutsche Welle, 07 September 2022)
INTERNATIONAL
Iran found guilty of hacking Albanian government websites
On 07 September, Albania cut ties with Iran after an investigation of July cyberattacks on the country’s digital infrastructure revealed that it was state aggression and not carried out by an individual or independent groups. The staff of the Iranian embassy in the capital city of Albania, Tirana, were given 24 hours notice to leave the country. A group known as HomeLand Justice claimed credit for the attack initially. The investigation involving Albania, Microsoft and the FBI discovered that the attack on the Albanian government’s digital services and websites being temporarily shut down was the works of four groups the Iranian government was sponsoring. Since 2013, Albania has been hosting the People’s Mojahedin Organization of Iran, an organization that opposes the current Iranian regime. The two countries have clashed since then. (“Albania breaks diplomatic ties with Iran over major cyberattack,” Euronews, 07 September 2022)
War in Ukraine: Day 196
By Rishma Banerjee
War on the Ground
On 07 August, Ukraine’s nuclear operator, Energoatom, said that it supports the deployment of UN peacekeepers in the Zaporizhzhia nuclear power plant. Which has been under Russia’s control since March. The attacks have sparked the fear of nuclear disaster, and thus Energoatom Chief Petro Kotyn welcomed a peacekeeping contingent at the plant. Kotyn also reiterated “...the immediate establishment of a nuclear safety and security protection zone,” as mentioned in the IAEA report, and called for withdrawal of Russian troops. He also welcomed the two members of the 14-member IAEA team who are to remain in Zaporizhzhia permanently to monitor the plant's safety.
Ukraine’s Agrarian Policy and Food Ministry signed a memorandum with Poland on building a cross-border pipeline to transport vegetable oils from Ukraine to Gdansk in Poland. A working group will be set up soon to work on technical details for the construction of the pipeline and the two terminals.
On 07 September, Ukrinform reported on ‘How to Ensure a Military Campaign in 2023: Ukrainian Perspective’ by the Commander-in-Chief of Ukraine’s Armed Forces, General Valerii Zaluzhnyi, and a representative of the Verkhovna Rada, Lieutenant General Mykhailo Zabrodskyi. Where, Zaluzhnyi and Zabrodskyi speak about how the war in Ukraine has moved beyond a medium-intensity conflict in terms of military forces involved, types of weapons used, duration of the conflict, and other spatial indicators. They also mentioned the various directions that Russia’s offensive has taken. From establishing control till the administrative border of the Donetsk Region, advancing in the Zaporizhzhia direction, and making another attempt to seize Kyiv would be Russia’s main goals from the war. Zaluzhnyi and Zabrodskyi named the problems that Russia might face in their offensive like international isolation, economic pressure due to the sanctions, difficulties with general mobilization, and the lack of modern weapons and equipment. Although Zaluzhnyi claimed responsibility for attacks on Russian air bases in Crimea. Till now, Ukraine had just hinted on its involvement in the Crimea strikes. However, the senior military chief has now accepted over Ukraine's strikes, including those at Saky military facility, were conducted “… to physically transfer hostilities to Crimea.”
The Moscow View
Claims by Russia
On 07 September, Russia’s President Vladimir Putin addressed the plenary session of the Eastern Economic Forum. In a speech, Putin expressed his delight in hosting business leaders, experts, politicians, public figures, and members of government from countries across the world. He spoke about various political and economic issues that Russia is dealing with. Referring to the sanctions, Putin criticized the West for how they were attempting to “extinguish the sovereignty” of other countries and trying to popularize the Western narrative. He said that the US’s dominance in the global economy and politics was waning, and Europe was also wasting its development and growth due to these sanctions. Putin mentioned how the sanctions have triggered global inflation but how Russia's inflation rate was declining, unlike the Western countries. He referred to the diminishing trust in the dollar, euro, and pound sterling. He added Gazprom and China’s agreement to switch to 50/50 transactions in rubles and yuan for gas payments.
With regards to Ukraine, Putin said that Russia has made gains from Ukraine and that he does not intend to lose anything in their operation. On the proposal to cap oil and gas prices, he said that Russia would not supply gas, oil, coal, or heating oil if price caps were introduced and did not suit Russia’s interests. On the visa restrictions against Russian citizens, Putin maintained that they should act in a way that serves their interests. His advice was not to get involved in reciprocating the visa ban but to expand the practice of visa-free entry to Russia for more tourist groups, as that would benefit Russia.
On the same day, Russia’s permanent representative to the UN, Vassily Nebenzia, claimed that the grain deal with Ukraine, allowing Russia to deliver fertilizers and food products to global markets, had failed. Nebenzia said that no Russian vessels had left ports in Ukraine with grains, despite the agreement. He also hinted that since their provisions are not being fulfilled, Russia could refuse to extend the deal, with ends in November.
On 06 September, Russia’s spokesperson, Dmitry Peskov, spoke about US President Joe Biden’s comment opposing Russia’s identification as a state sponsor of terrorism. Peskov said that Biden’s sentiment was a “good thing.” However, he found that Biden being asked such a question was “horrendous” and “very difficult to wrap one’s mind around.” Peskov warned that such statement was not an indication of a softer stance by the US.
The West View
Responses from the US and Europe
On 06 September, Liz Truss, after assuming the Office of the UK’s Prime Minister, spoke to the President of Ukraine, Volodymyr Zelenskyy. She reiterated her support for Ukraine’s freedom and democracy and said that Zelenskyy would have her full backing. The leaders discussed the need to strengthen global security and Putin’s attempts to weaponize energy.
On the same day, the European Commission proposed to suspend the EU’s Visa Facilitation Agreement with Russia entirely. If the proposal passes, Russian citizens will not be able to access the EU easily and will have to follow a more protracted and expensive visa application process. They will also lose the privilege of multiple entry visas in the Schengen area and must submit more documentary evidence when applying for a visa. The Commission has also presented a proposal not to recognize Russian passports issued in the occupied areas of Ukraine. Commissioner for Home Affairs Ylva Johansson said that this move was necessary as Russia continues to violate international laws, which breaches the principles of the Visa Facilitation Agreement.
On 07 September, Latvia, Lithuania, and Estonia agreed to ban the entry of Russian citizens from Russia or Belarus to enter their countries. Exceptions will be made only for humanitarian and family reasons, lorry drivers, and diplomats. The announcement comes after several weeks of deliberations by EU countries regarding the increased Schengen Visa application from Russian tourists. On the increasing border crossing by Russians, Latvia’s Foreign Minister Edgars Rinkevics said, “…This is becoming a public security issue; this is also an issue of a moral and political nature.”
On the same day, European Commission President Ursula von der Leyen spoke about the EU’s gas market and prospects. She outlined three major steps decided by the EU. First, the demand reduction of gas, which had been a success with joint storage of 82 per cent, has already been created. Second, to diversify away from Russian fossil fuels, which the EU has been working hard to implement. Third, to refocus on investing in renewables. However, Von der Leyen said that Russia's manipulation of the gas market was having a spillover effect on the electricity market, which was compounded by other factors like heatwaves and droughts. She thus outlined immediate measures that the EU could implement. First was the smart saving of electricity, whereby a mandatory target would be set to reduce electricity use at peak hours. Second, a price cap would be placed on revenues of energy-producing and fossil fuel companies so that consumers can benefit from the low costs of energy sources. Third, liquidity support will be facilitated for Member states to help the companies deal with the volatility of the markets and fourth, lowering the cost of gas by cutting Russia’s revenues. In this context, Von der Leyen mentioned that the EU was succeeding as at the beginning of the war, 40 per cent of the imported gas was from Russia, while the number now is down to nine per cent.
NATO and Allied forces are maintaining a military presence in the Atlantic Ocean, the North Sea and the Mediterranean Sea to monitor Russian warships. So far, they have three Russian naval ships- Slava-class cruiser Marshal Ustinov, the Udaloy-class destroyer, and a support ship. Regarding the activity, Admiral Stefan Pauly from Germany, a commander with NATO’s surface forces, said: “It creates overall maritime awareness and contributes to the safety of navigation for the international maritime community.”
The Global Fallouts
Implications of the Ukraine war
After the International Atomic Energy Agency (IAEA) mission visit to Zaporizhzhia nuclear power plant, the UN Secretary General, António Guterres, called for a demilitarised zone around the plant. In an address to a UN Security Council session, he supported the recommendations put forward by the Director of the IAEA, Rafael Mariano Grossi. Guterres urged Russian and Ukrainian forces to cease military operations near the plant.
On 07 September, Myanmar’s military leader, Min Aung Hlaing, reported that Myanmar would be buying petroleum products from Russia. Hlaing mentioned they were expecting the first diesel delivery in a few days. He also confirmed that Myanmar would pay Russia in whatever currency they accept to ease the supply for both states.
On 07 September, the Prime Minister of Mongolia, Luvsannamsrein Oyun-Erdene, met Putin at the Eastern Economic Forum. Putin welcomed Oyun-Erdene and spoke about how Mongolia and Russia have a long diplomatic relationship. The leaders discussed the logistics of supplying Russian gas to China through Mongolia at the forum. They also spoke about their collaboration in several infrastructural projects like the Ulaanbaatar railway, which runs through areas rich in mineral resources and metals.
On the same day, the Chinese National Petroleum Corporation (CNPC) issued a brief statement on the agreement with Russia’s gas company Gazprom. According to the agreement, China will pay Gazprom half in Roubles and half in Yuan for Russian gas supplies through the Power of Siberia Pipeline. The move is an extension of the 30-year contract signed between Russia and China for the supply of 10 billion cubic meters of gas per year. The CNPC Chairman, Dai Houliang, met Gazprom Chairman Alexey Miller to figure out the details of the transaction. Miller noted that this arrangement would be a “mutually beneficial, timely, reliable and practical decision”. Gazprom, however, said that the technical parameters of the arrangement had not been discussed yet.
References
“Ukrainian Nuclear Operator Suggests UN Peacekeepers in Zaporizhzhia,” Kyiv Post, 07 September 2022
“Ukraine to transport vegetable oils to Poland through pipeline,” Ukrinform, 07 September 2022
“General Staff not rule out continuation of hostilities in 2023,” Ukrinform, 07 September 2022
“Ukraine military chief claims responsibility for strikes in Crimea,” Reuters, 07 September 2022
“Eastern Economic Forum plenary session,” kremlin.ru, 07 September 2022
“Putin speaks at forum in Russia's Far East region,” Reuters, 07 September 2022
“Kremlin comments on Biden’s reluctance to blacklist Russia,” RT, 06 September 2022
“Moscow sounds alarm over Ukrainian grain deal,” RT, 07 September 2022
“Putin opposes tit-for-tat visa restrictions,” TASS, 07 September 2022
“Prime Minister Liz Truss's call with President Zelenskyy: 6 September 2022,” gov.uk, 06 September 2022
Camille Gijs, “Estonia, Latvia, Lithuania to restrict entry of Russians,” POLITICO, 07 September 2022
“NATO monitors Russian warships in the North Sea,” nato.int, 07 September 2022
“Commission proposes full suspension of Visa Facilitation Agreement with Russia,” ec.europa.eu, 07 September 2022
“Statement by President von der Leyen on energy,” ec.europa.eu, 07 September 2022
“UN calls for demilitarised zone around Zaporizhzhia nuclear plant,” The Guardian, 07 September 2022
“Myanmar Buys Diesel Fuel From Russia, Junta Chief Says,” The Moscow Times, 07 September 2022
“Meeting with Prime Minister of Mongolia Luvsannamsrein Oyuun-Erdene,” kremlin.ru, 07 September 2022
“Russia's Gazprom, CNPC agree to use rouble, yuan for gas payments - Gazprom,” Channel News Asia, 07 September 2022