The Russian Economy Will Benefit from the Eurasian Union and Greater Eurasia

Translated by Ollie Richardson

15:25:13
03/05/2018

riafan.ru

The quarrel with the West and the new sanctions limit fully-fledged trade between Russia and the western countries, but they also give the opportunity to develop additional trade routes within the framework of the Eurasian Union. The Russian economist, professor of Russian Academy of Sciences, director of the Centre for Integration Studies of the Eurasian Development Bank Evgeny Vinokurov told the Federal News Agency why trade in the Eurasian Union is today very interesting for the Russian economy.

Evgeny, what alternatives do trade in the Eurasian direction give Russia?

“Here we have the prospect of creating a truly effective common market of 180 million people and two trillion dollars. There is an opportunity to remove non-tariff barriers and to create opportunities for business: to firstly develop – starting with the domestic market, to accumulate funds and competences, and enter with them in the global market. And the ultimate goal is still the development of the world market. Economically this topic is very interesting to us because it is a vector of withdrawal from the West and the creation of a multipolar world.”

Why is it profitable for Russian buyers? Can goods, the inflow of which is limited from the West, come to us from Eurasian routes?

“They already are: over the last five consecutive years the flow of containers along the West-East axis through Russia grows twice every year, an effective alternative to shipping was created by combining ‘price + time factor + convenience factor’. Our two transport corridors proved to be very useful and promising (one goes west through the Trans-Siberian Railway, the second goes through Kazakhstan to the central regions of China): the Chinese now transport their containers along this route for 14 days, and in five years the volume of transit has grown from 5000 to 262,000 containers, and this year it will grow by 70%. This is already a real logistic alternative, an addition to sea freight, and an excellent option for business. The topic of internal coherence is very important for the Eurasian Union. Now the transport scheme looks like this: from central China containers go to Moscow, trucks are overloaded, and after this the goods are transported, say, to the Volga region — it ends up being more and more expensive, but currently there aren’t enough logistic centers for removing such ‘bottle necks’. If to invest in developing the infrastructure of these routes, then internal regions will have new opportunities for business.”

What does the development of the Eurasian Union now depend on?

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“Our neighbors in the Eurasian Union now depend on us: Russia gives 87% of Eurasian GDP and 75% of the population. We need our neighbors in spheres of trade, investments, and earnings of labor migrants (for example, in Tajikistan and Kyrgyzstan 30% of national GDP is the money of labor migrants, the main branch of the economy of these countries today). Against the background of the war between Russia and the West the Eurasian Union now tries to not turn into a fortress, agreements on free trade zones in Vietnam, Iran, Singapore, and China were signed for this purpose. The economy of the Eurasian Union is still small — 2.5% of the world’s GDP, so it cannot yet create a competitive environment, but there is a long-term vector for export and access to the global market. Russia also has its own national task of developing non-oil export, and Eurasian integration and its market are a way to achieve our target.”

Should Russia invest more in the Eurasian Union now?

“We, in the Centre for Integration Studies of the Eurasian Development Bank, have a database of 60 regional organisations that we have carried out analysis for and given out lessons concerning the Eurasian Union. One of the main ones is as follows: international regional organisations are most vulnerable in the first decade of their development. If they pass through it, internal stability later appears. So during these years it is necessary to help Eurasian integration stand on its own feet: not to feel sorry for it for personnel and financial resources — all of this will pay off. It is a large market for Russia, this is about 20 billion dollars of direct investments that are accumulated in the countries of the Eurasian Union. And what is important is general stability. It is difficult to estimate it in figures, but it is important: if stable economies in neighboring States surround Russia, then it is an enormous plus for us.”

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