Russia Far East Grand Sale: A Tanking Russia GDP Sees Putin, The Salesman

Putin made a call early September 2015 for greater investment in Russia’s resource-rich Far East region, coming as a last hope, for an economic renaissance, with sanctions & low energy price hit Russia internally with gross domestic product shrinking 4.6% in the second quarter compared with the previous year.

And Russia’s finance ministry now expects the economy will not return to growth until late 2015 or next year, & a slowdown in the Chinese economy that has torn apart Putin’s dream of an alliance against the West.

The latest is that Japan’s prime Minister Abem is warm to Putin’s idea of developing Russia Far East, and have said, Russia and Japan good relations, is critical for a prosperous Asia.

Howeverm Russia and Japan have some territorial disputes and Russia have made some aggressive military moves in the Pacific area, that at times, in partnership with China. China, claims all of South China Seas for itself, being China into conflict with many & in a recent, credible research, most countries in Asia, sees China as a threat of some-what a threat.

Japan and China, while co-operating on economics and commerce, like ASEAN, both Japan and much of ASEAN is on a collision course with China, as a reaction to China’s milirary aggression in the Pacific Waters.

Putin has made economic ties with China a centerpiece of its plan to reduce its dependence on energy exports to Europe, a major customer for Russian gas. Russia has also pinned its hopes on China because Moscow’s relations with the West have been at a post-Cold War low since the annexation last year of Crimea.

At the Eastern Economic Forum in the port city of Vladivostok, Mr. Putin said the Russia would create the best conditions for domestic and foreign investors to conduct business. In May, Putin created the forum to encourage new investment in the region, from China, Japan and South Korea to develop the region’s economic potential and deepen trade ties with the Asia-Pacific region, to even, ahead of the forum, Russian state energy giant OAO Rosneft announced that state-owned China Petrochemical Corp. would take a stake in two oil fields.

Putin Is Waking Up From Chinese Pipe Dream (source)

Russia’s President Vladimir Putin is currently in Beijing to attend a celebration of the 70th anniversary of Allied Powers’ victory over Japan in World War II. Putin will try to use his trip to China — the 24th in his long tenure as leader — to enhance economic and political ties between the two countries. This time, however, that seems to be far more problematic than ever before.

First and foremost, Russia may soon feel the effects of China’s spectacular economic slowdown. According to official statistics, growth rates decelerated slightly from 7.7 percent in the first quarter of 2013 to 7 percent in the second quarter of 2015 — but calculations based on electricity use suggest the real growth may be as low as 4.5-5 percent.
Combined with a recent stock market crash, this has already caused a downturn in global commodity prices, which has hit Russia hard. Much more important, however, is the fact that China was not only a price-setting player, but by far the biggest importer of raw materials in the world — and Russian authorities looked forward to turning their country into China’s largest supplier.

Putin said back in 2007 that by 2025 Russia should dispatch to China around 35 percent of all its oil exports and close to 25 percent of its natural gas supplies (in 2014, the numbers stood at 14.8 and 0.05 percent). Moscow hoped that China would become Russia’s new major trading partner, surpassing the EU by 2030.

These days, those dreams have evaporated — no one knows whether the “Power of Siberia” gas pipeline will be completed, and the amount of oil, coal, or non-ferrous ore supplies may also decline since the Chinese will consume raw materials from deposits in Asia, Africa and Latin America. The Chinese helped to develop these deposits in recent years with tens of billions of dollars in overseas investment.

The second big issue is prospective cooperation in Central Asia, considered in Moscow to be strategically important. The Russians believed for years in the possibility of developing the “New Silk Road” connecting China with Europe via continental routes in Siberia, Kazakhstan and Central Russia. But these plans were only plans — the Russians have done nothing to build railway and motorway networks between Russia’s southern and western borders.

Vladimir Yakunin, the recently fired chief of Russian Railways, devoted more time to promoting Orthodox religious doctrine and speculating on geopolitical issues than running his company’s core business. Therefore the Chinese decided to opt for the southern route, calling it the “Maritime Silk Road” (it has become much more seductive since the completion of the second line of the Suez Canal by the Egyptians), and later turned their attention to Iran — trying to redirect the continental Silk Road to the Caspian Sea’s southern shore.

Today, China’s foreign direct investments (FDI) in Kazakhstan are 10.5 times greater than those channeled to Russia — and there is little doubt that the “great transit game” Putin relied heavily on has been lost by Moscow. All other pipe dreams, like the one that was connected with the Northern Sea passage, have crumbled as well: In 2014, transit cargo traffic in the Far North went down by 76 percent and is now 4,000 times smaller than what passes through the Szue.


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