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by F. William Engdahl from Journal-Neo Website
Depending on how it proceeds, it could help China to make necessary corrections to its current BRI development model and even benefit the development of the United States in a peaceful way.
Here are some factors to
consider.
The original rather vague concept has been greatly expanded with creation of numerous state-tied think tanks in China proposing this or that new element.
A major problem, however,
has become evident in recent months in several BRI partner countries
where China seems to have pursued its own project concepts such as
in Malaysia, without due consideration for the needs of the partner
country, sometimes leaving them with unpayable debts.
If that is to happen, it cannot be a mere repeat of the Anglo-American IMF model, "with Chinese characteristics." Here is where recent initiatives of Russia's Putin government could provide a major recalibration.
The recent ASEAN meeting
is instructive in this regard.
With the Obama administration strong-arming of the EU to impose economic (self-destructive) sanctions in their trade with Russia, Russia understandably reviewed her options elsewhere.
Initially, that has meant opening new economic and political and even military relations with the other giant Eurasian power, China.
The results of the cooperation have been impressive in many areas. That said, the danger always lurks that the asymmetry of the relation will make Russia one day overly-dependent on China, and not a sovereign equal.
The recent signs of a
Putin Asia Pivot also beyond China could be beneficial to
all sides.
On the agenda was discussion of how to deepen contacts and trade between Russia's Eurasian Economic Union (EAEU) and ASEAN as well as creating what they term a Greater Eurasian Partnership also in the context of the Shanghai Cooperation Organization (SCO) which includes,
Russia, owing to its geography and its economy, despite not being the economic or financial colossus China is, is uniquely positioned to be the facilitator of deeper economic and political cooperation across Asia, especially in areas where historical distrust of China is strong.
A look at the Eurasian
map will show how intimately close Russia is to all these countries.
Now Russia is well-situated to leverage that geographical, economic
and even military advantage with other Asian partners.
ASEAN formally designated
their relation with Russia for the first time as a "strategic
partnership."
Among projects are agreement for Russia with its advanced IT industry to join with ASEAN in developing "smart cities" along the lines already in process between Moscow and Singapore.
Putin also extended a personal invitation to the ASEAN members to be guests at the 2019,
Mutual trade between the
ASEAN countries and the Russian-dominated Eurasian Economic Union
grew in 2017 by 40% to some $36 billion, still a small fraction of
the potential.
Russia has been involved with Vietnam since it discovered the first successful commercial oil offshore Vietnam during the Cold War.
In 2015 the EAEU and
Vietnam signed a Free Trade Agreement. Bilateral trade grew by 31%
between Vietnam and the EAEU (90% Russia) in 2017 to almost $4
billion, and is on a similar further growth path in 2018.
Food exports included fruits, vegetables, coffee, cashew nut, and seafood. The treaty calls for the gradual reduction to an average of between 1-2% for import tariffs on both sides by 2025.
Now with the MOU between Russia's EAEU and the ASEAN, Vietnam is positioned to become the supply chain gateway to the other ASEAN countries for Russia and the EAEU.
For Vietnam the free
trade agreement with the countries of the EAEU opens a market with a
combined GDP of $2.2 trillion. They both have targeted US$10-12
billion bilateral trade by 2020, and US$30 billion
by 2030.
Japan, South Korea and
Russia are members of
ASEAN+8, the East Asia Summit.
Russia's rail transport artery, which is 5,772 miles long, has great development potential for mutual trade between the two nations, according to Japan's Deputy Minister of State Lands, Infrastructure, Transport and Tourism, Toshihiro Matsumoto.
Currently trade is done
by sea or air between the two, taking up to 62 days for ocean
freight to reach Russia via the Indian Ocean. Air freight is costly.
The new corridor would cut transport time significantly and reduce
shipping costs
as much as 40%.
A resolution of the
islands dispute could see that fund expand significantly.
As well, Japan and South Korea and India seek a balance to over-dependence on either the USA or on China.
Russia can represent a
highly productive "third way" without forcing a break with China, as
Russia uniquely is the bridge connecting all sides.
In their joint press conference Modi declared,
The talks also resulted in several agreements in space, nuclear energy and railways.
Then nuclear agreement
with Russia, currently the world's largest nuclear power
constructor, will include manufacturing of nuclear fuel assemblies
in India. And India will acquire 4 Krivak-class frigates from
Russia, two of which will be built in India under a $2.5 billion
deal.
They also reaffirmed a
strategic partnership, reviving relations going back to the 1950's
between India and Russia. The recent Russian attention to India
represents a significant change over the past four years to counter
a decline in Russia-India relations and trade as Washington tried to
draw India into its sphere.
It is clear that Putin is making it a state priority to pursue what he announced a year ago at APEC as Russia's Greater Eurasian Partnership.
There he cited Russia's intention to create an "Energy Super Ring" that unites,
...and the Sakhalin-Hokkaido transport link, a proposed road-rail bridge-tunnel that would connect Japan's northernmost island of Hokkaido with Russia's Sakhalin.
This could only be the
beginning of a mutually beneficial regional cooperation.
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