Page 67 - BNE_magazine_bne_September 2019

bne September 2019
Opinion 67
protest against smelly landfills, but with a triple surplus the Kremlin has the money to buy its way out of trouble and has launched a wide ranging, if as yet inefficient and ineffective, reform programme to deal with the biggest problems. The planned RUB27 trillion spending programme over the next six years has yet to have any material impact on ordinary people’s lives, but economists all believe that these effects will start making themselves felt in the second half of this year to some extent.
Putin is increasingly finding himself on the right side of the story as the world changes with the rise of the emerging markets. He is not alone in mistrusting the US, which he clearly has written off as an unreliable partner since it unilaterally withdrew from the Anti-Ballistic Missile Treaty (ABM) in 2002. That drove Russia into China’s arms, but Russia took most of the heat until recently. Trump's trade war with China has brought Beijing into open conflict with Washington. And China’s President Xi Jinping and Putin now stand shoulder to shoulder in defying the US hegemony.
“The US is isolated by Russia and China,” Putin quipped
after meeting with Xi, who was the guest of honour at this year’s St Petersburg International Economic Forum (SPIEF) that kicked off on June 6. SPIEF is supposed to be about meeting international investors, but this year Russia's flagship investment confernce was all about China that signed about half of all the investment deals announced at the conference.
But Russia's foreign policy is not just about China. The first sign of a historical shift in the centre of gravity of global geopolitics eastwards was President George W Bush's decision to call a G20 summit to deal with the 2008 meltdown, not a G7 summit.
G seven to twenty
Russia was expelled from the G7 as a result of its military campaign against Chechnya – and it didn't care. Last year’s G7 summit hosted by Canada barely registered in the international press and is largely irrelevant today.
The G20 is a much bigger, much rougher playground than the elite G7 club of rich nations. Russia's relations with the west are in the gutter, but those with the likes of Brazil, India and the other emerging markets are flourishing. Putin pre-empted his Osaka appearance by giving a big interview to a major media outlet as he always does to prep the ground.
And it proved to be controversial as he told the Financial Times editor Lionel Barber that liberalism is obsolete. That comment brought down opprobrium, including an editorial from the FT saying that liberalism is alive and well. But is it? In the obligatory summit group photo of all the leaders in attendance – 28 presidents and prime ministers – those following liberal agendas were in the minority.
ALACO DISPATCHES:
Why Brussels is unnerved by China’s Balkan overtures
Yigal Chazan of Alaco
B
China’s growing investments in the Western Balkans, which Beijing sees as an important part of its ambitious Belt and Road Initiative (BRI), may leave some countries in the impoverished region with unsustainable debt and set back their hopes of European Union membership.
China has provided this volatile area of Southeast Europe – comprising Albania, Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia – with billions of dollars in concessionary infrastructure loans, viewing it as a BRI land corridor, integral to the ‘Balkan Silk Road’, in essence a gateway to prized European markets.
Beijing’s trillion-dollar BRI project aims to establish transport and economic linkages between China and the West along
a series of land and maritime corridors, stretching across Asia, the Middle East and Africa, with the Western Balkans soaking up much of the funding earmarked for former Eastern bloc countries. Over half of the $9.4bn Chinese investment in Eastern and Central Europe in 2016 and 2017 went to five Western Balkans states.
China has focused its investment on the region’s ports, railways and roads as well as energy facilities. It is improving transport connectivity and power-generation capacity
as well as creating much-needed jobs in countries that might otherwise struggle to attract similar volumes of loan financing, given the levels of political and economic risk.
While the EU remains the principal regional trading partner and FDI investor, its funding process can be bureaucratic
and often conditional on recipient countries fulfilling strict conditions and undertaking substantial reforms. Chinese loans make limited demands, even when borrowers are potentially at risk of defaulting on repayments.
eijing sees the former Yugoslavia as a key element of its plan for greater access to European markets, but
its investments in the region are a mixed blessing.
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