Russia creates 'economic weapons' against the West
(Baonghean.vn) - The Eurasian Economic Union is preparing for a breakthrough in industrial cooperation. Thanks to that, Russia will solve the import problem; while the remaining members will receive a strong source of motivation for economic growth.
The Russian Ministry of Industry and Trade has published a draft law approving amendments to the Eurasian Economic Union (EAEU) Treaty. The document proposes the creation of mechanisms for financing joint industrial projects involving at least three union countries within five years.
According to the Head of Industry and Agro-Industrial Complex of the Eurasian Economic Commission, Artak Kamalyan, the EAEU is ready to allocate $20 million annually, to ensure the progress of the implementation of the $1 billion planned program.
The Eurasian Economic Community (EEC) claims that financial assistance will promote the technological development of EAEU countries and accelerate the integration process. For Russia, this is an opportunity to replace supplies that have been reduced due to sanctions and the withdrawal of foreign companies.
According to the Eurasian Development Bank, Russia is by far the largest investor in the EAEU. From 2016 to mid-2022, Russia invested $10.6 billion in Kazakhstan, $5.3 billion in Belarus, $3.1 billion in Armenia, and $946 million in Kyrgyzstan.
Kazakhstan's Minister of Industry and Infrastructure Development Marat Karabaev said that there are currently about 125 joint investment projects between Russia and Kazakhstan, but Kazakhstan wants to increase this number to 250 by 2024, and up to 800 projects within five years, worth $75 billion. This money is expected to be invested in the manufacturing industry, iron ore processing, aluminum and copper industry, construction and light industry. At the same time, Moscow and Astana are already the most important investment pair in the EAEU.
The weak point in mutual foreign direct investment between the EAEU countries is the structural model and sectoral cooperation of these investments. So far, it has not been possible to build cross-border value chains, but has stopped at technological cooperation.
Leonid Vardomsky, head of the Center for Post-Soviet Studies at the Institute of Economics of the Russian Academy of Sciences, said that the EAEU provides relatively little financial support at the moment. However, if this mechanism is reformed, economic ties could develop further. Under the pressure of international sanctions, Russian businessmen are looking for an alternative to trading with the West, and they have turned their attention to the Eurasian Union. This should be taken advantage of, the expert said.
“The benefits of industrial cooperation are obvious. At a minimum, it helps to implement agreements on the circulation of goods within the EAEU. Until now, a lot of things were imported from abroad, while national production capacities were sufficient. When the new mechanism starts working, it will be possible to think about creating Eurasian technologies that will accelerate the integration process,” economist Leonid Vardomsky believes.
Contrary to this view, the Director General of the CIS Financial and Banking Council, Pavel Nefidov, believes that before taking the initiative, risks must be addressed. “A bank lending money to people from another country will not face many difficult legal problems in repaying the capital. So far, this problem has been solved by setting certain limits. But this is not enough to speed up the process of Eurasian integration,” he explained.
Expert Pavel Nefidov suggests providing all EAEU banks with equal opportunities on the territory of the member states of the union. In addition, a financial institution may refuse to lend to a business due to an unstable economic or political situation. In this case, local authorities must provide security guarantees./.
