EASTERN ECONOMIC FORUM

CONTEXT

Russia hosted the seventh Eastern Economic Forum at Vladivostok. The forum provided the platform for entrepreneurs to expand their businesses into Russia‘s Far East.

EASTERN ECONOMIC FORUM

• It was established in 2015 to encourage foreign investments in the RFE.
• The EEF displays the economic potential, suitable business, suitable business conditions, and investment opportunities in the region.
• Agreements signed at the EEF increased from 217in 2017 to 380 agreements in 2021, worth 3.6 trillion roubles.
• As of 2022, almost 2,729 investment projects are being planned in the region. The agreement focus on infrastructure, transportation projects, mineral excavations, construction, industry, and agriculture.

MAJOR PARTICIPANTS

CHINA

• The Forum aimed at connecting the Far East with the Asia Pacific region
• China is the biggest investor in the region as it sees potential in promoting the Chinese Belt and Road Initiative and the Polar Sea Route in the RFE.
• China's investment in the region accounts for 90%of the total investment. Russia has been welcoming Chinese investment since 2015, more now than ever due to economic pressure caused by the war in Ukraine.
• The Trans –Siberian Railway has further helped Russia and China in advancing trade ties.
• The countries share a 4000-kilometer-long border, which enables them to tap into each other’s resources with some infrastructural assistance.
• China is also looking to develop its Heilongjiang province which connects with the RFE.
• China and Russia have invested in a fund to develop northeastern China and the RFE, through collaborations on connecting the cities of Blagoveshchensk and Heihe via a 1,080metre bridge, supplying natural gas, and a rail bridge connecting the cities of Nizhneleninskoye and Tongjiang.

SOUTH KOREA

• South Korea has invested in shipbuilding projects, the manufacturing of electrical equipment, gas –liquefying plants, agricultural production, and fisheries.
• In 2017, the Export-Import Bank of Korea and the Far East Development Fund announced their intention to inject $2 billion into the RFE in three years.

JAPAN

• In 2017, Japanese investment s through 21 projects amounted to $ 16 billion.
• Under Shizo Abe “s leadership, Japan identified eight areas of economic cooperation and pushed private businesses to invest in the development of the RFE.
• Japan seeks to depend on Russia's oil and gas resources after the 2011 meltdown in Fukushima which led the government to pull out of nuclear energy.
• Japan also sees a market for its agro technologies which have the potential to flourish in the RFE, given similar climatic conditions.
• The trade ties between Japan and Russia are hindered by the Kuril Islands dispute as they are claimed by both countries.

INDIA

• India is keen to deepen its cooperation in energy, pharmaceuticals, maritime connectivity, healthcare, tourism, the diamond industry, and the Arctic.
• In 2019, India also offered a $1 billion line of credit to develop infrastructure in the region.
• Through the EEF, India aims to establish strong inter-state interactions with Russia.
• Business representatives of Gujarat and the Republic of Sakha have launched agreements in the diamond and pharmaceuticals industry.

EEF AIM

• The primary objectives of the EEF are to increase Foreign Direct Investments in the RFE.
• The sparse population living in the region is another factor in encouraging people to move and work in the Far East.
• The region’s riches and resources contribute to five percent of Russia’s GDP.
• The RFE is geographically placed at a strategic location, acting as a gateway into Asia.
• The Russian government has strategically developed the region intending to connect Russia to the Asian trading routes.
• With the fast modernization of cities like Vladivostok, Khabarovsk, Ulan-Ude, Chita, and more, the government aims to attract more investment in the region.
• Russia is trying to attract Asian economies in investing and developing the Far East.

ISSUES

• But despite the abundance and availability of materials procuring and supplying them is an issue due to the unavailability of personnel.

INDIA NEEDS TO STRIKE A BALANCE BETWEEN EEF AND INDO –PACIFIC ECONOMIC FRAMEWORK FOR PROSPERITY (IPEF)

• The U.S-led Indo –Pacific Economic Framework for prosperity (IPEF) and the EEF are incomparable based on their geographic coverage and partnership with the host countries.
• India has vested interests in both the forums and has worked towards balancing its involvement
• India has not shied away from investing in Russia –initiated EEF despite the current international conditions. At the same time, India has given its confirmation and acceptance to three of the four pillars in the IPEF.
• The IPEF also presents an ideal opportunity for India to act in the region, without being part of the China-led Regional Comprehensive Economic Partnership or another regional grouping like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
• The IPEF will also play a key role in building resilient supply chains. India’s participation in the forum will help in disengaging from a supply chain that is dependent on China and will also make it a part of the global supply chain network
• Additionally, the IPEF partners will act as new sources of raw materials and other essential products, further reducing India’s reliance on China for raw materials.