$42 billion in deals reportedly signed at forum in Far East
Call it mission accomplished: Moscow’s hopes of buttressing its global diplomatic profile and overseeing big-money deals appear to have been fulfilled at the three-day Eastern Economic Forum, which closes today in Vladivostok.
Not only were such global a-listers as Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe, a regular attendee, welcomed by the forum’s host Russian President Vladimir Putin, but over US$42 billion dollars worth of deals were reportedly done on the sidelines.
But, at a time when Russia is pressured by Western sanctions, and state coffers are strained – to the point where Moscow has been forced to implement hugely unpopular pension reforms to make up budget shortfalls – it was not clear what percentage of those deals were foreign investments.
The Eastern Economic forum takes place annually in Vladivostok, the port city on Russia’s far eastern rim. It is designed to lure investment and showcase business opportunities in the country’s vast eastern region. The Russian Far East boasts abundant natural wealth, but suffers from poor infrastructure, a dwindling populace, a harsh climate and under-investment. Inaugurated in 2015, this year’s forum was the fourth and it has had the highest-profile of any to date.
The forum’s visibility this year was boosted by the Vostok (“East”) 2018 war games, which got underway across Siberia and the Russian Far East on the same day that the forum commenced. The drills are gargantuan in scale: 300,000 troops are participating, including contingents from China and Mongolia. They end next week, on Sept. 17.
Putin’s stage management
Russia’s president has a knack for publicity stunts, and Putin grabbed plenty of global headlines in Vladivostok.
The big photo opp came when Xi and Putin were filmed making and eating blinis, or Russian pancakes, together with caviar and vodka. It was Xi’s first visit to the annual forum, signifying the tight relationship between the two leaders at a time when both countries are engaged in strategic and military confrontations with the United States.
Both are opposed to US missile defense systems deployed close to their borders, which they see as tools that offset the Chinese and Russian nuclear deterrents. And while Russia struggles with Western sanctions, imposed following its annexation of Crimea and intervention in eastern Ukraine, and now increasing after the Skripal poisoning controversy in the United Kingdom, China is being hammered by tariffs imposed on its exports by Washington, which is on an offensive against what it considers unfair trade practices.
Putin revealed in a press briefing that Beijing and Moscow plan to use their own currencies in trade deals, dropping their reliance on the US dollar.
Chinese media were glowing in the forum’s aftermath. The Putin-Xi meeting in Vladivostok was “…of far-reaching significance as it cemented mutual trust and friendship and promoted win-win regional cooperation,” said Chinese State Councilor and Foreign Minister Wang Yi, according to Xinhua.
The countries strengthened synergies related to the Belt and Road Initiative and the Eurasian Economic Union, focusing on cooperation in energy, agriculture, scientific and technological innovation, and finance. They also boosted joint research and development in science and technology, Xinhua reported.
Abe shocked by peace deal offer
Japanese Prime Minister Shinzo Abe also attended. He has reportedly met Putin 22 times, with whom he has struck up a relationship as he seeks to resolve long-term territorial and historical disputes with Russia.
In a move that took Japanese officials by surprise, Putin publically proposed to Abe that the two sign peace treaty to end World War II. “An idea has just come into my head,” Putin said during a public Q&A session. “Let’s conclude a peace agreement by year’s end without any preconditions.”
Abe, apparently taken aback, did not immediately respond.
The issue is a long-running one between the two countries. In the final days of that conflagration, Soviet forces stormed into Japanese-occupied Manchuria and North Korea at the end of World War II, seizing a number of islands north of Hokkaido. The two countries have never signed a peace treaty, and Japan continues to dispute the ownership of the Kuril islands that are occupied by Russia.
Japanese media quoted Chief Cabinet Secretary Chief Cabinet Secretary Yoshihide Suga as saying that Putin’s proposal came out of the blue: the issue had not been raised in pre-forum meetings. And a senior Japanese official sniffed, according to the Japan Times, that Putin’s apparently off-the-cuff remark was “unofficial.”
Putin also met South Korean Prime Minister Lee Nak-yon, following his summit with South Korean President Moon Jae-in during the Russia-hosted World Cup. Putin said that Russian-South Korean trade rose 27% last year and 8% in the first half of this year, according to Yonhap news agency.
The Russian president said the two countries want to flesh out key areas of cooperation, such as gas pipelines and rail connections via North Korea – long-debated projects which do not, as yet, appear politically feasible – as well as initiatives in shipbuilding, agriculture and power generation.
Foreign investment not disclosed
While politics stole the limelight, the forum is primarily a political entity. According to Russian news agency Tass, by the morning of the last day of the three-day forum, 175 deals had been done worth $42.07 billion. Some 6,000 delegates visited Vladivostok and they took part in over 100 business-related seminars and fora.
The figure for deals compares favorably to $18.86 billion worth of deals at the first forum, $26.11 billion at the second, and $36.27 billion at the third, Russian Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev told reporters, according to TASS.
The highest profile deal announced at the forum was that signed between China’s flagship e-commerce outfit, Alibaba Group, Russian telco MegaFon and Russian Internet company Mail.ru Group, according to a statement released to media.
Investors in the new entity include Russia’s sovereign wealth fund, which is acquiring a 13% stake in the JV. The move allows Alibaba to expand its presence in Russia’s nascent e-commerce market, but while the statement said the new venture would be valued at $2 billion, it was not made public how much capital Alibaba had invested.
Nor was it clear how many of the deals signed at the forum were foreign investments, and how many were domestic.
TASS noted that the “Asian investment fund” GenFund was investing in the Far Eastern projects of a Russia agro-holdings firm and in a fertilizer plant. But it also noted that 100 SSJ-100 aircraft were being delivered to Aeroflot. Those aircraft are made by Russian aerospace firm Sukhoi and Aeroflot is the Russian national carrier.