Eastern Economic Forum

In News: Russia hosted the seventh Eastern Economic Forum (EEF) Vladivostok from September 5 to 8. The four-day forum is a platform for entrepreneurs to expand their businesses into Russia’s Far East (RFE).

About RFE:

• The region encompasses one-third of Russia’s territory and is rich with natural resources such as fish, oil, natural gas, wood, diamonds, and other minerals.
• The region’s riches and resources contribute to five per cent of Russia’s GDP. But despite the abundance and availability of materials, procuring and supplying them is an issue due to the unavailability of personnel.

About EEF:

• The Eastern Economic Forum was established in 2015 to encourage foreign investments in Russia’s the Far East.
• As an annual gathering, EEF displays the economic potential, suitable business conditions and investment opportunities in the region.
• As of 2022, almost 2,729 investment projects are being planned in the region with a focus on infrastructure, transportation projects, mineral excavations, construction, industry, and agriculture.

Trading partners:

• Russia and China: This year, the Forum aimed at connecting the Far East with the Asia Pacific region. The two countries share a 4000-kilometer-long border, which enables them to tap into each other’s resources with some infrastructural assistance. China is the biggest investor in the region (90% of total investments) in light of promoting the Chinese Belt and Road Initiative and the Polar Sea Route in the RFE. The Trans-Siberian Railway, supply of natural gas and a rail bridge has further helped Russia and China in advancing trade ties.
• Russia and South Korea: has invested in shipbuilding projects, manufacturing of electrical equipment, gas-liquefying plants, agricultural production, and fisheries including intention to inject $2 billion in the RFE in a span of three years.
• Russia and Japan: Japan depends on Russian oil and gas resources also sees a market for its agro-technologies. In 2017, Japanese investments through 21 projects amounted to $16 billion. Japan identified eight areas of economic cooperation and pushed private businesses to invest in the development of the RFE. Challenge of Kuril Islands dispute exists between both countries.
• Russia and India: Prime Minister expressed the country’s readiness in expanding trade, connectivity, cooperation, and investments in Russia especially 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 a strong inter-state interaction with Russia. Business representatives of Gujarat and the Republic of Sakha have launched agreements in the diamond and pharmaceuticals industry.

What does the EEF aim for?

• The primary objective of the EEF is to increase the Foreign Direct Investments (FDI) in the RFE.
• The region encompasses one-third of Russia’s territory and is rich with natural resources such as fish, oil, natural gas, wood, diamonds, and other minerals.
• The sparse population living in the region is another factor for encouraging people to move and work in the Far East.
  • The region’s riches and resources contribute to 5% of Russia’s GDP. But despite the abundance and availability of materials, procuring and supplying them is an issue due to the unavailability of personnel.
• The RFE is geographically placed at a strategic location; acting as a gateway into Asia. The Russian government has strategically developed the region with the aim of connecting Russia to the Asian trading routes.
• The Ukraine invasion is a worrying issue as it affects the economic growth of the country. However, Russia believes that it can survive the economic crisis and the sanctions with the help of China and other Asian powers.
• The coming together of countries like Myanmar, Armenia, Russia, and China seems like the forming of an anti-sanctions group in the international order.

Indo-Pacific Economic Framework for Prosperity (IPEF):

Will India be able to achieve a balance between the EEF and the IPEF?

• The U.S.-led Indo-Pacific Economic Framework for Prosperity (IPEF) and the EEF are incomparable based on its geographic coverage and the 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 the 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.
  • IPEF also presents an ideal opportunity for India to act in the region, without being part of the China-led Regional Comprehensive Economic Partnership (RCEP) or other regional grouping like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP).
• The IPEF will also play a key role in building resilient supply chains. India’s participation in the forum will help in disengaging from supply chains that are 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 material and other essential products, further reducing India’s reliance on China for raw materials.
• India, Japan, and Australia last year also launched the Supply Chain Resilience Initiative (SCRI), a trilateral initiative of countries in the Indo-Pacific (IP) region to create a virtuous cycle of enhancing supply chain resilience with a view to eventually attaining strong, sustainable, balanced, and inclusive growth in the region.

Way forward:

• India has vested interests in both the EEF and the Indo-Pacific Economic Framework (IPEF) and has worked towards balancing its involvement.
• India should also balance its membership of multiple regional and global fora like IPEF, EEF, SCRI, QUAD etc, encompassing economic and strategic interests, in pursuit of its new policy of ‘multi-alignment’.

Source: The Hindu