Russia's 2023 International Economic Agenda—A Glimpse

TASS has interviewed Deputy Minister of Foreign Affairs Alexander Pankin, initially asking him what might be expected from Russia's 2023 EAEU Presidency, then asking about several other questions about Russia's economic foreign relations, most notably Russia's relations with the IMF and WTO. I found this to be very important and educational, while the machine translation seemed better than usual.

Question: Could you tell us about the integration plans within the EAEU for the current year? What will Russia focus on as a presidential country in 2023?

A: Cooperation within the Eurasian Economic Union is developing quite dynamically. In the current geopolitical and economic situation, joint work on the EAEU platform to a certain extent made it possible to minimize the negative consequences of sanctions and restrictive measures by a number of Western countries against two member states - Russia and Belarus - and to increase the stability of the economies of the Union states. Important steps have been taken to support Eurasian business and citizens.

In his work within the framework of Russia's presidency of the EAEU this year, key attention will be paid to the implementation of the priorities that were formulated and outlined by President of the Russian Federation Vladimir Putin in his Address to the Heads of the EAEU Member States. Among them: ensuring energy and food security, as well as technological independence of key sectors of the economy, accelerating digital transformation; creation of a common financial market; removing regulatory and trade barriers; development of transport infrastructure; climate agenda; increasing scientific and youth exchanges. The priority seems to be the launch of the process of preparing new long-term planning documents that will determine the main vectors of integration cooperation for the period up to 2030 and 2045.

The development of the international agenda of the EAEU will continue, including in the context of popularizing the Union not only on the internal, but also on the external contour. It is important to build mutually beneficial and equal cooperation between the five countries and foreign partners and international associations, expand contacts with the states of the Asia-Pacific region, the Middle East, Africa and Latin America. Our association should become one of the key centres for the formation of the Greater Eurasian Partnership.

Taking into account the proposals of Russian ministries and departments, a program of events of the Russian chairmanship has been formed. It includes about 70 meetings, conferences, round tables devoted to various aspects of the development of cooperation within the Union. For example, in connection with the meeting of the Supreme Eurasian Economic Council (May 24-25, Sochi) with the participation of the heads of the EAEU member states, the Eurasian Economic Forum will be held. "On the sidelines" of the Eurasian Intergovernmental Council and the Council of CIS Heads of Government on June 7-9, Sochi will host the III Eurasian Congress, the II Youth Forum of the CIS and the EAEU, as well as the international exhibition of cooperation projects "Eurasia is our home".

Question: When are you planning to conclude agreements on free trade zones between the EAEU and Iran, the EAEU and Egypt? How is similar work with Israel and India going? When will FTA negotiations with Indonesia and the UAE be launched?

A: The topic of concluding trade agreements with third countries is in constant focus of attention of the Eurasian Economic Commission (EEC) and the EAEU member states. At the same time, it is not easy to name specific deadlines for the conclusion of an agreement, since the preparation of such documents is a long process that requires serious analysis.

The most intensive negotiation process is underway on a full-fledged free trade agreement with Iran: since November 2021, six rounds of consultations have been held. A promising task is to complete negotiations this year and sign the agreement.

The implementation of the Interim Agreement of the EAEU-Iran of May 17, 2018, which provides for the liberalization of trade on a limited range of goods, has already favorably affected the mutual trade of the parties. During its operation (entered into force on October 27, 2019), the trade turnover of the Union states with Iran doubled to $ 5 billion. United States.

The preparation of a similar document with Egypt is progressing steadily. In October 2022, the fifth round of consultations was held, which contributed to further rapprochement of the positions of the parties.

In the framework of cooperation with Indonesia and the UAE, I would like to emphasize the constructive attitude of all interested parties, thanks to which decisions to launch negotiations were made very quickly. The first round of consultations with partners from the UAE is scheduled for early March this year, from Indonesia - for the end of March - the beginning of April this year.

Recently, contacts between the EEC and India on this issue have intensified, but it is too early to talk about specific agreements.

The negotiation process with Israel after six rounds was practically "frozen" several years ago due to the lack of real benefits for the Union from the adoption of such an agreement, taking into account the position of Tel Aviv on the terms of its conclusion.

Question: Does Russia plan to leave the IMF and WTO, taking into account the Sanctions Policy of the West and the Fund's financial assistance to Ukraine? Why are we currently maintaining membership in these organizations? What negative consequences could such a step have for the Russian economy?

A: The Russian Federation has been a member of the International Monetary Fund since 1992.

Starting in 2000, Russia stopped attracting the Fund's credit resources, and in 2005 prematurely repaid its debt, moving from the role of a recipient of funds to a full-fledged partnership. Since the Russian Federation has fulfilled all its obligations to the Fund, it is not able to make demands on the economic policy of our country, and its recommendations are not binding on us.

Since 2005, Russia has participated in various financial operations of the Fund, including the financing of credit programs, development assistance programs, and debt cancellation of the poorest countries. The IMF provided our country with advisory support, including technical assistance, seminars, and advanced training of government officials. Russian relevant agencies periodically contact the Fund on the economic situation in the country and forecasts for the development of the world economy. All these issues have been and are being discussed at the Foundation with our participation and taking into account our interests.

From a foreign policy point of view, we proceed from the expediency of continuing full-scale participation in the activities of such a large and influential international financial organization as the IMF, which is an important element of the post-war economic world order, as well as a specialized agency of the UN. This is of both important image importance and a purely practical interest in terms of access to advanced international financial expertise and involvement in the process of coordinating global economic initiatives and projects. Thanks to its membership in the IMF, Russia has the opportunity to participate directly in the work of the International Monetary and Financial Committee, which is a key advisory body to global financial governance.

Participation in the work of the Fund allows us to use its platform to convey to the world community the Russian position on key economic issues of our time, including paying attention to the increasingly clear inconsistency of the current model of the global financial architecture and its excessive politicization.

Russia's demonstrative initiative withdrawal from this structure would most likely be presented by our ill-wishers as a refusal to support countries in need and from the global development agenda as a whole. In addition, we should not forget that the Russian multi-country directorate of the IMF includes Syria, whose interests we actively defend.

It should also be borne in mind that membership in the IMF, regardless of our attitude to this structure and the existing disagreements, is still to a certain extent a "quality mark" recognized by the world community for the world's leading economies.

As for the World Trade Organisation, the issue of withdrawal from this structure was indeed discussed in connection with the relevant initiatives of a number of deputies of the State Duma of the Federal Assembly of the Russian Federation. At the same time, to date, the position of the relevant agencies, including the Russian Foreign Ministry, has not changed – we still consider the WTO an important and uncontested platform for defending Russia's trade and economic interests. Full membership in the Organization allows our country to participate in the development and improvement of the rules of global trade, promoting and protecting national priorities in this area. Active work at the WTO site contributes to the implementation of tasks related to strengthening the presence of domestic economic operators in traditional and new foreign markets, expanding the range and geography of Russian exports.

A possible withdrawal from the WTO would mean a de facto withdrawal from the processes of the international division of labor, would lead to a decrease in involvement in global production and marketing chains, and would negatively affect the level and quality of foreign economic relations. No state in the history of the GATT/WTO has renounced membership in the organization. Given the high level of Russia's integration into the world economy, such a radical step could lead to artificial self-isolation of the national economy.

Question: How do you assess the economic consequences for Russia from the introduction of the oil price ceiling – now and in the future? Can our country in the future receive significant profits due to the growth of oil consumption, in particular, in the Asian region, where we have redirected our supplies?

A: In view of the decision of the EU countries to abandon the import of Russian oil and petroleum products, the Russian fuel and energy sector has reoriented towards closer cooperation and trade with friendly countries, in particular the Asian region, where the demand for energy resources is growing at a faster pace. Nevertheless, it will take some time to establish full-fledged ties and create additional infrastructure to serve the growing needs of the oil and gas industry in the Asian direction.

The Russian Foreign Ministry is counteracting the attempts of Westerners to draw friendly states into an economic confrontation with the Russian Federation. Washington and its allies regularly make attempts to expand the circle of countries that support restrictive measures introduced in circumvention of the UN Security Council, including the "ceiling on prices" for oil and oil products.

The application of discriminatory pricing in relation to Russian hydrocarbons will lead to the cessation of their supply, as provided for by the Decree of the President of the Russian Federation of December 27, 2022. Western countries are trying to take advantage of their monopoly position in the market of financial and insurance services to prevent the sea transportation of Russian oil. At the moment, there are no significant economic consequences from the introduction of conditional restrictions.

In coordination with the Ministry of Energy of Russia, work is being carried out with the main importers of our oil. At this stage, energy cooperation and trade with friendly countries continues without political reservations on their part.

Question: Do the BRICS partners show interest in creating a single currency of the association? Can we expect practical results in this area by the end of this year?

A: It is no secret that the current international financial system today serves primarily the interests of the United States and its allies. At the same time, the dollar, which is its cornerstone, has been turned from a reserve currency by Washington itself into a weapon. There is no doubt that the unlawful deprivation of Russia of the opportunity to dispose of its dollar holdings sent an unequivocal signal to other countries: the US currency has become a high-risk financial instrument.

In this regard, more and more countries are thinking about increasing the role of alternative currencies to the US dollar in mutual settlements. This trend can no longer be reversed. Our BRICS partners are well aware of this. Brazilian President L. Lula da Silva recently announced the initiative to create single currencies within the framework of the association when used in mutual settlements. Prior to this, At the XIV Summit of the Five (June 23-24, 2022), President of Russia Vladimir Putin proposed to think about the possibility of establishing an international reserve currency based on a basket of currencies of the BRICS countries. And, I must say that the share of non-dollar transactions between the BRICS countries is steadily growing.

In this context, it is not surprising that there are ideas to create a single currency of unification, however, it must be admitted, there are certain difficulties in this matter. Thus, the transition of two or more countries to a single currency will require the creation of a new emission center and regulator (an analogue of the European Central Bank). However, agreeing on the order of its formation and the scope of powers, as well as the location, can be quite a difficult process. As you know, the transfer of rights to money emission to a supranational body limits the ability to pursue an independent macroeconomic and monetary policy.

It would be more pragmatic to consider the hypothetical BRICS currency not as a replacement for the national one, but as a new promising multilateral instrument based on a basket of currencies of the member countries of the association. One of the previously proposed models involves the functioning of the BRICS currency as a reserve currency by analogy with the special drawing rights issued by the IMF. But this option also requires in-depth study by the relevant Russian state bodies and their partners in the BRICS.

At the same time, it is important to understand that our association is not integrative, that is, it is not aimed at forming a single economic space with unified norms in the financial, economic, migration and other spheres. BRICS is a multifaceted strategic partnership, a sought-after platform for rapprochement of positions on a wide range of interstate dialogue. This is a very democratic format, no one imposes anything on anyone in it, there is no rigid bloc discipline inherent in archaic military-political alliances. The Five are united by a positive agenda aimed at creating favorable economic and political conditions for the internal development of our countries and improving the well-being of their peoples.

Question: Is it possible to create a free trade zone on the basis of BRICS, BRICS Plus? How does Russia assess this prospect? Are there such discussions within the framework of the merger?

A: The issue of creating a free trade area (FTA) on the basis of BRICS or in the expanded format "BRICS Plus" is not on the agenda at this stage. This is not an easy task. Let me remind you that Russia has a common trade space within the EAEU. South Africa participates in the African Continental Free Trade Area. Brazil is a member of MERCOSUR. This is if we go over the top, not taking into account the relevant bilateral agreements of the BRICS members with other associations, such as India's agreement with the ASEAN countries. Regardless of the obvious difficulty of agreeing on all possible nuances of the creation of the Five FTA, taking into account the existing multilateral agreements, the launch of a discussion on this topic should be preceded by a comprehensive analysis of the economic feasibility and added value for all participants from the creation of such a mechanism.

Question: What are Russia's expectations from working with APEC in 2023? What goals does Russia set for this year? In general, with which Asian countries is it now a priority for Russia to establish or deepen cooperation?

A: The Asia-Pacific region has traditionally been one of the key areas of Russia's foreign policy. Today it is a major center of world trade and economy, a natural point of attraction in international relations.

Russia's cooperation with the economies of the Asia-Pacific region is characterized by progressive dynamics and specific content, as evidenced by the stable growth of Russia's foreign trade turnover with partners in the region. In recent years, even with the effects of the COVID-19 coronavirus pandemic, we have reached record levels with a number of countries. With China, for example, in 2022, the value of mutual supplies increased by 29%, exceeding the figure of $ 190 billion. United States.

Russia occupies a leading position in the APEC forum and is the author of many popular initiatives. We are setting ourselves up for further substantive practical work within the framework of APEC. First of all, we are talking about strengthening the multilateral trading system under the auspices of the WTO. Russia is also a dynamic supplier of hydrocarbons, food and fertilizers in the region. We intend to expand the range of our commercial turnover primarily through goods with "high added value". We will promote Russian technologies, digital solutions, engineering products and agricultural products within the framework of APEC.

It is important to protect such cooperation from illegal restrictive measures by Western countries, primarily the United States and the EU. It is sad that they continue to unwind the spiral of geopolitical confrontation. Additional risks are provoked by the United States, the EU and the countries of the "seven": one-sided forms of energy transition, inflation of the "printing press", illegitimate barriers to trade in Russian food and fertilizers. This accelerates the growth of prices for the basic needs of the population and business - energy and food, "hits the wallet" of ordinary citizens. We will strive to overcome these challenges by creating, in coalition with other countries, alternative trade, transport and settlement mechanisms that do not depend on Western whims. We mean, in particular, China, the ASEAN countries and Latin America.

We will actively use the creative potential of President Vladimir Putin's initiative to create a Greater Eurasian Partnership, which involves building a broad integration contour with the prospect of participation by the EAEU, the SCO and ASEAN.

We are aimed at making a practical contribution to the work of APEC. We plan to pay special attention to the formation of convincing agreements that would be able to give an additional impetus to the global economy and international development. This includes, among other things, the promotion of initiatives and projects in the field of trade policy, global supply chains, carbon pricing, digitalization, development of remote and rural areas, and women's entrepreneurship.

We look forward to maintaining the non-politicised nature of the forum's work on the priorities of the forum, which were agreed upon with Russia's active participation. Its rich agenda for this year – interconnectedness, innovation, ecology, sustainable development – fully coincides with Russian interests.