Tuesday, January 26, 2016

Kremlin has Only Itself to Blame that So Many Countries Want to Bypass Russia, Inozemtsev Says

Paul Goble

            Staunton, January 26 – Vladimir Putin’s proclivity for using trade as a political weapon is why all countries along his country’s periphery as well as many further afield are seeking to develop trade routes that bypass the Russian Federation lest they fall victim to that tactic in the future, according to Vladislav Inozemtsev.

            In a comment for Ukraine’s “Segodnya” portal, the Moscow economist says that a recent example of the Kremlin policy backfiring can be seen in the response of Kazakhstan and Ukraine to Russia’s decision to block the transit of goods between those two countries (segodnya.ua/opinion/inozemtsevcolumn/kreml-vytesnil-shelkovyy-put-v-obhod-rossii-686058.html).

            Indeed, Inozemtsev argues, Moscow’s latest use of economic sanctions against its neighbors for political goals has likely “put an end to one of the most ambitious geo-economic projects of the Kremlin,” a new silk road between China and the European Union passing through the Russian Federation.”

            By blocking trade between Kazakhstan and Ukraine, “Russia put Kazakhstan, its main partner in the Eurasian customs union in a difficult position” and prompted Astana to reflect just how bad a situation it could find itself if Moscow began to view it as “disloyal.”  It could break Kazakhstan unless Kazakhstan finds alternative trade routes.

            “Of course,” Inozemtsev says, “Moscow’s decision contradicts the rules of the Customs Union, but the Kremlin has long been accustomed to looking down on its allies,” and they recognize that. And it contradicts Moscow’s own interests because it has strengthened the hands of those who want to participate in China’s Silk Road project that bypasses Russia altogether.

            Not long  ago Russia was “extremely optimistic” that it would get its way on the path of that project, but now it is clear that Russia won’t have constructed the necessary infrastructure until 2020 – and as planned now, that infrastructure may in fact be inadequate to the task.  China and the others can move more quickly, and now they are doing so.

            The Russians also thought they had a lock on this because the Russian route would have to pass through only two tariff borders, with the Customs Union and then the European Union. But because of Russian pressure, the others are cooperating in ways that have eliminated whatever advantage that situation earlier appeared to confer.

            It is unlikely that the bypass route will ever carry as much as its organizers hope – sea routes will still play an important role – but the Caspian one will cost Russia at least 10 to 12 million tons of cargo every year and cost Moscow one of the levers it has been counting on to keep its neighbors in line.

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