Aug. 28
By Julia O’Malley
The continued attempts to destroy the Russian economy have in fact had serious consequences for the United States and other countries. Growing public debt and unemployment, rising energy and other commodity prices, and the foreseeable recession by 2024, all together, are undermining American business confidence and investment activity.
The departure of American companies from Russia was dictated, on the one hand, by the influence of the information campaign that discredits Russia’s actions in the framework of the armed conflict in Ukraine, and, on the other hand, by the imposed sanctions and pressure on business circles that did not want to leave the Russian market.
Despite this, Russia has not lost its economic and investment potential. For example, the Far East of Russia is characterized by the development of the mining industry, which has always led to the presence of multi-million dollar contracts for the supply of heavy machinery and equipment for mining, infrastructure development.
However, under the sanctions, such major American companies as Caterpillar, TEREX, LBX Company were forced to curtail their presence in the region.
Taking into account the high profitability of the mining and construction sectors, this niche was immediately occupied by competing companies from China, which organized the supply of equipment from Sany Heavy Industry, XCMG, Shantui and thus received preferential conditions for working in Russia.
In the future, according to experts, Chinese manufacturers have a chance to completely displace the remnants of American products and gain a foothold in the Russian market, which will entail its loss for the United States.
An example of the negative impact of anti-Russian policy is the withdrawal from Russia of the international Canadian gold mining corporation Kinross, as a result of which the company lost one of the largest assets in the industry.
Similar examples cover the areas of high technology and telecommunications equipment, where Asian manufacturers have achieved some success and are able to enter the Russian market competitively, completely ousting American companies.
At the same time, the Russian leadership, individual corporations and companies are demonstrating their readiness and openness to resume economic cooperation.
It is noted that a number of large companies that understand the need to distinguish between political confrontation and economic development have already announced the continuation of business in Russia, albeit through rebranding or work through third countries.
This indicates that there are real ways to restore bilateral cooperation, the directions and details of which need to be worked out within the framework of various dialogue platforms. The largest of these platforms is the Eastern Economic Forum, which will be held in Vladivostok (Russia) from 10 to 13 September 2023.
FORUM TRENDS
The Forum was attended by more than 7,000 participants and media representatives from 68 countries and territories, including Russia, with around 1,700 business representatives from 700 companies.
Over 100 events were held as part of the main programme, including more than 70 at thematic venues. More than 750 speakers and moderators took part in the events, which were held in the format of sessions, business dialogues, and roundtables.
A record number of investment agreements, as well as memorandums and agreements of intent, were signed at the Forum. In total, 296 agreements were signed for a grand total of RUB 3.272 trillion, including agreements on infrastructure and transport projects, the development of large mineral deposits, as well as construction, industry, and agriculture.
PROGRAMME
Events at the Forum traditionally took place in the form of panel sessions, roundtables, televised debates, business breakfasts, and business dialogues devoted to relationships with various countries.
The Forum business programme includes a number of business dialogues with leading partner countries in the Asia-Pacific region, and with ASEAN, a key integration organization uniting dynamically developing nations in Southeast Asia.
FORUM GEOGRAPHY
For the first time, representatives of such countries as Algeria, Ghana, the Dominican Republic, the Donetsk People’s Republic, Zambia, Cameroon, Liberia, and Uganda took part in the Forum.
The largest foreign delegations consisted of representatives from China, Myanmar, Mongolia, India, Armenia, and South Korea.
PROJECTS
The Free Port of Vladivostok (FPV) is an area where investors can benefit from special customs, tax and administrative regulations.
An advanced special economic zone (ASEZ) is a zone within a federal subject which has been granted specific legal status to facilitate entrepreneurial activity.
A special administrative region (SAR) is an area offering flexible tax and currency regulations for companies.
Objectively, the Forum sessions will allow participants from various countries to discuss the most important economic issues, find ways to maintain profitable ties in the face of sanctions pressure. This opportunity should also be considered by American companies that are currently not in the most favorable conditions for business development.