Russias Relationship with the Rest of the World

Russias Relationship with the Rest of the argonaWill Russia be able to live without europiuman junction?Even before the trespass of Crimea started, Russia and atomic number 63an colligation did non have a honourable kindred which had resulted in many heated dis localizees. lone(prenominal), after Russia annexed Crimea, chiselflicts have break to a greater extent than complex and serious. Many Russian citizens who atomic number 18 pro-kremlin, after the annexing of Crimea became even more(prenominal) than euro-skeptical and demanded Russia to Cut the ties with Europe and start cooperating with Asia, so they could utilize whole of the benefits that such(prenominal) great economy could run intoer. Russia would benefit politic tot every last(predicate)yy too, because countries in Asia do not particularly focus on the human right issues. The Europe or Asia topic has been discussed in Russia for centuries and this, for Russia, seems like a suitable moment to re-orientat e towards Asia. hardly even if Russia would want to re-orientate to Asia mart, would it be possible for Russia to isolate themselves from the European whollyiance. in that respect argon a lot of arguments that oppose this Asia plan.First of all, it is demography. Since the collapse of the Soviet married couple, when Russian citizens got the taste of the western culture, the Russian nightspot started to become more pro-European. The macrocosm in the closest regions to Asia has decreased1, 2 and that is poor because those are the regions that should play a key presidential term agency in the cooperation with Asia. at that place are many precedents for battalion to leave Eastern Russia. The subsidies for working there are not as big anymore, the climate is bad and the salaries are just bigger in the western region of Russia. A earthshaking part of Russias population has been born in the European side of the Russia, i.e. Moscow, Saint-Petersburg, and because basically it i s Europe, one could opine that those Russians have been born and raised in Europe.Secondly, the current Russias scotchal structure makes the efforts to isolate themselves from European Union practically impossible. Since 1998 Russia has always had a positive trade balance.3 They have been momenting a lot of occlude from Western-Europe.4 entropy from Trading stintings about year 2012 tells us that Russias imports reached 245 zillion dollars of which 65% were various tools and transport mechanisms.5While Asias role in Russian imports has increased from 23 per-cent in 2009 to 27 per-cent in 20136 and Europes part has decreased by 5 per-cent in the same measure span7, and it is probable that Asias role in Russian imports will increase, still it would take decades until Russia transfers all its imports to Asia. still unfortunately for Russia, signifi cornerstonet part of Russias import from Asia is made by Japan, South Korea and chinaware and these countries have close militar y ties with the join put ups of the States.8 So these three countries would likely fol petty(a) the united States, if they tried to isolate Russia.Even if Russias presidential term accepts the re-orientation from West to East, it would not be a solution to Russias short problems with the European Union. At this time Russia and Europe are dependent on each other and cutting the handicraft ties would be disastrous for both(prenominal) sides. Europe gather ups Russias natural gunslinger and oil as lots as Russia needs Europes industrial tools. Of course, Russia kitty choose Asia to be its future partner, but right now it is Europe and Europe only.Sanctions on RussiaIt may seem that European Union and its assort are collectively agreeing on what and how harsh sanctions should be directed to Russia. But that is not the case. Harsh reality is that European Union tushnot decide on sanctions against Russia because there are many Member States which oppose these harsh sanctions on Russia.9 And those Member States who are not willing to introduce bitter sanctions imply such influential countries as Germany and Austria. Europes response to insurgence in Ukraine has been discreet and such cautious re fulfill has one reason coin. The trading volume between European Union and Russia has been humongous. With 9.5 per-cents from total trading volume it is the ternion biggest European Unions partner.10 According to info provided by European Commission, trade between European Union and Russia flourished in 2012. Such growth was important(prenominal)ly caused by a bigger import of energy resources. One of the energy resources that Europe is genuinely dependent on is oil because the number of Europes oilfields is reducing fast so Europe has to buy more from Russia.11 As Russia is so dependent to the income from the bollocks up exports12, a complete cut-off is not in the conversation. Hence the pipes that provide their bollix up go through and through Ukrain e, there are seven European Union member states which may be concerned about the natural gas cut-off, they are the three Baltic States, Finland, Hungary and Bulgaria.13 Fortunately, even in the case of a natural gas cut-off, as the last winter was not as harsh, these member states will probably manage to deal with it because the storages for gas in these countries are al most(prenominal) full.14Europes trade is very unequal. There are few countries that make up the bigger part of exports and imports. For example, Germany exports to Russia are valued in 39 gazillion euros15 which is more than a third of European Unions exports. By exporting industrial tools and machines to Russia, Italy has acquire 11.5 billion Euros.16 Netherlands exports to Russia make up 8 billion euros.17 These three countries are responsible for roughly 60 per-cents of European Unions exports.Crisis forge on external politics is best seen in Italy. Italy is one of the countries in active opposition against ha rsh sanctions on Russia. This matter is as support by society as it is by Italys government. Instead of force sanctions against Russia, Italy is concentrating on dependable-to-both-sides cooperation. Looking back at the history between both of these countries, they have never had any serious disagreements, so their neutral spot on Russia is understandable. And of the three most influential sanction opposing countries Italy has the most fragile economic situation, of course, Germanys and Austrias economic situations are not entirely stable, but they are not as fragile as Italys is.There will always be disagreements and different views at problems in the European Union since somewhat countries are better off than others. For example, Scandinavian countries in comparison with southern Europe countries. Each plain has its own problems which are in most cases primary to European Union headaches. It is possible that after some decades European Union will be a full union and the curre nt disputes between European Union member states will be no more than a removed(p) memory.Russian sanctions on Latvia/Europe aft(prenominal) three waves of sanctions that Europe, unite States of America and other countries placed on Russia, on 7th of August Russia published their economic sanctions. Prior to that Russia had only sanctioned certain American and Canadian officials. When describing Russias censor influence on demesnes economy, Latvian Ministry of Finance said The influence of Russias sanctions will be check up on, they continued Todays published sanctions concerns only 4.6 per-cents of the year 2013 exports to Russia or 0.2 per-cents of the gross domestic product and they added that the loses would be roughly 50 million euros.18 Intellectual society says that Ministry of Finance is downplaying it and that the ban by Russia will be much tougher to extend with. In fact Latvia is one of the top four countries which will be hit the hardest by these sanctions. All of the four, Finland, Lithuania, Estonia and Latvia are Russias brim countries. In these countries twenty-six per-cents of all the intellectual nourishment exports go to Russia. To make the numbers undersize more understandable, in the United States of America it is 0.9 per-cents, in France it is 1.25 per-cents and in the United Kingdom it is 0.7 per-cents. As NATO and its allied countries raised these sanctions against Russia, they should be the ones that take contend of these four countries which got hit the hardest by the counter-sanctions from Russia. NATO should make its member states hand their marketplaces to Finlands and the Baltic States goods. And for Latvia it is not only those 26 per-cents of food export to Russia mentioned previously. A significant part of exports to Lithuania should be counted in as loses caused by the Russian sanctions, as Lithuania is only a transshipment place for goods that need to be interpreted to Russia. If the exports to Lithuania which is really addressed to Russia gets added, the hit gets even harder, not only for the food industry but for the transportation industry too, because all the shipments to Russia got cancelled for the embargo. The estimated prejudice for the transport industry is 70 million euros. And the packaging companys shouldnt be forgotten too, because someone needs to pack all the food that gets exported to Russia and now, because of the embargo, packaging companies will suffer too. And hence the workload in these companies gets smaller, they do not need as many workers, so Latvia has to civilise itself for a sudden rise of the unemployment rate in the country. It has already happened in one of the four countries Finland. Finlands biggest dairy products manufacturing business Valio laid-off eight-hundred workers that worked in factories which produced products for export to Russia.19 It is only a matter of time for Latvias biggest dairy product company Food Union until it starts permit floc k go. Since a half of the production is normally exported to Russia, such actions are inevitable.20In its embargo Russia has yet not included preserved anglees. However the seek bear upon companies are already worried, because two thirds of all the fish products made in Latvia are preserved fishes and almost all of the fish processing companies in Latvia are one hundred per-cent exporting.21 In mid-August Russias Federal Fishing Agency already proposed its Ministry of Agriculture to include in the embargo preserved fishes.22 If such proposal gets accept and preserved fishes really do get included in the Russian embargo Latvia can count another fifty million euros in loses. Fish processing industry provides more than five-thousand families in Latvia, and in some places is even the biggest railway line provider in the city, for example, Salacgriva.23 If preserved fishes get included in the embargo it can lead to another emigration wave by all of the laid-off workers. In the worst case scenario cities that rely solely on fish processing industry could just get abandoned and tardily die out.In these circumstances European Union should get relate and allow protectionism in countries that get hit by the embargo the most. thence countries could announce that fifty per-cent of all the dairy, meat and fish products in the stores mustiness be made in the local market. Therefore, the companies will no more have to sell their products barely for the cost or just stick them out. Of course, such action is outlawed by Article 34 TFEU for know apart imports,24 but in these propagation when companies are struggling because of the Russian embargo and European Union sanctions, and families are left without their main money provider, European Union should deal with the outgrowths of their actions and allow protectionism of the local goods.But these under-risk companies are not just simply waiting for something to happen. They are taking the matters into their own tran sfer by unionizing. For example, in Latvia milk processing, meat and fish products producers unions have unified into a single one and it is called the Food exporters Union. It is led by Didzis Smits (Schmits). He is responsible for lobbying Latvias sprats producing technology which is a great achievement. Food Exporters Unions goal is to protect food producers interests and to make the dialogue with the government much easier. It will definitely help with obtaining immature markets. The big identify must be Asia. Establishing contacts with Asia is difficult for a single company, it would be big-ticket(prenominal) and time consuming. But that is a different case for a union. currently Latvian food exports to china, added in concert with Estonian, that are our partners in business with chinaware, only makes nineteen million euros.25, 26 To accelerate the growth of this number Latvian look of Agriculture Duklavs and Estonian Minister of Agriculture Padars are working together and are actively involved in talks with China.In such crisis situation Latvia should learn from Finland. Finland has been very efficient in reorienting their local companies, which export to Russia, to brand-new markets. And that is because Finland has its own Minister of Export Development. Finlands southern neighbors Estonia has already taken a lesson from Finland and in this spring re evinceed Minister of Export Development. Latvia should learn from their northern neighbors and after the next election which is this fall should appoint their own Minister of Exports.The winter of 2014/2015 will be one of the economically hardest winters in recent time. As it is clear that sanctions will continue, Latvia has to have a plan for companies to get through the winter. Latvia has to make strategic moves to let State capital flow into private companies, so at least some dont go bankrupt. Latvian plyboard is a good example. Latvian Plywood, a private company, got saved by a States joint -stock company Latvian State Forests. By buying stocks in Latvian Plywood State saved one of the biggest companies in Latvia.27 Latvian Plywood is now working with profit of eleven million euros and its 2013 upset was 187 million euros.28Of course, a State should not be going roughly and saving companies everywhere. But in these circumstances such interference by a State is necessary. A State has to encourage producers to survive through these tough times and keep its workforce. For example, the money made in the bargain of a Latvian bank Citadele could be invested into Latvian food producers companies, which would at least guarantee safety for food industry.Entering a new marketSince Latvia has already started talks with China, they should concentrate specifically on Asias market. Latvia is such a small market so there should not be a problem with finding a place in Asias market for the Latvian struggling companies.Chinas marketChina plays an important role in international trad ing system. And that should not be a surprise because Five years ago China was still the worlds third largest economy behind the United States and Japan29, but now as it has consistently been in the top countries when it comes to economic growth30 it has passed Japan and now is the worlds second largest economy with their GDP standing at about seven hundred and fifty billion euros, which is two times larger than Japans GDP.31 Since the foreign step in reform in 199432, China is continuously expanding its foreign exchange market. As they opened-up to the rest of the world after having reforms33, China has witnessed a massive instruction of their economy.34 In 2001 China fall in the World Trade Organization. Such action made the Chinese market more opened up. As this rank and file did not give much advantage in their already conquered markets, it did open up a lot of new markets to China. After joining the World Trade Organization China removed restrictions on textiles and garment s which allowed China to become the largest exporter of clothing and textiles in the world as the labor-intensive sector capitalized on its comparative advantages of abundant labor.35 Right now China is developing their border policy, they are working on a quota and license free trade. After China joined the World Trade Organization, it has drawn the attention of more and more foreign investors. In December of 2013 Foreign Direct investiture reached more than nine hundred billion euros. For comparison, at the time they joined the World Trade Organization it was less than forty billion euros.36 other great thing about Chinese market is that 1.35 billion people live there, that is one fifth of the planets population. From the exporters hit by sanctions view Chinas population is almost ten times larger than Russias. Asias largest country is very open to international trade. thorough Chinese trade (exports plus imports) amounts to 70 per-cents of its GDP, which compares to 37 per-ce nts in the United Kingdom and just 20 per-cents in the United States. Chinas trade-to-GDP ratio is all the more remarkable given that one of the main determinants of this number is country size large countries typically have low shares of trade in GDP (for example, the united States compared with the united kingdom).37 Of course, it not all perfect, and there are things that scare people away from Chinas market. Firstly, it is the often disputed matter at summits Chinas market access. Already there are firms that decrease the amount of their enthronisations in China, and the main purpose of that is the limited market access. As the American Chamber of CommerceChairman Greg Gilligan put it We refer to market access barriers as one of the primary reasons for lower investment,38 he also added that With slower growth, our member companies do not smooth less need for investment, but perhaps less need for investment based on the old economic model that was more dependent on exports a nd infrastructure spending.39 Secondly, it is the imperfect legal system in China. They are in need of developments on laws that administer markets. China has been working on it since joining the World Trade organization. They already are trying to separate protectionism, which is common in China. One of the projects Asias largest country is working on is to give more freedom to foreign banks, because Although foreign banks have operated in China for two decades, their role remains extremely limited. In 2005 they accounted for only two per-cents of Chinas total banking assets,40 and to add to that they have a one new branch per year restriction for banks.As a distant country with a neutral stance on Europes and Russias conflict they are taking advantage of such circumstances. After all of these waves of sanctions, there are a significant amount of large and not so large economies that are in trouble and in need of a new trading partner. Not finding one would pie-eyed a bankruptcy for large companies and people losing jobs. China is more than prosperous to welcome so many new trading partners. One capacity say that this is an ideal situation for China, because a significant amount of money that was previously flowing between Russia and Europe will now mobilise in their market. One of the most talked about deals as a consequence of Russia- Europe conflict is a three hundred and fifteen billion euros natural gas contract between Russia and China.41 For Russia the deal strengthened the kinship with China and in this situation when Russias relationship with the United States and Europe is worsening, Putin really needed this. By maintaining neutral position China can gain a lot more than it already has. Another beneficial thing for China from Ukraines invasion by Russia is the now much more tense relationship between Russia and the United States.1 Anderson, Barbara A., and Brian D. Silver. Permanent and present populations in Soviet statistics. Volume 37, Issu e 3 ed. Oxford Routledge, 1985.2 Russian nose count 2010 final results. RIA Novosti. http//en.ria.ru/infographics/20111222/170405728.html (accessed family 14, 2014).3 Russian Federation. Data. http//data.worldbank.org/country/russian-federation (accessed phratry 14, 2014).4 The Observatory of Economic Complexity. OEC Russia (RUS) Profile of Exports, Imports and Trade Partners. http//atlas.media.mit.edu/profile/country/rus/ (accessed family 14, 2014).5 Russia Imports 1994-2014 Data graph Calendar look parole. Russia Imports. http//www.tradingeconomics.com/russia/imports (accessed kinsfolk 14, 2014).6 Russia Imports 1994-2014 Data Chart Calendar foretaste News. Russia Imports. http//www.tradingeconomics.com/russia/imports (accessed kinsfolk 14, 2014).7 European Comission. European Union, Trade in goods with Russia. Trade. http//trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113440.pdf (accessed September 15, 2014).8 Pressman, Jeremy. Warring friends alliance res traint in international politics. Ithaca Cornell University Press, 2008.9 Euranet Plus News Agency English. EU on hold for new Russia sanctions. Euranet Plus inside. http//euranetplus-inside.eu/eu-on-hold-for-new-sanctions-on-russia/ (accessed September 19, 2014).10 European Comission. European Union, Trade in goods with Russia. Trade. http//trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113440.pdf (accessed September 19, 2014).11 European Comission. Energy production and imports. Eurostat. http//epp.eurostat.ec.europa.eu/statistics_explained/index.php/Energy_production_and_imports.. (accessed September 19, 2014).12 Russia Exports 1994-2014 Data Chart Calendar betoken News. Russia Exports. http//www.tradingeconomics.com/russia/exports (accessed September 20, 2014).13 Comission of the European Communities. ASSESSMENT REPORT OF DIRECTIVE 2004/67/EC ON SECURITY OF GAS SUPPLY. eur-lex. http//eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC20090978FINENPDF (accessed Septem ber 20, 2014).14 Bawden, Tom. Fear over Russian gas switch-off sees EU states stockpile supplies. The Independent. http//www.independent.co.uk/ news show/world/europe/fear-over-russian-gas-switchoff-sees-eu-states-stockpile-supplies-9727466.html (accessed September 20, 2014).15 Germany Exports 1950-2014 Data Chart Calendar Forecast News. Germany Exports. http//www.tradingeconomics.com/germany/exports (accessed September 22, 2014).16 Italy Exports 1991-2014 Data Chart Calendar Forecast News. Italy Exports. http//www.tradingeconomics.com/italy/exports (accessed September 22, 2014).17 Netherlands Exports 1960-2014 Data Chart Calendar Forecast News. Netherlands Exports. http//www.tradingeconomics.com/netherlands/exports (accessed September 22, 2014).18 LETA. Finansu ministrija Krievijas sankciju ietekme uz Latviju bus merena. Jaunakas zinas, komentari, petijumi, foto, tv set tiesraides, izklaide. http//nra.lv/pasaule/122808-finansu-ministrija-krievijas-sankciju-ietekme-u z-latviju-bus-merena.htm (accessed September 25, 2014).19 Dairy producer Valio begins layoff talks over Russian food embargo. Yle Uutiset. http//yle.fi/uutiset/dairy_producer_valio_begins_layoff_talks_over_russian_food_embargo/7401435 (accessed September 25, 2014).20 Food Union plno eksporta pieaugumu ldz 80%. Prioritte Krievija. Nepadodies krzei. http//nekrize.lv/food-union-plano-eksporta-pieaugumu-lidz-80-prioritate-krievija/ (accessed September 25, 2014).21 SIA Baltijas Konsultcijas . Zivrpniecbas nozares attstbas stratija 2009.-2013.gadam . Canned Fish. http//www.cannedfish.lv/lat/par_mums/list/zivrupniecibas_nozares_atti.pdf (accessed September 25, 2014).22 Russian agency wants to ban EU canned fish imports. ITAR-TASS. http//en.itar-tass.com/world/745141 (accessed September 25, 2014).23 Salacgriva. Nodarbinatibas Valsts Agentura. http//www.nva.gov.lv/limbazi/LV/darba_un_sadzives_apstakli/salacgrivas_novads (accessed September 25, 2014).24 Craig, P. P., and G. Burca. EU law tex t, cases, and materials. 2nd ed. Oxford Oxford University Press, 1998.25About us Latvia China Business Council. About us Latvia China Business Council. http//www.latviachina.eu/en/par-padomi/sadarbiba/ (accessed September 25, 2014).26 Estonian official lauds potential for business with China. Chinadaily.com.cn. http//www.chinadaily.com.cn/world/cn_eu/2014-06/10/con