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Eastern Economic Forum - Shanmugam IAS academy in coimbatore
Eastern Economic Forum

PM TO ATTEND EASTERN ECONOMIC FORUM

What’s in news?

PM Narendra Modi has been invited as the chief guest of the Eastern Economic Forum in Vladivostok by Russian President Vladimir Putin on September 5.

Background:

  • Modi is to visit Vladivostok to attend the Eastern Economic Forum as well as the annual bilateral summit with Russian President Vladimir Putin.
  • This is the 20th summit between the leaders of the two countries since the year 2000 when the mechanism was institutionalized.
  • The meeting between Modi and Putin next week will be their third this year—previously they met on the margins of the Shanghai Cooperation Organisation meet in the Kyrgyz capital Bishkek and the G20 meet in Osaka.
  • They will meet again in November at the BRICS summit in Brasilia.

About the Eastern Economic Forum:

  • The Eastern Economic Forum was established by Decree of the President of the Russian Federation Vladimir Putin in 2015.
  • The Eastern Economic Forum takes place each year in Vladivostok.
  • It serves as a platform for the discussion of key issues in the world economy, regional integration, and the development of new industrial and technological sectors, as well as of the global challenges facing Russia and other nations.
  • Events at the Forum traditionally take place in the form of panel sessions, roundtables, televised debates, business breakfasts, and business dialogues devoted to Russia’s relationships with various countries.

Key data:

  • Prime Minister Narendra Modi’s visit to Russia on September 4-5 will open a “new chapter” in the already close ties between the two countries as both sides will aim to expand cooperation in a plethora of areas, including defence, trade, civil nuclear energy and hydrocarbons, agriculture, space, outer space, and finance.

Defence:

  • Russia will be delivering the S-400 air defence missile system to India by 2023 despite the US pressure on New Delhi not to acquire the system.
  • India has been facing the threat of sanctions by the US for procuring these missiles from Moscow.  America has threatened to impose sanctions on India under the CAATSA (Countering America’s Adversaries Through Sanctions Act) legislation.
  • India will “soon” make 20% of the payment towards the $5.2 billion missile deal under a new payment mechanism.
  • Sberbank of Russia, that has a branch in New Delhi — is to receive the amount in rupees and pay Moscow in ruble under the new payment mechanism.
  • Russia’s VTB Bank which too has a presence in India, is also expected to be engaged for payments made in defence deals between New Delhi and Moscow.

New payment method:

  • India and Russia have agreed on a new payment method through their national currencies for multi-billion-dollar defence deals, in a bid to avoid risks created by the U.S. threat of sanctions and banking restrictions.
  • Defence contracts will be settled in rubles and rupees.
  • The world’s second largest arms exporter after the U.S., Russia suffered a 17% drop in foreign weapons deals from 2014-2018 amid declining purchases by India and Venezuela.
  • Promsvyazbank PJSC, a central bank-controlled Russian lender that has been tasked with financing the defence industry to shield the two biggest state-owned banks Sberbank and VTB from the threat of U.S. sanctions, is ready to play a role in the Indian transactions

Nuclear:

  • PM likely to sign a pact for the construction of six nuclear power plants for India. This is apart from the six being set up in Kudankulam in Tamil Nadu.

Marine:

  • Both the countries are working on developing a maritime transport corridor between Vladivostok and Chennai, which will give a new dimension to the mutual economic and trade relations between India and Russia.

Free trade zone between India & Eurasian Economic Union:

  • All preparations for discussions about a free trade zone between India and the Eurasian Economic Union have been finished.

About Eurasian economic union:

  • The block includes Russia, Belarus, Armenia, Kyrgyzstan and Kazakhstan. It was  formally established on January 1, 2015.
  • The Eurasian economic union is the final outcome of a process which began as a customs union in 2010 between Russia, Belarus and Kazakhstan. It transformed itself into a single economic space in 2012 to integrate trade, energy, industry and transport in the region.
  • The EEU will have free movement of goods, services and labour. It will also have its own bureaucratic structure.
  • The creation of EEU is being seen as the counter measure against Americans and Europeans attempt to isolate Russia.

Far east:

  • The two countries are looking to get Indian investment into Russia’s Far East that borders China, a region rich in mineral resources.

About the far east:

  • The Far East is the easternmost part of Russia. 
  • The macro-region borders two oceans, the Pacific and the Arctic, and five countries (China, Japan, Mongolia, the United States and the DPRK).
  • The Far Eastern Federal District covers more than a third of the country’s territory.

Resources: 

  • The Far East is rich in natural resources like diamonds, stannary, borax materials, 50 gold, tungsten, and fish and seafood.
  • About 1/3 of all coal reserves and hydro-engineering resources of the country are here.
  • Forests of the region comprise about 30% of the total forest area of Russia.
  • Russia had also wanted to integrate the former states of the Soviet Union into one economic and political block. It was also a legitimate aspiration of Russia.

 

Links to note:

https://www.iasipstnpsc.in/bcim-economic-corridor/

https://www.thehindubusinessline.com/news/world/defence-payments-no-more-an-issue-russia/article29286177.ece

https://www.ndtv.com/india-news/pm-modis-visit-to-vladivostok-next-week-to-open-new-chapter-in-ties-russia-2091751

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