Russias Relationship with the Rest of the World

Russias Relationship with the Rest of the WorldWill Russia be able to live without atomic be 63an kernel? blush before the invasion of Crimea started, Russia and atomic number 63an northward did non have a good relationship which had resulted in many heated disputes. However, after Russia annexed Crimea, conflicts have take much complex and serious. Many Russian citizens who atomic number 18 pro-kremlin, after the annexing of Crimea became even much euro-skeptical and demanded Russia to Cut the ties with Europe and start cooperating with Asia, so they could utilize all of the benefits that much(prenominal)(prenominal) great economy could offer. Russia would benefit politically too, because countries in Asia do not discussion sectionicularly focus on the human right issues. The Europe or Asia stem has been discussed in Russia for centuries and this, for Russia, seems like a suitable moment to re-orientate towards Asia. But even if Russia would want to re-orientate to Asia foodstuff, would it be possible for Russia to impound themselves from the European Union. on that point atomic number 18 a lap of arguments that oppose this Asia plan.First of all, it is demography. Since the collapse of the Soviet Union, when Russian citizens got the taste of the western culture, the Russian society started to become more pro-European. The population in the scalelike regions to Asia has lessend1, 2 and that is poor because those be the regions that should play a key social occasion in the cooperation with Asia. There are many reasons for people 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 significant part of Russias population has been born in the European side of the Russia, i.e. Moscow, Saint-Petersburg, and because basically it is Europe, unmatched could say that those Russians have been born and embossed in Europe.Secondly, the current Russias economic structure names the efforts to isolate themselves from European Union practically impossible. Since 1998 Russia has always had a positive trade balance.3 They have been flakeing a lot of hooey from Western-Europe.4 Data from Trading Economics about year 2012 tells us that Russias imports reached 245 one thousand million 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 cartridge clip span7, and it is probable that Asias role in Russian imports ordain increase, still it would take decades until Russia transfers all its imports to Asia. But unfortunately for Russia, significant part of Russias import from Asia is made by Japan, South Korea and Taiwan and these countries have close military ties with the United States of America.8 So these three countries would probably follow the Unite d States, if they tried to isolate Russia.Even if Russias government accepts the re-orientation from West to East, it would not be a solution to Russias short-term problems with the European Union. At this time Russia and Europe are dependent on each other and cutting the trading ties would be disastrous for some(prenominal) sides. Europe indispensabilitys Russias natural accelerator and oil colour as much as Russia needs Europes industrial tools. Of course, Russia can 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 allies 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 cannot 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 volitioning to introduce bitter sanctions include such inf luential countries as Germany and Austria. Europes response to insurgency in Ukraine has been discreet and such cautious reaction has one reason bills. The trading volume surrounded by European Union and Russia has been humongous. With 9.5 per-cents from total trading volume it is the trio biggest European Unions partner.10 According to data provided by European Commission, trade between European Union and Russia flourished in 2012. Such growth was mainly caused by a bigger import of energy resources. One of the energy resources that Europe is rightfully dependent on is oil because the number of Europes oilfields is reducing riotous so Europe has to buy more from Russia.11 As Russia is so dependent to the income from the gas trades12, a complete cut-off is not in the conversation. Hence the pipes that provide their gas go through Ukraine, there are seven European Union member states which may be concerned about the natural gas cut-off, they are the three Baltic States, Finlan d, 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 almost 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 billion euros15 which is more than a third of European Unions exports. By exporting industrial tools and machines to Russia, Italy has earned 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 influence on external politics is best seen in Italy. Italy is one of the countries in active opposition against harsh sanctions on Russia. This matter is as supported by society as it is by Italys government. Instead of pushing sanctions against Russia, Italy is concentr ating on beneficial-to-both-sides cooperation. Looking back at the history between both of these countries, they have never had any serious disagreements, so their neutral stance on Russia is understandable. And of the three most influential sanction opposing countries Italy has the most lean 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 dissimilar views at problems in the European Union since some countries are better off than others. For example, Scandinavian countries in comparability with southern Europe countries. Each outlandish 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 current disputes between European Union member states will be no more than a distant memory.Russian sanctions on Latvia/EuropeAfter three waves of sanction s that Europe, United States of America and other countries placed on Russia, on 7th of sumptuous Russia published their economic sanctions. Prior to that Russia had only sanctioned certain American and Canadian officials. When describing Russias embargo influence on countrys economy, Latvian Ministry of Finance said The influence of Russias sanctions will be moderate, 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 embargo by Russia will be much tougher to bear with. In situation Latvia is one of the top four countries which will be off the hardest by these sanctions. All of the four, Finland, Lithuania, Estonia and Latvia are Russias border countries. In these countries twenty-six per-cents of all the pabulum exports go to Rus sia. To make the numbers little 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 landed estate it is 0.7 per-cents. As NATO and its allied countries raised these sanctions against Russia, they should be the ones that take care of these four countries which got hit the hardest by the counter-sanctions from Russia. NATO should make its member states open their markets to Finlands and the Baltic States goods. And for Latvia it is not only those 26 per-cents of regimen 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 taken to Russia. If the exports to Lithuania which is really addressed to Russia motors added, the hit gets even harder, not only for the sustenance attention but for the transportation sedulousness 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 prepare itself for a explosive rise of the unemployment rate in the country. It has already happened in one of the four countries Finland. Finlands biggest dairy products producer 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 letting people go. Since a half of the product is normally exported to Russia, such actions are inevitable.20In its embargo Russia has yet not included preserved fishes. However the fish proces sing companies are already worried, because cardinal 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 job provider in the city, for example, Salacgriva.23 If preserved fishes get included in the embargo it can top off 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 slowly die out.In these circumstances European Union should get involved and allow protect ionism in countries that get hit by the embargo the most. Then countries could announce that fifty per-cent of all the dairy, meat and fish products in the stores must be made in the local market. Therefore, the companies will no more have to sell their products barely for the cost or just throw them out. Of course, such action is outlawed by Article 34 TFEU for discriminating imports,24 but in these generation 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 consequences 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 hands by unionizing. For example, in Latvia milk processing, meat and fish products producers unions have merged into a single one and it is called the Food Exporters Union. It is led by Didzis Smi ts (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 decidedly help with obtaining new markets. The big target must be Asia. Establishing contacts with Asia is difficult for a single company, it would be expensive and time consuming. But that is a different case for a union. Currently Latvian food exports to China, added together with Estonian, that are our partners in business with China, only makes nineteen million euros.25, 26 To accelerate the growth of this number Latvian Minister 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 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 appointed 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 Plywood 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 turnover was 187 million euros.2 8Of course, a State should not be going around and saving companies everywhere. But in these circumstances such dissonance 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 sales agreement 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 trading system. And that should not be a surprise because Five years ago China was still the macrocosms third largest economy behind the United States and Japan29, but now as it has consistently been in the top countries when it comes t o 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 exotic exchange 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 ontogeny of their economy.34 In 2001 China joined the World calling judicature. Such action made the Chinese market more opened up. As this membership did not give much profit in their already conquered markets, it did open up a lot of new markets to China. After joining the World Trade Organization China removed travails on textiles and garments 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 correct now China is developing their border policy, t hey 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 Investment 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 Another 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. Total Chinese trade (exports plus imports) amounts to 70 per-cents of its GDP, which compares to 37 per-cents 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 tr ade in GDP (for example, the united States compared with the united kingdom).37 Of course, it not all perfect, and there are things that dash 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 investments 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 lowered investment,38 he also added that With slower growth, our member companies do not reflect less need for investment, but perhaps less need for investment based on the old economic model that was more reliant on exports and 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 eliminate protectionism, which is roughhewn 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 botheration and in need of a new trading partner. Not finding one would mean a bankruptcy for large companies and people losing jobs. China is more than happy to welcome so many new trading partners. One might say that this is an ideal situation for China, because a significant amount of money that was previously flowing between Rus sia and Europe will now circulate 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 relationship 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, Issue 3 ed. Oxford Routledge, 1985.2 Russian Census 2010 final results. RIA Novosti. http//en.ria.ru/infographics/20111222/170405728.html (accessed folk 14, 2014).3 Russian Federation. Data. http//data.worldbank.org/country/russian-federation (accessed family 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 phratry 14, 2014).5 Russia Imports 1994-2014 Data Chart schedule Forecast intelligence information. Russia Imports. http//www.tradingeconomics.com/russia/imports (accessed family 14, 2014).6 Russia Imports 1994-2014 Data Chart Calendar Forecast News. Russia Imports. http//www.tradingeconomics.com/russia/imports (accessed September 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 restraint 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/ (acc essed 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. postal code 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 Forecast 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 shelter OF GAS SUPPLY. eur-lex. http//eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC20090978FINENPDF (accessed September 20, 2014).14 Bawden, Tom. Fear over Russian gas switch-off sees EU states stockpile supplies. The Independent. http//www.independent.co.uk/news/world/europe/fear-over-russian-gas-switchoff-sees-eu-states-stockpile-supplies-972746 6.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, video tiesraides, izklaide. http//nra.lv/pasaule/122808-finansu-ministrija-krievijas-sankciju-ietekme-uz-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 (acces sed 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 text, 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 Esto nian official lauds potential for business with China. Chinadaily.com.cn. http//www.chinadaily.com.cn/world/cn_eu/2014-06/10/con