Context: Russia hosted the seventh Eastern Economic Forum (EEF) Vladivostok from September 5 to 8. The four-day forum is a platform for entrepreneurs to expand their businesses into Russia’s Far East (RFE).

Russian Far East(RFE)

• The Russian Far East stretches from Lake Baikal, the world’s largest freshwater lake, to the Pacific Ocean and comprises roughly a third of Russia’s territory.

• Area is rich with natural resources such as fish, oil, natural gas, wood, diamonds and other minerals which contribute to 05% of Russia’s GDP. 

• Procuring and supplying  these resources is an issue due to lack of population in the area and unavailability of personnel. 

• The RFE is geographically placed at a strategic location which acts as a gateway into Asian trading routes.

About Eastern Economic Forum

• The EEF was established in 2015 to encourage investment in the Russian Far East(RFE) to displays the economic potential, suitable business conditions and investment opportunities in the region. 

• The region encompasses one-third of Russia’s territory and is rich with natural resources such as fish, oil, natural gas, wood, diamonds and other minerals. 

• Agreements signed at the EEF increased from 217 in 2017 to 380 agreements in 2021, worth 3.6 trillion roubles. 

• As of 2022, almost 2,729 investment projects are being planned in the region. The agreements focus on infrastructure, transportation projects, mineral excavations, construction, industry and agriculture.

What does the EEF aim for?

• The primary objective of the EEF is to increase the Foreign Direct Investments in the RFE. 

• The sparse population living in the region is another factor for encouraging people to move and work in the Far East. 

• The region’s riches and resources contribute to five per cent of Russia’s GDP. But despite the abundance and availability of materials, procuring and supplying them is an issue due to the unavailability of personnel.

• Although, the EEF is an annual gathering, the forum comes at an opportune time for Russia who is dealing with the impact of the sanctions. 

• Moreover, the coming together of countries like Myanmar, Armenia, Russia, and China seems like the forming of an anti-sanctions group in the international order.

Key Players in EEF

• Main objective of the Seventh Eastern Economic Forum was connecting the Far East with the Asia Pacific region.

1) China and EEF

• China, as the biggest investor in the region, sees potential in promoting its  Belt and Road Initiative and the Polar Sea Route in Russia’s Far East (RFE).

• 90% of the total investments in the region are from China.

• Due to economic pressures caused by the Ukraine conflict, Russia needs Chinese investments now more than ever.

• Russia-China shares a 4000-kilometre-long border, Trans-Siberian railways enables them for functional  trade and sharing of resources with some infrastructural assistance. 

• Both have invested in a fund to develop RFE and northeastern China  by connecting the cities of Blagoveshchensk and Heihe via a 1,080 metre bridge, supplying natural gas, and a rail bridge connecting the cities of Nizhneleninskoye and Tongjiang. 

South Korea and EEF

• South Korea has invested in manufacturing of electrical equipment, shipbuilding projects, agricultural production, gas-liquefying plants and fisheries. 

• In 2017, the Export-Import Bank of Korea and the Far East Development Fund announced their intention to inject $2 billion in the RFE. 

Japan and EEF

• Japan has invested $16 billion in the region through 21 projects in 2017.

• Japan has identified 08 areas of economic cooperation and pushed private businesses to invest in the development of the RFE. 

• Japan depends on oil and gas resources from Russia after the 2011 Fukushima disaster which led the Japanese government to pull out of nuclear energy. 

• Given similar climatic conditions, RFE can be a potential market for Japanese agro-technologies.

• The trade relations between Russia and Japan are hindered by the Kuril Islands dispute as they are claimed by both countries. 

India and EEF

• India aims to establish a strong inter-state interaction with Russia through the EEF.

• Prime Minister Narendra Modi expressed India’s readiness in expanding trade, connectivity and investments in Russia during the recent Forum.

• The RFE  has many petroleum resources which is of great interest to India

• There are also plans to connect the port of Chennai with Vladivostok, the largest city in the Russian Far East which would provide an alternative sea-route with respect to the Suez Canal. 

• India is keen to deepen its cooperation in energy, pharmaceuticals, maritime connectivity, healthcare, tourism, the diamond industry and the Arctic.

• In 2019, India also offered a $1 billion line of credit to develop infrastructure in the region.

• Business representatives of Gujarat and the Republic of Sakha have launched agreements in the diamond and pharmaceuticals industry.  

Will India be able to achieve a balance between the EEF and the Indo-Pacific Economic Framework for Prosperity (IPEF)?

• The U.S. led Indo-Pacific Economic Framework for Prosperity (IPEF) and the EEF are very different based on its geographic coverage and the partnership with the host-countries. 

• India has invested substantially in EEF despite the current international conditions. At the same time, India has given its confirmation and acceptance to three of the four pillars in the IPEF. 

• The IPEF presents a great opportunity for India to act in the Asia-Pacific region, without being part of other regional groupings such as China-led Regional Comprehensive Economic Partnership. 

• The IPEF partners act as new sources of raw material and other essential products,  reducing India’s reliance on China for raw materials.

• The IPEF will also play a key role in building resilient supply chains. India’s participation in the forum will help in disengaging from supply chains that are dependent on China and will also make it a part of the global supply chain network.

Conclusion

• EEF operates within the framework of the Russian agenda regarding the development of the Far East and its integration into the global economy. It gains significance, especially during ongoing conflict with Ukraine and following international sanctions.