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The primary goal of this project is to analyze the current relations of Russia with other countries and to understand what prospects is Russia having and the aim of the project is to find out how to adjust or keep in touch with strategically important partners.
Introduction 2
Globalization 3
Notion, main characteristics 3
Tendencies, advantages and disadvantages 5
Forms and specifics 7
Russia in world economy 9
Strategic interests in west countries. 9
Russian interests in USA and Latin America 12
Russian economic interests in East countries. 12
Russia in international organizations 12
Future prospects and recommendations 12
Conclusion 12
Endnotes 12
Contents
The primary goal of this project is to analyze the current relations of Russia with other countries and to understand what prospects is Russia having and the aim of the project is to find out how to adjust or keep in touch with strategically important partners.
There were vital changes in the world for the last years. Accruing processes of globalization, despite the inconsistent consequences, conduct to more uniform distribution of resources of influence and economic growth, putting an objective basis for a multipolar design of the international relations. Strengthening of the collective and legal beginnings in the international relations on the basis of a recognition of indivisibility of safety in the modern world proceeds. Value of the power factor has increased in the world politics, as a whole access to resources. The world situation of Russia was considerably strengthened. Strong, more self-assured Russia became the important component of positive changes in the world.
Accruing globalizations
of economy is shown in international trade growth. Economic rapprochement
of the countries has not only positive consequences. Helping to move
ahead faster by the way of economic growth and progress, economic interdependence
has simultaneously made each country rather sensitive to external influences.
One of new lines of economic in the conditions of its globalisation
is sharply increased speed of occurrence and distribution of crises
in the financial markets.
Globalization of economic activity is a process of close integration and interdependence of countries and regions.
Globalization includes greater international movement of commodities,
money, information, and people; and the development of technology,
organizations, legal systems, and infrastructures to allow this movement.
And I would like to point out some economic characteristics of globalisation:
General increase in awareness, opportunity, and transportation technology has allowed for people to move about the world in search of a new home, a new job, or to flee a place of danger. Most migration takes place within or between developing countries, possibly because lower standards of living and lower wages push individuals to places with a greater chance for economic success.
Additionally, capital (money) is being moved globally with the ease of electronic transference and a rise in perceived investment opportunities.
This makes the rest of this list possible is the ever-increasing capacity for and efficiency of how people and things move and communicate. In years past, people across the globe did not have the ability to communicate and could not interact without difficulty. Nowadays, a phone, instant message, fax, or video conference call can easily be used to connect people. Additionally, anyone with the funds can book a plane flight and show up half way across the world in a matter of hours. In short, the "friction of distance" is lessened, and the world begins to metaphorically shrink.
The main changes brought by financial globalisation are trends towards intensive cross-border financial and payment flows, greater risk-sharing internationally through a broader array of financial instruments, an increasing share of cross-border holdings of assets and an increasing international profile of financial markets, market institutions.
Also globalization helps to raise the growth rate in countries. It can be done through direct and indirect channels. Direct channels are transfer of technology from advanced to developing countries, development of domestic financial sectors and others. Indirect channels are some kind of increased production specialization due to better risk management, to decrease production risks.
The main driving force of financial globalization is interaction of new technological factors with sweeping liberalization and deregulation.
The main benefits of financial and economic globalization.
First of all, globalization leads to a more financially interconnected world and a deeper degree of financial integration of developing countries with international financial markets. The main benefit of globalization for developing countries is the development of their financial system, which involves more complete, deeper, more stable, and better-regulated financial markets.
Also globalization leads to more efficient international allocation of capital, to capital deepening and that all leads to the growth of the GDP.
Although globalization has several potential benefits, it can also carry some risks.
These risks are more likely to appear in the short run, when countries open up. One well-known risk is that globalization can be related to financial crises. The crises in Asia and Russia in 1997–98, Brazil in 1999, Ecuador in 2000, Turkey in 2001, Argentina in 2001, and Uruguay in 2002 are some examples that captured worldwide interest, and that’s why I think that globalization can not lead to prolonged global financial stability.
Another risk of globalization is the segmentation that it can create between those able to participate in the global financial system and those that need to rely on domestic financial sectors.
It is true that globalization encourages free trade among countries on an international level, but some countries try to save their national markets. The main export of poorer countries is usually agricultural goods. It is difficult for these countries to compete with stronger countries that subsidize their own farmers. Because the farmers in the poorer countries cannot compete, they are forced to sell their crops at much lower price than what the market is paying.
Exploitation of foreign impoverished workers: The deterioration of protections for weaker nations by stronger industrialized powers has resulted in the exploitation of the people in those nations to become cheap labor. Due to the lack of protections, companies from powerful industrialized nations are able to offer workers enough salary to entice them to endure extremely long hours and unsafe working conditions.
The globalization leads to the outsourcing. The low cost of workers have enticed corporations to move production to foreign countries. The laid off unskilled workers are forced into the service sector where wages and benefits are low, but turnover is high. This has contributed to the widening economic gap between skilled and unskilled workers. The loss of these jobs has also contributed greatly to the slow decline of the middle class which is a major factor in the increasing economic inequality in the country.
To
sum up advantages and disadvantages, I’d like to say that the globalization
can strengthen the country but at the same time it is a source of risk,
and calls for close cooperation among the world's major countries.
The various advantages of financial globalization are that as capital flow has increased in each and every country it helps in protecting the nations against financial crisis. Also as the capital flows between nations due to the globalization of finance it helps in more efficient world allocation of money. Further, the advantage of globalization is that with more money entering the nations, people now have more money at their disposal and this has helped in improving the international living standards. The main disadvantage of this type of globalization is that increased interconnectedness has exposed the nations to financial shocks. Further the disadvantage of financial globalization is that there is always the risk factor that sudden reversal of capital may lead to economic disruption on a large- scale. Also it has been seen that financial globalization has proved beneficial for the developed countries who have exploited the developing countries.
Traditionally politics has been undertaken within national political systems. National governments have been ultimately responsible for maintaining the security and economic welfare of their citizens, as well as the protection of human rights and the environment within their borders. With global ecological changes, an ever more integrated global economy, and other global trends, political activity increasingly takes place at the global level.
Under globalization, politics can take place above the state through political integration schemes such as the European Union and through intergovernmental organizations such as the International Monetary Fund, the World Bank and the World Trade Organization. Political activity can also transcend national borders through global movements and NGOs. Civil society organizations act globally by forming alliances with organizations in other countries, using global communications systems, and lobbying international organizations and other actors directly, instead of working through their national governments.
geographically remote locations.
values across national borders. This sharing of ideas generally leads to an
interconnectedness and interaction between peoples of diverse cultures and ways
of life.
impact on our thinking than some of the other, more frequently cited symbols of cultural globalization. . The biggest barrier to cultural globalization is poverty.
It is a well-known fact that for Russia, integration into the world economy and the West is, first and foremost, integration with Europe, its primary economic partner.
Adjustment of partner relations between so various subjects of the international relations is a difficult process, demanding non-standard approaches and decisions. The success assumes presence of two conditions - high degree of mutual interest in cooperation and enough effective mechanism of interaction.
At the heart of the tendency to close interaction of Russia from European countries besides political factors lie economic factors which value last years has considerably increased.
Exact feature of the last fifth anniversary is sharp reduction (more than in 2,5*1 times) goods turnover of Russia with the countries of CIS and its impressive growth with the European countries, which nowadays it counts an order of 40 %*1 of the Russian foreign trade turnover. The given group of the countries strongly wins first place in export and import of Russia, considerably having pushed aside other countries. Russia in the West European market it realizes more than 10 %*1 of gross national product. Another thing is very important: owing to power raw specificity of export Russia requires the capacious markets, capable to absorb a mass consignment of goods (natural gas, oil, production of a nuclear fuel cycle, ferrous metallurgy, chemistry, etc.). The European countries are heavy users of the basic goods of the Russian export. Other free markets for realization of so considerable volumes of power-raw production at Russia practically are not present. The territorial affinity of the west market, developed enough system of communications give the chance to save on costs (service, transport), connected with import of consumer goods, process equipment, any services.
European market is very important in the strategic plan.
Forthcoming structural reorganization of the industry, and then export towards increase in a share of machine-technical products and production of deep processing will demand radical updating of all industrial base, use not only high technology, a know-how, but also modern management methods manufacture and sale in the conditions of a rigid international competition. From this point of view of the European countries are the most perspective for Russia partners as for acquisition of the newest equipment, and loan by the Russian companies of administrative knowledge, use of experience of commercial activity in the international markets. It is not out of place to remind that the west countries have surpassed the USA and Japan in a foreign trade turnover total volume, keeping in the hands about 40 %*1 of world trade.
It especially concerns power supply: at the expense of import from Russia the fifth part in oil and mineral oil, approximately as much in nuclear fuel becomes covered more than third of requirements of the west countries in natural gas, almost. Exporters of the west countries, especially such branches are interested in the Russian market, as mechanical engineering, manufacture of cars, the food goods also. Well-being of considerable number of the West European firms depends on export on the Russian market. Development of potentially large and capacious Russian market becomes one of the important elements of long-term strategy of the leading European industrial companies and banks.
The big mutual interest represents development of credit and financial relations. The main part of a Russian debt (about 80*1 %) is made by credits and other forms of the loans received from the EU countries directly or through the international financial organizations and banks where these countries have a high quota. Without the given means Russia hardly could carry out financial stabilization, make rouble partially converted, to strengthen its international positions. Mutual financial dependence of Russia and the west countries has got, thus, long-term character.
Russia and the European countries are interested in wide investment cooperation. Demand for foreign capital investments in the Russian market is rather high and the minimum 10-12 blns of dollars per year.
The basic obstacle is still big degree of risk of investments into Russia, connected with insufficient political stability, imperfection of legal base and a number of other reasons. It is obvious that in process of improvement of a political and investment climate interest to it from outside the western firms will increase in Russia.
In a geographic distribution of the Russian export a share of the European countries in 2008 counted 56.7%*2 and leading partners were the Netherlands (12.2%), Italy (9%) and Germany (7.1%).
This graph shows the main Russian partners in the west. And you can
see the amount of exports and imports given in blns of dollar. On the
first place is the Netherlands and Russian export in this country equals
57*2 bln of $.
On this graph you can see direct investments in the European countries. There are the main partners and the most invested countries are Cyprus and the Netherlands. They count 15352*5 and 12688 mlns of $ respectively
On this graph you can see foreign investments in Russia and again the main amount has Cyprus ( it has 7387*3 mln of $)
Interconnection
of Russia and the west countries have already reached the scales demanding
rapprochement of operating conditions Russian and uniform European markets,
creation of the business environment facilitating transboundary movement
of commodity streams, industrial, financial, manpower resources, interfirm
integration. It is a question, thus, of necessity of formation of the
mechanism of interaction between Russia and Europe, adequate to the
developed conditions and requirements of both parties.
The basis of such mechanism is created by a Partnership and Cooperation Agreement establishing necessary legal and organizational frameworks. For the first time relations of Russia and EU are based on market economy principles, are regulated by the conventional norms in world practice, including rules of the World Trade Organization (WTO). In a number of cooperation areas more preferential mode, than defined by WTO rules is provided. The problem, however, consists that EU states, being members of the WTO, have left far forward in the field of liberalization of trade with the third countries (in the European Union trading and other barriers are almost completely cancelled, uniform home market is created). Russia only prepares for the joining into this organization, continuing widely to use trading-customs protection of the market.
For Russia membership in EU does not create any obvious added cost, any advantages which at us are not present now. Therefore Russia is not going to join EU.
Priority of relations with the USA it is objectively caused by that the situation of the international safety and strategic stability. It depends on their condition, efficiency of efforts of the world community in struggle against new calls and threats. Besides, taking into account weight of the USA in world affairs, quality of the Russian-American relations is one of the factors of creation of favorable external conditions for the decision of problems of social and economic development of Russia.
Cooperation with Russia can really promote in conditions when many countries in the world are already disturbed by use of the force by America, to success of the USA in business of maintenance of global leadership. In a more comprehensive sense, close connections between the USA and Russia are capable to become the deterrent for other states which in that case cannot consider Moscow as a potential source of political support.
There are some reasons why the US really needs these good relations with
Russia and will avoid some misunderstandings.
Development of the American-Russian economic cooperation should take the important place in the agenda of relations between the USA and Russia.
There are quite established trade relations with the USA and the Russian
export with the states equals 13.5*2 bln $ and import equals 13.8 bls $.
Russia maintains diplomatic relations with 31 countries of Latin America and the Caribbean. In 2004 relations with Grenade were restored, relations with Saint-Vincent and Grenadines, Saint-Christopher and Nevis, Bahamas, Saint Lucia were established.
The policy for strengthening relations with the states of the region is being implemented. The interaction on the world arena is being expanded and trade
economic, investment, science-technology and cultural cooperation is being developed. The political dialogue is developing as well.
Venezuela, Bolivia, Nicaragua, Cuba, Ecuador, Argentina are boosting the integration projects in Latin America. In the meantime Russia is successfully restoring its economic and political influence in Latin America after a long period of underestimating of the continent in foreign-political and external economical interests of Russia.
Many experts note that Russia’s current interests coincide with Latin-American integration and its purposes. In the broader context its interests coincide with the formation of the new international economic order which will decrease economic dependence on the US dollar and therefore on interests of transnational financial structures. Latin American countries are forming this order. Venezuela, Brazil, Nicaragua, Cuba, Ecuador and Argentina have recently agreed to create a common market of goods, services, capitals and human resources. And also they decided to create a common currency independent of the US dollar.
Russia-Latin cooperation in the oil and gas field intensively influence the world oil market and first of all there is an increase of the world prices which are essential to Russia and Latin American “oil” countries such as Bolivia, Venezuela and Ecuador. Since their common resources are a quarter of the world resources.
Russia could directly buy products of tropical agriculture (cane sugar, coffee, cacao and fruits), fish and meat production but not through “western” resellers who jack up prices by 25%.*4
Russian industry is provided with long-term orders of production of various equipment and related goods which Latin America requires. And this means stable work places, high demand for skilled manpower, scientific and technical workers.
Many Russian order-driven enterprises will have a long-term incentive not to transmit money to the off-shore countries and zones (majority of which are in Latin America) but to invest in Latin American sectors with guaranteed returns, that’s why there are lots of investitions in the Latin countries.
Russia, being the Eurasian country, has long-term political and economic interests in Asian-Pacific region (АPR). The essence of these interests consists in providing here not only safety of Russia, but also raising competitiveness of the country. The given region possesses huge human and natural resources and is capable to rough economic development.
Basis for constructive advancement of Russia on an Asian-Pacific direction is
realization of possibilities for an establishment of new relations with the USA,
normalization of relations with Japan, stable good neighbourhood with China and
dynamical development of all-round communications with south Koreas, other
countries and groups of the states ATR, in particular, with АSEAN. For
maintenance of interests of Russia in Post-Soviet central-Asian region close
cooperation with India can play the important role.
Economic interests of Russia in АТР are potentially huge, as there is a severe need of the prompt development of east part of its territory.
For the last fifteen years China became the basic economic partner of Russia in APR. In my opinion, for today, power cooperation is a key theme in economic relations between Russia and China. Promptly growing Chinese economy demands more and more energy carriers and as China not so rich with oil and gas as Russia does, these resources, in escalating quantities, should be delivered from abroad. But this trade, this raw material delivery critically depends on Persian gulf. The Russian Eastern Siberia, being close and politically stable, is strategically important for China, the supplier of hydrocarbons. And it in the long term should help to diversify structure of deliveries.
And, of course, Russia and China intend to continue and expand further cooperation in space. The Russian principles of designing are put in a basis of the Chinese liquid rocket engines.
Now the Russian and Chinese parties actively study possibilities of joint working out and realization of the large-scale projects which are equitable to mutual interests and problems of space programs of both countries.
China is one of the main economic partners of Russia. The relations which have developed between two countries of strategic partnership allow to assert with confidence that Russia and China will overcome all difficulties at formation of the new mechanism of economic interaction.
There are not so high investments in China and from China in Russia, but it exceeds some European countries. For the last year size of Russian investments in china was only 48*5 mln of $. However by this indicator China is the first among Asian countries. But the country whose investments in Russia were the highest in 2008 was Korea ( 278*3 mln $), on the second place is Japan ( 197*3 mln $) and only then goes China ( 36*3 mln $).
Japan is the second partner of Russia in СВА by the sizes of trade and economic relations. The structure of bilateral trade is limited throughout already many years rather by a small number of the goods. In the Russian export 90*6 % of its counts nonferrous metals, wood, fish and seafood, and in the Japanese export to Russia about 40*6 % it is consumer goods of long using, such as cars, color TVs and video recorders, and also on textile products and foodstuff. Russia is opened for all-round partnership with Japan on the basis of mutual respect of interests. Creation of strong economic base and deepening of communications in practical areas of cooperation should promote formation of atmosphere for the decisions of political problems focused in the future in mutual relations. To sum up, Russia and Japan has many not used possibilities on development of mutually advantageous bilateral economic relations.
The number of the basic economic partners of Russia in APR after China and Japan goes also South Korea. In comparison with them Russia has established and develops direct trade and economic cooperation with Russia rather recently. South Korea, testing an acute shortage of some natural resources, is stably interested in import from Russia black and nonferrous metals, wood and coal, mineral fertilizers and the chemical goods. Russia, in turn, shows interest to purchases in South Korea concerning cheap, but enough qualitative textile products and the goods of household electronics. There are quite stable economic relations between Russia and Korea, but despite this fact, neither Russia, nor South Korea are not satisfied by a current state of their trade and economic relations and repeatedly declared at various levels the intention as much as possible to promote growth of their volume and perfection of their structure.
India-Russian relations refers to the bilateral relations between the Republic of
India and the Russian Federation. Bilateral trade turnover is modest and stood at
US $ 3*7 bn in 2007, out of which Indian Exports to Russia were valued at US $
908*7 mn. Main Indian exports to Russia are pharmaceuticals; tea, coffee & spices;
apparel & clothing; edible preparations; and engineering goods. Main Indian
imports from Russia are iron and steel; fertilizers; non-ferrous metals; paper
products; coal, coke & briquettes; cereals; and rubber. Indo-Russian trade is
expected to reach US $10*7 billion by 2010. Energy sector is an important area in
Indo-Russian bilateral relations. Both sides have expressed interest in expanding
cooperation in the energy sector.
Expansion
of multiplane relations with Iran, including in trade and economic
sphere, including transport, telecommunications, a fuel and energy complex
and cooperation in regional affairs, is equitable to long-term interests
of Russia. Prospects of bilateral cooperation in the most various areas
will depend in many respects on development of a situation round the
Iranian nuclear program. Concerning Iran it is important to follow the
balanced policy, on the one hand, to provide our national interests
in this country, and with another – not to admit infringement of a
mode of nuclear non-distribution.
Russia is one of the international community's key players. And in my opinion it is impossible for Russia be in globalisation without its participation in the
international organizations. And Russia is the member of lots of strategically
important economic organizations.
Russia is a member of Asia-Pacific Economic Cooperation (APEC). APEC has entered the 21st century as a major and authoritative regional structure with a uniquely broad membership of countries situated on both sides of the Pacific. Represented in it are Asia, the Eastern American continent and the Southern Pacific. Russia has been successfully cooperating within its framework. Active and multifaceted participation in the work of APEC is becoming an increasingly important aspect of Russia's foreign policy on its eastern frontiers.
Russia is also a member of the Group of Eight, comprising the world's most
industrialized nations, as well as a member of a significant number of other
international organizations including the Council of Europe and the OSCE
(Organization for Security and Co-operation in Europe).
Russia plays a key role in organizations which were established after the breakup
of the Soviet Union: the CIS (Commonwealth of Independent States) , EurAsEC,
CSTO (Collective Security Treaty Organization), and SCO (Shanghai Cooperation
Organization). Also Russia participated in lots of other international
organizations*8
Cooperation between Russia and OPEC has been acquiring a more constructive character in recent times. At the moment Russia does not have an official status in the organization, despite the fact that its representatives take part in the OPEC events on a permanent basis. Russia has no plans to join OPEC as it wants to continue implementing relatively independent policy in defining the volumes of hydrocarbon extraction.
The key element in Russia's advance is trade and WTO accession. Russia started negotiating its accession to the GATT 16 years ago (in 1993) – even before the WTO was created. WTO membership is the minimum investment to integrate in the global economy, in rules and openness. It’s a guarantee of open markets for the goods and services you export, including steel, chemicals, fertilizer, spirits, and much more later. It means cheaper inputs for your companies and lower prices for your consumers to stimulate Russia's consumer demand growth. It’s the bottom line for more risk-averse investment capital outside the energy sector – the guarantee that gives others the confidence to sell in your market. Russia is not just the largest economy outside of the WTO, it is the only large economy still outside of the WTO. Every other major emerging economy - China, India, Brazil, South Africa – has chosen the economic benefits and international standing that comes with WTO membership, over the deceptive autonomy of standing apart.
Russia should
further establish good relations with lots of countries and join in
different international organizations because Russia will only benefit
from such co-operations and Russian economy and trade will only flourish.
As I think that establishing goodwill and economically profitable relations
with CIS countries is very important for Russia, it should think carefully about its
foreign policy. Russia should conclude the customs union with "the ready" countries (Belarus, Kazakhstan), and prepare the other countries to join the union on readiness. The key role of resource maintenance of the EurAsEC activity should play the Eurasian bank of development.
It is necessary to be united and to have strategic partnership on the symmetric-pragmatical basis because these relations remained and developed as optimal model. In basis of such model there are historic, economic, military-political and humanitarian interests of the parties, mutual aspiration to resist the threats and calls of regional and international safety. These relations will be stable for lots of years. We can name many of these countries - Belarus, Kazakhstan, Ukraine, Azerbaijan, Armenia, Uzbekistan, Kirghizia, Tajikistan and the others.
Concerning the European countries, Russian should continue to develop trade and economic relations, including an investment component, with those of them who are adjusted on cooperation with Russia (in particular Germany, France, Spain, Italy, Great Britain).
Russia should continue expanding relations in the Russia-India-China direction as it is very useful and advantageous union.
It is very important to deepen interaction with Iran in transport sphere, because the creation of such will lead to the International transport corridor "North-south" through railway service between our countries.
During the analysis of the economic relationships of Russia with other countries we can obviously see that Russian economy is very open almost for every country. This openness promotes the increase of the efficiency of Russian economy, its competitiveness, but at the same time undermines economic safety of the country. Globalisation means interdependence, instead of dependence of one country on another. It is necessary for Russia to increase volume of foreign investments, and also to expand access on the markets, to improve the economy. In the modern world where the markets develop very dynamically, any attempt of a manipulation by economic relations in not economic interests is doomed to failure.
Russia should further establish good relations with lots of countries and join in different international organizations because Russia will only benefit from such co-operations and Russian economy and trade will only flourish.
Natural riches of Russia are really very great. We have oil and gas, but the quantity of mineral resources is not infinite. Russia should wisely and carefully develop its economic strategy in order not to be bankrupt one day but to reach the leading positions in the world economy. From my point of view, it is necessary to make structure of economy of Russia an original transfer link for re-export: on the one hand, technologies and the capital - from the West on the East (from developed in developing countries), with another – material and a manpower from the East on the West (from developing in the developed countries), in every possible way enriching economic structure of the Russia. Thus export of the Russian raw materials should be replaced with re-export of the raw materials imported gradually from developing countries, and the incomes received from raw export, it is required to direct on payment of import of high technologies and manufactures. Development of industrial technological ways is necessary for carrying out at the expense of internal sources and the means received from export of their production in developing countries.
Russia has
a high potential to play the important role in the global economy. And
it should support and improve its relations with the countries on the
all directions – west, east, north and south. This will guarantee
Russia the safe economic future.
Bibliography