When Russia hosted the APEC Summit in Vladivostok in 2012, hopes were high that Russia could become a major economic player in the region. One year later, we’re still waiting for the results.
Russian President Vladimir Putin speaks during at the press conference following the 2012 APEC summit. Photo: Yury Smityuk
When Russia announced a move towards integration into the economy of the Asia-Pacific region as a key priority of its foreign policy several years ago, the decision was viewed as the logical consequence of the strengthening of Asia-Pacific’s importance in world politics and the global economy. Amidst the backdrop of increased competition among the leading powers for influence in Asia, Russia also felt the pressure to develop its national economy, especially in Siberia and the Far East.
It’s easy to see why Russia’s role in the region becomes an important factor. Asia-Pacific countries collectively represent more than half of the world's GDP, 44 percent of world trade and 40 percent of world population. Overall, they account for 23 percent of total Russian trade, whose primary trading partner, China, is the region’s largest economy. From a geopolitical perspective, the rise of China challenges U.S. influence in the region, and various U.S. foreign policy initiatives in recent years have been aimed at preserving its leadership in Asia.
Even though Moscow’s capabilities in Asia are far from those of Washington and Beijing, Russian politicians and researchers claim that Russia also tries to engage in big diplomacy in the region.
The most important direction of Russia’s new Asian policy was its active participation in the Asia-Pacific Economic Cooperation (APEC) Summit, which Russia chaired in 2012. During that time, representatives of the government and the Russian business community formulated reasonable and specific proposals that received high approval from partner economies. Proposals made by the Russian delegation in the areas of regional integration, transport and logistics, food security and innovative development, met the interests of both Russia and the other members of the forum.
According to international consultants, the overall economic effect of the harmonization of customs rules and procedures, the implementation of automatic identification technologies in transport, technology transfer and the implementation of novel solutions in the field of food distribution would approach a trillion dollars by 2020, with Russia as primary beneficiary.
This is due to the opportunity of increasing the supply of grain and other agricultural products to countries with large percentages of undernourished population, an increase of cargo transit through Russian territory, as well as foreign investment in Russian infrastructure. Russian business representatives formulated and introduced a range of initiatives within the ABAC framework that received the support of all APEC members, in each of the stated Russian priorities.
In particular, among the internationally endorsed initiatives of the Russian business community was harmonization of customs rules and procedures, including the integration of a "single window" principle and the use of common standards and codes in automatic identification of goods as well as integrated GLONASS / GPS satellite systems.
A key factor in the success of the Russian chairmanship was the focus not only on the promotion of national interests in a multilateral format, but also on "teamwork" - the development of initiatives in the interest of all member economies of the regional association. This was primarily due to the fact that one of the informal purposes of the chairmanship was to prove to the other regional leaders that Russia is deeply involved in regional development, can easily navigate key regional issues and can rightly be considered one of the key powers in the region -- not only in a political-military sense, but also in an economic sense. Therefore, a broad range of Russian initiatives included many projects that were cultivated within APEC for a long time, but were never implemented.
Russia’s APEC summit: One-time effort
APEC activation turned out to be a temporary phenomenon rather than a systemic transformation in Russia’s national policy. Despite the fact that regional integration is of major importance to Russia’s economic development, the country is not actively involved in integration processes and cannot claim a significant position in Asia. Russia’s successful APEC 2012 summit was a result of a one-time effort, which has subsequently ceased to bear fruit.
Many of the achievements of the Russian chairmanship that were successfully integrated into the summit were preserved during the Indonesian chairmanship and are likely to remain important directions within APEC in the future. However, almost counter-intuitively, this is primarily true for those initiatives that have been associated less with Russian interests, and more with those common to the region.
For example, Russia received approval on a list of environmentally-friendly goods not to be overtaxed at customs and to draft a model chapter on transparency for regional economic integration agreements. It ensured their discussion and adoption by consensus in an effective and relatively conflict-free manner, despite initial contradictions among member economies.
Meanwhile, those initiatives that have been of greater importance to Russia than to other economies were largely ignored by forum participants in 2013, and have either undergone significant changes, or were almost completely abandoned. Most importantly, food security has become a marginal topic while transportation infrastructure development focuses on projects that are unlikely to be beneficial for Russia.
So, what actually happened in Russia after it successfully chaired APEC in 2012? A possible reason for the policy shift may deal with domestic issues rather than global politics. The 2012 success in Asia was not utilized by Russia in 2013, when all of its chairmanship initiatives should have been realized.
The logic of Russian political management is often referred to as “manual steering” because priority projects demand personal attention of the leadership and the attraction of the strongest teams. As soon as the APEC chairmanship was over, the interagency team that had been in charge of the initiatives was diverted to other projects such as the Eurasian Economic Commission and the G20.
Government agencies have sharply reduced the level of their involvement in APEC-related initiatives, and business representatives completely disregarded the meetings and content of the Business Advisory Council. All key agency representatives who oversaw APEC work have been redirected to new priority projects, the expert community was effectively disbanded, and the composition of Russian business representatives in APEC updated.
As a result, a long-term positive impact on the Russian economy should not be expected. Moreover, representatives from key regional economies were disappointed with Russia's inconsistency, which caused considerable damage to its hard-earned “soft power.” From the point of view of regional and global policy, this inconsistency has important implications for Russian relations with both China and the U.S. For China, it means that Russia is unlikely to become a full-fledged partner in its competition with Washington over influence in Asia, and, for the United States, it means that Russia is unable to significantly affect U.S. leadership in the region.