Erik Larsen Nov. 18, 2016, 1:49 p.m.

Common economic space from Lisbon to Vladivostok


        Today the idea of building a Common economic space from Lisbon to Vladivostok, presented at the St. Petersburg International Economic Forum, held June 16, 2016, continues to actively develop.

        Building a common economic space from Lisbon to Vladivostok is considered to be an optional way for prevention of confrontation and for harmonious economic development for the countries of North Europe, particularly in Norway. “Even if it has no unified rules in place, including business rules, at least they must be compatible” – says the Chairman of the Council of the Russian-Norwegian Chamber of Commerce Reidar Karlsen from the headquarters in Oslo.

        Norway is a relatively young European country that possesses significant reserves of mineral and water resources. Norway has a well-developed fishing industry, a ship-building industry, marine transport, research and innovations, social policy. At the same time the country is holding the third place in oil export in the world.

        Today the oil and gas industry is suffering one of the heaviest crises in over the past 30 years. According to calculations, the profits of the industry in 2015 were by 10-20% lower than in 2014; the industry profits are expected to drop by 20-30%. Probably, this falling tendency will continue in 2016, which makes Norway directly dependent on the hydrocarbon market.

        Cooperation within the framework of the Common economic space will definitely create privileged opportunities for export of goods, withdrawal from oil dependence and participation in large-scale profitable construction projects and projects of infrastructure development along the Northern Sea Route, in particular, for the supply of high-tech equipment, training of human resources and exchange of knowledge.

        Thus, Norway will actually get access to the common continental market of the capacity of trillion euro that will help to reach the key objective – the structural reconstruction of Norway economy, from raw material-oriented to the high-tech industry.

        According to Reidar Karlsen, currently the economies of the developed and developing countries are suffering a crisis, the growth rates have slowed down, therefore, large projects are definitely required. According to him, the speed of the development of the Common economic space is impressive and promises to find new ways to overcome the economic recession, which is also extremely interesting for Norway.

        The representatives of German economy, who rely on the creation of the Common economic space with Russia, have also spoken in favor of this initiative at the St.Petersburg International Economic Forum. The new head of the Eastern Committee of German economy Wolfgang Büchele said: “The Eastern Committee of German economy is considered to be the most uncompromising critic of the sanctions, imposed by the EU on Russia in connection with the war in Ukraine. The attitude of the Committee to this issue is contrary to the policy of German Chancellor Angela Merkel in relation to Russia. Everybody can lose in the current situation”. W.Büchele has supported the idea to create a Common economic space from Lisbon to Vladivostok, formulated several years ago by Russian president Vladimir Putin. From the point of view of the Eastern Committee, it is not areas on for rejection of the free trade zone concept, moreover, according to W.Büchele, the situation in Ukraine has made this goal more pressing.

        W.Büchele is sure that Russia is a part of Europe, just like 28 countries of the EU. W.Büchele emphasized the need to enter the alliances with those who are interested in dialogue. German entrepreneurs stay confident: they feel the support from the Minister of Economy himself and from the Chairman of the SDPG (Social Democratic Party of Germany) Sigmar Gabriel, who in his speech at the German-Russian Forum in October 2016 also supported the Putin’s idea of establishment оf a free trade zone from Lisbon to Vladivostok.

        Phillippe Pegorier, the president of Alstom (a large French machine-building company) in Russia is also sure that Alstom will fully use the possibilities, provided by Eurasian integration. “Economic cooperation will continue despite political issues”, - he emphasized.

        Today there are favorable conditions for these initiatives due to activation of Russia in establishment of a dialogue with APR (the Asian-Pacific Region) countries in regard to revamping the transport-logistic infrastructure of Eurasia, including the RF and the countries of the Central Asian Region. The important place in these plans belongs to the work on generation of the port and other infrastructure of the Northern Sea Route.

        A favorable message for building a Common economic space from Lisbon to Vladivostok is signing agreements for free trade zones with ASEAN (Association of South East Asian Nations) countries.

        Currently over 40 countries and international organizations, including China, Indonesia, Israel and Iran, expressed their interest in signing the free trade agreement with the Eurasian Economic Union (hereinafter – “EEU”). If the countries of Europe sign the corresponding agreements, they will get the opportunities of unrestricted access to the markets of the former Soviet Union, RF, CAR (Central African Republic), APR, ASEAN.

        On the 5th of October 2016 a free trade agreement between the EEU, headed by Russia, and Vietnam was ratified and became effective. Due to this agreement Vietnam will get access to the market of the EEU countries of the capacity of 181 mln. people. The EEU countries– Russia, Armenia, Belarus, Kazakhstan and Kirgizstan – received a preemptive right to sell goods to Vietnam.

        The free trade agreement covers over 90% of all goods, traded between the EEU and Vietnam. It will allow the exporters from the EEU countries to save about $40-60 mln. in the first year already. The Vietnam companies can save up to $5-10 mln. per annum.

        With the help of this agreement the official Hanoi is hoping to significantly increase the volume of international trade. It is expected that the volume of trade turnover with Russia by 2020 will more than double and reach $10 bln. 

        Currently Russia and Singapore are beginning to run consultations on the possibility of establishment of a free trade zone. It is assumed that Singapore will become a platform for Russian exporters to enter the markets of the countries of the Asian-Pacific Region. According to the information from the Agency of foreign trade and investments of Singapore, the volume of international trade of the two countries in 2014 reached USD 10.76 bln., of which the Russian export of oil and metals amounted to about USD10 bln.

        The President of Association “Know Eurasia”, the president of the Board of directors of Bank “Inteza” Antonio Fallico emphasized that associations need to develop cooperation and to build a common economic space from Lisbon to Vladivostok and Singapore. A.Fallico also expressed his opinion on the possibility of introduction of a single currency in the EEU. According to him, this measure could provide an accrual in the mutual trade turnover of the Union countries by 50%, at the same time the introduction of a single currency would mean the abandonment of a part of sovereignty for the EEU countries.

        It should be noted that consultations with Singapore will run at the background of other important negotiations, including those dedicated to interfacing Russia with the Silk Way Economic Belt.