Tuesday, December 13, 2022
Compiled by Chris Devonshire-Ellis
We cover the entire Eurasian region this week, starting with the recent China-Mongolia State Visit and the implications for mutual trade and investment. We look at Vietnam’s interests in Russia’s huge dairy market, India’s stated position on Russian oil, more Central Asian regional trade increases, and a host of activities in the Middle East including Chinese President Xi Jinping’s State visit to Saudi Arabia. Staying within the region we examine Qatar’s growing INSTC links with Iran, and the UAE’s fast-track scheme to have a Free Trade deal with the Eurasian Economic Union.
Russian trade with Georgia is significantly up while the impending demise of SWIFT’s credibility is outlined with Russian opting for alternative financial system trade deals via Rupees in India and the RMB Yuan in China. We complete this issue with our usual roundup of all BRI global headlines.
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The state visit of the Mongolian President Ukhnaa Khurelsukh marks a new height in China-Mongolia relations. As the two countries plan the development of their cooperation against the background of the COVID-19 pandemic and global uncertainties, we discuss their existing bilateral trade and investment relations. China has been Mongolia’s top investment source and trade partner for 18 consecutive years, while Mongolia is an active member of the Belt and Road Initiative.
Dairy is among a range of products to benefit from reduced tariffs under the Vietnam-Eurasian Economic Union (VN-EAEU) free trade agreement. The agreement, signed in 2015, has strengthened ties between Vietnam and the bloc, which may soon pay dividends for one of Vietnam’s biggest dairy producers.
India has decided against the price cap of US$60 per barrel imposed by the G7 nations, European Union (EU), and Australia on Russian oil. It has defended this position as the pursuit of a balanced and independent foreign policy in the public interest. Russia has welcomed the move and in turn extended cooperation for leasing and construction of large crude carrier ships to overcome the ban on insurance services and tanker chartering in the EU and Britain so that India can continue buying discounted oil.
The bilateral trade turnover between Kyrgyzstan and Uzbekistan since the beginning of 2022 has reached US$1 billion, a record figure. The announcement was made by Shavkat Mirziyoyev, the President of Uzbekistan, following conversations with Sadyr Zhaparov, the President of Kyrgyzstan this week. Shifting supply chains and BRI developments are boosting Central Asian trade and investment with positive regional results.
China’s President Xi Jinping has concluded a three-day visit to the Kingdom of Saudi Arabia, where multiple deals have been signed, including 34 investment agreements in sectors such as energy (green hydrogen, solar), information technology, cloud services, transportation, logistics, medical industries, housing, and construction. Besides these, Saudi state media stated that China and Saudi Arabia signed additional deals valued at around US$30 billion on December 8. A deal over Huawei Technologies will bring cloud computing, data centers, and high-tech complexes to Saudi Smart cities.
The Eurasian Economic Union (EAEU) countries – Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia have approved the commencement of talks to conclude a free trade agreement between the EAEU and the United Arab Emirates (UAE). Bilateral trade has risen 60% this year as Russian & EAEU businesses eye Dubai and Abu Dhabi opportunities.
Iran’s minister of roads and urban development Mehrdad Bazrpash and Qatar’s Minister of Transport Jassim bin Saif bin Ahmed Al Sulaiti have held meetings to discuss enhancing mutual transportation development. The two sides negotiated to expand cooperation in the sphere of transportation and agreed on the implementation of previously agreed documents between the two countries that had been signed off in February. Significant Port, Energy and Underwater Persian Gulf Tunnel projects are all on the agenda, including arrangements for Qatar to become a regional hub as part of the INSTC.
Georgia has been increasing Russian imports to record highs this year, while Western economies have been exiting the market. Economists believe Georgian buyers are taking advantage of weak demand for Russian commodities and snapping up bargains. According to the latest data from Georgia’s National Statistics Office, Georgian imports from Russia grew 74% in the first ten months of 2022, continuing a decade-long trend.
Indian exporters are expecting shipments to Russia to be settled in rupees next week, the first time the new system will be tested since the Reserve Bank of India launched it earlier this year. As of now, five to six banks have been allowed to open Vostro accounts to facilitate international trade settlement in rupees. About 10-11 Vostro accounts have been opened. For example, six vostro accounts have been opened in the IndusInd Bank which means six different Russian banks have opened accounts with the bank.
Gazprombank (GPB) has launched money remittances for individuals in Chinese yuan from their accounts to the accounts of individuals and legal entities in any other bank in Russia or abroad, the bank has stated. Gazprombank retail clients could previously make transfers in Russian rubles, U.S. dollars, and Euros. In the West, the bank is sanctioned and unreachable via SWIFT, but elsewhere the bank performs its normal functions via Russia’s own SPFS financial payments system.
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