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Silk road to Eurasian economic Union: an incentive for growth or a threat of collapse?
Material posted: Publication date: 20-10-2018
How much for Chinese infrastructure investment from the point of view of geopolitics?

Large projects often create major problems due to non-compliance the extent to which the private individual's perception of businessmen and politicians. In particular, this effect is manifested from the governments of, say, regional level, perceiving everything through the prism of the usual scope of notions about the world.

This is most clearly seen on the example of Chinese global "Belt and Road" affecting virtually the entire world. If rough, the layout looks fairly simple. There is one large "factory of the world" and it is located in China, while a key consumer markets are in Europe and the United States, where goods have to be transported.

Total Chinese exports in 2016 amounted to 2.27 trillion dollars, of which 19% goes to the United States, about 16% to Europe, 5% in South America. Usually logistics costs on average account for approximately 10% of total sales. Thus, we can assume that a transit country, serving, for example, the flow from China to the European Union, all together to make a "silk road" something about 36 to 40 billion dollars a year.

On the one hand, it is a strong stimulus to the growth of a very wide range of areas, from improving the actual infrastructure to the harmonization of customs and administrative procedures of neighbouring countries along the route of the cargo. What is more convenient for the customer in the end will be the whole line in General, the faster and easier to send the traffic will be on it, the stronger will grow the total volume, and hence the amount of transit fees. Benefit interesting the fact that to obtain its transit almost nothing to do. China itself produces the goods and he stimulates their sales, the rest can just be for the money they carry, which in fact, resembles a profit only from the fact that the current of the river.

But along with stimulating to the convergence effect of the project, however, demonstrates dezintegriruetsja result. It seems funny to look at the attempts by some border States like Georgia and Ukraine, to create your own private exclusive transport corridor for the whole "silk road", but it should be recognized that very similar trends are beginning to show and some members of the EAEU. This was pointed out researcher at the Berlin centre of Caspian region studies at the Free University of Berlin Jacopo Maria Pepe, who advises the Italian foreign Ministry on Eurasian Affairs.

The scale of the estimated profit at the logistics service of the Chinese trade flows different countries is perceived, that is to say, according to their own scale, primarily economic. If for Russia, which is of 1.57 trillion dollars of nominal GDP cooperation with China in the framework of the project only just beneficial for Kazakhstan ($134 billion), Azerbaijan (43.5 billion), or Turkmenistan (35.7 billion), the numbers look something very fantastic, literally tumana mind.

This gives rise to attempts, in any manner and at almost any cost to win over as large a part of the supply volumes. It seems that the road will be one, all shipments will go only on it, and then pass it should only "through us". The money at stake is so huge that there are different unions and international organizations you can donate.

This derives from a misunderstanding of two things. First, there is no "one way" this volume of traffic is not able to digest even theoretically. Secondly, Beijing and he is not interested to close a strategic the line on any one country or one logistics option. Too fraught with blocking it with some independence.

Speaking of "Belt and Road" China is actually creating a wide transport corridor from a number of parallel and largely complementary lines. There, in particular, "European" in the whole will be right in three ways. About 40% will remain on a traditional sea lines across the Indian ocean and the Suez canal into the Mediterranean sea. Even the order of 45-50% will be allocated through the Northern sea route.

Pure land it is planned to allocate only 5-7% of cargo, and even they go for several options of routes. Among which the key there are three: totally Russia in parallel the TRANS-Siberian railway; together through Kazakhstan and Russia; separated by the southern route through Turkey. It is important to note that these options are not three plans, among which wins the "one person", is a three corridor, which Beijing intends to operate simultaneously. However, the Central Asian members of the EAEU seems that the road can be only one, and the business of life to win them to himself.

It should be noted that without showing this explicitly, Beijing, however, whether the evolving situation to their advantage using it. Although the project as a whole and is positioned as a global, all agreements on it are strictly direct inter-state character, not the EEU as an organisation that represents the interests of all its participants.

In an effort to secure the passage of the "paths" "precisely through us," the governments of small countries are going to provide China greater preferences, extensive special conditions and the estimated reduction rate that is then used by the Chinese side in negotiations with other countries.

Wins originating from China, whereas members of the EEU, as a whole, as an organization, individually, as independent States, by contrast, lose.

What can be done is the big question. The answer depends on the "sides". For Russian diplomacy, the emerging trend can be a good basis for the strengthening of the Eurasian Union not only at the level of General conversations about a hypothetical geopolitical advantage, but also in very tangible money.

Speaking on a United front and agreeing to be represented by an organization of the Eurasian Union and its members will be able to obtain more favorable terms than in the case of behind-the-scenes negotiations with Beijing directly. Thus the benefits of the EEU will become more than the material shape. Remarkably, for the scale of the Russian economy the size is not so significant, whereas for the scale economies of the States of Central Asia, it is comparable to the concept of "drivers of economic growth," which they were not so much.

So admittedly, Jacopo Maria Pepe has touched on a very important point that we have no right to miss. Of course, if you really want to turn the EEU into a powerful international political and economic force.

Alexander Zapolskis


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