Waking Giant Russia Opens Eye on Asian Trade at APEC

A gas flame is seen behind barbed wire at an oil company production plant in Prirazlomnoye, western Siberia (AFP Photo)

Russian trade, traditionally aimed at Europe and the former Soviet republics, is shifting to Asia as the energy-rich giant wakes to the economic potential of the booming region, officials said.
Europe remains the dominant partner for Russia, but trade with the 21-member Asia-Pacific Economic Cooperation ( APEC) forum now surpasses that with ex-Soviet countries, Russian trade ministry official Vladimir Frolov said Friday.

"Russia has turned the second eagle's head toward Asia," Frolov said, referring to the double-headed bird of prey on Russia's coat of arms.

"The share of (ex-Soviet) countries is falling and we are redirecting this investment to the APEC region," Frolov told reporters in Hanoi ahead of President  Vladimir Putin's arrival Saturday for the annual APEC summit.

Despite its vast size and long Pacific coast, Russia is something of an odd man out in APEC, which it only joined in 1998, nearly a decade after the organisation was founded.

Trade volumes between Russia and other heavyweight APEC countries are relatively puny, amounting to just 16.7 percent of Russia's 315 billion dollar (246 billion euro) trade worldwide in the first nine months of this year.

Fifty five percent of Russia's trade is with the  European Union and 14.7 percent with the ex-Soviet Commonwealth of Independent States.

Putin, who is also meeting separately this weekend with the leaders of China, Japan, Republic of Korea, the United States and Viet Nam, hopes he can start redressing the imbalance.

The Kremlin leader is accompanied by a Who's Who of Russian businessmen including Alexei Miller, head of natural gas behemoth Gazprom, aluminium magnate Oleg Deripaska, and a top executive from arms exporter Rosoboroneksport.

Russia is the world's biggest gas producer and second biggest oil exporter, as well as the leading arms exporter, selling 7.1 billion dollars of weapons last year, according to US figures.

That puts Russia in the sights of rapidly growing Asian states shopping for military technology, machinery and, especially, for energy.

"So far, APEC and the Asia-Pacific is not the main market for Russian oil and gas, but we consider that in the future the Asia-Pacific region could be an equally important market" to Europe, said Frolov, deputy head at the trade ministry's APEC section.

A major part of that plan involves new pipelines being constructed, or planned, to take Siberian oil and gas to the Pacific coast.

The Kremlin's chief advisor on APEC, Vasily Dobrovolsky, said Putin would also discuss a Russian idea "to create a network of contacts within APEC so that information can be exchanged in case of any threat to infrastructure."

However, Russia's Asian partners are finding out that the double-headed eagle also has claws.

In an echo of European jitters about over-dependency on Russian energy, Japan is furious about a regulatory assault against a 20-billion-dollar (16-billion-euro) British-Japanese oil project at Sakhalin-2 on Russia's Pacific coast.

The Kremlin, meanwhile, is making increasingly clear that the days of sweet deals for foreign partners are over.

"We are convinced that the terms should be beneficial for all partners," Putin wrote in Japan's Yomiuri Shimbun newspaper Friday.

Russia may have arrived late at the APEC party, but it is trying to make up for lost time.

The latest sign: officials this week announced that the Russian Pacific city of Vladivostok hopes to host the forum's summit in 2012.

Source: AFP

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