Since 2014, the Russian Federation has suffered from severe economic sanctions imposed on it primarily by Western nations. Because of these actions, the Russian economy has stagnated in recent times, leaving the nation with much desire to find ‘new friends’ within the world of global trade and business. In response, Russia has began a major pivot towards the Asia-Pacific region.
Just last year, Singaporean Prime Minister Lee Hsien Loong visited Yerevan in Armenia, which is a member of the Russian-led Eurasian Economic Union (EEU). The EEU is a grouping of various Eurasian nations that include Armenia, Russia, Belarus and Kazakhstan. Within this after several rounds of negotiations, “Singapore and the EEU signed a free trade agreement, the first of that scale for the Eurasian bloc”. Overall, what this suggested was a massive victory for Russia, and its economic ambition within Southeast Asia. This is because of the increased business opportunities that the deal is expected to offer, and with the signing of this trade deal between Singapore and the EEU, Russia may well have found in Singapore an entry point to the rest of Southeast Asia.
Russia has already sought to increase foreign direct investment in Southeast Asia – the second stage of efforts to increase economic integration – as evinced by the over $1 billion in investment projects signed at the Russian-ASEAN Summit in Singapore, in 2018.
This unlikely partnership demonstrates the failing efficacy and relevance of Western sanctions against Russia following the annexation of Crimea. Not only are Singaporean businesses looking to invest in Russia, but there are also “almost 700 Russian companies in Singapore, including tech heavyweights like Kaspersky Lab, and energy giants such as Rosneft and Gazprom. Trade between the two countries reached $5 billion in 2018 and is growing.”
The mutual benefits of growing bilateral trade are fairly evident. Singapore is one of the leading centres of global finance, and a major player within the Association of Southeast Asian Nations (ASEAN), while Russia possess a wide range of primary resources and exercises considerable influence over Central Asia and Eastern Europe, suggesting the emergence of a mutually profitable relationship in coming years. In addition to this, thanks to the trade deal, other members of the EEU will gain increased access to ASEAN markets.
The contrast with Moscow’s old relationship with Southeast Asia is stark. As the leading communist power, Moscow enjoyed preferential access to certain Southeast Asian markets while being excluded absolutely from others. Following the collapse of the Soviet Union, Russia’s influence and prestige waned noticeably over its sphere of influence. Had Russian access to Western markets not been so significantly curtailed by Western sanctions, its need to pursue alternate markets, including “an appealing gateway”, such as Singapore, would not have been so great. In strengthening ties with ASEAN, Russia joins other major Asian nations who have concluded treaties with ASEAN, examples being India and China.
Overall, these developments are part of a global pivot to Asia in politics and trade, and show that Russia is interested in playing a part in the rise of ASEAN, which promises to be locus of increased struggle amongst the major powers. What will be interesting to see is how both Singapore and the rest of ASEAN respond to Russian interest and investment in this emerging economic region.
Nathan Wilson is a student of philosophy and politics at the University of Stirling, specialising in International Politics and Political Violence within the Asia-Pacific region. He previously studied abroad at Lingnan University in Hong Kong.
Picture via Kremlin.ru.