On Wednesday, December 14, the 13th Asian Conference of the Valdai Discussion Club ended in St. Petersburg. On the final day of the conference, one open session was held, dedicated to the changes in the transport, logistics and financial sectors.
Despite the fact that the session was devoted to specialised issues, the speakers could not but touch on the topic of the changing world order. Nguyen Hung Son, Vice President for Research at the Diplomatic Academy of Vietnam, presented his country’s perspective on the ongoing changes. According to him, the world order that existed after the end of the Cold War was generally beneficial to the countries of Southeast Asia, which are relatively weak players on the world stage. Vietnam — and ASEAN as a whole — are not in favour of the demolition of the existing world order, but for an evolutionary path of development, anyway they recognise the emergence of new forces and factors.
Speaking about relations with Russia, Nguyen noted that Vietnam is interested in its presence in the Indo-Pacific (emphasising that Hanoi shares this concept). At the same time, at the moment, bilateral trade is at zero, and the main task is to maintain the tourist flow. He named cooperation in the field of gas production and the defence sector as promising areas, although Vietnam’s vulnerability in face of Western sanctions is a big obstacle to expand cooperation.
Meanwhile, Russia, which is under a flurry of sanctions, is demonstrating resilience, including in the transport and logistics sector. Aleksey Bezborodov, managing partner of Infra Projects, said that despite the difficulties, no company went bankrupt in transport and logistics in Russia. The volume of trade has remained the same, but the direction has changed. The bulk of trade flows moved to the Far East, primarily the Vostochny port. Because of this, average ship waiting time is 2-3 weeks, and sometimes more. In connection with the lockdowns in China, there are problems with the delivery of goods by land, too. Bezborodov expects the situation in Primorye to stabilise by the spring of 2023.
If we talk about the European direction, then the role of Turkey stands out here, the volume of trade with which is growing at a “giant progression” — up to 70%. Cargoes are delivered to Russia both through the port of Novorossiysk and by road through the countries of the Caucasus. However, despite the blocking of container traffic by the EU, the port of St. Petersburg does not suffer either. As Bezborodov noted, some European companies continue to work, despite the prohibitions of their authorities. Summing up, he stressed that European sanctions and Chinese lockdowns are the two main obstacles for Russian logistics at the current stage, but China’s expected departure from its zero-Covid policy gives some hope that the situation will improve.
Raza Muhammad, President of the Islamabad Institute for Policy Studies, spoke about Asia’s role in sustaining global growth as the world economy rebuilds. According to him, natural resources, human capital, geographic opportunities and geopolitical importance in world affairs have provided Asia with a unique advantage over other continents. New financial mechanisms are emerging in Asia, he stressed. The currencies of Asian countries are strengthening their positions, competing with the US dollar — and this is in the interests of Russia, which is steadily pursuing a policy of de-dollarisation of foreign trade.
Alexander Korolev, Deputy Director of the Center for Comprehensive European and International Studies, National Research University Higher School of Economics, spoke about the challenges that arise in the financial sector. He singled out two groups of risks for Russia’s financial cohesion: the physical impossibility of conducting transactions in dollars and euros and the fear of partners falling under secondary sanctions (the EU, which was previously sceptical of this practice, adopted it in 2022).
According to the researcher, under these conditions, Russia needs to continue de-dollarisation, expand the use of alternatives to the SWIFT system, develop a network of mutual correspondent accounts in national currencies, expand the use of clearing and currency swaps, make more active use of national payment systems and expand the list of trading currency pairs on the Moscow Exchange.
At the same time, trading in national currencies entails a number of challenges, including the high volatility of a number of currencies (for example, the Turkish lira). An important issue is the provision of trade on a parity basis. In conclusion, Korolev called for a review of the efficiency parameters of free trade zones, stressing that free trade zones in and of themselves do not lead to an increase in trade. To do this, among other things, it is necessary to develop logistics and integrate into value chains.