DOROTHY HORSFIELD. The St Petersburg International Economic Forum. A New World Order?

Oct 16, 2018

One of the most interesting aspects of this year’s St Petersburg International Economic Forum was the way it undermined commonplaces about a post-Soviet Russia with an economy is on the skids as a result of sanctions, international vilification, and its overdependence on energy sector revenues. How plausible were the Forum’s optimistic evocation of a new world economic order, shaped by a Fourth Industrial Revolution, in which Russia can play an integral role?

Held every year since 1997, the St Petersburg International Economic Forum is commonly known as the Russian version of the Davos World Economic Forum, with which it has a partnership. As in previous years, the 2018 Forum constituted a financial bonanza. According to the official government statistics, 550 business agreements between Russian and foreign corporations and affiliates, worth around $US38 billion, were signed on the Forum’s sidelines. Prominent on the list of those countries which have signed up are around 3000 American companies, such as Boeing, General Motors, 600 British companies including BP and Shell, as well as China, Germany, notably the gigantic company, Bayer, Volkswagen, Deutsche Bank, allegedly the bank of choice for Russia’s oligarchs, and Japan and France, who were this year’s honoured guest countries.  

Altogether the Forum attracted a record 17000 participants from 143 countries. As far as I could tell, mainly through the lens of a business breakfast I co-hosted with the Secretary of Australia Russia Dialogue, Dr Alexey Goncharov, Australians were virtually absent. In any event, they seemed to keep a low profile -understandably perhaps because Russia’s a long way away, at no 12 it is well down the ranking of the world’s largest economies (only a notch higher than our relatively small island), it is subject to limited sanctions by our current Liberal government, and our exports to the country amount to a mere AUD$589 million – as distinct from exports to our no1 trading partner, China, which are worth around AUD$129.5 billion. The significant issue here, is whether to overlook Russia’s potential as a more substantial trading partner is to marginalise ourselves with regard to what has also been claimed to be the beginning of a seismic shift in the world economic order towards a ‘Eurasian Century.’

Underpinning what seemed to be a very successful trade fair, the Forum’s message was that integral to the country’s enthusiastic embrace of globalised capitalism, of which its membership of the WTO has become emblematic, were the government’s repeated assurances that Russia was committed to financial regulatory systems that were aimed at ensuring an ‘Economy of Trust.’ Nor should this message be seen as simply a matter of domestic corporate regulation and anti-corruption policies. In his address, President Putin endorsed the view that, though not perfect, the WTO remains the key link to ensuring rules-based international economic stability.  Behind such assurances was the much deeper concern that resonated through the Forum about the rise of protectionism, fostered by Trump’s illiterate economic policies and general diplomatic stupidity, currently exemplified by the intensifying trade war between the US and China. As Putin put it more politely, if we are to avoid chaos, ‘it is important that we not allow artificial limitations to curb multilateral trade, finance, manufacturing, or investment. His view was echoed by the IMF’s Christine Lagarde who warned of the ‘darkening clouds from the risk of a retreat from global trade and multilateral cooperation.’

Also resonating through the Forum was the curious concept of ‘Two Worlds,’ which seemed tosuggest that Western vilification of Russia could be circumvented or ignored. On the one hand, there are the Russophobic geopolitical Realists, whose focus is on Russia’s interventions its near abroad, notably in South Ossetia, Georgia and Ukraine, and in Syria and the wider Middle East, on accusations of hacking, human rights violations, nerve agent poisonings and the downing of MH17, as well as its creation of a new generation, high tech weapons’ arsenal – a world which in the context of the Forum barely seemed to rate a mention, even by the IMF. 

In radical contrast, there is the other world where everyone benefits from an innovative international economy. From Putin’s opening speech onward, the Forum was well-stocked with the language of clever, futuristic global capitalism – with a human face. The unipolarity of what has been seen by many as morally-degraded US foreign policies is being replaced by genuine multipolarity. As well as the Russian President, on the podium for the plenary session were French President Emmanuel Macron, China’s Vice-President, Wang Qishan, Japan’s Prime Minister, Shinzo Abe, and Christine Lagarde, all of whom gave fulsome endorsements of the advantages of economic engagement with Russia’s resurgent growth.  As the session’s moderator, Bloomberg News Editor-in-Chief, John Micklethwaite, quipped, given it was very rare to find such leaders in one room, it could just be a sign of ‘Donald Trump’s unique ability to bring people together.’

For instance, Lagarde’s plenary session speech repeated her exceptionally positive assessment of Russia’s financial management. The Kremlin had developed an ‘admirable’ macroeconomic framework, she said, which had enabled it to weather the tough times throughout both the 2007-8 Global Financial Crisis and the imposition of sanctions following its engagement with the events in Ukraine and Crimea. Today’s Russia had almost no fiscal deficit, a solid current account balance and very little debt. The IMF’s estimated a 2.5% growth in the country’s GDP in 2018/19, revised upwards from last year’s figure of 1.5%. 

The urbane Shinzo Abe waxed more rhapsodic. ‘If you’re going to dream,’ he said, ‘you’d better dream big,’ and invited us to imagine a regional zone of peace and prosperity. Implicit in such a dream is China’s massive, multi-multi billion dollar reconstruction of the ancient Silk Road maritime and overland trade routes with their tentacles reaching north, south and west across the reaches of Eurasia – not least into the Russian Federation. In other words, the dream is not so much about a new World Economic Order as an ambitious drive to relocate and revitalise the existing international capitalist system. 

For Russia, this does not imply a turning away from Old Europe. Rather it has meant a stronger focus on the Asia-Pacific in the pursuit of large-scale investments and the expansion of its export markets, including hopefully in meeting the need for adaptive, innovative technological solutions to the environmental ravages caused by industrial revolutions 1-3.  

Finally, to those digital technologies and biomedical breakthroughs that constitute the building blocks of the Fourth Industrial Revolution.  When it comes to Russia, Lagarde pointed out, her IMF message is repetitive – to continue diversifying out of oil, boosting health and education, reducing market concentration, and integrating more into the global economy. It reminded her of the plight of Liz Taylor’s fifth husband: ‘He knew what he had to do, but how to be original?

Dr Dorothy Horsfield is a Foundation Fellow of the Australian National University’s Australian Studies Institute and a Member of the Steering Committee of its Emeritus Faculty. Her most recent book, ‘Russia in the Wake of the Cold War Perceptions and Prejudices, was published in 2017 by the US publisher, Lexington.

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