DOI: 10.32609/j.ruje.11.145426

Authors: Anna M. Golovanova

Abstract: The paper is devoted to econometric analysis of the impact of Russia–Ukraine conflict, which started in February 2022, on TV advertising strategies of fast-moving consumer goods (FMCG) companies. With the help of quantitative methods, the study analyzes changes in TV advertising expenditures of domestic and foreign brands, using Mediascope TV Index daily data from 2021 and 2022 to test the hypothesis of whether this geopolitical shock made advertising costs dwindle or rise. Cross-country-of-origin and cross-product differences are also investigated. It is confirmed that, on average, the shock resulted in a reduction of ad expenditures of FMCG companies with a pronounced effect on domestic brands and brands from “friendly” countries. Thus, the cost-saving arguments seem to outweigh the expected benefits from promotion in the majority of the considered FMCG product markets. The increase in ad spending on isolated product groups (clothing, electronics, personal hygiene items and tobacco and alcoholic beverages) indirectly evidences that the brands faced sharp intensification of competition because of structural changes in the markets under which extra ad spending was found reasonable.

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DOI: 10.32609/j.ruje.11.145396

Authors: Nataliia Vlasova, Ahmed Alwadeai

Abstract: This study investigates the multifaceted relationship between international sanctions and economic freedom, treating it not simply as an economic construct but as a fundamental pillar of societal well-being. Drawing upon a panel dataset of 21 countries subjected to sanctions between 2002 and 2022, we analyze the impact of sanctions — both economic and non-economic — on overall and component-level economic freedom. Methodologically, we integrate Panel-Corrected Standard Errors, Feasible Generalized Least Squares, and Partial Least Squares Structural Equation Modeling, thereby addressing issues such as heteroskedasticity, autocorrelation, and the complexity of multiple interdependent relationships. Our findings reveal a consistent negative effect of sanctions on economic freedom, although the severity and channels of impact vary according to the nature and source of the sanctions, as well as the institutional and temporal contexts. Notably, sanctions imposed by the United Nations emerge as particularly constraining for property rights and monetary freedom, while trade and financial restrictions curtail investment and market openness. At the same time, sanctioned states demonstrate varying degrees of resilience, adapting policies and seeking alternative markets to mitigate sanctions. These outcomes underline the dual nature of sanctions as powerful tools of international diplomacy that can inadvertently undermine economic freedom. By illuminating these dynamics, our study offers insights for policymakers and scholars alike, emphasizing the importance of tailoring sanctions to limit harm to economic liberties while pursuing legitimate foreign policy objectives.

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DOI: 10.32609/j.ruje.10.125317

Authors: Maribel Aponte-Garcia

Abstract: In response to international sanctions, Russia has restructured its hydrocarbon commerce through trade deflection, redirecting exports from sanctioning to non-sanctioning countries. The research aimed to analyze hydrocarbon trade deflection under the Russia–Ukraine conflict within the context of the China–Russia Strategic Partnership and BRICS, and to assess the restructuring of Russia’s crude oil and natural gas supply chains from 2020 to 2023. Two questions were addressed: Whether trade deflection shifted towards non-sanctioning countries, including China and other BRICS countries; whether Russia’s oil and gas supply chains were restructured towards these regions? Design incorporates the method developed by the author which generates and utilizes an integrated database of Bill of Lading and export data to analyze supply-chain trade restructuring, identifying specific shifts in trade flows by product, country, and enterprises. Findings reflected that after sanctions were imposed in early 2022, Russian hydrocarbon exports to sanctioning countries declined sharply, while exports to non-sanctioning countries, particularly China and India, increased significantly. Findings demonstrate the effectiveness of trade deflection as a strategic response to sanctions. This strategy has mitigated the adverse impacts on Russian oil and gas industry, with significant increases in exports to China and India. The Comprehensive Strategic Partnership with China has helped secure a substantial market for Russian crude oil and increased China’s energy security. This study enhances understanding of trade deflection mechanisms and provides a framework for analyzing the interplay between international trade, geopolitical strategies, and economic resilience. Geopolitical alliances and trade partnerships have ensured resilience and continuity in global trade. This shift indicates strategic diversification towards Asian markets and increased Central Asian involvement. BRICS engagement has provided Russia with a platform to advocate for energy security and challenge Western dominance in global energy governance. Future research should explore other supply-chain components and analyze trade within the BRICS+ group and Russia–China bilateral trade.

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DOI: 10.32609/j.ruje.10.121368

Authors: Elena Daniela Sarau

Abstract: This study investigates the role of economic sanctions within contemporary national security strategies, focusing on their impact, motivations, and implications for sender states. Utilizing a mixed-methods approach, the research combines qualitative and quantitative methodologies to comprehensively analyze unilateral and autonomous economic sanctions imposed by the U.S. and the EC/EU between 1950 and 2019. The comparative and descriptive analysis examines 97 sanctions episodes, including 60 unilateral U.S. sanctions and an original dataset of 37 EC/EU autonomous economic sanctions episodes. The findings reveal that economic sanctions imposed by both entities generally yield positive economic outcomes for sender states. Endogenous motivations such as economic security concerns, geopolitical interests, and domestic political considerations emerge as significant drivers behind the deployment of sanctions. Economic sanctions are perceived as a strategic tool serving political objectives while enhancing economic security of sender states. Tangible benefits, including strengthened negotiating positions and domestic support, underscore the instrumental role of sanctions in advancing sender states’ interests globally. In summary, this research contributes valuable insights into the complex dynamics of economic sanctions and their implications for sender states. The study offers pertinent guidance for policymakers, scholars, and practitioners navigating global security and economic governance challenges by examining economic sanctions’ motivations, impacts, and implications within contemporary national security strategies.

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DOI: 10.32609/j.ruje.10.118505

Authors: Osama D. Sweidan

Abstract: Recently researchers performed empirical economic studies to investigate how geopolitical risk impacts diverse economic sectors. We take a fresh perspective by exploring whether advancements in the U.S. IT sector can account for fluctuations in China’s geopolitical risk. The conflict between China and the United States regarding semiconductors revolves around technological supremacy, economic dominance, and national security concerns. China has been striving to become self-sufficient in semiconductor production to reduce reliance on foreign suppliers, particularly the United States. However, the United States has imposed restrictions on semiconductor exports to China. Our study constructs a theoretical framework and utilizes the bounds testing approach for cointegration to estimate the parameters of the Autoregressive Distributed Lag model. We use monthly data from January 1993 to November 2023. The findings reveal that the U.S. IT sector significantly and positively influences China’s geopolitical risk. From a policy implication perspective, the race to lead the global IT sector may emerge as the primary source of economic and political instability unless rival nations reach a compromise.

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DOI: 10.32609/j.ruje.10.118769

Authors: Ahmed Alwadeai, Nataliia Vlasova, Hadi Mareeh, Nadeem Aljonaid

Abstract: This study investigates the impact of economic sanctions on exchange rate volatility, with a specific focus on the role of foreign reserves in mitigating these effects across 21 countries from 2002 to 2022. Employing advanced econometric models, including Panel-Corrected Standard Errors (PCSE) and Feasible Generalized Least Squares (FGLS), our analysis identifies a positive correlation between economic sanctions and increased exchange rate volatility. A significant finding is that high reserves-to-GDP ratios do not fully stabilize exchange rate volatility in the presence of economic sanctions, challenging the traditional view of reserves as reliable stabilizers. It also demonstrates an inverse relationship between heightened reserves-to-GDP ratios and economic growth during periods of sanctions, indicating that larger reserves may reflect economic difficulties rather than strength. These findings implicitly call for a reevaluation of economic policies in favor of adopting strategies that mitigate global economic uncertainties. Supported by previous literature, the importance of international cooperation and governance that foster economic and trade diversification is highlighted. This approach can provide alternative sources of foreign exchange and reduce economic vulnerability to sanctions, enhancing overall economic resilience and stability.

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DOI: 10.32609/j.ruje.9.103780

Authors: Agus Dwi Nugroho, Imade Yoga Prasada, Zoltan Lakner

Abstract: The EU has agreed to sanction Russia by prohibiting bilateral trade, including food imports. This study aims to determine the impact of EU sanctions on EU19 food imports from Russia. The two-stage least squares (TSLS) and propensity score matching (PSM) were used to analyze EU19 food import data from January 1999 to October 2022. According to the findings of this study, the sanctions have no impact on EU19 food imports from Russia. The sanctions were only recently imposed so they have not had a significant impact on bilateral trade between the EU and Russia. On the other hand, EU19 is trying to be realistic about the implementation of sanctions due to their reliance on Russian food. Our findings provide a new perspective for the development of a non-tariff-barrier theory in which sanctions or other trade barriers are ineffective in countries that rely heavily on other countries.

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DOI: 10.32609/j.ruje.9.97733

Authors: Osama D. Sweidan

Abstract: Exploring the nexus between geopolitical risk (GPR) and military expenditures (ME) has been limited during the past period. It is justified by the absence of a well-published proxy for GPR. Recently, the work of Caldara and Iacoviello (2022) stimulated scholars to examine the consequences of GPR. Our paper seeks to understand the relationship between GPR and ME in the United States (US). It designs a theoretical framework and computes an econometric model using the Autoregressive Distributed Lag methodology based on annual data (1960–2021). In addition, it uses the pairwise Toda–Yamamoto causality test. The results show that the relationship between GPR and ME is one of unidirectional causality and runs from ME to GPR in the US. Further, this relationship is statistically significant and positive in the short and long run. This finding supports our hypothesis that the US GPR is a consequence of resource allocation, i.e., ME, and can be controlled, directed, and mitigated. Thus, ME is a tool to achieve the US international hegemony’s strategic goals. From a policy implication perspective, it has been proved that GPR has broad negative consequences for various economies. Thus, moving toward cooperation and coordination with other nations instead of accumulating ME tends to support the international economy.

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DOI: 10.32609/j.ruje.9.104661

Authors: Igor M. Drapkin, Anna A. Fedyunina, Yuri V. Simachev

Abstract: The economic sanctions imposed by the United States, Europe, and other countries since 2014 have heightened the unpredictability and turbulence in the business environment for Russian firms, necessitating exploration of new international partners and transformation of economic relationships. This paper aims to examine the redirection of Russian outward foreign­ direct investment (OFDI) in the context of these economic sanctions, particularly those intensified since 2022. The analysis employs an estimated econometric model to compare actual and potential levels of OFDI, utilizing a comprehensive database covering 74 origin and 102 destination countries from 2010 to 2019. The estimation technique employs Poisson pseudo-maximum likelihood approaches. The findings indicate that Russian firms demonstrated underinvestment in most regions, except for Northern and Western Europe, during the examined period. The 2014 sanctions resulted in a significant decline in Russian OFDI to the countries imposing sanctions, while there was an increase in OFDI to Asia, the Middle East, and the CIS countries. As anticipated, the 2022 sanctions exerted additional pressure on Russian OFDI, leading to a further shift of their outflows towards Asia and the Middle East, which, however, could not compensate for the sharp decline in OFDI to the EU countries and North America. The results highlight the existence of untapped OFDI potential for Russia in African and Latin American countries as well as in the Middle East. These regions emerge as desirable partners for bilateral economic liberalization. From a policy perspective, the findings emphasize the importance for the Russian Federation to pursue deep trade agreements that encompass investment preferences, public procurement, and the protection of intellectual property rights with regions harboring untapped potential for OFDI. Additionally, expanding government support for domestic firms venturing abroad is crucial to sustain and enhance integration into the global economy, especially in the face of sanctions.

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DOI: 10.32609/j.ruje.9.104761

Authors: Marek Dabrowski

Abstract: The post-communist transition in the former Soviet Union (FSU) cannot be considered entirely successful, especially in the political and institutional spheres. Nevertheless, in the economic sphere, the transition process succeeded in rebuilding the foundations of market economies based on private ownership by the early 2000s, even if the adopted­ policies and institutions have proved suboptimal and distortive in many countries. The transition experience in the FSU region has demonstrated a correlation between political and economic reforms, with a strong impact of the former on the latter. The deficit of democracy, civil freedoms and the rule of law has negatively impacted the course of the economic transition, causing significant delay, distortions and partial reversals.

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DOI: 10.32609/j.ruje.8.78026

Authors: Javad Keypour

Abstract: The security of gas supply is one of the main concerns for the European Union (EU), especially when considering the EU’s dependence on Russian gas. The idea of importing liquefied natural gas (LNG) from the United States has recently emerged as an alternative to reduce EU dependency on Russia. However, the idea still needs to be evaluated­, especially the extent to which it is beneficial or practicable for EU gas security. Composing as it does an appropriate indicator, namely the risks to the EU gas supply, this current research attempts to evaluate the idea of substitution. The composed touchstone comprises critical elements, including political risks for gas supply and transit, the importance of natural gas imports in the gross domestic product, and fungibility of the import. This indicator has then been applied to six selected member states. The results of our analysis indicate that importing gas from the United States improves supply security in five cases. Nevertheless, the benefits of substitution should be evaluated­ considering the limitations of available infrastructures and the economic factors. This could suggest that importing the U.S. LNG can be a feasible policy for Poland and the Baltic States, however, not necessarily for Germany, Italy and, especially, France. Therefore, replacing Russian gas with the U.S. LNG entails some prerequisites before being considered a beneficial alternative for EU gas security.

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DOI: 10.32609/j.ruje.6.55450

Authors: Emre Hatipoglu, Saleh Al Muhanna, Brian Efird

Abstract: The development of renewable energy is often treated as a purely positive outcome for the world, without consideration of the challenges that come with implementation at scale, which will inevitably follow with the process of a global energy transition. Studies on the political process of the transition to a world of renewables are scarce. This article provides a review on the geopolitical, institutional, and technological aspects of the development of renewable energy sources, including transportation and delivery of energy across national borders. At scale internationally, renewable energy will present many of the same issues as other mature sources of energy. Security, export interdependence, and the availability of source materials will all become increasingly important concerns.

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DOI: 10.32609/j.ruje.6.55478

Authors: Kirsten Westphal

Abstract: Russia is the world’s largest gas exporter and Germany is its most important market. Moreover, natural gas is a centerpiece of the Russian economy and the backbone of its energy supply to the Russian population. In terms of its external gas relations, Germany has always kept a special and strategic position, both in terms of volumes, but also in substance. This contribution explores the impact of the energy transition on the bilateral gas relationship. It argues that the bilateral gas relationship has been subjected to various paradigm shifts in the past, but, until recently, the relationship has been seen as in line with the strategic energy triangle of climate change/sustainability, supply security and economic competitiveness. This perception has come into question over two issues: climate change and supply security. Moreover, Germany’s authority over the conduct and the legal framework of bilateral gas relations has been increasingly contested, by Brussels, but also horizontally by other EU member states. At this stage, it is very uncertain whether both sides will manage to maintain and redefine their close energy partnership to address climate change. Decarbonizing the gas value chain would be a centerpiece. This would require a political shift away from securitization to decarbonization, not only in Germany, but even more so in the EU, and in particular, in Russia.

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DOI: 10.32609/j.ruje.6.55867

Authors: Vladimir A. Mau

Abstract: This article presents an analysis of the key challenges facing the global economy, as well as the impact of these challenges on Russia. It addresses main collisions that have emerged in recent years, including the proliferation of etatism and populism, increasing social and political polarization, the growing importance of national issues vs the global agenda, as well as the social, economic and political consequences of using digital technologies against the backdrop of the global economy spiraling into an unprecedented crisis. The pandemic and its global economic impact are analyzed within the context of the 2008–2009 global financial crisis. This is the foundation which we set for discussing Russia’s economic agenda.

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DOI: 10.32609/j.ruje.5.49346

Authors: Alicia Garcia-Herrero , Jianwei Xu

Abstract: This paper reviews China’s growing economic ties with Russia. We conclude that such ties have strengthened in terms of trade and cross border lending, but less in terms of Chinese foreign direct investment in, or portfolio flows to, Russia. Meanwhile, Europe remains Russia’s largest trading partner, lender and investor. In relation to trade, China seems to have become more of a competitor for the EU on Russia’s market when we appraise China’s increasing export share and the increasing value added of its exports and previous empirical analysis at the product level. Increasing competition between European and Chinese exports should not be surprising as there is ample evidence that China has been moving fast up the technology ladder during the past few decades. Competition over investment and lending is more limited but the situation could change rapidly with China and Russia giving clear signs of a stronger-than-ever strategic partnership.

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DOI: 10.32609/j.ruje.5.49417

Authors: Marek Dabrowski

Abstract: In the decade of the 2010s, the pace of economic growth in Russia slowed down to an annual rate of below 2% and most forecasts suggest that this is will be the new “normal” for the Russian economy at least in the medium-term. While politically and socially disappointing, such a growth slowdown is unavoidable due to adverse demographic trends. A combination of a shrinking working-age population and population aging must lead to a lower growth pace as compared to the period when the working-age population was still increasing and the effects of population aging were limited (the decade of the 2000s). Compensatory measures such as a gradual increase in the retirement age and an open labor migration policy, although economically positive, can only partly mitigate the negative effects of a shrinking domestic labor force. In this respect, Russia does not differ from other European countries and some Asian countries. However, demography and shrinking labor supply cannot fully explain low potential growth. Stagnation in total factor productivity is another reason. It results from a poor business and investment climate, difficulty in diversifying away from the dominant role of the hydrocarbon sector, and deteriorating political and economic relations with the US and EU which limit trade, investment and innovation opportunities. To increase its potential growth, Russia needs comprehensive economic and institutional reforms that, in turn, will be conditioned by political reforms and by improved economic and political relationships with the US, the EU and Russia’s neighbors.

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DOI: 10.32609/j.ruje.5.38704

Authors: Michael Baltensperger, Uri Dadush

Abstract: China’s Belt and Road Initiative (BRI) is an international trade and development strategy. Launched in 2013, it is one of the ways that China asserts its role in world affairs and captures the opportunities of globalization. The BRI has the potential to enhance development prospects across the world and in China, but that potential might not be realized because the BRI’s objectives are too broad and ill-defined, and its execution is too often non-transparent, lacking in due diligence and uncoordinated. This article documents the background and context of the BRI, recounts what is known about the extent of the initiative and specifies its various motivations. It highlights that the initiative meets very large infrastructure investments gaps, which is welcome and needed, and that China’s goal of forging stronger links with its trading partners around the world are legitimate, so long, of course, as the underlying intent remains peaceful. Though many observers welcome the BRI, many others oppose it for good reasons, while others misunderstand it and oppose it for bad reasons. The paper identifies and discusses concerns about the initiative that relate to its geopolitical objectives, its priorities, its geographic scope, the role of state-owned enterprises, the allocation of resources, issues of transparency and of due diligence. Particularly, it shows that this initiative deals with a vast number of countries that are in very different states of development and that an apparent lack of well-defined priorities is holding the initiative back. The paper also highlights the issue of debt overload which is distressing several BRI countries and discourages further projects. It points briefly to possible improvements that China and the other stakeholders in the BRI can make to get the most out of their investments. The BRI, to be effective, needs to meet the basic conditions of a trade and development strategy, which are clear objectives, adequate resources, selectivity, a workable implementation plan, due diligence and clear communication. Involvement of multilateral lenders could help with this. Finally, China has to improve the evaluation of project’s risks and costs and step up its due diligence approach to demonstrate that it respects the long-term interests of those countries that are at the receiving end of its BRI projects.

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DOI: 10.32609/j.ruje.5.35234

Authors: Vladimir A. Mau

Abstract: This paper deals with global trends and their influence on Russian economic and social performance. A new economic crisis is looming, and the lack of institutional reforms, which were put on the agenda by the crisis of 2008–2009, is a source of current concern. In 2018 Russian authorities announced a set of national goals and projects as the central point of social and economic policy for 2018–2024. The new economic growth policy includes the shift from the demand-side growth model to the supply-side one, broad implementation of project methods in economic policy, and continuation of conservative fiscal and monetary policy.

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DOI: 10.1016/j.ruje.2016.08.002

Authors: Marek Dabrowski

Abstract: Since the collapse of the Soviet Union, its successor states have suffered from cyclical currency crises. The most recent episode of 2014–2016 was caused by a combination of external and domestic factors. The former include tighter US monetary policy, slower global growth, and declining commodity prices, whereas the latter include the former Soviet Union (FSU) economies’ extreme macroeconomic fragility (a legacy of past crises), numerous microeconomic rigidities and structural distortions in addition to governmental deficits. In addition, the Russian–Ukraine conflict dealt a heavy blow to both economies and their neighbors. Effective anti-crisis policies must aim at eliminating all deep-rooted causes of repeated financial and macroeconomic turbulence and must involve deep structural and institutional reforms in the entire region.

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DOI: 10.1016/j.ruje.2016.06.003

Authors: Andrei Yakovlev

Abstract: Contrary to the focus on the events of the last two years (2014–2015) associated with the accession of Crimea to Russia and military conflict in Eastern Ukraine, in this study, I stress that serious changes in Russian domestic policy (with strong pressure on political opposition, state propaganda and sharp anti-Western rhetoric, as well as the fight against “foreign agents’) became visible in 2012. Geopolitical ambitions to revise the “global order” (introduced by the USA after the collapse of the USSR) and the increased role of Russia in “global governance” were declared by leaders of the country much earlier, with Vladimir Putin's famous Munich speech in 2007. These ambitions were based on the robust economic growth of the mid-2000s, which encouraged the Russian ruling elite to adopt the view that Russia (with its huge energy resources) is a new economic superpower. In this paper, I will show that the concept of “Militant Russia” in a proper sense can be attributed rather to the period of the mid-2000s. After 2008–2009, the global financial crisis and, especially, the Arab Spring and mass political protests against electoral fraud in Moscow in December 2011, the Russian ruling elite made mostly “militant” attempts to defend its power and assets.

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DOI: 10.1016/j.ruje.2016.06.002

Authors: Julian Cooper

Abstract: The article analyses the development of the military dimension of Russia's economy over the past decade or more, including the significant growth of military expenditure and its principal driver, spending on the ambitious state armament programme to 2020. For the first time for almost twenty-five years Russia once again possesses capable armed forces. With greater economic and military strength Russia's leadership now feels able to be more assertive, even militant, on the world stage. These developments threaten to be constrained by the poor performance of the economy, facing the government with a policy challenge. However, for Russia and the main Western powers there can be no going back to the status quo ante.

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DOI: 10.1016/j.ruje.2016.06.001

Authors: Silvana Malle

Abstract: This paper argues that Russia has embarked on a difficult path to economic sovereignty and heightened security to withstand rising antagonism from the West that culminated with the application of punitive sanctions against Russia's positioning on Ukraine. With the aim of lessening economic dependence on trade with the EU, its major trade partner for decades, Russia tries to work out a patriotic model of growth based on two vectors: import and trade partner substitution. The pursuit of self-sufficiency in foodstuffs adds an important pillar to security concerns as reflected earlier in the 2010 Doctrine on Food Security. But import substitution will be costly and difficult to manage. Fiscal balances and exchange rates will need to adjust to the new challenges. Finding new partners eastwards is also complicated. Trade with China, in hydrocarbons or other commodities, requires massive infrastructural work that neither the government nor private investors can afford in a situation of financial stringency. Investment from China is slow to materialize as the economic slowdown also impinges on China's projects. Nonetheless important deals on gas and infrastructure have been agreed and are pursued despite difficulties. A favourable institutional framework aimed at attracting investors to the Far East is in place. It will be up to the local administrations to make the best of it and venture capital to run the risk. The outlook is long-term, but both Russia and China have learnt from history to be patient.

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