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Putin Says Asia Can Count on Russia for Energy

Fri, 09/07/2012 - 5:53am
ELAINE KURTENBACH,AP Business Writer

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VLADIVOSTOK, Russia (AP) — President Vladimir Putin promised Asia and Pacific leaders meeting in the seaport of Vladivostok on Friday that they could count on Russia to be a reliable energy supplier and provide a bridge to Europe that can help revitalize regional trade.

Russia is boosting its exports of oil and gas to Asia after years of focusing almost entirely on supplying Europe. Moscow also has ambitious plans to develop its railroads, roads, seaports and airports in the east of the country with the aim of providing a reliable transportation link between Asia and Europe.

"The first and main thing we're going to do is develop transport infrastructure," Putin told regional business leaders.

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He played up Russia's common economic space with neighbors Kazakhstan and Belarus as opening "a direct route to Europe for business in the Pacific region."

Faltering vital signs in China and elsewhere make pushing ahead with more and freer trade an urgent priority for the 21-member Asia-Pacific Economic Cooperation forum, whose leaders are gathered in the Russian Far East port of Vladivostok for their annual summit.

APEC aims to foster growth by dismantling barriers and bottlenecks that slow trade and business, while nurturing closer economic ties.

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Given its status as an organization governed by consensus, APEC is not known for major policy breakthroughs. Election-year politics and territorial spats make this year particularly challenging.

From the Kuril islands to the northeast of Vladivostok all the way to the Spratlys in the South China Sea, various neighbors are squabbling over territories at a time when they most need to be focused on promoting growth.

South Korea is feuding with Japan, Japan with China and Russia, China with many of its Southeast Asian neighbors. With elections due soon in South Korea and Japan, and a once-in-a-decade change in the Communist Party leadership pending in China, lame-duck leaders facing nationalist pressures at home have little room for amicably resolving the disputes.

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"It's bad luck that it happens just before all these transitions. Everybody is looking around and saying, 'these people won't be at the table in three months,'" said William Overholt, an Asia expert at Harvard University's Kennedy School of Government.

The sharp decline in growth in trade this year — from 12 percent in December to 4.6 percent in May — underscores the importance of pushing ahead with trade initiatives, the APEC Policy Support Unit, an independent data analysis and research unit, said in a report issued Friday.

As hosts, Russian leaders are showcasing their country's recent entry into the rules-setting World Trade Organization — a key step in traditionally Europe-centric Moscow's effort to build trade and investment ties with its neighbors in the Far East.

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"What I'd expect from the meeting is Russia trying to show itself to be a global power, and certainly my view and that of many others is that is not true anymore," said Xenia Dormandy, an expert at the London-based think-tank Chatham House.

President Barack Obama's decision to skip this year's gathering — Secretary of State Hillary Clinton is attending in his place — allows Russia greater leeway to shape its agenda, said Peter Drysdale, a professor emeritus at Australia National University who helped set up APEC in 1989.

"After a long time sitting on the sidelines, the Russians have thrown considerable diplomatic firepower into working up a strong APEC agenda," Drysdale said in a commentary on the website East Asia Forum.

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Since last year's summit in Honolulu, Canada and Mexico have gotten the go-ahead to join nine other nations involved in talks on forming a U.S.-backed free trade bloc known as the "Trans-Pacific Partnership." But participants have yet to reach their goal of setting a legal framework this year for the initiative, and Japan, its leaders preoccupied with tax reforms and domestic politics, has so far been unable to join the negotiations.

Such difficulties are inevitable given the high standards set out for the arrangement, said New Zealand's prime minister, John Key.

"All governments involved will have to take some tough decisions if we are to get there. But I am convinced that the high quality TPP is not only achievable but critical for growth in the region," Key told a conference on the sidelines of the APEC summit.

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China, which some economists say is on course to overtake the U.S. as the world's biggest economy this decade, appears wary of backing a U.S.-led initiative, and it has commitments to rival free trade blocs in East and Southeast Asia.

TPP talks resumed Thursday near Washington, and officials attending APEC were discussing it in their own meetings. But without China or Japan, the world's No. 3 economy, the initiative would have little traction.

Meeting the rigorous standards for open and free trade, and for protection of trademarks and patents, for example, also would be arduous for former centrally-planned economies such as China and Russia.

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But Andrei Belousov, Russia's economy minister, said his country was keen to join.

Meanwhile, keen to leaven its European-dominated trade and balance its growing reliance on dealing with China, Russia is also pursuing a customs union that is meant to evolve into a "Eurasian Economic Union" that would stretch from the Atlantic to the Pacific Ocean.

With Europe still mired in its debt crisis, Asia remains the biggest driver of global growth, despite a decline in powerhouse China's economic growth to a three-year low of 7.6 percent in the second quarter — and signs Japan's own export-led recovery is sputtering.

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In its latest forecast, the Manila-based Asian Development Bank predicted the region's economies will expand by 6.6 percent this year.

"Russia is looking to Asia. It's not growing as fast as it was two years ago but it's still the bright spot in the global economy," said Tony Nash, managing director at IHS Global Insight in Singapore. "It's still where the action is."

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Associated Press writer Lynn Berry contributed.

 

 

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