The geopolitical situation in Southeast Asia is favorable for Russia and allows Moscow to expand its cooperation with ASEAN countries.

Journalists at a joint news conference during the ASEAN-Russia Summit in Sochi. Photo: RIA Novosti

Current economic challenges in Russia and the unfavorable international situation with its traditional Western partners are forcing Moscow to pay more attention to the East. Apart from Russia’s extensive economic and political cooperation with China, the Kremlin is looking to expand its cooperation with the countries of Southeast Asia, which are very attractive both economically and technologically.

In this context, on May 19-20, Russia hosted the ASEAN-Russia Summit in Sochi and commemorated 20 years since dialogue was first established with ASEAN countries.

The economic importance of ASEAN

The Association for Southeast Asian Nations (ASEAN) that was created almost 50 years ago is rather special among regional interstate associations. The ten ASEAN member countries span over 4,480,000 square kilometers (1,729,737 square miles) and have a population of over 600 million. Their combined gross domestic product (GDP) in 2015 amounted to $2.6 trillion, or 7 percent of gross world product (GWP), which legitimately makes the organization a key global player.

Indonesia, Thailand, and Malaysia set the political and economic tone within ASEAN. Currently, the Association is actively cooperating with various countries in accordance with the principles of a free market economy.

The ASEAN+3 format (which includes China, Japan and South Korea) is doing well. By the way, for the past seven years, China has been the Association's major trade partner. Commercial exchange between China and ASEAN countries exceeds $500 billion. ASEAN is also working on enhancing its economic cooperation with Australia, New Zealand, India and the European Union.

Four ASEAN member states (Brunei, Indonesia, Malaysia and Singapore) were also simultaneously participating in the creation of the Trans-Pacific Partnership Agreement (TPP) initiated by the U.S. Thus, it is clear that ASEAN countries are firmly committed to the development of free trade zones without any tariff limitations and barriers.

Twenty years of partnership

The Sochi ASEAN-Russia Summit was the third of its kind even though the agreement on “partnership dialogue” between Russia and ASEAN dates all the way back to 1996. Over two decades of partner relations, the parties developed various cooperation mechanisms, such as high-level policy dialogue, a Joint Cooperation Committee, and a Working Group on Trade and Economic Cooperation.

It is important to emphasize that cooperation between Russia and ASEAN is not limited to commerce and trade. For example, partners adopted the Work Plan on Countering Terrorism and Transnational Crime and are actively cooperating in humanitarian and medical fields, higher education, and at the interparliamentary level. 

Still, since ASEAN has always been a predominantly economic alliance, the foreign trade dimension plays the key role in Russia’s relations with Southeast Asia.

Challenges to Russia-ASEAN economic cooperation

Of course, it is not always smooth sailing. Over the past ten years, total trade turnover between Russia and ASEAN countries amounted to $21.5 billion, but its growth has been clearly slowing down since 2010. According to Boris Vinogradov, a journalist specializing in international relations and East Asia, “Russian business just has nothing to offer.”

However, the slower pace of mutual trade turnover growth can also be explained by the Russian economic slowdown and difficulties related to the sharp drop in global oil prices, sanctions and the overall condition of the Russian economy.

Compared with China and the U.S., Russia’s economic influence in the ASEAN area is much weaker. Still, ASEAN countries and Moscow declared their mutual interest in increasing their economic cooperation.

Joko Widado, the president of Indonesia, ASEAN's most influential member, says, “We hope that we can increase our trade with Russia. Of course, we invite Russian investors to Indonesia.” Leaders of other member countries share his opinion. 

Did the ASEAN-Russia Summit reach any breakthroughs?

So far it is pretty obvious that the ASEAN-Russia Summit and Business Forum held on May 19-20 in Sochi was a major regional and international event. However, its results can be seen only over the mid- and long-term.

Sochi welcomed heads of states and governments of almost all ASEAN members. Given that Western anti-Russian sanctions are still in effect, the Summit can be interpreted as Moscow’s political success in breaking its international isolation.

It is also important to point out that the adopted Sochi Declaration spelled out Russia’s and ASEAN member states’ obligations on strengthening cooperation on political and security issues, including combating terrorism, fighting organized transnational crime, and upholding maritime security.

With the ongoing Russian anti-terror campaign in Syria and the growing terrorist threat around the world, including in some ASEAN countries, these obligations indicate that Moscow and Association members are in complete agreement on the issue of terrorism.

Still, top-level negotiations mainly focused on the economy. Russian Minister of Economic Development Alexey Ulyukaev suggested “the creation of an economic partnership akin to the format used to manage relations between Russia and ASEAN countries.” That would involve intense cooperation on economic regulation and the adjustment of legal norms pertaining to trade, services and investment protection.

Addressing the ASEAN-Russia Business Forum participants, Russian President Vladimir Putin stated that Russia offered 57 joint projects in innovation and technology. He also pointed out that Russian business is increasingly active in Southeast Asia. For example, Russian mining companies are working in Indonesia and Myanmar, nuclear power projects are ongoing in Vietnam, and Russia is participating in high-tech projects in Malaysia.

Putin also specifically encouraged Southeast Asian partners to invest in infrastructure projects in the Russian Far East.

Another important development is the announcement that Russia and three ASEAN member states (Vietnam, Singapore and Cambodia) are ready to start working on a free trade zone between ASEAN and the Eurasian Economic Union (EEU). Promotion and further development of the EEU project is crucial for Moscow given the complicated economic conditions in the EEU member states and the unfavorable international climate for Russia.

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It is extremely important for Moscow that the idea has the backing of Thongloun Sisoulith, current chairman of ASEAN and prime minister of Laos, and Le Luong Minh, secretary general of ASEAN and a high-ranking Vietnamese diplomat. Historically, Vietnam and Laos have been Russia’s allies, so it makes the current ASEAN geopolitical environment close to ideal for the Kremlin’s agenda in Southeast Asia.

Over time, we will see if Russia manages to use the situation to its advantage as Russia’s partnership with ASEAN now enters its third decade.

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.