RUSSIAN INTERNATIONAL FINANCEBy: Andriy Lahush – 250459077
For Dr. J.D. Han, Economics 3370a KingFor Dr. J.D. Han, Economics 3370a King’’s University College 2011s University College 2011
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Table of Contents
:: Relevant Background and Statistics
::Investigation of Russian Economy’s
Sources of Growth
::2008 Global Financial Crisis and
its effects on Russia
::Russia and European Union
::Russia and “Near Abroad”
::Russia and Japan
::Current Developments
::Conclusion
Purpose
There currently are lots of
exciting new developments in
the economy of Russia, which
deserve a closer attention.
Historical Background & Relevant Statistics
• December 1991: USSR split into Russia and 14 other independent republics in
part because USSR lost to China in the United States’ bid for a preferred
business partner due to their unwillingness to adopt new technology.
• Adopted a semi-authoritarian state, carefully managed politics, prudent
management of Russia's windfall energy wealth
• Largest state in the world: 17,098,242 sq km (1.8 times the size of the US)
• Wide natural resource base including major deposits of oil, natural gas, coal,
and many strategic minerals, timber. Even though, like in Canada, climate,
terrain, and distance hinders resource exploitation, the world demand is
gradually making it feasible to exploit the above resources.
• Population of 139,390,205 (July 2010 est.) 9th globally (-0.465% growth rate)
• GDP of $2.116 trillion USD (2009 est.) (8th in the world; 73rd in per capita)
• Comparatively low investment ratio: 21.5% of GDP (2009 est.) 74th in globally
• Decelerating inflation rate – 11.7% (2009 est.) from 14.1% (2008 est.)
• #2 natural gas (#1 exporter) producer globally; #1 proved reserves
• #6 positive current account balance globally
:: Source : CIA World Factbook ::
Investigation of the Russian Economy’s
Sources of GrowthLong Term Growth is Due to Real FactorsLong Term Growth is Due to Real Factors
•• Productivity (leads to higher profits, so that firms can invest Productivity (leads to higher profits, so that firms can invest in new technologies, create in new technologies, create
jobs, pay more in wages and dividends)jobs, pay more in wages and dividends)
Total factor productivity growth of 5.8 percent has been the driTotal factor productivity growth of 5.8 percent has been the driving force behind average ving force behind average
GDP growth of 6.5 percent over 1999 GDP growth of 6.5 percent over 1999 –– 2005 due to utilization of excess capacity, 2005 due to utilization of excess capacity,
relocation of labour and capital to more productive sectors (Worelocation of labour and capital to more productive sectors (World Bank)rld Bank)
But: But:
•• Russian firms have exhausted the postRussian firms have exhausted the post--soviet productivity gains derived from more soviet productivity gains derived from more
efferent labour and capital allocations. The capacity utilizatioefferent labour and capital allocations. The capacity utilization rates rose from 42 percent n rates rose from 42 percent
in 1999 to almost 70 percent in 2005. (The World Bank)in 1999 to almost 70 percent in 2005. (The World Bank)
•• Low Investment Rate Prevents Russian Economical GrowthLow Investment Rate Prevents Russian Economical Growth
Russia has a wide range of natural resources, demand for which iRussia has a wide range of natural resources, demand for which is rising, but the s rising, but the
investment rate in only 21.5% of GDP (2009 est.) (74investment rate in only 21.5% of GDP (2009 est.) (74thth Globally (CIA Globally (CIA FactbookFactbook))
:: The Old Saint Petersburg Stock Exchange :: CIA Factbook ::
ThereforeTherefore
To sustain growth Russia needs to increase productivity in termsTo sustain growth Russia needs to increase productivity in terms of of
technology, foreign development and foreign knowtechnology, foreign development and foreign know--how, as the growth from the posthow, as the growth from the post--
socialist transition is running out. Russia needs to make foreisocialist transition is running out. Russia needs to make foreign investment more gn investment more
attractive to make up for its low domestic investment. Russian attractive to make up for its low domestic investment. Russian government is currently government is currently
taking steps to do the above.taking steps to do the above.
Russia and The Economic Crisis
•• Reliance on commodity exports makes Russia vulnerable to boom anReliance on commodity exports makes Russia vulnerable to boom and bust cycles that d bust cycles that
follow the highly volatile swings in global commodity prices (CIfollow the highly volatile swings in global commodity prices (CIA A FactbookFactbook))
•• Russian government and people, awash with money, were convinced Russian government and people, awash with money, were convinced their economy was their economy was
invulnerable to the world financial crisis until the 2008 crash invulnerable to the world financial crisis until the 2008 crash of oil prices and world of oil prices and world
markets (The Seattle Times)markets (The Seattle Times)
•• Russia made the mistake of confusing high oil prices with the geRussia made the mistake of confusing high oil prices with the genius of their economic nius of their economic
management. management. --Rory Rory MacFarquharMacFarquhar, Goldman Sachs in Moscow, Goldman Sachs in Moscow
•• Kremlin and Kremlin and DumaDuma failed to let businesses and the economy diversify. (The Seattfailed to let businesses and the economy diversify. (The Seattle Times)le Times)
•• Heavy focus on oil resulted in no paved roads from Moscow to VlaHeavy focus on oil resulted in no paved roads from Moscow to Vladivostok for Russian divostok for Russian
people and businesses, 10people and businesses, 10--20% interest rates for entrepreneurs (0% is optimal, as 20% interest rates for entrepreneurs (0% is optimal, as
discussed in class), and scientists leaving for better equipped discussed in class), and scientists leaving for better equipped laboratories and universities laboratories and universities
in Europe and America (The Seattle Times), devastating homein Europe and America (The Seattle Times), devastating home--grown research and grown research and
innovations.innovations.
•• Russian government acknowledged these vulnerabilities of the RusRussian government acknowledged these vulnerabilities of the Russian Statesian State’’s economy s economy
and currently is working with international bodies, such as EU, and currently is working with international bodies, such as EU, Japan, and exJapan, and ex--Soviet states Soviet states
to strengthen Russian economy.to strengthen Russian economy.
•The government starting in 2007 has embarked on an ambitious program to reduce this dependency and build up the country's high technology sectors. (CIA Factbook)
Russia and the EU Bloc•• Almost half Russian imports and exports are with EU states. (SpiAlmost half Russian imports and exports are with EU states. (Spiegel Online) EU is the biggest egel Online) EU is the biggest
trading partner of Russia. Russia is EUtrading partner of Russia. Russia is EU’’s third largest trading partner (Spiegel), allowing the block tos third largest trading partner (Spiegel), allowing the block to
press their political agenda against Russia, even though businespress their political agenda against Russia, even though businesses, like Siemens and Volkswagen ses, like Siemens and Volkswagen
(Spiegel), that can benefit from a more free trade lobby its gov(Spiegel), that can benefit from a more free trade lobby its governments to change their position. ernments to change their position.
•• In Germany Putin criticized obstacles to Russian investment in EIn Germany Putin criticized obstacles to Russian investment in Europe. According to him, Russian urope. According to him, Russian
companies are keen to invest in European firms, but encounter recompanies are keen to invest in European firms, but encounter resistance from the European side sistance from the European side
again and again. (Spiegel Online) Such cooperation would improagain and again. (Spiegel Online) Such cooperation would improve Russian productivity and access ve Russian productivity and access
to technologies.to technologies.
•• Governments in Berlin, Warsaw and Paris are not completely open Governments in Berlin, Warsaw and Paris are not completely open to such cooperation. They fear to such cooperation. They fear
domination by the Russian statedomination by the Russian state’’s energy giant s energy giant GazpromGazprom. (Spiegel). (Spiegel)
•• EU is under Russian energy dependence. EU is under Russian energy dependence. ““What will you use, firewood? But you will need to go to What will you use, firewood? But you will need to go to
Siberia to get the firewood, too." Siberia to get the firewood, too." –– V.V. Putin in Berlin Nov 2010 V.V. Putin in Berlin Nov 2010
•• This exerts economic and political pressure on the European blocThis exerts economic and political pressure on the European bloc..
•• Russia is number 2 producer of natural gas globally. #1 is USA, Russia is number 2 producer of natural gas globally. #1 is USA, but it is used there domestically.but it is used there domestically.
•• Economically there is no choice, but to cooperate with Moscow foEconomically there is no choice, but to cooperate with Moscow for EU. (r EU. (EUbusinessEUbusiness))
•• Therefore, the declining European bloc is forced to cooperate wiTherefore, the declining European bloc is forced to cooperate with Russia in order to generate th Russia in order to generate
profits for its enterprises, and to achieve stability in the eneprofits for its enterprises, and to achieve stability in the energy sectors. Russia should (in its rgy sectors. Russia should (in its
interests) and does apply these advantages to push Europe to putinterests) and does apply these advantages to push Europe to put its isolationist policies against its isolationist policies against
Russia aside, and to build a freer economic relationship. In EuRussia aside, and to build a freer economic relationship. In Europe governments fear that the rope governments fear that the
future will bring economic relations on markedly Russian, ratherfuture will bring economic relations on markedly Russian, rather than European terms.than European terms.
Russian “Near Abroad”Russian politicians refer to the exRussian politicians refer to the ex--soviet block as the soviet block as the ““Near AbroadNear Abroad”” (Wikipedia) (Wikipedia)
and exert political and economical pressures to control them.and exert political and economical pressures to control them.
For example, when with Russian backing a proFor example, when with Russian backing a pro--Russian government came to Russian government came to
power in Ukraine in the early 2010, the trade turnover increasedpower in Ukraine in the early 2010, the trade turnover increased 70% in 6 70% in 6
months (RIA months (RIA NovostiNovosti), largely due to sale of uranium reserves and aviation ), largely due to sale of uranium reserves and aviation
industry capital.industry capital.
Russia wants a Russia wants a ‘‘single economic space in the postsingle economic space in the post--Soviet areaSoviet area”” (RIA (RIA NovostiNovosti) )
and to establish Rouble as a key currency in the region.and to establish Rouble as a key currency in the region.
Russia, Belarus, Kyrgyzstan, Tajikistan and Kazakhstan agreed toRussia, Belarus, Kyrgyzstan, Tajikistan and Kazakhstan agreed to create a create a
single economic space by January 1, 2012 as Eurasian Economic Cosingle economic space by January 1, 2012 as Eurasian Economic Community. mmunity.
Ukraine withheld (RIA Ukraine withheld (RIA NovostiNovosti), as it is a member of WTO. (Kyiv Post)), as it is a member of WTO. (Kyiv Post)
Russia is attempting to reRussia is attempting to re--establish a monetary hegemony in the establish a monetary hegemony in the ““near abroad,near abroad,””
which will give it control over the monetary systems of the regiwhich will give it control over the monetary systems of the region.on.
Russian relations with a formerly socialist Poland have warmed uRussian relations with a formerly socialist Poland have warmed up after a plane p after a plane
crash of an openlycrash of an openly--hostile to Russia former polish president under mysterious hostile to Russia former polish president under mysterious
circumstances over the Russian territory. For the first time bycircumstances over the Russian territory. For the first time by a Russian head of a Russian head of
state in nine years (MSN News), Dmitri state in nine years (MSN News), Dmitri MedvedevMedvedev visited Poland on December visited Poland on December
66thth 2010 and paved over historical problems with a new 2010 and paved over historical problems with a new russophilerussophile government. government.
He signed a series of economic agreements for bilateral investmeHe signed a series of economic agreements for bilateral investment between nt between
countries. (Voice of America)countries. (Voice of America)
Economics, Russia, Japan and the PacificEconomics, Russia, Japan and the Pacific
:: Photo: CIA Factbook – Russia ::
As the world demand for raw material is growing, Russia starts dAs the world demand for raw material is growing, Russia starts developing its deposit reserves further and eveloping its deposit reserves further and
further into its challenging terrain. This includes the Pacificfurther into its challenging terrain. This includes the Pacific, specifically the disputed with Japan Kuril , specifically the disputed with Japan Kuril
Islands.Islands.
““We are interested in people to stay here. The development is impWe are interested in people to stay here. The development is important here, we will certainly invest ortant here, we will certainly invest
money here.money here.”” --MedvedevMedvedev (Tatar Inform)(Tatar Inform)
The islands are believed to have offshore hydrocarbon reserves The islands are believed to have offshore hydrocarbon reserves (New Europe)(New Europe)
Critics await ASEAN 2012 conference in Vladivostok, as it is preCritics await ASEAN 2012 conference in Vladivostok, as it is predicted that by then Japan and Russia will dicted that by then Japan and Russia will
resolve a deal for a coresolve a deal for a co--development of the region, without giving up sovereignty, which development of the region, without giving up sovereignty, which is politically is politically
unacceptable. (Vladivostok2012.com)unacceptable. (Vladivostok2012.com)
JapanJapan’’s s MitMitsui and sui and MitsubishiMitsubishi work with Russiawork with Russia’’s s GazpromGazprom on the Sakhalin II field and Japanese companieson the Sakhalin II field and Japanese companies
would also like to be involved in the development of the would also like to be involved in the development of the YamalYamal peninsula, despite that both countries are peninsula, despite that both countries are
technically still at war. (technically still at war. (NewEuropeNewEurope))
High savings rate of Japan, its technological ability and knowHigh savings rate of Japan, its technological ability and know--how will prove crucial in developing the how will prove crucial in developing the
lucrative Russian mineral and petrochemical deposits. This showlucrative Russian mineral and petrochemical deposits. This shows how international finance can supersedes how international finance can supersede
political or emotional tensions. Pecuniary reasons and good ecopolitical or emotional tensions. Pecuniary reasons and good economics cause foes to collaborate.nomics cause foes to collaborate.
A mutual cooperation is seen with Korea, where Russian side is uA mutual cooperation is seen with Korea, where Russian side is used as a conduit for trade with Europe, sed as a conduit for trade with Europe,
transtrans--Korean railway liked with the Siberian railway system forces NorKorean railway liked with the Siberian railway system forces North Korea to be more open and lays th Korea to be more open and lays
steps toward a peaceful resteps toward a peaceful re--unification, and reduces gas dependence from the Middle East (U.unification, and reduces gas dependence from the Middle East (U.S. Army War S. Army War
College). KOGAS is leading the development and investment in IrkCollege). KOGAS is leading the development and investment in Irkutsk, Russia (Subsea O&G Directory) and utsk, Russia (Subsea O&G Directory) and
in the in the KovyktaKovykta field (TNK.BP). Such cooperation for Japanfield (TNK.BP). Such cooperation for Japan’’s waning economy means trading its innovation s waning economy means trading its innovation
driven knowdriven know--how for the investment opportunities in Russia, where Korea and how for the investment opportunities in Russia, where Korea and China are already doing China are already doing
business.business.
Current Developments
““TradeTrade can improve productivity by providing access to new investment can improve productivity by providing access to new investment capital,capital,
technologies, expertise and export markets, but this has not haptechnologies, expertise and export markets, but this has not happened in Russia.pened in Russia.””
““RussiaRussia’’s s integration into global productionintegration into global production chains remains limited.chains remains limited.””
““Export diversificationExport diversification towards greater sophistication of products needs to be promotedtowards greater sophistication of products needs to be promoted..””
--The World Bank 2007The World Bank 2007
•• Nov 25, 2010 Nov 25, 2010 –– Vladimir Putin proposes creation of a harmonious economic commuVladimir Putin proposes creation of a harmonious economic community (a nity (a free trade zone) stretching from Lisbon to Vladivostok There he free trade zone) stretching from Lisbon to Vladivostok There he reaches an agreement on reaches an agreement on the elimination of tariffs on raw materials such as wood (Spiegethe elimination of tariffs on raw materials such as wood (Spiegel Online) and railway freight l Online) and railway freight (MSN News) on November 7(MSN News) on November 7thth..
•• Moscow is hoping to become a member of WTO in 2011 (Spiegel OnliMoscow is hoping to become a member of WTO in 2011 (Spiegel Online) with US backing.ne) with US backing.
•• The government is now in process of easing restrictions and openThe government is now in process of easing restrictions and opening deposits of up to 250 ing deposits of up to 250 (up from 50) tons to foreign firms. (Russia Today) Anything ove(up from 50) tons to foreign firms. (Russia Today) Anything over the limit is a strategic r the limit is a strategic resource and falls under government jurisdiction.resource and falls under government jurisdiction.
•• Max Keiser, a Russian economist states: Max Keiser, a Russian economist states: ““The UK is long gone, continental Europe is outside The UK is long gone, continental Europe is outside of Germany of Germany –– doesndoesn’’t produce anything.t produce anything.”” Markus Markus KerberKerber, a professor of political science at , a professor of political science at Berlin University, says economic crisis can be used an opportuniBerlin University, says economic crisis can be used an opportunity for Russia and Germany ty for Russia and Germany to open a new chapter in their trade relationship.to open a new chapter in their trade relationship. According to him According to him ““Russia is a natural ally Russia is a natural ally to Germanyto Germany”” (Russia Today), at least economically, as its resources are nee(Russia Today), at least economically, as its resources are needed to match ded to match German high productivity. Russia needs German technologies and German high productivity. Russia needs German technologies and investment to increase investment to increase its productivity, and the government of Russia currently lobbiesits productivity, and the government of Russia currently lobbies EU governments and EU governments and businesses for a closer and less restricted economic cooperationbusinesses for a closer and less restricted economic cooperation..
•• September 2010 September 2010 -- Vladimir PutinVladimir Putin’’s Government invested 5 billion roubles into Moscow s Government invested 5 billion roubles into Moscow State University and allocated money for an additional 50 billioState University and allocated money for an additional 50 billion rouble investment from n rouble investment from nonnon--government sources. (government sources. (XinHuaNetXinHuaNet) This will boost productivity through R and D.) This will boost productivity through R and D.
Closing Closing –– The GoodThe Good
Russia does not have an entrepreneurial culture. EntrepreneurshiRussia does not have an entrepreneurial culture. Entrepreneurship and p and
leadership are alien concepts for an average Russian. Russia is leadership are alien concepts for an average Russian. Russia is a wella well--educated educated
nation. To counter this, the new nation. To counter this, the new SkolkovoSkolkovo School of Management, scheduled to School of Management, scheduled to
be open by 2012 has gained national attention and Putin's supporbe open by 2012 has gained national attention and Putin's support. According to t. According to
RubanRuban VardanianVardanian, a founder of the school, "Russia's future lies in its people, , a founder of the school, "Russia's future lies in its people, not not
its oil and gas.its oil and gas.““ (The Seattle Times)(The Seattle Times)
All things considered, it seems that Russia has learned from theAll things considered, it seems that Russia has learned from the 2008 economic 2008 economic
crisis and its on its way to become a more open country with a gcrisis and its on its way to become a more open country with a greater diversity reater diversity
of international business. Its vast natural resources allow forof international business. Its vast natural resources allow for an investment an investment
opportunity from Germany, Japan and other nations, which will bropportunity from Germany, Japan and other nations, which will bring new ing new
technological and managerial knowledge. However, Russia needs ttechnological and managerial knowledge. However, Russia needs to invest o invest
more in its people and diversify its industry. Signs that the lmore in its people and diversify its industry. Signs that the leadership is paying eadership is paying
attention to these issues emerge. Russia now invests heavily inattention to these issues emerge. Russia now invests heavily into IT, is now a to IT, is now a
net agricultural exporter, and a the middle class in emerging. net agricultural exporter, and a the middle class in emerging. (CIA (CIA FactbookFactbook) )
However, a lot is yet to be done to ensure that Russia does not However, a lot is yet to be done to ensure that Russia does not fall victim to the fall victim to the
next economic downturn.next economic downturn.
Economic forces supplant the political, historical and nationaliEconomic forces supplant the political, historical and nationalistic policies of stic policies of
Russia and its neighbours, as the world demand for natural resouRussia and its neighbours, as the world demand for natural resources increases.rces increases.
Closing – The Bad and the Ugly
•• In Russia power and wealth is still largely concentrated in the In Russia power and wealth is still largely concentrated in the hands of oligarchs, hands of oligarchs, and 15.8% (November 2007) below poverty line (CIA and 15.8% (November 2007) below poverty line (CIA FactbookFactbook). ).
•• In the past decade Russian government officials traded in their In the past decade Russian government officials traded in their rusty rusty VolgasVolgas for for bulletproof, shiny Mercedes, and invested in an Elton John concebulletproof, shiny Mercedes, and invested in an Elton John concert, while they rt, while they could have brought to Moscow Harvard business professors, Cornelcould have brought to Moscow Harvard business professors, Cornell agricultural l agricultural scientists, Microsoft's managers, developed nanotechnology or buscientists, Microsoft's managers, developed nanotechnology or built new genetic ilt new genetic research labs. (The Seattle Times) Now the government is tryingresearch labs. (The Seattle Times) Now the government is trying to get on track to get on track and catch up with innovations and bids for foreign investment.and catch up with innovations and bids for foreign investment.
•• Protection of property rights is still weak and the private sectProtection of property rights is still weak and the private sector remains subject to or remains subject to heavy state interference (CIA heavy state interference (CIA FactbookFactbook), threatening foreign investment.), threatening foreign investment.
•• European Union foresees an uneven playing field while dealing wiEuropean Union foresees an uneven playing field while dealing with Russia, this th Russia, this impedes their bilateral economic cooperation. Europe is constanimpedes their bilateral economic cooperation. Europe is constantly trying to tly trying to buffer against Russian Influence.buffer against Russian Influence.
•• Low domestic investment rate due to poor entrepreneurial cultureLow domestic investment rate due to poor entrepreneurial culture, high bank , high bank interest rates, and lack of opportunities and free market.interest rates, and lack of opportunities and free market.
•• LongLong--term challenges for Russia include a shrinking workforce, a highterm challenges for Russia include a shrinking workforce, a high level of level of corruption (which was once describes as number one industry in Rcorruption (which was once describes as number one industry in Russia on BBC ussia on BBC News), and poor infrastructure in need of large capital investmeNews), and poor infrastructure in need of large capital investment (CIA nt (CIA FactbookFactbook))
Sources
World Bank (2007)
Russian Economic Report
http://siteresources.worldbank.org/INTRUSSIANFEDERATION/Resources/Chap2.pdf
Central Intelligence Agency (2010)
The World Factbook – Central Asia: Russia
https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
RIA Novosti
Russia expects CIS countries to create free trade zone by yearend
http://en.rian.ru/exsoviet/20100617/159463469.html
RIA Novosti (2010)
Russia-Ukraine trade up 70% in 6 months – Yanukovych
http://en.rian.ru/russia/20100828/160377834.html
Spiegel Online International
Putin's Free-Trade Proposal Is 'Just a Smokescreen‘
http://www.spiegel.de/international/europe/0,1518,731370,00.html
MSN News
EU opens WTO door to Russia in 'milestone' deal
http://news.ph.msn.com/top-stories/article.aspx?cp-documentid=4507188
Sources Continued
Vladivostok 2012 (2010)
http://www.vladivostok2012.com/review/?p=6&rpp=53
KyivPost (2010)
Yanukovych: Ukraine won't join Customs Union
http://www.kyivpost.com/news/nation/detail/65139/
Russia Today (2010)
Russian gold looks to strategic law change for growth
http://rt.com/business/news/strategic-law-growth-going/
Tatar-inform (2010)
Russia interested in development of Kuril Islands - Medvedev
http://eng.tatar-inform.ru/news/2010/11/01/32387/
New Europe (2010)
Russia, Japan near Kuril Islands endgame
http://www.neurope.eu/articles/103618.php
AH6HY - David Flack (2003)
Japan/Russia (disputed IOTA islands)
http://www.qsl.net/ah6hy/occupied.html
EUbusiness (2010)
EU should consult Russia on energy reforms: Putin
http://www.eubusiness.com/news-eu/russia-germany.79j/
Russia Today (2010)
Putin talks post-crisis economy with Merkel
http://rt.com/news/putin-talk-post-crisis-economy/
The Seattle Times on Russia Blog (2008)
Russia's Economic Crisis Could Have Been Avoided
http://www.russiablog.org/2008/12/russias_economic_crisis_could_have_been_avoided_mamchur.php
XINHUANEWS (2010)
Russia to invest 5 bln roubles in its top university
http://news.xinhuanet.com/english2010/culture/2010-09/27/c_13532523.htm
Voice of America (2010)
Medvedev's Visit Signals Warming Relations with Poland
http://www.voanews.com/english/news/europe/Medvedevs-Visit-Signals-Warming-Relations-with-Poland-111533384.html
U.S. Army War College – John W. Bauer (2009)
Unlocking Russian Interests on the Korean Peninsula
http://www.carlisle.army.mil/usawc/parameters/Articles/09summer/bauer.pdf
Subsea Oil and Gas Directory (2009)
KOGAS Korea Gas Corporation
http://www.subsea.org/company/listdetails.asp?companyid=2771
TNK*BP (2010)
Kovykta Project
http://www.tnk-bp.com/operations/exploration-production/projects/kovykta/
Sources Continued 2
MoscowKuril Islands
VladivostokEurope
China
Japan
U
S
From the U.S. Army War
College. The proposed
Trans Korean Pipeline
and Railroad, which is
envisioned to facilitate
Korean unification, once
completed. A parallel
cooperation is envisioned
over the Kuril Islands.
This shows how economic
forces facilitate
international development,
despite the political
intrigue and conflicts.