• The Russians are coming – again!



    At first glance, relationship building between Russia and the Philippines looks an unlikely match. It still does, at least to me even at a second and third glance.

    Russians are basically Europeans and the nation, although expansionist around its borders in earlier times, has historically never been a colonizer or even notably interested in the concept of overseas colonization as was much pursued by other European powers. Even now its official development assistance worldwide stands at less than $1 billion a year, compared with the European Union at $90 billion and the US at $32 billion. Even Norway, with its 5 million population, manages to provide $6 billion. According to Xinhua news agency, China had provided $36 billion by the end of 2009.

    Russia did, however, during its period as the Union of Soviet Socialist Republics establish in 1949 the COMECON, an organization for mutual economic assistance, which existed until 1991. Most members were the Eastern European states such as Poland and Bulgaria but it also included Cuba, Mongolia and Vietnam as members, and observers included Mexico, North Korea and Laos. The COMECON disbanded at the end of the Cold War period and the transition of the USSR to the Russian Federation, at which time many of its members joined other organisations such as the EU and Asean. Cuba and Vietnam still retain strong links with the new Russia.

    The Philippines has attracted about 20,000 Russian tourists in 2012, compared with the 1.3 million who go to Thailand. In 1949 there were some 5,500 Russians evacuated from China during the communist revolution, and were settled in the Visayas at Tubabao near Eastern Samar.

    During my working travels I have dealt with Russians in Russia, both with major organizations such as Gazprom and in Siberia, with communes and local industrial complexes during the Glasnost period of the 1980s. I like the place; its architecture, its weather, its people, the food. Hopefully one day I will have other opportunities to visit it. It is very Northern European.

    Russian warships have just been in Manila, there is talk of defence cooperation and buying Russian armaments. Post COMECON, this looks like a new initiative on the part of the Russian Federation, promoted by the Philippines.

    Russia’s main trading partner is the EU, which accounts for 41 percent of Russian exports, mainly oil and gas. In terms of balance of trade most EU states have a deficit with Russia, the largest deficit being with the Netherlands at minus 21 billion euros. The UK has attracted Russian investments of about $11 billion, including Russian ownership of a major UK newspaper, “The Independent”. According to the United Nations (UNCTAD) Russia was the eighth biggest investor economy in the world in 2012 – the US came top, the UK was fifth.

    Aside from selling a lot of gas and oil to Europe, and also some to China, Russia is the world’s second biggest armaments exporter after the US, with sales of $15 billion a year. Unsurprising, therefore, that the Philippines is looking to Russia as a source of armament purchases.

    It seems unlikely that the Philippines would become another Cuba, the times for that sort of thing have long passed, albeit Russia does still manage to prospect for oil in the Gulf of Mexico thanks to its Cuban links.

    Russia produces just slightly less coal than Indonesia [373MT vs 407MT/year] and coal is its 4th largest export after petroleum products and aluminium. Perhaps Russia may be an alternative source of coal for the growing Philippine power generation needs; most of the coal is in Siberia and the Russian Far East, as are significant oil reserves.

    In terms of future trade relationships, clearly, armaments are a likely area as may be coal, oil and even steel imports. For the Philippines, there could be exports of agricultural products and possibly some semiconductor work. If the Philippines could tempt some of the 1.3 million tourists away from Thailand, then that would be a useful addition to the 5 million or so tourists that came in 2015.

    It would take a lot more trade potential to make much of a dent in the trade relationships with the EU, US or China, though.

    Mike can be contacted at mawootton@gmail.com


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