Translation. Region: Russian Federal
Source: Government of the Russian Federation – An important disclaimer is at the bottom of this article.
Alexey Overchuk: “A change in the technological order is taking place”
Deputy Prime Minister Alexei Overchuk discusses the nature of the changes taking place in international trade, the struggle of countries for access to rare earth minerals, and the establishment of new trade relations for Russia in an interview with Vedomosti.
Interview with Alexey Overchuk for the Vedomosti newspaper
Question: Vedomosti, together with Roscongress and economists, prepared a report for the SPIEF on the topic of “Global Development Opportunities.” The main trend that experts are currently noting is the fragmentation of the global economy. In your opinion, what balance of power may be established in the near future?
A. Overchuk: Indeed, fragmentation of the world economy, or deglobalization, is happening. This has an economic background.
Globalization emerged in the late 1940s and early 1950s as a response to the economic and social successes of the socialist economy. In the United States, it was seen as a threat to a way of life based on private property.
In this global confrontation, the USSR and its allies were excluded from global supply chains, financial restrictions were imposed on them, export controls were applied, obstacles were created to obtaining export revenues, and conditions were created for the diversion of resources to unproductive expenditures, such as the arms race and peripheral military conflicts. The policy of containment put the USSR in a position where its revenue opportunities were narrowed and its expenditure obligations increased. The calculation was that at some point the country’s budget, formed on the basis of a strict planning system, would cross the break-even point and the state would not be able to fulfill its obligations to the Soviet people.
At the same time, in exchange for participating in the containment policy, the United States created the most favorable conditions for the development of the countries that supported them. They were provided with access to cheap finance, technology, education, and security guarantees. Thus, these countries were freed up funds that could be used for development, and market conditions and freedom of capital movement made it possible to build the most effective international supply chains. Investments were placed where they gave the greatest return, which made it possible to better saturate the market with goods. An international trade system was formed that sought to ensure free access of goods to foreign markets, including the most capacious consumer market on the planet.
The United States bore the burden of maintaining this system for decades, but also, thanks to the strength of its domestic market, it was able to turn a blind eye to tariff restrictions and barriers to American exports in the markets of friendly countries. Many of these countries took advantage of globalization, which demonstrated the advantages of a market economy. It was not emphasized that this success was financed by the largest economy in the world. The outcome of the confrontation between the two economic systems is known, and, obviously, the point of further bearing these costs has diminished. Today, countries that have enjoyed the benefits of globalization for 70 years are forced to pay their own bills, costs and their structure are changing, and this is pushing the world to find a new balance.
Question: Why did fragmentation begin now?
A. Overchuk: These processes are long and are now just becoming noticeable. Over the past 30 years, there has been a series of economic crises and regional conflicts that have diverted resources and influenced the growth of national debt. The United States allowed a trade imbalance and barriers to its exports. Trust in the dollar-based international financial system has been undermined. The freezing of Russian foreign assets and talk of their confiscation have called into question the security of property rights. New technologies have emerged. Internal problems have accumulated. Apparently, [US President Donald] Trump wondered: why continue to bear this global burden when solving the accumulated internal problems requires corresponding expenses? All this has a complex effect.
In addition, the pandemic has highlighted the weaknesses of the global economy. China has gone into isolation, causing supply disruptions to global markets. The vulnerability of international commodity flows and dependence on foreign suppliers, for example, of the same chips, began to be perceived as a security threat. There has come an understanding that the global economy does not always work as we would like, it is necessary to reduce the transport shoulder, move production closer to consumers, and even better, especially when it comes to security issues, not to transfer technology and develop our own production.
Question: How would you identify the potential fault lines of global economic fragmentation?
A. Overchuk: The modern world is connected by complex economic threads, and if they begin to break, their recreation in other regions will require very large investments, the justification of which will often be questionable. At the same time, processes have already been launched that are throwing the global system out of balance and forcing the formation of new cooperation chains and the search for new balances. In this environment, countries will be attracted to the largest economies of their regions. Obviously, such factors as the presence of domestic consumer demand capable of ensuring the necessary level of sustainable independent development, the presence of science and a production base that supports technological sovereignty, own resources necessary to ensure food and energy security, as well as the development of a new economy will play a role here. Availability of water will be critical. The presence of a civilizational community and a common language for communication will play a role. Not many regions of the planet that, despite fragmentation, will continue to maintain ties with each other fall under this description.
Question: The trade deficit has been the main reason for the double- and triple-digit tariffs in the US. What are the long-term consequences of the US tariffs?
A. Overchuk: They will negotiate and look for a balance of interests. First, they announced an increase in tariffs and made it clear to their partners how everything could suddenly change and become bad, and then they rolled back and negotiations began. Tariffs are a double-edged sword. Their growth entails an increase in prices for imported consumer goods, which affects inflation, leads to a drop in real incomes, etc. It is unlikely that anyone wants to go this route completely, but some positions of American exports may improve. The main goal of these efforts is to create conditions for the relocation of production to North America. A self-sufficient macro-region with a huge consumer market and global export opportunities is being formed here. Such shifts do not happen quickly, so the coming years will be spent in a joint search for new equilibrium points, which will be very dynamic. Agreements will be reached and quickly revised.
Question: We discussed with experts how difficult it will be for China to overcome this. They are focused on the domestic market, but the export economy still accounts for a significant part of the GDP. How will this hit China, even if they agree to reduce duties to reasonable levels?
A. Overchuk: China is making a lot of efforts to improve people’s living standards and increase domestic consumption. Its progress in this area is obvious. On the other hand, it is, of course, an export-oriented economy that has extracted maximum benefits from globalization and has become one of the most technologically advanced on the planet. The international trade system has made the economies of the United States and China interdependent like no other. The state of relations between them determines the well-being of the entire world, and both countries understand the consequences of their abrupt rupture. At the same time, it is known that China’s growth is now perceived in the United States as a threat to its leadership. Hence the use of export control measures and the withdrawal of assets of American companies. In addition, recreating the international supply chains formed in and around China will require attracting an unbearable volume of investment. This will take time. So there will be agreements on some positions.
At the same time, China is actively diversifying its export markets. As a country with a strategic vision, China has been working on implementing its Belt and Road Initiative for over 10 years, creating favorable conditions for promoting its goods, services, technologies, and knowledge to foreign markets. This is a global project. Geography does not allow us to talk about it as a macro-region, but rather as a global network structure with the center of economic gravity in China.
Question: It used to be that the production process was distributed across different countries: raw materials were mined here, processing and assembly took place – design and software work took place there… If the value chains were to be broken, how would production and international trade take place?
A. Overchuk: It will not come to a complete break. The world is very complex now. Hundreds and thousands of individual components and parts are produced in dozens of countries and cross state borders dozens of times before they are put together into a final product that is consumed on some completely different side of the world. The changes that are taking place lead to changes in the cost structure of production and delivery of goods and services to end consumers, which does not go unnoticed by investors and they react to it. In addition, the global economic system has shown its vulnerabilities. Some things will continue to be created as a product resulting from coordinated global efforts, while others will be localized within individual macro-regions and countries. Much of this is based on economic calculations, while others are dictated by the current global situation.
Particular attention should be paid to new types of resources for the new economy. After all, countries with technologies do not always have a sufficient resource base. Therefore, international supply chains connecting different regions of the world are likely to receive new content. Countries with technologies will strive to develop their own production, and therefore the need for cross-border knowledge transfer will decrease. End consumers will have access to user devices connected to computing power located in countries that own technological solutions and intellectual property rights. The main flows of global income will also be directed there. Such technological dependence will be avoided by those who can independently develop the relevant competencies and protect their market. Potentially, there are three or four macro-regions on the planet that are already doing this or will be able to do so.
Question: Is it economically feasible to do everything in one country?
A. Overchuk: It is economically expedient to optimize costs, i.e. to distribute production in such a way that the best competitive conditions are achieved for each specific product on the consumer market. This is how it worked under globalization. On the other hand, there are factors of technological sovereignty, food and energy security. Some countries can afford greater dependence on external circumstances, some less. Their income level will also depend on this.
Question: So this is a question of national security and sovereignty?
A. Overchuk: This is at the intersection of interests, ambitions and opportunities.
Question: If we resume trade relations with the US, is it possible to increase trade turnover? Last year it was a 30-year low – $3.5 billion. Compared to the economies these are, one could say there was simply no trade turnover.
A. Overchuk: Our trade turnover with one of the two largest economies in the world (China. – Vedomosti) exceeds $244 billion. With Belarus we have $51 billion, with Armenia it exceeded $12 billion. Therefore, as they say, when there is practically nothing, Russian-American mutual trade has good potential. Taking into account the low base effect, trade turnover with the USA will grow rapidly if such decisions are made.
The United States is currently attracting investors to its country and seeking to create new production facilities. Even taking into account the capacity of the North American market, the United States will be interested in increasing its exports. From this point of view, the EAEU is about 190 million consumers with good purchasing power living within the perimeter of the common customs contour. In other words, this is a promising market for the United States. As for the reverse flow of goods from the EAEU, we see interest in access to critical minerals and rare earths, which Central Asia, located between China, Afghanistan, Iran, the Caspian Sea and Russia, is rich in. Investing in the creation of modern high-tech production facilities in North America requires ensuring guaranteed supplies of raw materials, which makes the existence of secure supply chains critically necessary. The most cost-effective and secure route from Central Asia to North America lies north of Kazakhstan to the Baltic and the Barents Sea. There are other areas of mutual interest, so there is certainly potential.
Question: This year marks the 10th anniversary of the Greater Eurasian Partnership idea. It was planned that the EAEU would be “coupled” with other associations that already exist on the continent. Which ones have more prospects?
A. Overchuk: Various integration associations are being formed on the large Eurasian continent today. There is the EU, the EAEU, the CIS, and ASEAN. China is developing its Belt and Road project. The SCO has recently been paying increasing attention to issues of improving transport connectivity on the continent and creating common investment mechanisms for development. These are already mechanisms for linking participating economies.
If we talk about the EAEU, work is underway to develop international transport corridors that will play a central role in the overall transport framework of Greater Eurasia, integration with the Chinese Belt and Road initiative is being carried out, industrial cooperation projects that build value chains are being supported, trade barriers are being reduced, and the free trade zone is being expanded. This is what is already being done.
Of particular importance for the EAEU is the development of trade relations with the countries of the Global South and the formation of better conditions for promoting exports from our countries to this market, as well as saturating our common market with their products. These efforts contribute to the development of mutual trade with India, Iran, Pakistan, Afghanistan, and further – with Southeast Asia, with Africa. These are all rapidly developing markets with good demographics, and there is prospect there.
Question: Since you mentioned Afghanistan… The Supreme Court lifted the terrorist status of the Taliban, the de facto authorities of the country. How do you think this could change the approaches to the implementation of international projects in the country and Russia’s participation in them?
A. Overchuk: Russia has a varied history with this country, and many people have questions about the normalization of relations with the Taliban movement. What should be understood here? For the first time in many years, a situation has developed in Afghanistan where the central government controls the entire territory of the country and seeks to ensure peaceful conditions. Representatives of Afghanistan say that they are interested in living in peace with their neighbors and developing their own economy. The results of these efforts are already noticeable. Automobile transit from Russia, from Central Asia through Afghanistan to Pakistan has begun.
The Afghans have proposed a list of projects: from the construction of residential buildings to power plants, from road construction to the production and processing of agricultural products. Any government interested in improving life in its country will take such actions. It is in our interests for Afghanistan to be a peaceful state, and for people to be engaged in peaceful life. We want to contribute to this. Especially since the leadership of this country demonstrates a positive attitude towards Russia.
Question: On the issue of Eurasian transport corridors. There is North-South. Iraq has spoken about its intention to build a branch from Iran. There is Turkey’s “Development Road” project – from the Persian Gulf through Iraq to Turkey and Europe. Can this also be connected somehow? Or are they competitors?
A. Overchuk: There are many initiatives in the transport and logistics sector on the continent. Countries are striving to develop international transport corridors. As a result, a single transport framework of Greater Eurasia will be formed. The totality of these efforts, even competing with each other, will strengthen transport connectivity in the macro-region and promote the development of its economies. Everyone in Greater Eurasia will benefit from this. But peace is needed for this.
Question: We have a free trade zone with Vietnam. Are there any similar agreements planned with India, with which our trade is growing?
A. Overchuk: The purpose of such agreements is to simplify trade conditions, reduce costs for business by improving the accessibility of foreign markets, which leads to an increase in mutual trade, complementarity and growth of the economies of the participating countries. The EAEU member states view India as the largest and geographically closest market in Eurasia to our union, with which it is possible to conclude a free trade agreement. Together with our partners in the EAEU and the CIS, we are working to improve transport connectivity with India and create better conditions for the mutual movement of goods between our markets. Afghanistan, Iran and Pakistan are also interested in developing such infrastructure. The free trade agreement with Iran entered into force in May this year. Preparations were underway with Pakistan to launch the first freight train between our countries. Our vision of Greater Eurasia, among other things, includes the formation of a continental transport framework, which, where possible, will be supported by free trade agreements. It is clear that what is now starting to happen between Iran and Israel is pushing this prospect back and slowing down the economic development of the countries in the region.
Consultations are underway on the issue of the agreement with India. We see that India is also working in this direction, concluding agreements with other countries, for example with the UAE or, most recently, in May, with Britain, developing trade and economic ties with the USA. The totality of such efforts of many countries is forming a new network of mutually beneficial ties and relations between states and international integration associations.
Question: What are the positions of the parties?
A. Overchuk: The positions of the parties will be set out in the signed document.
Question: You said that it is important to strengthen good-neighborly relations in order to counter external challenges that are growing every year. In this regard, what prospects do you see for the development of the EAEU? Is it possible to expand the number of its participants?
A. Overchuk: The EAEU has already reached a very high level of economic integration. Five equal member states have access to a large common market, have put in place a mechanism to support industrial cooperation and are jointly expanding the free trade zone, providing better competitive conditions for their exports. In general, the EAEU has resolved the problems of food and energy security, and transport connectivity is being strengthened. Last year, the GDP growth rates of the EAEU member states exceeded the world average. All this does not go unnoticed, and an increasing number of countries are showing interest in closer cooperation with our integration association.
As for the accession of new states to the EAEU, this is always their sovereign decision, taken based on an analysis of the pros and cons that the respective economies will receive. Countries comprehensively assess the impact of integration on individual sectors of their economy, investment attraction, the labor market, their foreign economic and foreign policy relations with other countries. For our part, we also consider these models, assess how the opening of our markets to potential member states will affect our economies, as well as how the structure of their economies will be transformed. We understand that for the economies of our closest neighbors, joining the EAEU will create new opportunities for growth and development.
Question: We have observer countries in the EAEU. As if joining is the next step for them?
A. Overchuk: Observer states in the EAEU are Uzbekistan, Iran, Cuba. This status gives the country the opportunity to gain access to materials, documents, have the opportunity to participate at the expert level in working meetings, can state their positions there, and also take part in regular meetings at the level of heads of government and heads of state. The EAEU is the largest economic integration association in our region, and, understanding its logic, they can make more informed decisions for interaction and development of their economies.
The EAEU is a leading trading partner, for example, for Uzbekistan. At the same time, Uzbekistan is a member of the CIS, where there is also a free trade zone for goods and services. In addition, Uzbekistan has certain advantages in customs clearance of goods going to our markets. Russian business is actively investing in the economy of this country. Our countries have a flexible set of economic integration tools and have the choice to act as they see fit. If any country ever considers it promising to join the EAEU, it will make a corresponding request, and the EAEU member states will consider it.
Question: There is also the issue of distribution of duties in the EAEU. Could this be a barrier for countries to join?
A. Overchuk: The system of distribution of customs duties is designed in such a way that the accession of a new member state will require a revision of the existing shares due to each state. This is part of the accession process, during which all countries will agree on a new distribution formula, which directly affects the size of customs revenues of each participant in the integration association. However, even if we imagine that the country will incur losses, it will still ultimately benefit from access to a larger market, participation in cooperation chains, resources and the economic growth associated with all this. All this is taken into account, and the experience of the EAEU shows that agreements are always found. So there is no barrier here – there will be negotiations, and this is normal.
Question: It seems that there is a threat of the opposite process – a reduction in the number of EAEU participants. Armenia recently adopted a law on striving to join the EU. At the end of 2024, you said that Yerevan’s trade with it was falling, while with the EAEU it was growing. The Armenian Foreign Ministry said in May that they had not submitted applications to the EU and intended to work in the EAEU. How do you assess such conflicting signals?
A. Overchuk: In 2014, before joining the EAEU, Armenia’s per capita GDP was approximately $3,850. Thanks to barrier-free access to the EAEU market, this figure exceeded $8,500 in 2024. Mutual trade with the EAEU in 2024 reached $12.7 billion. For comparison: the volume of mutual trade between Armenia and the EU in 2024 was $2.3 billion. Providing the republic with food and energy on favorable terms also contributes to the sustainable and dynamic development of Armenia as our ally. Armenia’s economic success is a demonstration of the advantages of the interaction model within the EAEU. On the one hand, this is what shapes reality in Armenia, and on the other hand, there are people in Armenia who believe that developing relations with the EU opens up more prospects for their country than interaction with the EAEU. Ultimately, this will be the choice of the Armenian people, and we will always respect it.
Currently, there is a discussion in Armenia and practical measures are being taken to get closer to the EU. This is already having a negative economic effect. Back in September of last year, I drew the attention of my colleagues to the fact that due to the rapprochement with the EU, Russian entrepreneurs are starting to be more cautious about doing business with Armenia. According to our estimates, our mutual trade turnover last year already lost about $2 billion. This year, we have already lost $3 billion, and the overall decline by the end of the year will obviously be $6 billion. For a country with a GDP of about $26 billion, these are very noticeable figures. And this is only the reaction of Russian business to the Armenian discussion about rapprochement with the EU.
It is obvious that the EAEU and the EU are incompatible. It is impossible to be in two unions at the same time. Moreover, Brussels, despite the fact that many in Armenia do not want a break, will not allow Yerevan to have normal relations with Russia in the current conditions. Therefore, when the people of Armenia go to make their choice, they will need to imagine how this will affect the lives of ordinary people and what will happen next.
For example, in 2022, Brussels closed the skies of Europe to Russian air carriers. The European perspective means that Yerevan will also have to stop air traffic with Russia, since decisions will be made elsewhere. Of course, people will adapt and start flying via Tbilisi, but this means that families will not be able to communicate with their loved ones in Russia as easily, or grandchildren from Russia cannot simply be put on a direct flight to Yerevan and sent to their relatives for the summer. Of course, the flow of tourists from Russia – and this is the main source of tourist income – will come to naught, which will affect the hotel and restaurant business, and this will also affect retail.
Europe has closed for Russian hauliers and retaliatory measures have been introduced against European hauliers. Today, at the borders of the Union State of Russia and Belarus with the EU, cargo is being re-coupled, and then it is pulled by a vehicle with Russian or Belarusian license plates. The European perspective means that Armenian trucks will also come to Verkhniy Lars, re-coupled and return back to Armenia. There may be many such everyday examples in the future.
This year, the dynamics of Armenia’s trade with the EU has shown growth, while Armenian exports to the EU are declining. Unfortunately, Armenia has already made a decision to simplify the procedure for processing documents on conformity assessment of food products imported to Armenia from non-EAEU member states. Because of this seemingly inconspicuous decision, in addition to the fact that foreign goods will begin to create competition within Armenia and displace Armenian producers, Russia will need to assess the threats to its market. The authors of this document expect that the EAEU will not be able to open its market to goods that do not meet its requirements, which means that Russia will need to strengthen control in Upper Lars, which will be felt by many bona fide Armenian producers selling their goods to Russia, and this will cause their dissatisfaction with the actions of Russia and the EAEU. We are being placed in such conditions, and the ultimate goal of these efforts, as the EU wants, is a complete break between Russia and Armenia. Whether the Armenians want this is a question they will have to answer. In today’s reality, given the state of relations between Russia and the EU, this is exactly how life looks, and people need to know about it.
The law declaring the beginning of the process of joining the EU has already been adopted, and we have a tradition of taking the law seriously. It is a difficult situation: once again, it will be the choice of the people of Armenia, and we will respect it. We want to develop multifaceted ties with Armenia. Armenian employers and regions are also in favor of developing ties with Russia, they are talking about the urgent need to increase the number of checkpoints.
Question: From the point of view of global development trends, can the EU somehow be part of the Greater Eurasian space?
A. Overchuk: Someday, maybe. The main problem of the European Union is the lack of its own resources, and Europeans have long understood this well. Every time the world stood on the threshold of a new industrial revolution, the question of access to resources arose. If you recall the Treaty of Versailles, then significant attention was paid to coal, and if you recall the post-war agreements in the 20th century, then the discussion was about gas and oil. In the context of the transition to a new economic order, Europe is seeking to gain access to resources that it does not have, but which are necessary to maintain its position in the new world.
The EU is the largest developed market with high purchasing power of the population. In the current conditions, the EU ceases to be a purely economic union, while it is losing its production base, in a number of important positions it depends on foreign technologies, and the most effective transport routes pass through the Union State. A more sober assessment of the situation would help Brussels peacefully fit into global trends, become part of Greater Eurasia and largely maintain its standard of living.
Question: BRICS, which includes Brazil, Russia, India, China, South Africa, the UAE, Iran, Egypt, Ethiopia and Indonesia, has been expanding very rapidly in recent years – up to and including 2024. What opportunities does Russia have in BRICS? Is further expansion possible?
A. Overchuk: BRICS is a unique platform: there are no big, small, senior or junior. It appeared relatively recently and, one might say, is still feeling out possible options for interaction, comparing the positions of the parties and, due to its global nature and respectful attitude to the opinions of all partners, is careful in forming institutional mechanisms for interaction. Discussions take place on an equal footing, without mentoring, moralizing or imposing someone else’s positions. Everyone has the opportunity to convey their point of view, and if others share it, it is reflected in the final documents, which, as a rule, reflect positions on issues on the global agenda, and also define a joint vision of development.
BRICS does not oppose itself to the existing international institutions and does not seek to replace them, most likely, it develops a joint position for work within them. At the same time, without opposing itself to the existing international structures, BRICS does not exclude the creation of alternative structures. For example, the New Development Bank has been created. There is an exchange of experience, knowledge, approaches, and certain positions are being developed at the interdepartmental level. There is in-depth interaction along the lines of finance ministries, central banks, tax authorities, transport workers and other areas. This in itself is very valuable and, in the case of joint interest, can begin to acquire specifics.
Other important points that are probably not paid much attention to: BRICS does not include countries whose relations were burdened by a colonial past, and there is no division into developed and developing countries. All this makes it attractive for many countries of the world.
Question: The BRICS countries are very geographically divided by regions: there are integration associations that are geographically more compact – the EAEU, the EU, NAFTA. That is, this is not an integration process and organization, but rather a club, like the G20 or an alternative to the G7?
A. Overchuk: The advantage of BRICS is that it is not really a regional association. Its wide geographical distribution ensures the presence of various points of view on this platform, reflecting regional characteristics and vision. Countries that play a leading role in their regions participate there. Many of them are centers of economic attraction in their regions, and in this sense BRICS can become a coordinating support for the interaction of future macro-regions. And this gives BRICS additional weight, not to mention the fact that BRICS is today economically larger than the G7.
Question: What are Russia’s prospects with the Association of Southeast Asian Nations (ASEAN)? Is a free trade zone possible with this association?
A. Overchuk: Interaction in the EAEU-ASEAN format is developing. EAEU and ASEAN days are held at the ASEAN and EEC venues. Last year, a session on “Economic Integration and Connectivity of ASEAN and Northern Eurasia Macroregions” was held as part of the ASEAN Business Investment Summit, where the conjugation of their economic potentials was discussed. Over the past 10 years, mutual trade between Russia and ASEAN countries has grown by more than 80%. Cooperation will develop, but, of course, the relocation of production, changes in tariff policy, and the need to create conditions for development in the EAEU member states require a careful assessment of the consequences of concluding free trade agreements, which our five countries always do.
And then there is APEC, which includes the USA, China, Japan, Mexico, Canada, Australia and other countries of the Pacific Ocean basin, where the idea of creating a free trade zone was also previously promoted. The world is trying out interaction in various formats, in which, in principle, everyone shares common points of view regarding a set of global challenges.
Question: You have previously predicted that there will be a struggle between countries for access to rare earth minerals. The United States and Ukraine recently signed an agreement on access to them. Why have rare earth minerals become such an important resource?
A. Overchuk: The fall in the cost of memory storage and the data streams continuously generated by the Internet of Things, along with the ability to work with unstructured data, have pushed the corporate world to create digital services based on algorithms and predictive analytics methods that allow us to predict the behavior of both various systems and individual users. In turn, all this has paved the way for the development of large language models and artificial intelligence, which requires a lot of energy. A little earlier, global concern about the growth of the average temperature on the planet and the need to switch to clean energy sources became more acute. The synergy of these changes leads to a point beyond which, as famous classics wrote, other production forces and production relations begin to operate. All this began to move actively about 15-17 years ago. So if you follow these processes, what is happening becomes clear.
The technological order is changing, and this always requires new resources. When we depended – still depend, however – on the internal combustion engine, oil was the main resource. Today, the world is changing – and critical minerals and rare earths are becoming priority resources. But no serious investor will start investing until they have calculated all the risks and are completely confident in the control over the uninterrupted supply of raw materials.
In the modern world, everyone strives to breathe fresh air, have access to clean water and prevent the planet’s temperature from rising. Achieving these noble goals requires restructuring the economy, closing old and organizing new production facilities, which creates a new demand and structure for the consumption of raw materials. For example, the transition to electric vehicles entails an increase in demand for lithium, copper, nickel and other so-called critical materials. Previously, these resources were not needed in such quantities, but today the situation has changed. Therefore, an assessment is made of global reserves, in which countries they are located, to what extent they will be able to meet the expected demand.
There are studies that suggest that maintaining someone’s usual level of consumption, for example, two cars in each family, may raise the issue of a shortage of critical materials on the planet. It is clear that the economy of shared consumption has arrived and it is becoming more convenient to order a taxi or rent a car through an app than to buy one, but nevertheless, the issue of resource shortage is present. Therefore, those who have the appropriate technologies and an understanding of the development vector are striving to gain control over critical materials and rare earths. What happened in Ukraine with the signing of the well-known agreement is one illustration of the process. This is really very critical for the development of society, ensuring leadership positions in the global economy and maintaining the usual level of consumption. Those who do not yet fully understand this – enter into contracts with foreign companies to develop their reserves.
Question: In addition to new types of resources, the issue of world hunger is also being discussed. It is believed that consumption will change, food preferences will change. For example, there is an opinion that there will not be enough meat for everyone, there will be plant food.
A. Overchuk: At the recent Astana Forum, the FAO Director General said that Kazakhstan could theoretically feed 1 billion people. This is a very serious figure, given that the area under grain crops in Kazakhstan is about 15 million hectares, while in the world it is about 700 million hectares. This is only about Kazakhstan. Russia has more areas, better water supply, and higher yields. In addition, if we talk about the production and export of fertilizers to global markets, Russia and Belarus have strong positions here. Our macro-region is very well positioned in terms of ensuring its own food security and has unique export potential. If we are not hindered in receiving income from the sale of grain and food, then the problems of hunger in the world will be less acute.
And of course, it is necessary to help needy countries develop food production, overcome poverty and increase incomes. This potential has not yet been exhausted either.
Question: Another trend that is being talked about all over the world is the demographic problem: the aging population, the declining birth rate, even in India. This also directly affects the economy through labor resources, demand. How can we solve this problem here in Northern Eurasia? Attract labor from South Asia, ASEAN, Africa?
A. Overchuk: A decrease in the supply of labor in the labor market leads to an increase in its cost and inflation. The import of cheap labor allows us to solve current problems, but in the longer term it reduces incentives to increase labor productivity, transition to new technologies and leads to economic backwardness. Given the advantages that Northern Eurasia has, it is already attracting migrants from South Asia and Africa.
In some places, the demographic problem is considered to be population decline, while in others, on the contrary, it is population growth. Some places experience a labor shortage, while in others, there is an oversupply and pressure on social infrastructure. In general, Northern Eurasia looks rather balanced. Uzbekistan, Tajikistan and Kazakhstan are recording rapid growth: for example, in Uzbekistan in 2024, with a population of almost 38 million people, 962,000 children were born. So the problems are different everywhere.
Northern Eurasia is a single civilizational space with a common language of communication and worldview. This unity is the greatest advantage of all the peoples inhabiting our region, and therefore it is very important to preserve and support it. It is these efforts, as well as technological development and increased labor productivity, that will allow us to preserve our uniqueness and provide what is necessary for the further development of our macro-region in the new world.
Question: Now the status of the world’s factory belongs to China. There is the US, which is transferring production to itself with the help of a trade war. There is ASEAN, for example, where even China is transferring production because there is cheap labor there. There is Africa. What new future layouts for the global division of labor do you see?
A. Overchuk: These processes are constantly happening in the world. 70 years ago, the main production facilities were located in the USA and Europe. Then they moved to Japan, then to South Korea and China. Now the ASEAN countries are growing, and Africa is starting to develop. Every time one of the countries reached a certain level of development and income, investors had a question about the advisability of moving assets to economies that require lower costs. The impetus for making such decisions, as a rule, is a change in the cost of labor and, for example, tariff measures. Access to water and energy, the environment for doing business are also important. China has now reached a point of development where it itself has begun to move its production, and not only to the ASEAN countries, but also to the North American free trade zone, and is actively working with Africa.
This process has been repeated in one form or another in different countries at different times. Assessing the features of the current stage, it is necessary to pay attention to the reduction in the share of live labor in the cost structure, which is happening due to the widespread introduction of new technologies, including artificial intelligence. This is what makes it possible to return production to highly developed countries with traditionally high labor costs. The advantage will be with those who master the technology and access to resources, but this will also increase the income gap, which will pose very serious social issues for these countries, including the need for a wider distribution of private property and the income it creates.
Question: What will this changing world be like in the medium and long term, and what will be Russia’s role in it?
A. Overchuk: In terms of purchasing power parity, Russia is one of the four leading economies in the world, which makes it the center of economic gravity of Northern Eurasia. Russia and its allies in the EAEU and the CIS have everything they need for confident development in the world of the future. Together, we have a literate and relatively large population, we have technologies and all the necessary resources, including water, we do not have acute problems with food and energy security, and we are expanding the free trade zone. The CIS countries have everything they need for success, which will be possible if we complement each other, develop integration, and jointly build ties with other macro-regions of the emerging world.
Please note: This information is raw content directly from the source of the information. It is exactly what the source states and does not reflect the position of MIL-OSI or its clients.
