HERALD - MARCH 2020 by HERALD

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ОФИЦИАЛЬНОЕ ИЗДАНИЕ ФБА ЕАС, МБС # 1 (9) | 2020

52 Dr. Frank Schauff Prospects of the EU-EAEU dialogue and Russia’s role in the process

Евразийский финансово-экономический

33 EURAS IAN F INAN C IAL & E C O N O MIC

HER ALD Е В РАЗИЙСКИЙ Ф И Н А Н С ОВ О -Э КОН ОМИ ЧЕ С К И Й

В Е С ТНИК

page

A. Kazakov Digital Economy: the real backbone of integration in CIS and EAEU

14 A. Shokhin From the Arctic to Cape of Good Hope: Collaboration opportunities for Russia and its EAEU partners with Africa

AIFC – an important financial center in the world and leading in the region KAIRAT KELIMBETOV: PER SONALITY

№ 1 (9) | 2020

ЛИЧНОСТЬ

КАЙРАТ КЕЛИМБЕТОВ:

МФЦА – важный финансовый центр в мире и ведущий в регионе

подробнее на стр.

А. Шохин От Арктики до мыса Доброй Надежды: Какие возможности предоставляет партнерство с Африкой для России и ее партнеров по ЕАЭС?

14 А. Казаков Цифровая экономика: реальная опора интеграции в СНГ и ЕАЭС

# 1 (9) | 2020

33 Франк Шауфф Будущее диалога между ЕС и ЕАЭС и роль России в этом процессе

№ 1 (9) | 2020

eurasian financial & economic

O F F I C I A L P U B L I CAT I O N O F F B A E AC , I B C

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Российский союз промышленников и предпринимателей

ФИНАНСОВО-БАНКОВСКАЯ АССОЦИАЦИЯ ЕВРОАЗИАТСКОГО СОТРУДНИЧЕСТВА

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NOVEMBER, SEARCH FOR NEW FORMATS OF COOPERATION 26–27

2020

FORUM THE EURASIAN ECONOMIC UNION&THE EU: • Breakout sessions

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HERALD eurasian financial & economic

E DITORIAL BOARD :

# 1 (9) | 2020

Alexander Murychev, Chairman of Editorial Board, Chairman of Coordinating Council of FBA EAC, Executive Vice-President of RSPP, Chairman of IBC

FOUNDERS: Financial & Banking Association of Euro-Asian Cooperation (FBA EAC)

Anvar Abdraev, President of Union of Banks of Kyrgyzstan Bakhytbek Baiseitov, President of Association of Banks of the Republic of Kazakhstan

International Banking Council (International Coordinating Council of Banking Associations)

Oleg Berezovoy, General Director of FBA EAC Andrea Boldi, owner of the company NEMESI S.R.L. (Italy) Yves Pozzo di Borgo, Former President of friendship group with Central Asia in the Senate (France) Samvel Chzmachian, Deputy General Director of FBA EAC, Head of Representative office of FBA EAC in Armenia

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Bakhtiyar Khamidov, General Director of Uzbekistan Banking Association Anatoly Kazakov, Chairman of the Coordination Council of Financial and Banking Council of the CIS Elena Korobkova, Executive Director of Independent Association of Banks of Ukraine Manish Kumar, General Director of Soltex Group Ltd., Head of Representative office of FBA EAC in India, Sri Lanka, Bangladesh, Malaysia Alexander Kuchinsky, Deputy Chairman of FBA EAC Coordinating Council, Chairman of the Association of Belarusian Banks Berislav Kutle, CEO of Banks Association of Bosnia and Herzegovina Istvan Lengyel, Secretary General of Banking Association for Central and Eastern Europe Amirsho Miraliev, Chairman of the Board of Association of Banks of Tajikistan Valery Murin, Editor in Chief of the magazine "Eurasian Financial and Economic Herald" Zakir Nuriyev, President of Azerbaijan Banks Association Svetlana Orlova, General Director of Information and Publishing Center “Eurasia” Ltd. Bratislav Pejaković, Secretary General of Association of Montenegrin Banks

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Глобальная экономика chairman’s corner

CONTENT Dear colleagues and friends! For six years in a row we have held the Financial and Economic Forum “The Eurasian Economic Union and the EU: search for new formats of cooperation”. And every year we see a stronger shift of the agenda towards the problems and challenges of digitalization able to bring fundamental transformations in all spheres of peoples’ lives and activity. What yesterday seemed a fantasy today is being actively introduced into our Alexander Murychev, everyday life. Traditional sectors of economy are Chairman of Editorial Board being transformed, new markets and niches are of the magazine "Eurasian Financial and Economic Herald" arising. Today one of the main sources of added value is the creation and study of digital portraits of customs, whose data become the main asset of digital companies. The digitalization of production integrates such breakthrough technologies as virtual modeling, Internet of things, robotics, artificial intelligence, cloud computing technologies, new communication standards etc. Moreover the digital state management and finally the digitalization of science is also not such a far future. So it is no surprise that more than one article in the Herald covers this topic. The protection of the environment is another challenge of the day. Steps towards a low-emission, so called “green” economy, higher demand for clean energy resources are made by many countries today. The readers of this issue of Herald will have the opportunity to learn some factors which reveal the essence and define the prospects of our “green” future. The heading “Special opinion” overviews the possible international economic alliances on the territory of Eurasia. We believe that with globalization gaining pace these issues are interesting for the wide audience of our magazine. At the confluence of technologies, business and law Astana International Financial Center appeared in Kazakhstan – a kind of navigator for the diverse business world. For a short time of its work AIFC has reached impressive financial and economic results. So it’s no coincidence that the cover face of this issue is Kairat Kelimbetov, AIFC Govenor, a famous state figure of the Republic of Kazakhstan, a person with colossal experience in economy and management. As usual the founders’ pages of the Herald – FBA EAC and IBC are really eventful highlighting the results of the Sixth Moscow International Financial and Economic Forum and the meeting of the International Banking Council held in October last year in Minsk discussing the priority areas of digital transformation of the banking sector. The material provided by the Russian Union of Industrialists and Entrepreneurs is also interesting. Its activity has moved far beyond internal affairs of Russia. The article dwells upon the long-range partnership of RSPP with business-unions of Africa and North-East Asia. Looking back at the complicated and mostly controversial subject of digitalization it’s worth remembering the words of the great Albert Einstein: “It has become appallingly obvious that our technology has exceeded our humanity”. The Herald always aims to provide its readers not only with food for thought but also with the opportunity to become acquainted with the beauty. In this issue we draw the line of the photo contest “The world through the eyes of a photographer” – 2019. It is especially pleasant that on the eve of the International Women’s Day the winner of the contest is a lady who managed to demonstrate in her works a refined taste and a sense of the beautiful. The gentlemen of the Editorial Board of the Herald congratulate the winner of the contest as well as all female readers of our magazine on the first spring holiday. Read the Herald and be happy!

PERSONALITY K. Kelimbetov: “We see the AIFC as an important financial centre in the world and leading in the region”

RSPP NEWS A.Shokhin. From the Arctic to Cape of Good Hope: collaboration opportunities for Russia and its EAEU partners with Africa

North-East Asia Business Association: Russian entrepreneurs turn east

16 FOUNDER’S PAGE. FBA EAC The Sixth Moscow International Financial and Economic Forum “The Eurasian Economic Union and the EU: search for new formats of cooperation”

23 EXPERT OPINION

M. Rodionova. Summarizing the Sixth Moscow International Financial and Economic Forum

24 FOUNDER’S PAGE. IBC Discussing the digital transformation of the banking sector

25 A. Voylukov. Priorities of digital transformation of the banking sector

28 FINANCIAL SYSTEM

OF THE COUNTRIES OF EURASIA Ernest Žejn. Digitalization: banks may be-

come irrelevant

30 A. Kuchinsky. Belarusian banks: trend on “green” economy

33 A. Kazakov. Digital Economy: the real backbone of integration in CIS and EAEU

36 WORLD TRENDS

Qiang Wang, Zh. Pisarenko. China and Russia: moving towards a green growth model

39 V. Donchenko, B. Boravskiy.

Relevant problems of formation and development of the world market of recyclables from production and consumption wastes

44 ADVANCED TECHNOLOGIES

S. Pynzar. «J-Pass» technology – a step to «touchless» future

48 SPECIAL OPINION

V. Kotenev. Russian-German economic relations in the fast-paced world

52 F. Schauff. Prospects of the EU – EAEU dialogue and Russia’s role in the process

54 PRACTICE

A. Kotlyarskiy. Digitalization as a strategic approach to increasing the efficiency of mining enterprises

56 HISTORY OF MONEY

V. Krasnikov. Moldavan Leu – legacy of cen-

turies

58 PHOTO CONTEST Winners of the Photo contest 2019

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BELARUSIAN BANKS: TREND ON “GREEN” ECONOMY

Alexander Kuchinsky. The “green” economy is becoming more and more popular among the credit and financial organization of the Republic of Belarus. Many people associate their development and the future of the country with it.

CHINA AND RUSSIA: MOVING TOWARDS A GREEN GROWTH MODEL

Qiang Wang, Zhanna Pisarenko.

The Chinese economy is now moving from the stage of rapid growth to the stage of qualitative development and environment concern.

8 33 44

DIGITAL ECONOMY: THE REAL BACKBONE OF INTEGRATION IN CIS AND EAEU

Anatoly Kazakov. CIS countries are facing a challenge today: in the next 10 years to join the range of the countries with the new techno-economic paradigm

«J-PASS» TECHNOLOGY – A STEP TO «TOUCHLESS» FUTURE

Sergey Pynzar. Today the range of application of «JPass» technology is really wide. The marking can be used for identification and verification of different items, details and other elements, for the control of operations with them, for the account and management including the management of separate systems and complexes.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

49 49

RUSSIAN-GERMAN ECONOMIC RELATIONS IN THE FAST-PACED WORLD

Vladimir Kotenev. There is a sensible vector headed not to a standoff but to fruitful cooperation between the Russian Federation, Europe in general and Germany in particular. And the Eurasian space can become a good platform for fruitful relations.

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Personality

www: aifc.kz

”

WE SEE THE AIFC AS AN IMPORTANT FINANCIAL CENTRE IN THE WORLD AND LEADING IN THE REGION Kairat Kelimbetov, Governor of the Astana International Financial Centre (AIFC)

– Kazakhstan is not among the leaders in the financial sector. This is a country mainly focused on oil exports. Therefore, it is interesting, what was the reason for the turn to financial markets? In short, what was the origin of the AIFC concept? – By the way, economy’s orientation on the raw materials has become the reason for the turn to financial markets. In a broader sense, one of the areas of development of non-primary industries. The movement aimed in this direction in Kazakhstan began long ago, long before the fall of oil prices in 2014.

A course towards diversification was taken back in 2009, as part of the annual Address to the people, which is given by the first President N. Nazarbayev. As a consequence, there was made a state program for accelerated industrial and innovative development, that is still valid. Later, N. Nazarbayev said: “The global economic system might seriously fail already in 2013–2014, and, in particular, cause a collapse in world prices for raw materials.” During his Address to the People in 2012. The fall of the oil prices, which began in 2014, confirmed the correctness of

this statement. Until now, oil prices remain volatile and they are influenced by different factors. Thus, the country has a clear understanding that relying on oil revenues alone will not ensure sustainable long-term development. Kazakhstan has embarked on the realization of its industrial potential. There are high hopes for the agricultural sector. In general, there are many areas in which we can move. The goals and objectives of economic diversification are enshrined in all strategic documents. In order to develop the economy and ensure access to capital, it is simply nec-

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essary to have a developed financial system. The banking sector has been and remains as the most important component, and banks in Kazakhstan are quite developed. This is the first branch of our economy, after the commodity sector, which rapidly developed and began meeting international standards. But its weaknesses were shown by the 2008 crisis. One of the drawbacks of the system that existed was, for instance, a weak stock market, which, as a rule, is more resistant to external shocks. Afterward, there is a question of investment. I believe that attracting investment is critically important both for Russia and Kazakhstan. State investment can not solve all the problems. It also inevitably creates distortions in the economy. We need a private investor, whom we must interest and attract. In due course, about $ 330 billion of foreign investment came to Kazakhstan, mostly in the commodity sector. At present, in order to realize diversification we must provide investment in non-resource sectors for accelerated growth in the new conditions. Moreover, both external and internal investments are required. The country has funds, however, opportunities to invest them into business are limited. This situation is similar to Russia. When there are no such opportunities, capital begins to go abroad, or lies as a dead weight. Share capital is a way for citizens to invest into the economy and increase them. AIFC in perspective creates conditions for the economy in sequence to develop capital market, which should solve the issue of attracting both internal and external investments. For this, the state even took an unprecedented step – the introduction of a separate jurisdiction. In the AIFC, justice is based on English law. This is an independent court that includes nine judges-international experts. They are all British, all of them are recognized experts and highly respected both in their own country and worldwide. For example, the first head of the Court was Lord Woolf, formerly the supreme judge of England and Wales, a member of The Court of Appeal of the High Court of Hong Kong, and the first chairman of the Civil and Commercial Court of the Qatar Financial Centre in Doha. The AIFC also has an International Arbitration Centre. It is also created on the basis of international standards and consists of independent international arbitrators. The special jurisdiction of the AIFC was embodied in the Constitution. Accordingly, on December 7, 2015, Nursul-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

tan Nazarbayev signed the Constitutional Law “On the AIFC”, according to which the corresponding changes were made to the Supreme Law. All these actions have been done to protect investors. Investor must be sure that the risk for his investments does not exceed normal commercial risk, and that he will not face arbitrariness, disputes will be resolved according to the law that is understandable to him. It is common that outside the countries of the first world, large investors try to secure state guarantees. But what if we want to attract not one but hundreds of investors, both large and not so? It is unrealistic to give personal guarantees to everyone. For this, a separate jurisdiction was created, clearly fixed at the level of the state’s Constitution. All this became the reason why Kazakhstan created an international financial centre. We have created a new stock exchange in cooperation with NASDAQ and the Shanghai Stock Exchange; an asset and wealth management market for individuals and Islamic finance and fintech are being developed. AIFC aspires to achieve a number of goals. Firstly, the development of the country's financial market. Secondly, the promotion of investment. Thirdly, the integration of Kazakhstan into the global financial system. And the last but not least, is the development of the region, the creation of a developed network of economic ties in it. – In this case, what markets does the financial centre rely on, which regions do you see as the main areas in which the AIFC will develop? What place does the AIFC take in the process of Eurasian integration? – Kazakhstan is guided by the multi-vector course in foreign policy, which was formulated by N. Nazarbayev. Therefore, the AIFC is also guided by the course of this policy, we see ourselves as a set of institutions on the basis of which a productive interaction is created between the economies of Kazakhstan and its neighbors. And not just the neighbors. We have three key areas of cooperation: Central Asia; EAEU countries; Belt and Road Initiative. Here we see that the main areas of development cover the countries that are neighboring us. Russia and China are not only the powerful countries, but also the largest trading partners of Kazakhstan. China participates in Kazakhstan’s economy mainly in the sphere of infrastructure and raw materials projects.

The potential for trading with the PRC is generally believed to be huge. There is an opportunity to earnestly increase, primarily, the agricultural production. On the other hand, China is actively investing in infrastructure in the region. However, for the effectiveness of trade and investment there must be an open area working in accordance with international standards. AIFC is that kind of area. The same applies to the EAEU, and its largest participant – Russia. The institutions which will bring cooperation to the new level are needed; they are also expected to attract investors, provide attracting conditions for them. In general, we need an infrastructure of financial flows, trust and guarantees. These are the things we are trying to implement in the AIFC. This, of course, is a long process, but we have already begun, and there are several achievements in this direction. Undoubtedly, the Central Asian region is a key area. Here, the necessity for such an institution as the AIFC is not only our interest, but also the interest of all countries in the region, this is a mutually beneficial business. – Central Asia is for sure, a significant region. We see that it is crucial from Russia's constant interest in it, both geopolitically and in the sense of the business interests of corporations. But overall, what future does the region have? So far, the development of your neighbors, the post-Soviet countries of Central Asia, is rather uneven in economic terms. – We have a large reserve for growth, associated with a fairly high birth rate in the region. The near future of Central Asia is connected with the fact that we are updating personnel, which means that we need to invest more actively in young people, so that they provide states with a much more prosperous future and build new modern institutions. Less than thirty years ago, we literally rebuilt the entire market economy from scratch. Due to market reforms that were carried out at the very dawn of independence by Elbasy, Kazakhstan has been the economic leader in the region for a long time and still remains in this position. At the same time, the economies of other countries in the region are equally important to investors. We see, for example, significant growth in Uzbekistan, which suggests that Central Asia continues to be an attractive destination for foreign investment. The region’s growth rates are among the highest, I think now

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Personality личность

is a good time for such integration processes and creation of international platforms. – Prospects and current situation – there must be a bridge, which will allow ambitious plans to be realized. We know that you are actively working with countries in the region. But when it comes to the AIFC, in what areas do you plan to advance in the region, including the EAEU and Central Asia? And specifically, what kind of products do you offer to the region? – I think it is necessary to highlight several anchor products that are in demand in our region. This is, first of all, our jurisdiction, which guarantees the right of ownership and protection of the interests of investors and businessmen, this is our high-tech exchange, which is sufficiently secured by liquidity, as well as other various instruments, such as Islamic finance, that is actively growing, and green finance- I suppose these factors are the most interesting and important in connection with the movement towards decarbonization of the world economy, which will obviously be gaining rate. We all need a stable and prosperous region, and more or less all the regional initiatives of the leadership of Kazakhstan from the moment of independence have been directed to it.

We want to interact effectively with all our neighbors. This, in my opinion, is the only scenario in which the region can succeed. Our task as a regional hub is also to create trusting relationships between participants of the process, representing a wide variety of states.

For this, in fact, there is our separate jurisdiction with clear and independent rules of the game that can be used by citizens of China, Russia, Uzbekistan, and the countries of the European Union. Our institutional infrastructure is needed for financial flows.

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Kairat Nematovich Kelimbetov К. Kelimbetov – Governor of the Astana International Financial Centre (AIFC). He worked at the Supreme Economic Council under the President of the Republic of Kazakhstan, also he worked at the Administration of the President of the Republic of Kazakhstan, headed the Agency for Strategic Planning of the Republic of Kazakhstan, was the First Vice Minister of Finance of the Republic of Kazakhstan. From 2002 to 2006 he worked as the Minister of Economy and Budget Planning of Kazakhstan. In 2006, he headed the Kazyna Sustainable Development Fund. In January 2008, he was appointed as a head of the Presidential Administration of the Republic of Kazakhstan.

– Russian entrepreneurs aim to operate in Kazakhstan and neighboring countries. This is related to both large corporations and smaller companies. The investment potential here is quite large. Nonetheless, all these things often abut on restrictions – infrastructure, regulatory, etc. Can the AIFC act as an instrument for entry to your markets for closer cooperation between Russian and Kazakhstani businesses, and may be even wider – regional business? – I think that the AIFC should come as an assembly point for the Kazakh-Russian business. Russian Federation is our key trading partner, and we can only deepen our cooperation. – The Chinese Belt and Road Initiative, which you already mentioned, is perhaps the largest and most ambitious project of our time, but at the same time, it is rather ambiguous. We know that Kazakhstan, like other countries along the Belt and Road route, is very actively involved in it. What place does the AIFC take in the structure of this project? – As part of partnerships with leading Chinese financial institutions, the AIFC places special emphasis on creating, on its basis, ecosystems for all possible operations (including investment and financing) connected with Belt and Road Initiative projects. And this will ultimately help to diversify the country's economy by increasing the number of investment projects in various areas of industry, and expanding export of products to China.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

Today, Astana International Exchange has already created a special exchange sector of the market for attracting investments on the Belt and Road projects from international investors, primarily Chinese investors. AIFC also collaborates with key financial institutions in China. Thus, the Construction Bank of China, the second largest asset in the world, and the China Development Bank became participants of the AIFC and opened their branches and representative offices here. The Shanghai Stock Exchange, as well as the largest Silk Road Infrastructure Fund, have become strategic partners and shareholders of the Astana International Exchange. The AIFC regulator has entered into agreements with the China Securities Regulatory Commission (CSRC) and the China Banking and Insurance Regulatory Commission (CBIRC), allowing Chinese professional participants to operate on the AIFC site. The largest Chinese brokers CITIC, CICC, Shenwan Hongyuan also became trading members of the Astana International Exchange, allowing the issuers of the Exchange to attract capital of a large and diversified pool of investors – What is AIFC like in the Kazakhstan’s domestic market? How do you assess purely Kazakhstani direction of your work? – We are now actively interacting with the domestic market. For example, we have registered a large fund of agriculture development, which will take a

From 2008 to 2011, he managed the Sovereign Wealth Fund Samruk-Kazyna, which combined all state assets. Since April 2011, he worked as the Minister of Economic Development and Trade of the Republic of Kazakhstan. In January 2012, he was appointed as a Deputy Prime Minister of the Republic of Kazakhstan, oversaw macroeconomics, budget policy, state asset management and the financial sector, tax and customs policy, and he was also the Chairman of the Council of the Eurasian Economic Commission representing the Republic of Kazakhstan. In October 2013, he was appointed as a chairman of the National Bank of the Republic of Kazakhstan. Since December 2015 - Governor of the Astana International Financial Centre.

new approach to the sphere and sees itself as a tool for its complete reload. Privatization of national companies of Samruk-Kazyna is realized through the Astana International Exchange, this simply increases the base of private investors. People are very professional about this, and I think that the upcoming placements of KazMunayGas, Kazakhtelecom and Air Astana will only consolidate our success in this regard. – How do you see the AIFC if all the ideas that are laid down in it will be fully implemented? – We see the AIFC as an important financial centre in the world. And this, of course, in the near future will have a fruitful impact on the development of the financial centre, the economy of our country, and the economy of Central Asia.

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RSPP news

The shore became very boring Of elements hostile and crashing, And there, in surges of midday, Below the African sunrays I will recall the gloomy Russia Alexander Pushkin

Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP)

FROM THE ARCTIC TO CAPE OF GOOD HOPE: COLLABORATION OPPORTUNITIES FOR RUSSIA AND ITS EAEU PARTNERS WITH AFRICA www.рспп.рф

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For a long time, the fates of Russia and Africa have been closely intertwined with one another. Culture, politics, economics, history – there is no field where we don’t have a common past and present. The black continent has attracted millions of our compatriots at all times. Epochs have changed, however, there has always been genuine interest, the desire to know, feel and understand Africa, to develop friendly relations. But if Africa was more of a mystery for the Russian Empire existing in the poems of Pushkin and Gumilyov, for the Soviet Union Africa became the most important political and partly economic partner in the struggle for a better future. Our country has helped in the fight for independence and the development of dozens of African partners. But with the collapse of the USSR, the relations of the former Soviet republics with African states (and Russia is no exception) significantly weakened, and in some areas virtually came down to nothing. Partly it was due to a rethinking of foreign policy and overstretched the capacity, largely due to the massive support of partners from developing countries. Partly – the economic decline in the post-Soviet space and the deteriorating situation in Africa, with the escalation of armed conflict and the poverty of the population. However the situation is gradually changing. Rising commodity prices related to the next phase of the commodity super-cycle, as well as certain political stabilization have led to a significant improvement of the situation in the economies of many African states. At the same time, in the politics and economy of the Black Continent began to replace the former USSR with the new centers of power, primarily China and India, as well as our former Cold War rivals from Western countries. In 1995, turnover with Russia, accounted only for 0.48% of trade in Africa or $ 922 million, according to UNCTAD (table 1). By 2000, the situation has slightly improved: trade with our country grew to 0.49% ($ 1.451 million). For example, from 1995 to 2000, China increased its share in African trade from 1.32% ($ 2.555 million) to 3.6% ($ 10.562 million). At that time the largest trading partners of African countries were the USA, France, and Germany. So, in 1995 and 2000 the United States accounted for 10.7% and 13.1% of African trade. However, in the course of the next two decades, the situation has altered fundamentally. China and India came to the fore, becoming the largest trading partners of Africa at the end of 2018

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

Table 1.

African trade with key partners (million US dollars) 1995

2000

2005

2010

2015

2018

China

2 555

10 562

39 665

126 876

178 575

210 575

France

25 778

29 347

47 389

66 423

57 274

60 483

Germany

14 453

20 659

35 457

49 070

46 158

52 715

India

3 065

7 618

15 121

49 361

61 106

69 256

Great Britain

7 798

17 999

27 553

35 688

28 800

30 818

20 884

38 599

83 410

115 813

53 409

62 888

Russia

922

1 451

3 406

6 409

8 973

19 456

EAEU

977

1 652

3 620

7 138

10 011

20 660

World

193 962

USA

294 831 578 704 1 031 247 1 023 751 1 161 502

Source: calculations of the Center for Multilateral Cooperation and Eurasian Integration, RSPP according to UNCTAD Stat

(18.13% and 5.97%, respectively). Furthermore, the share of the former US leader fell to 5.41%. There is a similar situation in African trade in France, Germany and the UK. The growth of physical volumes of trade between these countries with African partners lagged behind the dynamics of African trade with other countries. And what about Russia? At the end of 2018, our country accounted for 1.68% of African trade. On the one hand, this is little compared to the successes of China or India. But on the other hand, Russia had closed the gap in the share of African trade with partners from developed countries. While in 1995 the volume of trade between Russia and Africa was 21 times less than the trade of Africa and the USA, in 2018 it was only 3 times less. And if we compare the statistics of export deliveries to Africa, it turns out that our country’s position is even better. In 2018, Russian exports to Africa exceeded $ 17.4 billion (2.94% of world exports to Africa). Compared to US exports to Africa, the advantage in favor of America is less than 1.5 times, despite an enormous difference in the size of the economies of Russia and the US. According to the results of 2018 (UNCTAD Stat data), the structure of Russian exports was dominated by raw and unclassified goods ($ 5.3 billion), food, animals and grain ($ 4.1 billion), fuel, lubricants and related products ($ 3 billion), industrial products ($ 2 billion), engineering products and transportation equipment ($ 944 million). It must be pointed out that the existing commodity structure of Russian export deliveries to Africa is becoming an important factor that stimulates the devel-

opment of highly productive export-oriented sectors of the Russian economy. Russia's interest in building the trade with Africa is also confirmed by the acquisition of a stake in Afreximbank by Russian Export Center JSC (REC) at the end of 2017. As a result of the transaction, REC became the third largest shareholder of the bank among nonAfrican financial institutions and organizations. This decision creates new opportunities for Russian exporters to enter African markets through cooperation with a large and reputable financial institution with extensive and highquality expertise. As for investment cooperation with Africa, although Russia concedes by volume of foreign direct investment (FDI) in the region to such countries as France (64 billion US dollars of accumulated FDI in 2017), the Netherlands (63 billion dollars), the United States ($ 50 billion), Great Britain ($ 46 billion), China ($ 43 billion), the volume is still essential for Russia to be considered a major player. The accumulated Russian investments in the region reach $ 17 billion, according to estimates by the African Institute of the Russian Academy of Sciences. Russian business is an important player in many African countries, including Egypt, Guinea, South Africa, Zimbabwe, Congo, Ghana and many others. With a number of African states (with Angola, Algeria, Egypt, Zimbabwe, Namibia, Nigeria, South Africa, Equatorial Guinea) our country has concluded agreements on the promotion and protection of investments that create favorable conditions for investment. But what do we see behind dry figures? It is really important that Russian

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RSPP news

companies not only create working places, pay taxes and develop the economic growth of African states, but they also aim to contribute to the sustainable development of the region. For example before the Tokyo Summit of B20 in March, 2019 a brochure was prepared containing projects and practices of international business which promoted the Sustainable Development Goals (SDGs). The brochure presented the activities of Russian business including the sustainable development projects in such African countries as Guinea, Burkina Faso, Sudan, Zimbabwe, Tunisia, Kenya, Nigeria, the Republic of South Africa, Lesotho, Togo, Malawi, San Tome and Príncipe. Russian business is concerned not only with profits but also with the development of the local societies including housing improvements, soil enrichment, health development and struggle against mass diseases. Thus the efforts of Russian companies create the conditions for serious progress in the implementation of SDGs in the region which desperately needs international support. However regardless of apparent success there is no way for us to stop in the development of cooperation with the African partners. Today Africa is a promising economic space; following the Asian-Pacific region it is the point of

flashy economic growth with about 40% of the world minerals reserves in its situ. Besides Africa is strengthening its positions not only as a source of raw materials, but also as a promising target market for the end products due to the increase in the financially reliable population. These positions are supposed to be improved also by the African Continental Free Trade Area (AfCFTA) created in 2019. It is an important step towards the formation of a market with 1.2 billion people and total GDP of member-states amounting to $2.5 trillion. However one should remember that African economic growth has a fickle disposition still strongly depending from the mineral markets environment. On the one hand it fuels the interest of African countries to establish on their territory the capacities with high added value with the aim to cope with the “resource curse”, and on the other hand it stimulated the diversification of external partnerships and sustainable delivery chains with reliable foreign partners. This context created new opportunities for deeper collaboration with Africa both bilaterally and multilaterally. For Russia it implies collaboration opportunities with its EAEU partners. Today the EAEU potential in Africa is not exploited to the full in most cases. As the above mentioned calculations

Tver coach-building plant presented prototypes of railway wagon to the Minister of transport of Egypt

show Russia dominates in the trade of EAEU with Africa: in 2018 our country accounted for 94% of the EAEU trade with the region. However other Union member-states are also getting noticed by African states: the export of Belarus to Africa has gone up one-and-a-half times in the last 8 years, Kazakhstan – 2.4 times. Among promising cooperation areas between the EAEU and Africa are agriculture, chemical and metal industry, engineering, energy, transport, trade, digital technologies, education. EAEU provides African countries with wide opportunities within the Generalized System of Trade Preferences once created with active participation of the USSR. Most part of import from Africa to EAEU enjoys preferential customs rates thus boosting the African export to EAEU. In this respect the authorities and business see their key tasks as follows: to create necessary conditions (political, legal, economic, information) for a more active interaction of EAEU companies and African partners and to raise their awareness of the available opportunities; to work out new formats of interaction in order to reduce transaction and (in the future) production expenses.

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Within the business program of the Economic Forum “Russia-Africa” RSPP together with the Africa Institute of RAS held a panel session “Business in Africa: opportunities, conditions and risks”, October 23, 2019

Africa is a perfect ground for new joint projects which would be free from restrictive policies executed by a number of foreign countries. Here worth mentioning is the RussianEgyptian contract on the supply of 1.3 thousand coaches of different classes. The contract implies their assembly at the Hungarian factory Dunakeszi Jarmujavito Kft from the component parts produced at the Tver coachbuilding plant, part of JSC “Transmashholding”. Transmashholding is going to be the leading developer while the Hungarian party – Hungarian ExportImport Bank – will act as a production and financial partner. Such approach of “collaboration on the third countries’ markets” could also be practiced in EAEU policy. An important part of the work on expanding the presence of EAEU in Africa is stimulation of the “integration of integration” through concluding the agreements on free trade. This process has already been launched: in early 2019 discussions began about the agreement on free trade between EAEU and Egypt – the key trade partner of the Union in Africa. However, perhaps even stronger effect could be achieved in case of a complex multilateral agreement on free trade between EAEU and the members of African Union (AU), the largest organization of the countries of African continent uniting 54 states.

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Today the AU’s goal is more than ambitious: to create a common internal market without barriers for free movement of the four production factors as well as a full-fledged monetary and economic union with an in-home central bank and single currency. AU could promote the united platform for multilateral trade negotiations with the participation of separate African states and EAEU. The creation of such FTA would remove or at least facilitate tariff restrictions of the Eurasian export to Africa and would drive the production cooperation of EAEU countries. These negotiations could also remove nontariff barriers which often undermine the trade even worse than the tariff rates. The first step towards this goal has also been made: at the Summit and Economic Forum “Russia – Africa” in October, 2019 a Memorandum of understanding and cooperation between the Eurasian Economic Commission (EEC) and the African Union Commission (AUC) was signed. The MOU creates the basis for institutional collaboration between EAEU and AU. As the former Chairman of the EEC Board Tigran Sargsyan noted: “We are interested in the African Union because it is a dynamic economic market with population of 1.3 billion people. The growth rate evidence that in the nearest future Africa will become a serious economic actor of a world scale”. Ap-

parently it would be odd not to take this chance. The interaction between not only authorities but also business unions could also contribute to the cooperation and solve the problem of information deficit among businesses of Eurasia and Africa. To implement this idea we could create under the auspices of AU a Business Council including the main business associations from the AU member-states. And its vis-à-vis could be the EAEU Business Council which unites the key business associations of the Union memberstates. Russia’s interests in the Council are represented by the Russian Union of Industrialists and Entrepreneurs (RSPP). In conclusion we would like to go back to where we started the article. The important positive factors of the collaboration development between EAEU and Russia are the Russian language, common history and cooperation experience. Many representatives of African elites used to study in the USSR and EAEU states, they know and love our countries, act as objects and providers of our “soft power”. Very often this fact alone can open the door to new markets of this challenging but important region. And today when Africa has a chance to become the continent of the future it is crucial to catch the great opportunities for collaboration which are opening for us. Companies-members to RSPP are prepared for this.

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RSPP news

NORTH EAST ASIA BUSINESS ASSOCIATION: RUSSIAN ENTREPRENEURS TURN EAST Sergey Krasilnikov, Vice-President – Managing Director, International Cooperation and Integration, RSPP

Sergey Mikhnevich, Director, Center of Multilateral Cooperation and Eurasian Integration, RSPP, PhD in Politics

Trade and economic cooperation with AsiaPacific Region in general and with North East Asia in particular is a priority for the Russ ian foreign policy. The valid Foreign Policy Concept of the Russian Federation approved by the President of the Russian Federation V.Putin on November 30, 2016 says that “to day we can see scattered world potential of power and development, its shift to APR”. The document underlines that “Russia considers its stronger position in APR and more active relations with the countries of the region as a strategic area of its foreign policy… Russia is interested in active participation in the inte gration processes in APR, in taking advantage of its possibilities when implementing the pro grams of social and economic development of Siberia and the Far East”. With complicated re lations with the Western countries the impor tance of APR for Russia grows. In 2018 the APEC economies accounted for 32.3% of the Russian foreign trade in com parison to 30.5% in 2017. It’s worth mention

ing that in 2017 there was trade deficit with APEC economies which amounted to $5.98 billion while in 2018 the trade surplus es reached $19.289 billion. Six years ago 23% of Russian foreign trade and 17% of export accounted for APEC. However, only 4.14% stocks of the Russian FDI were directed to the APEC countries ($14.252 billion) as of the be ginning of 2019. Whereby half of the Russian investments to the APEC economies account ed for the USA ($7.227 billion). To put this in perspective: stocks of the Russian FDI in Chi na amounted only to $254 million. As for the incoming FDI from APEC to our economy in 2018 they have dropped nearly twice: from 6.49% to 3.89% (from $28.634 billion to $15.84 billion). According to the Central Bank of the Russ ian Federation the largest investor to our country is Singapore with stocks of FDI to Rus sia amounting to $3.874 billion as at the be ginning of 2019. Considerably lower level of FDI comes from the Republic of Korea –

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$2.677 billion, China – $2.613 billion and Japan – $1.917 billion. Investments from Singapore, China and Japan have re duced while from Korea – grown. Russian investments to Asian coun tries are even smaller. The key receiver of the Russian FDI is Singapore – $3.472bn as of the start of 2019. Hong Kong and China follow Singapore lagging behind considerably: $325mn and $254mn correspondingly. Russian invest ments to Japan and the Republic of Ko rea find themselves within a statistical spread – $55mn and $33mn as pf the start of 2019. A serious gap between trade and in vestments of our country with Asia makes one think of policy changes of the national governments active in the re gion of international multilateral insti tutes and business. In the mediumterm and longterm perspective such situa tion seriously limits a stronger, more complex cooperation. In fact Asian states trading with Russia depend on its invest ment interaction with the Western coun tries. In the context of high global turbu lence it provokes considerable risks for their interests. The need to create new institutes and format which would provide for breakthrough opportunities to enhance the Eastern strand of the Russian policy is recognized not only by the govern mental bodies but by the Russian busi ness too. On August 22, 2019 within the ministerial Advisory Commission of the Greater Tumen Initiative a Memoran dum was signed on the establishment of the NorthEast Asia Business Associa tion. It has gathered large unions from Russia, China, the Republic of Korea and Mongolia: the Russian Union of Industri alists and Entrepreneurs (RSPP), China Council for the Promotion of the Inter national Trade (CCPIT), Chambers of Commerce and Industry of the Republic of Korea and Mongolia. The Association is open to businesses from other coun tries of the region such as Japan and DPRK as well as to partners beyond the region. The new Association has become the first international multilateral union of national businesses in the NorthEast Asia. Among its focus areas will be active information exchange of project ideas and proposals among the member unions and their companies, coopera tion to reveal and remove together with governmental bodies the barriers for trade and economic collaboration. Its work will be mainly focused on the im plementation of the “soft” and “hard” projects. The first type implies the devel opment of human capital and research,

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

the second one – investment and prac tical foreign economic activity. The key working areas of the Associ ation correspond with the priorities of the Greater Tumen Initiative including trade and investments, transport, agri culture, energy, tourism and many oth ers. For example the Association’s prior ities are going to involve industry and digitalization. This idea from the Russian side was supported by the partners. Pending are the basic documents reg ulating particular aspects of cooperation (such as the procedures and application forms for projects) as well as the polls among national businesses in order to define the targets of the Association more precisely and to work out effective cooperation formats. They will be imple mented in pilot projects and form the basis for the Strategic plan of action of the Association expected to be approved in Seoul in 2020. The Greater Tumen Initiative under which the new Association has been cre ated is the only multilateral intergovern mental platform of international coop eration in the NorthEast Asia working with the support of the UN Develop ment Program. The importance to en hance cooperation within the Greater Tumen Initiative was reflected in the Joint Statement of the Russian Federa tion and the People's Republic of China on the development of cooperation of the overall partnership and strategic in teraction entering the new era. The Statement was made on June 5, 2019 and published after the meeting be tween the President of the Russian Fed eration V.Putin and the Chairman of PRC Xi Jinping. The participants of the Greater Tu men Initiative are the Russian Federa tion, PRC, the Republic of Korea and Mongolia. One of the structures of the Initiative, the Committee of cooperation of regional authorities also involves the Japanese prefecture Tottori. Previously DPRK was also part to the Initiative but in 2009 left the program within the pol icy of reduction of participation in the UN programs and projects as the reac tion to the sanctions introduced towards DPRK due to its missilenuclear program. Natalya Stapran, the Head of the Russian delegation to the Initiative Advi sory Commission, Director of the De partment of multilateral economic coop eration and special projects of the Min istry of economic development of the Russian Federation in her speech under lined that the Initiative is a unique insti tute of international cooperation in the region based on diversity and justice. The establishment of the NorthEast

Asia Business Association is a major landmark in the development of the Ini tiative providing for a new level of prac tice and the implementation of capital intensive designs coinciding with the needs of memberstates. The establishment of the Association will support the development of the multilateral cooperation of the Russian business with foreign partners in harmo ny with bilateral ties. Regarding the in teraction within the Association RSPP believes that it should focus on the in terests of the national business, on the search and implementation of promising projects and the removal of excess bar riers for cooperation. The Russian position is shared by all partners to this new institute. During the inauguration meeting of the Association on August 22, 2019 Mr. Chen Zhou, the ViceChairman of CCPIT expressed hope that the work of Association will trigger the cooperation between the businesses of NorthEast Asia and will allow to make use of its latent potential. Mr. Duuren Tumenjargal, CEO of the Mongolian National Chamber of Com merce and Industry declared that the As sociation should focus of digitalization and its advantages for the development of the markets and trade of the North East Asian countries. Besides he as sumed that there are opportunities to create a special brand for the goods pro duced in the region. Mr. Kang Homin, Senior Vice Presi dent of Korea Chamber of Commerce and Industry underlined that in order to achieve top results the cooperation in the Association should include its close interaction with the export and import banks of the NorthEast Asia also under the GTI. This will ensure that the intro duced project ideas meet the require ments of the financial institutes. The Association parties are ready to take maximum efforts to develop effec tive interaction within the Association and to improve business cooperation in the region. The Association work will provide for synergetic effect in raising foreign business from the countries of NorthEast Asia for accelerated growth of the Russian Far East. Besides it is worth mentioning that the Memorandum on the establishment of Association is open to business unions from other countries including those be yond NorthEast Asia, and it can become a basis for a wider cooperation of busi ness unions of the whole APR and EAEU becoming a basis for the developing Greater Eurasian Partnership (GEP). For the first time the idea of GEP was announced in the Presidential Address

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RSPP news

to the Federal Assembly in 2015. In his address the President of the Russian Federation V.Putin stressed the need to form economic partnership among the EAEU, SCO states and the ASEAN. In 2016 at St. Petersburg International Eco nomic Forum (SPIEF) the Russian Presi dent stated that Russia and other EAEU countries support the establishment of GEP with the participation of China, In dia, Pakistan, Iran, CIS and other coun tries. Extending the idea of GEP Vladimir Putin also said: “Our partners and we believe that the Eurasian Economic Union can become one of the centers to form a wider integration framework… We could rely on a whole network of bilateral and multilateral trade agree ments of different depth, speed and lev el of interaction, market openness de pending on the readiness of this or that economy for such joint work, on the agreements on joint projects in science, education, advanced technologies”. As a “touchstone” the President of Russia offered an easier unification of regulation in the area of sectoral coop eration and investments, measures of technical, sanitary regulations, customs registration, protection of intellectual property rights. During his speech at the Supreme Eurasian Economic Council on October 1, 2019 Vladimir Putin under lined that the EAEU partners “should continue developing close ties of the

Eurasian Economic Union with the Shanghai Cooperation Organization and ASEAN, working towards the Greater Eurasian Partnership”. Currently the Russian expert commu nity is discussing different ways and ap proaches to the GEP structure. Vladimir Petrovskiy, Doctor of Politics, Chief Re searcher at the Institute of Far Eastern Studies of RAS points out such GEP ele ments as economic cooperation, mega projects, integration contingency which should be supported by the “guarantees against outside interference and impos ture of the models of public order and other not coming from the society itself. We need precise and clearly estimated common game rules on the internation al arena followed by all countries with out distinction”. According to the experts from the reputable international discussion club “Valdai” the institutional forms of the GEP “should have overall and inclusive character, combine politics and econo my, “soft” and “hard” power, should be applicable for the large, medium and small countries. We are holding in our hands great institutes of international cooperation and development with high potential — “Eurasian Integration”, fi nancial institutes of the “Silk Way” and Asian Infrastructure Investment Bank, SCO, multilateral formats with the par ticipation of ASEAN and a lot more. We

should improve them and make them complimentary”. It is also worth mentioning that with in the GEP business (together with the expert and scientific society) should be involved not only into consultations but also into the decisionmaking process re garding the development and function ing of the Partnership, equally with the representatives of governmental bodies. In the long run the GEP should have three main characteristics: controllabili ty, sustainability and ability for selfde velopment. Institutional structure of the GEP is still under development but some ideas have already been prepared. The cooperation on the platform of GTI in general and within the NEA Business As sociation in particular can successfully be used as one of the elements of the developing GEP system. Russian companies interested in par ticipation in the Association and coop eration development with foreign part ners from North East Asian countries can apply to the RSPP Division of inter national cooperation and integration. Forms and requirements to the project applications will be published in the rel evant part of RSPP web site after their approval. Before the approval the appli cations can be submitted via the service “Red button” available on the website of RSPP Division of international coop eration and integration.

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Founder’s page. FBA EAC

Financial & Banking Association of Euro-Asian Cooperation

Russian Union of Industrialists and Entrepreneurs

Eurasian Economic Commission

THE SIXTH MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” ON NOVEMBER 22, 2019 IN MOSCOW IN THE HOTEL AZIMUT SMOLENSKAYA MOSCOW THE SIXTH MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” WAS HELD. TRADITIONALLY THE PARTICIPANTS DISCUSSED THE MOST CRUCIAL FINANCIAL AND ECONOMIC ASPECTS OF EURASIAN INTEGRATION, NEW MARKET OPPORTUNITIES OF THE EURASIAN ECONOMIC UNION (EAEU) FOR THE EUROPEAN BUSINESS AND FURTHER DEVELOPMENT OF TRADE AND ECONOMIC COOPERATION BETWEEN EAEU AND THE EUROPEAN UNION (EU).

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The Forum welcomed the representatives of international development institutes, financial associations and organizations, businessmen, financial and economic experts, investment and insurance market representatives of memberstates of the Eurasian Economic Union and the European Union. The plenary session was moderated by Alexander Murychev, Chairman of the Coordinating Council of Financial and Banking Association of Euro-Asian Cooperation (FBA EAC), RSPP Executive Vice-President. In his welcome speech he pointed out that the work alliance of such unions as FBA EAC, RSPP and EEC for the sixth time has made it possible to gather on one platform all those who are interested in the development of trade and economic relations on the Eurasian space. This year the Forum welcomed 200 participants from 22 countries. The largest delegations came from Russia, Korea, France, Germany, China, Kazakhstan, Italy, India and Armenia. Timur Zhaksylykov, Chairman of FBA EAC Supervisory Board, Member of the Board – Minister in charge of Economy and Financial Policy of the EEC opened the plenary session. After

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

welcoming the participants of the Forum he shared his views on the prospects of contingence and cooperation of the EU and the EAEU mentioning that they are the largest integration blocks in the world. The European Union is the biggest trade, investment and technological partner of the EAEU and the main buyer of the goods exported from the EAEU member-states (50% of total export). In its turn the Eurasian Economic Union is the third largest trade partner of the EU after USA and China. T. Zhaksylykov also dwelled upon four main aspects of the possible joint actions of the EU and the EAEU which he believes in future could help to build effective and mutually advantageous economic relations. They are the creation of a more competitive private sector, the simplification of trade procedures, the improvement of transport and logistic compatibility and ties, and the integration of financial and capital markets. The speech of Alexander Shokhin, the President of the Russian Union of Industrialists and Entrepreneurs (RSPP) was mainly focused on the important work of business circles directly interested in the development of constructive

relations of the EU and the EAEU. A.Shokhin pointed out the most important areas of further development of Eurasian integration such as fewer trade and investment barriers, better transport infrastructure, cooperation in digital and banking sectors. А. Shokhin underlined that Russian business is highly interested and closely involved in the ongoing Eurasian integration. Speaking about the investment climate in Russia the RSPP President told the audience about the federal draft law “On the protection and encouragement for investments in the Russian Federation” as well as about the participation of business in the implementation of the mechanism of “regulatory guillotine”. He also mentioned new areas of cooperation of RSPP with colleagues from Germany and France in high-tech areas for example: the project with MEDEF International “Industry of Future” and the work within the German-Russian Incentive of Digitalization (GRID). Veronika Nikishina, Member of the Board, Minister for Trade of the Eurasian Economic Commission (today – CEO of REC) shared some figures of the EAEU and the EU turnover. During 8 months of 2019 the turnover of the

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Founder’s page. FBA EAC

two unions amounted to more than $ 212 billion. At the same time the EU countries account for 47% of the EAEU trade turnover while in 2014 this figure was 52% (in 2014 the EAEU countries accounted for 9.7% of the EU trade turnover, in 2018 – for 7.4%). According to the minister the rehabilitation of trade is still going on today. Bakhytbek Baiseitov, FBA EAC President, President of the Association of Banks of the Republic of Kazakhstan, Chairman of the Board of Directors of Bank CenterCredit argued that business is enthusiastic about the active dialogue of the EAEU and the EU. However there are factors today that hinder this dialogue, such as politics, inequality of economic development of the countries on the Eurasian territory, internal problems of the old and the new Europe. Nevertheless in every EAEU member-state it is necessary to create favorable business situation, to support entrepreneurship, to develop and protect competitiveness, to expand target markets, to widely introduce state and business partnership without excessive pressure from the state, to raise the financial stability of domestic companies. Pascal Lorot, Special Representative of France for Central Asia also found receptive audience. He described his mission as the renewal of the dialogue between the governments in the region, joint defining of cooperation ways and strategic areas in economic and financial sectors as well as the promotion of the interests of the French companies in the region and their support. P. Lorot stressed that France already has a considerable representation in the Central Asia and is the largest employer in Russia and the third largest investor in the country. Petr Bystron, Member of the German Parliament said it was a great honor to speak as a representative of the German Bundestag and the party Alternative for Germany at such a large Forum. “Our goal is to connect politics and business for the benefit of those both”, – said the deputy. P. Bystron dwelled upon the political situation in Europe and the whole world as well as the political and global economic crisis and criticized the influence of the sanctions struggle on the financial and economic figures in Europe. As for Germany P.Bystron pointed out that the main driver in Germany is the small and medium business. PHe also said that while previously the main money flows were coming to Germany from the USA now China prevails as well as Easter. Thus the deputy urged the Russian business and the EAEU

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countries to invest into the German economy and make use of the existing economic crisis as a good chance for a new development stage. Denis Ivanov, Chairman of the International Bank for Economic Co-operation stressed that the Bank today pays much attention to the cooperation between the EU and the EAEU. Recently the European Union has started to realize that the EAEU is a similar economic union, not a geo-political one. De-dollarization is going on not only on the territory of the EAEU but in the European Union too. “The contractors in Europe are eager to shift to Euro in the settlements” – said D. Ivanov. Blockchain settlements are also popular. Frank Schauff, CEO of the Association of European Businesses spoke about the Association which is one of the main investors in Russia and the EAEU uniting more than 500 largest European companies investing in Russia. The flow of mutual investments is constantly growing. Since the last year the flow from Russia to the EU has increased considerably. Speaking about the future of the EAEU-EU relations F. Schauff underlined that a free economic zone between the two unions could promote trade and export. With this regard it is necessary to speed up the harmonization of the European and the Eurasian technical standards. In conclusion F. Schauff positively assessed the work of RSPP, FBA EAC and other associations aimed at closer economic potential of the Euro-Asian countries. John Reade, Managing Director, Chief Market Strategist of the World Gold Council thanked the organizers of the Forum and informed about the situation on the world gold market and about the work of the World Gold Council which unites 26 largest goldmining companies. John Reade mentioned that Europe including Russia accounts for 14% of the world gold market and that the main producers of gold are Russia, CIS countries and Asia. He also mentioned that the main idea for the development of the sector is the relations with central banks. From the beginning of the economic crisis central banks buy more and more gold every year. Such countries as Russia, Kazakhstan, Uzbekistan, Tajikistan are the largest buyers of gold. Speaking about the EAEU he mentioned that the region plays an important role not only with regards to the purchases of gold by the central banks but also due to the production of gold. EAEU produces about

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

380 tons of gold per year, and together with CIS countries it accounts for 470 tons. Altogether it makes 14% of the world production of gold. In conclusion John Reade said that the combination of the production, gold reserves increase and stronger potential for private investments will make the Eurasian region the largest hub for the world gold market. Kyou-Hyun Kim, Deputy Director of the Korea-Russia Innovation Center (KRIC) thanked the organizers of the event and spoke about the work of KRIC. In particular he mentioned that today Korea is quickly developing and Russian companies play here an important role. The Korean partners are ready to make efforts to develop Russian-Korean business relations and assist Russian companies via commercialization of their know-how and innovative ideas. Kyou-Hyun Kim also informed that in June this year the Center signed a MOU with FBA EAC and expressed hope that it would result in many successful stories of cooperation between the Russian and Korean companies. After the plenary session the Forum participants continued their work in sessions.

Session: «EU – EAEU: prospects of investment cooperation» Moderators of the session were Philippe Delmotte – CEO of POD Consulting (France) and Vladimir Kotenev – Managing Director of Eurasian Strategic Consulting Ltd. (Germany), Ambassador i.r. of the Russian Federation. In the capacity of speakers were: Askar Kishkembaev – Head of the Office of the Member of the Board – Minister in charge of Economy and Financial Policy of the EEC (EAEU); Frank Schauff – CEO of the Association of European Businesses (EU); Bakhytbek Baiseitov – President of Financial & Banking Association of Euro-Asian Cooperation, President of the Association of Banks of the Republic of Kazakhstan, Chairman of the Board of Director of the Bank CenterCredit (Kazakhstan); Petr Bystron – Member of the German Parliament (Germany); Sergey Krasilnikov – Vice-President – Managing Director of International Cooperation and Integration RSPP (Russia); Christophe Pelisson – Chief Financial Officer of VICAT Russia and CIS, Vice-President of the French chamber of commerce in Kazakhstan (France); Florian Willershausen – Director Business Development of Creon Capital (Luxembourg); Amina Turgulova – Adviser to the Manager, International Finance Centre Astana (Kazakhstan).

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Founder’s page. FBA EAC

All speakers were solid in their understanding of the need to build a socalled “Greater Eurasia”, a common economic space from Lisbon to Vladivostok, in connecting the economic potentials of the two largest integration associations of the EU and EAEU In the second part of the section, the heads of leading companies of the Republic of Bashkortostan made a presentation of investment attractiveness of Bashkortostan: Vladislav Platonov – Director of Finance and Investment of NefteChemConsult LLC, Gyuzel Ishmiyarova – Project Manager, Premium LLC, Ruslan Syrtlanov – Project Manager AlmazGroup LLC. Their speeches excited interest among potential investors. Further negotiations continued in B2B mode.

Session: «Gold-mining and jewelry industries – new opportunities and technologies» The session was moderated by Valeriy Kryachko – Corresponding member of the Academy of geopolitical problems, Candidate of geological and mineralogical sciences and Tatiana Fic – Director of World Gold Council, WGC. T. Fic opened the session and presented a report of the world gold market and its current trends. The key message of her speech was “Gold as an investment asset”. The session included reports and presentations of the leading experts of the sector. Oleg Gorbunov – representative of GEOSCAN LLC demonstrated the use of Earth observation UAV. General Director of PROMTECH LLC Alexander Kotlyarskiy covered the topic of digital technologies to raise the productivity. Irina Rys – Deputy Chairman of the Board of Lanta Bank JSC surveyed new possibilities and technologies of the goldmining and jewelry sectors and also spotted the main factors of demand for the current gold. Gennadiy Teslenko – Director of geology of the Engineering Center “Gubkin-Innovations” of National University of Oil and Gas "Gubkin University" ensured the theoretical part of the session with his report of technological solutions for the fragmentation of different precious metals deposits of different genetic type and the moderator of the session Valeriy Kryachko, who spoke about peculiarities of the minerals of precious metals due to the advanced technologies of extraction. Andrea Boldi – President of the Italian NEMESI S.R.L. covered the world scenarios on the precious metals market.

Sergey Pynzar – Project Manager of J-PASS presented an advanced technology of integration of a touch-free mark point into jewelry items. Lamjav Bolbaatar – Director of mining, investment and cooperation of the company Mondulaan Trade XXK presented a brief review of the gold-mining sector of Mongolia. The session was conducted at a high scientific and practical level and covered most problems and achievements of the industry.

Session: «Innovation technologies as a promising investment» The organization and conduct of this session aimed to determine the order of interaction and develop basis approaches to the implementation of projects, based on common interests of both the owner of an innovative technology and the investor, as well as to highlight some innovative technologies that can be implemented in different economy’s sectors. Igor Sinchyrin, Head of Center of innovative technologies of FBA EAC, was a moderator of the section. The section was opened by Istvan Lengyel, Secretary General of Banking Association for Central and Eastern Europe with the topic “European experience in using alternative sources of financing for innovative business”. The report covered the issues of innovation funding by the European Union, national programs and market forms of innovation process support, innovation incubators and the role of banks in financing of innovation process. Alexandra Matveeva, Director of Client Department of International Bank of Economic Co-operation (IBEC), addressed with the theme of financing of innovative business. The speech outlined approaches and domestic experience in financing innovative projects. The further work of the section was continued by the speeches of the owners of innovative technologies. Nanotechnologies in construction – this is how Alexey Golik, General Director of “Renovation Center” LLC, introduced his presentation and report. The proposed technology of non-autoclave foam concrete provides minimum costs for the construction of various civil and industrial facilities with the preservation of existing standards in the industry. Valentin Karamzin, General Director of "Agromash" LLC, announced the topic of new materials based on aluminum alloys obtained in the gravitational fields. Products obtained as a re-

sult of gravitational impact on aluminum melt have physical and mechanical properties of steel and can be used in construction, transportation and mining. Leonid Ivanov, Vice-President of the International and Russian Engineering Academies, spoke about the activities of the Academy. In his speech, he focused on the main goals and objectives of the Academy and interaction with its branches and partners. Oleg Bogomolov, General Director of Engineering company “Interblock”, presented innovative products of the company in his presentation and report "Innovative Technologies of Engineering company “Interblock”. The presentation focused on energy and waste disposal equipment. That is, the technologies that are relevant not only today, but also in the long term. Also of interest is the experience of developing a company that uses its own resources without the participation of funding agencies. Mikhail Zernov, Vice-President of International Fund for Sustainable Peace and Development (IFSPD), made a presentation on technological solutions in the field of waste management and global trends in this area and summarized and announced the developments of his partners. Georgy Sviridov, General Director of “Ecospas 2050” LLC, made a report on "Innovations in the environmental sphere" and presented the equipment produced. The equipment for disposal of solid domestic waste on the basis of hightemperature impact, allowing to dispose of waste with high hazard class, was presented. The participants of the section showed interest in the water treatment and desalination unit. At the end of the section, Andrey Merzlyakov, Deputy Chairman of the Commission on Innovations and Investments, spoke on the topic "Russian innovative technologies as the subject of effective investments". Financial calculations on the proposed directions of work were presented, as well as the technology of climate management was voiced.

Session: «Technologies and finance: from services to ecosystems» Session of the Forum was moderator by Ernest Žejn, Vice-President of Chamber of Commerce and Industry of Slovenia and Andrey Lisitsyn, Director of the Center of financial policy and financial markets RSPP. In his opening speech, Andrey Lisitsyn noted the important role of digitalization in the development of any inte-

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gration processes, including those in the EU-EAEU-China, and drew the attention of participants to the need for detailed discussion and coordination of positions on all issues in this section. Zhanna Pisarenko, Assistant Professor of Saint-Petersburg State University, noted that the interdependence of all participants of the global financial market is increasing. Financial organizations of different types (insurance corporations, pension funds, commercial banks and investment funds) are united into global conglomerates. Representatives of non-financial businesses – service companies – are included in the work of the conglomerates. Natalia Kuznetsova, Professor of Saint-Petersburg State University added that clients becomes an active element of the financial ecosystem. She dedicated her report to the sphere of bank-insurance. Wang Qiang, Doctor of Natural Sciences, Professor of Management of Institute of Economics and Management,

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

China Petroleum University, informed about the gradual de-dollarization of the global oil industry, a policy that is carried out at the level of oil-producing countries' governments. In the future, payments between the countries can be made in digital currencies, Wang Qiang is convinced. Roman Zhukov, Director of the Center of information security competence of “Garda Technologies” LLC, reminded that ensuring cyber stability is one of the priorities of the Russian mega-regulator – the Bank of Russia. In November, the Central Bank warned of the danger of hacker attacks through the Rapid Payment System (RPC), which is the financial ecosystem. Ernest Žejn in his report drew a parallel between the retail sector and the financial market. A few years ago, people did not understand why to shop online if they are used to going to their favorite store. Now the turnover of online stores has increased many times and, for example, in the U.S. exceeds the turnover of

traditional trade. The same thing happens to banks. In this regard, there are numerous attempts to protect the personal data of customers – such as the directive PSD2, which is very "painful" to the business. "Whether this helps or not, we'll see in five to ten years," said Ernest Žejn. Roman Perepelkin, General Director of BIS Ltd., founder of platform ODANT, expressed regret that the vast majority of database management systems (DBMS) have been produced in the USA (400 out of 405 existing DBMS). This poses a certain threat to the countries that use them. Roman Fadeev, Vice-President of finance of "Silk Way" UCE (Kazakhstan), described the advantages of the exchange mechanism and described an attempt to establish an interexchange consortium between Uzbekistan and Kazakhstan. Igor Klyuchnikov, Chairman of the Board of Directors of Digital Payment LLC (Sendy payment system) told about

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Founder’s page. FBA EAC

specific solutions in the field of building ecosystems, which they implement in the process of digitalization of the cooperative movement (CoopLand) based on the experience of interaction with Chinese ecosystems (WeChat, AliPay). Roman Prokhorov, Chairman of the Board of Association “Financial investments”, said that Russia ranks fifth in the world in terms of e-commerce, and cashless payments have reached a share of 55%, having increased by 2.5 times in 2014-2018. Roman Prokhorov described the development strategy and risks of the National Payment System (NPS). Alexander Suraev, Director of legislation of the Center for digital development of RSPP, Member of RSPP Coordination Council for digitalization, informed participants about the current work of the RSPP on the legal support of the digital rights turnover, as well as on the creation of institutional and infrastructural conditions for the development of a competitive digital rights market in Russia. Egor Ivankov, Member of Coordinating Council of FBA EAC, General Director of Salus; Oleg Chanchikov, Chief Development Officer of APIBANK; Oleg

Litvinov, Chief Marketing Officer of BCS Financial Group; Alexander Frolov, Deputy General Director of “VEB Engineering” and others took part and made speeches within the framework of the digital section. The Forum was followed by a business lunch on behalf of FBA EAC. The organizers of the Forum express thanks to the sponsors of the sessions. The Sponsor of the first session «EU – EAEU: prospects of investment cooperation» was the company NefteKhimConsult. The company demonstrated its successes at the Forum, showed its investment and innovative potential of the Republic of Bashkortostan, presented a number of interesting investment projects. The company has huge experience and HR potential for different solutions in industrial processes, analysis and optimization of production stages, modelling and creation of software. The company possesses unique information about petrochemicals starting from the primary processing blocks and up to the processing of black oil, as well the technological appliances – compressors, heating stoves, heatexchange units, waste-heat boilers,

reactors of different constructions and purposes, separators, electrical equipment and automation systems (including software), and also about the features of water cycling units and their reactant treatment. Production support is a large part of the work of the company. It includes technical and technological optimization, mechanical works, urgent incorporations within a limited period of time, isolation work, mechanical, dry and hydromechanical cleaning of the equipment and pipe lines. The Sponsor of the second session «Gold-mining and jewelry industries– new opportunities and technologies» was the World Gold Council — the organization created in 1987 by the main world gold producers with the aim to stipulate the demand for gold. Today the members of the World Gold Council are the companies accounting for 60% of the world mining and production of gold. Uniting the major part of gold producers the Council works to influence the whole structure of gold purchases in different forms: in the jewelry industry, in the industrial production, on the investment markets.

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EXPERT OPINION:

SUMMARIZING THE SIXTH MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” With challenging geopolitical environment and strained dialogue between the Eurasian Economic Union (EAEU) and the European Union (EU) it is still necessary to establish close partnership (economic first of all) between the two unions. It is stipulated not only by geographical and historic factors (as well as similar institutional principles and supra-national powers) but first of all by geo economic ones (close economic cooperation). Heavy trade flows, promising investment ties and projects, economic security issues, interest of the EAEU states in the transfer of European technologies, the need to develop cross-border infrastructure and common neighboring states once again highlight the relevance of the agenda at the Sixth Moscow International Financial and Economic Forum “The Eurasian Economic Union and the EU: search for new formats of cooperation” (hereinafter – Forum) organized by the Financial and Banking Association of Euro-Asian Cooperation with the support of the Russian Union of Industrialists and Entrepreneurs and the Eurasian Economic Commission. The Forum was held on November 22, 2019 and placed the participants and guests in the discussion of the hottest issues of finance and economy of the Eurasian integration and new opportunities of the EAEU market for the European and Russian business. Azimut hotel premises gathered those interested in the development of trade and economic cooperation on the Eurasian space: representatives of international development institutes, financial unions as well as scientific society; businessmen; financial and economic experts, representatives of investment and insurance market. The relevance of such events is obvious and strategic for Russia. Worth mentioning are the organizers’ competence, the topicality and timeliness of the issues covered at the Forum itself and on the sidelines. The Forum delivered a lot of different opinions on cooperation and development. For instance four main aspects

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

were pointed out for in order to get the relations between the EAEU and the EU on the right foot: a more competitive private sector, easier trade procedures, better harmonized transport and logistic systems, integration of financial and capital markets. The plenary session of the forum enjoyed fraught debates on the advantages and disadvantages of the formation of the single financial market for EAEU states, new opportunities for the European suppliers and producers, special features of business in Russia and EAEU. These topics were in the main focus. The financial element of EAEU was also on the agenda overviewed from different sides at the sessions of the Forum “Technologies and finance: from services to ecosystems” and “EU – EAEU: prospects of investment cooperation”. Single financial market of the Union member-states provide for easier and non-discriminatory access of financial market players to the markets of each other. It concerns the banking and insurance sectors and securities markets. Moreover it is worth mentioning that the control of interaction between the sectors of financial markets is gaining crucial importance. Better access, quality and number of financial services for businesses and individuals in the member-states, new economic models for SME, new banking and non-banking forms of investments, e-commerce as an important and available way to expand export as well as growth, effective financial sector of member-states and competitiveness on the financial markets – it all contributes to the formation of single labor, goods, services and capital market. The Forum covered other key issues. Special attention was paid to the removal of barriers in order to execute the “four freedoms”: free movement of goods, services, capital and labor. This issue was also underlined by the new Prime Minister Mikhail Mishustin at the meeting on priority tasks within the Eurasian integration which again confirms the relevance of the Forum agenda.

Marina Rodionova, Candidate of sociological sciences, associate professor, Ph.D., Director of Center for European Studies, education services and consulting, associate professor at the Department of political studies and mass communications of Financial University under the Government of the Russian Federation Worth mentioning is also the work of business circles of the EAEU memberstates aimed to develop functional relations between different organizations. And despite such obstacles as inequality of economic development of the countries on the territory of Eurasia, the political situation in internal problems of the Core and New Europe business at the Forum showed much interest in the active and functional dialogue of EAEU and EU. In conclusion we would like to say that the joint work of the European Commission and the Eurasian Economic Commission is gaining pace. Its results and outlook as important practical step for the communication development on the whole Eurasian space were also covered at the Forum. In the context of the global system modification, misbalance in the international and political, financial, demographic, energetic and other sectors the real development prospects will fall on the countries able to embrace new formats of cooperation. The interaction of EAEU and EU is one of such formats, and the Moscow International Financial and Economic Forum which is becoming more and more popular is an important platform for its development and practical dialogue between EAEU and EU.

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Практика page. IBC Founder’s

DISCUSSION ON DIGITAL TRANSFORMATION OF THE BANKING SECTOR On October 22, 2019 a regular meeting of the International Coordinating Council of Bank Associations (International Banking Council, IBC) was held in President-Hotel Minsk. The Financial and Banking Association of Euro-Asian Cooperation is a member of the IBC for many years. At the event, the Association was represented by its General Director, O.Berezovoy. The meeting was organized by the Association of Belarusian Banks. The topic was “priority directions for digital transformation of the banking sector”. Before the beginning the meeting, IBC members had the opportunity to take part in the XVI International Forum on Banking Information Technology “BankIT’19”, held these days in Minsk. The IBC meeting began with welcome speeches by A.Murychev, the IBC Chairman, and D.Kalechits, Deputy

Chairman of the Board of National Bank of Republic of Belarus, invited as an honorary guest. The Chairman of the Association of Belarusian Bank, A.Kuchinsky made a presentation. The discussion was continued by Vice-President of the Association of Banks of Russia, A.Voylukov, Chairman of the Board of National Payment Council of Russia, A.Obaeva, Secretary General of Association of Montenegrin Banks, B.Pejakovic, Executive Director of Independent Association of Banks of Ukraine, E.Korobkova, Head of Representative office of FBA EAC in Armenia, S.Chzmachian, Chairman of the Board JSC “Non-Bank Credit and Financial Organization “ERIP”, E.Antoni, as well as partner of the Association of Belarusian Banks – General Director of Association “Infopark”, V.Basko. The momentous of the meeting was the awarding of A. Kuchinsky, the

Chairman of Association of Belarusian Banks, with supreme honors of FBA EAC – order. The award was presented by A.Murychev, Chairman of the Coordination Council of the Association. The next day the participants of IBC meeting visited the High Technology Park of the Republic of Belarus, where they got acquainted with the conditions of the companies' activity. As a result of that meeting, protocol decisions were adopted to recommend that IBC members use the meeting’s materials in their practical activities and familiarize interested credit and financial organizations of their countries with them for the widest possible dissemination among the international banking community. Also the meeting participants accepted the proposal of the Union of Banks of Kyrgyzstan to hold the next meeting of the IBC in spring 2020 in Bishkek.

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Alexey Voylukov, Vice-President, Association of banks of Russia

ASSOCIATION OF BANKS OF RUSSIA

PRIORITIES OF DIGITAL TRANSFORMATION OF THE BANKING SECTOR Today the banking sector all over the world is going through drastic changes aimed at the digitalization of processes. The trend has already closed thousands of bank offices worldwide. Online banking is also flourishing. The Russian banking sector is also an active follower of the trend. According to Deloitte Digital Russia is among top five countries – leaders of digital banking in ЕМЕА (Europe, Middle East and Africa). Since the start of the year the number of banks’ branches in Russia has been reduces by more than 1200 offices (in 01.01.2019–

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

01.09.2019). At the same time we can see more banks with development strategies which don’t imply physical presence. It is happening due to rapid development of the branchless banking. Judging by the polls of the Association of banks of Russia more than half (55.6%) of the managers of credit organizations in the survey agree that in a while digital banking will totally supersede the traditional one. According to KPMG 86% of respondents from Russian banks and financial institutes already have a program of digital transformation.

Large Russian banks stick to the transformation into digital organizations with a wide range of financial products and services. They invest considerable amounts into fintech and actively use innovative pilot projects. Once a full-scale digital transformation is completed banks will be able to render for their clients a wide range of services within their own financial and even non-financial ecosystems. Some of such platforms are already being created on the basis of large banks giving them considerable competitive advantages. However, most Russian banks can’t afford such projects.

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Founder’s page. IBC

The lack of money for digitalization is partly made up for by the establishment of nationwide platforms with a set of technological services. The Bank of Russia includes the following major elements into the developing financial infrastructure which meets the challenges of digital era: instant payments system; Unified system of identification and authentication (USIA) including the one with biometrics; financial marketplace; distributed ledger platform (blockchain) which allows to speed up the document flow between financial organizations. The formation of the nationwide financial infrastructure leads to partial equality of competitive opportunities for different groups of banks, to lower priority of the location of a bank, to the conditions for much lower expenses of business and better availability of financial services. In order to improve remote access to the financial services for the customers a platform has been created with remote identification with the application of the Unified system of identification and authentication and the Unified biometrics system (UBS). On June 30, 2018 in the Russian Federation the amendments were introduced to some laws and came into force. These amendments allow the state bodies, banks and other organizations if required by law to verify identity of individuals remotely basing of their personal

biometrics. Recently the banks were facing the challenge to equip their offices with the means to collect biometric patterns by the end of 2019. Once the necessary approvals are obtained in the regulating bodies we expect the launch of a cloud method of biometrics data cryptography of people (faces and voices) when passing it from banks to UBS. Besides the work is being carried on to create the digital profiles (DP) of individuals and legal entities. The launch of digital profile will allow people to look through their personal information in the state information systems (SIS) and to provide these data to financial organizations which would result in a slide of hardcopies flow. This technological solution also enhances the possibilities for banks to develop online crediting and to reduce expenses. In the context of ramping up digitalization with the aim to improve payment services there is an Instant payments system (IPS) – the crucial infrastructure project of federal importance. It was worked out by the Bank of Russia and aims to promote competitiveness, better payment services, wider financial access, lower price of payments for the population. IPS allows the individuals to transfer money 24/7 by mobile phone number to other individuals and their own accounts regardless of the bank of the remitter and the recipient of money. The system will be available via mobile apps of the banks linked

to IPS from smartphone, tablet or computer. Today 18 banks are connected to the system. Currently another project of the Bank of Russia is on the drawing boards – the e-commerce platform (Marketplace system). The target of the project is to create a system of retail distribution of financial products (services) and to register financial deals. The product line will include banking deposits, state and corporate bonds, units of investment funds (UIF), CMTPL (Compulsory Motor Third Party Liability) and mortgage loans. On the one hand it will allow the credit organizations which can’t afford their own platforms to promote their products on the basis of digital technologies. On the other hand the customers will get broader freedom of choice of financial services by the volume, quality and price. The key connecting element of the digital infrastructure on the financial market are Open API providing the opportunity to exchange information between information systems of different organizations applying standard interface protocol. The creation and development of digital financial infrastructure will provide for effective services on the financial market including for small and medium enterprises leading to better access to financial services on the whole territory of Russia as well as the development of competitiveness in the financial sector.

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In addition to the projects implemented with the support of the state and the Bank of Russia, financial organizations also work to introduce digital innovations themselves. The key digital transformation technologies in Russia are such technologies as the analysis of big data and the predictive analytics, artificial intelligence, robotics, machine learning and chat-bots, distributed ledger technologies, Open API, internet of things, virtual and augmented reality. Moreover according to KPMG in the nearest two years 72% of banks plan to develop AI technologies, 61% of the banks in the survey have already introduced and are testing robots, 45% of banks implement predictive analytics in some processes. Moreover among different activities the banks are already leading in applying chat-bots in the commercialization. New technologies allow the banks from different groups to reduce expenses and constantly improve services and their quality thus equaling market conditions. Meanwhile the rivalry pushes more and more banks to develop services for individuals and entrepreneurs based on partner services turning them into ecosystems. The main feature of an ecosystem is that a customer can get access through one of its members to all the rest parties to such system via connected services, maybe even under special terms only within its frames. Techni-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

cal capacity of such ecosystem includes the system of customer identification, speed data exchange, united program interfaces and other services. One of the drivers of digitalization in Russia is its largest bank - Sberbank. As far back as two years ago it introduced a strategy of switching to the principles of an ecosystem. Currently this ecosystem includes companies focused on different sectors such as e-commerce, medicine, telecommunications, identification, services for optimizing of business processes, etc. Another outstanding example of digital banking in Russia is Tinkoff Bank naming itself “a techno company with banking license”. It offers banking and lifestyle online services and is constantly developing advanced technologies in its work (machine learning and AI are applied almost in all processes). However one shouldn’t forget that the basic asset in the digital space is information and data protection – one of the cornerstones of digital economy. In order to ensure informational interaction and coordination for crime prevention in IT sector the Bank of Russia has created a Center for computer incident monitoring and response in credit and financial sphere (FinCERT of the Bank of Russia). Recognizing the need to consolidate efforts regarding the information protection the Association of banks of Russia has launched the platform of cyber threats data exchange.

The platform provides its participants with automatic on-line verified and relevant information. The platform is based on REST API which computerizes protection means without human involvement. Credit organizations if necessary can be assisted by technical specialists who will help with protection means for a credit organization for the further use and integration with the platform. The advantages of the platform are: aggregation of more than 26 resources of threat data (FinCERT of the Bank of Russia, communications providers, BI.ZONE), upload of useful information for the banks protection and automation of the process of usage of this information. The services of the platform can be used both by large and small organizations without advanced protection means and qualified personnel. On testing the platform in 2018 damage of no less than 3 bn. Rubles was prevented. Since 2019 the platform has been used commercially and its basic version is free for the members of the Association of the banks of Russia. Today 60 organizations are connected to the platform. It provides for the protection of 55% of the assets of the banking system, banks from 22 regions have been protected. The platform has taken part in the on-line training Cyber Polygon proving its effectiveness. After the connection to the platform the effectiveness of the competitors in cyber threats combating raised 7 times.

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Financial system of the countries of Eurasia

DIGITALIZATION: BANKS MAY BECOME IRRELEVANT Ernest Žejn, Vice President of ZITex, IT Export Association at Chamber of Commerce and Industry of Slovenia

Bitcoin monument in Slovenia

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With Digital Transformation businesses all over the world get a unique chance to embrace and evolve new business models, more scalable and with greater value-add than ever before. On the other hand, this poses at the same time a great threat for those who are not embracing new technologies; disruptors from across industries can not only interrupt normal business operations, but existentially endanger them. In financial industry this duality can be seen and recognised most easily. As banks are traditional institutions by default and their operations are nothing if not conventional and conservative, their embracement of digital agenda usually comes only by way of legislation and of strict regulation. This means that the whole financial sector is missing innovation catalysts, and is rather burdened by its legacy business dinosaurs. The majority of analysts feel that the basic challenge between classical banking and modern digital disruptors is so great that only a handful of banks will remain. This can be seen in Bill Gates’s quote “Banking is necessary. Banks are not.” or in Garner’s prediction that 80% of the extant banks will be made irrelevant by 2030.

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Size of Slovenia is 2 million of population, which means it is highly manageable, does not present a global threat for any corporation (in terms of having B2C affiliates in it) and is at the same time in the most regulated place on the planet (European Union and Eurozone). Due to this it has been identified by many banks as a perfect playground and test bed for new financial innovations and pilot projects. Large European banks start first in Slovenia with a limited pilot project, see if it works, and then roll it out over 445 million Europeans. As a result of this practice Slovenia has developed an ecosystem of the most advanced IT companies in the field of banking industry and also FinTech in general. Even more substantial proof came with the block chain revolution a few years ago. Slovenia was not only one of the first countries to embrace the new digital-only currency, but it had the biggest number of start-ups building and experimenting on the new platform. Bitcoin was widely embraced in only few months, and new crypto currency stock exchanges emerged (only in Slovenia you can see public monuments to Bitcoin). For example, Slovenia with its 2 million inhabitants had the same ICO market capitalisation as France .

Parallel and correlative to the development of banks, Slovenian IT companies had to start to adapt and transform themselves to outfit hundreds of IT pilot projects - not as IT projects themselves, but as innovation hubs, market research initiatives, and concept business pivots. Rather than being software houses writing different software infrastructure systems by specification from individual customers, software houses for Banks are becoming digital consulting partners and innovation hubs, trying to connect all different stakeholders (internal and external). Understanding the demands of the end customers across different banks, countries, segments and demography is everything in today’s global economy and one closed ecosystem (regardless of its size or competences) cannot prepare enough innovative solutions. In the next magazine we will share a good practice story, where one European bank with the help of different IT companies, technologies, and innovations, decreased its manpower by three quarters (it was one of the biggest in its country before the operation), and by digitalizing all the aspects of the customer on-boarding, credit, and other financial services, became the most financially successful bank in that country.

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Financial system of the countries of Eurasia

BELARUSIAN BANKS: TREND ON “GREEN” ECONOMY TODAY MANY GOVERNMENTS PAY MORE ATTENTION THAN EVER TO ENVIRONMENTAL PROTECTION. THE “GREEN” FINANCE MARKET IS GROWING RAPIDLY, WITH HUNDREDS OF BILLIONS OF DOLLARS IN ISSUING “GREEN” BONDS AND “CLIMATIC” SECURITIES. “GREEN” CREDITS FROM BANKS AND GOVERNMENTS ARE ESTIMATED TO REACH $1–1.5 TRILLION.

Belgazprombank is financing the construction of wind farms

Alexander Kuchinsky, Chairman of the Association of Belarusian Banks

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Belarusian credit and financial institutions make their contribution to the development of “green finance” and follow the principals of “green office”, aimed at improving energy efficiency, modernization, optimization of buildings and premises as well as training staff in the rational use of resources. This issue was discussed at the meeting of the Advisory Board under the National Bank of the Republic of Belarus as one of the aspects of the banks' corporate social responsibility, and the Association of Belarusian Banks presented a report on this topic. There are many projects and some of them should be considered. BSB Bank JSC totaled up that its offices use 7425 packs of paper per year, which requires 128 trees to be cut down. Then the bank's employees headed by the Chairman of the Board held a campaign "Let's plant trees together". The Yama memorial complex, located near the bank's central office, was chosen as a site. The Association of Belarusian Banks supported the initiative and held the action "Let's give trees back to the nature". BNB-Bank took part in the modernization of trucks to Euro-5 standard, actively promotes the development of electric transport and construction of charging infrastructure for it and credits at affordable rates for the purchase of electric cars, hybrids and equipment for their maintenance. By the way the Bank itself uses electric cars for deliveries and it has built two charging stations in Minsk and Grodno. While the Bank’s subsidiary BNB-Leasing raises funds from the North ecological financial corporation (NEFKO) in order to develop the electric transport in the Republic of Belarus. BPS-Sberbank is running a campaign “Green Marathon”. Hundreds of Belarussians took part in the race 4.2 km long in Brest and after that planted a parkway near the Brest Fortress. Besides the bank is actively introducing eco-offices which are a whole philosophy aimed to minimize the negative effects on the environment through the efficient use and saving both the planet’s resources and the financial resources of the bank. One of the central offices of BPS-Sberbank uses bioerodible stationary (bags, pens and notebooks), paper coffee cups and employee uniform is partly made of recycled material. Forty per cent of the offices’ operations are carried out paperless. By the way it allowed to avoid operational mistakes and to reduce working hours. The bank’s offices also introduce a separate waste collection and independent temperature controllers saving the heat energy by 482 Gcal per year.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

Similar trends are followed by the Bank BelVEB which develops the range of paperless online-products with online-codes in SMS. Clients’ profiles are also becoming electronic. It is evaluated that giving paperless online pin-codes only saves average 120 packs of special paper per year or five trees. As for the “green” financing the Belarusian banks issue loans to the construction projects of renewable energy resource, ecologically friendly buildings, organic agriculture. Considering loan applications from businesses bank managers always examine ecological and social risks. For instance Priorbank financed the construction of a production base for recyclable materials storage in Grodno and refinanced the expenses of one of its clients to create the base for PET bottles recycling. The Development Bank of the Republic of Belarus has a number of agreements with credit and financial institutes to finance small and medium business with raised funds of the International Bank for Reconstruction and Development. One of the criteria to get money is the conformity with the Framework document for environment protection and environmental ecological legislation. Executing the order of the President of Belarus to raise the effectiveness of recycling and to minimize the negative effects on the environment as well as to reduce the usage of plastic packaging the Management Board of the Development Bank has recently approved the terms of financing the small and medium business which produces eco-friendly packaging including from glass and paper. The loans can be received through partner-banks for the purchase (reconstruction, modernization, construction, capital repairs) of buildings, facilities and intangible assets (franchises). In the nearest future there will be agreements with all partner-banks. Belagroprombank for many years has financed citizens and their families with private subsidiary plots including with organic farming. Loans with lower rates are issued to buy cattle, poultry, bee colonies, beehives, honey extractors, young plants of fruit and berries, greenhouses. Moreover the bank helps with financing of gasification and electricity installation for farms, water and canalization adjustment, equipment purchase. The bank may also assist to agro-ecotourism units. Belarusbank JSC as a leader of the Belarusian financial market actively helps the business in the country to implement “green” projects. For example the

bank supports the project of “BudEco” Ltd. for the recycling of polymeric materials (overwrap and bags) with already constructed local waste treatment facilities with the use of waste water and the waste from biogas and cogeneration plant at “Milkavita” JSC. Belgazprombank has completed a number of projects for environment protection, energy saving, development of ecological energy resources and transport. In particular the Bank has financed the construction of a solar electric plant with total capacity of 17 megawatt on the territory of the Grodno region, a solar electric plant with total capacity of 6 megawatt in the Minsk region, the production of electric energy from renewable resources of energy (solar panels) in the Mogilev region, the construction of a wind plant in the Kruglyansk region. The Bank’s funds have helped to purchase and setup the wind turbines, wind power generators, solar module station in the Goretsk, Grodno and Shuchinsk regions, in Bykhov and Mstislav, to upgrade the working wind power stations in the Mogilev region. The Bank Dabrabyt has financed an investment project for the construction of the first biogas power station in Belarus. This project will increase the share of electric energy produced by biogas stations. Besides the banks run large scale ecological campaigns, promote among clients saving and sustainable use of natural resources. For example Belarusbank JSC is a partner of the project «Зялёныя скарбы Беларусi» managed by the Central botanic garden of the National Academy of Science and is aimed to preserve biodiversity and to revive the unique nature objects. Last year the bank’s employees were helping to remove plastic, glass and metal from the places with rear plants. The cleaning of different grounds was organized in all regional centers: in Brest the floodplain of the Muhavets river was cleaned, in Vitebsk the exposition of rear medical plants was repaired on the training ground of a medical university, in Gomel the early bloomers were cleared from rubbish in the area Novobelitsa, in the Grodno region the natural area “Ozery” with rear plants was cleaned, and in the Mogilev region on the territory of Alexandrian secondary school of the Shkalovsk district a reserve appeared for the population of extinct plant. Belinvestbank last year conducted a rebranding with a new mission “To support harmonized development of society aimed at respect for the envi-

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Financial system of the countries of Eurasia

ronment and personality”. This philosophy is supposed to lead Belinvestbank to gradual transformation into the first Belarusian eco-bank. In composes a lot of aspects and areas but the key one is ecological business of the bank itself and its partners. The transformation program is planned for seven years. Its main lines are included into the Development Strategy of Belinvestbank JSC starting from 2021. Among large “green” projects of the bank which are being developed is the issues of “green bonds”. Their feature is

that the raised money will be used for the projects connected with renewable energy, higher energy effectiveness, ecological transport or decarbonized economy. The launch of the accelerator of the “green” projects will allow to spot and support the ideas and technologies able to change the world for the better. Besides the bank in doing to continue financing “green” projects. The largest of them are already completed like the construction of photoelectricity station in the Mogilev region and the mini en-

Dabrabyt Bank financed the construction of the first biogas plant in Belarus

ergy and water supply station in the Grodno region. The Bank is also considering the financing a number of new “green” projects within the program Climate Smart Trade – the equipment and systems which can positively influence the climate change. Thus we should mention that the “green” economy is becoming more and more popular among the credit and financial organization of the Republic of Belarus. Many people associate their development and the future of the country with it.

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DIGITAL ECONOMY: THE REAL BACKBONE OF INTEGRATION IN CIS AND EAEU

Anatoly Kazakov, Chairman of the Business Council of the Association “Business Center of CIS Economic Development”, Chairman of the Coordination Council of CIS Financial and Banking Council

TODAY THE WORLD IS STANDING ON THE CUSP OF THE FOURTH INDUSTRIAL REVOLUTION WHICH IS ANTICIPATED TO BRING UP A RADICAL TRANSFORMATION OF THE EXISTING PRODUCTION CAPACITIES (TECHNO-ECONOMIC PARADIGM) INTO THE PRODUCTION BRAINPOWER (ARTIFICIAL INTELLIGENCE). AND THIS WILL INEVITABLY LEAD TO DRASTIC CHANGES IN THE PRODUCTION RELATIONS. AS A RULE SUCH CHANGES ARE FOLLOWED BY CRISES WHICH CAN ALREADY BE OBSERVED. AND WE SHOULD GET READY FOR IT WITHOUT DELAY.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

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Financial system of the countries of Eurasia

According to scientists the fourth industrial revolution will drive technological breakthrough in such sectors as AI, robotics, internet of things, Nano- and bio-technologies, quantum calculation etc. Whereby not only new and more effective technologies will ramp up but all the existing systems will go through external and internal transformation in countries, companies, sectors and society in general. The frameworks of the new techno-economic paradigm are only setting about (first of all in the USA, Japan and China) and are aimed at the development of science-driven “high” technologies. Everyone is aware of such notions as digitalization, robotics, AI, quantum and membrane technologies, fusion energy, gene engineering etc. Synthesis of achievements in these areas has led to the creation of a quantum computer, artificial intelligence and in the end will provide for a totally new level in the systems of management of state, society and economy. Experts believe that the new techno-economic paradigm of the fourth industrial revolution will start its formation in 2020–2030-s and will mature in 2040-s. In CIS countries with the most developed economy (Russia, Belarus, Kazakhstan etc.) the share of the new technoeconomic paradigm is not large yet and is mostly applied in the most developed sectors: military and aerospace industry. And the CIS countries are facing a challenge today: in the next 10 years to join the range of the countries with the new techno-economic paradigm (the sixth techno-economic paradigm in accor-

dance with the sixth N. Kondratiev cycle). One of the essential stages of the fourth industrial revolution is the transition from the analogue formats to the digital ones. In March, 2019 the Business Center of CIS Economic Development supported by the Executive Committee of CIS organized in Moscow the International Forum of CIS countries on the digital economy. The participants – leaders of integration structures like CIS, EAEU, the Union State of Russia and Belarus shared their vision of the ways for coordination and networking among states on the digitalization of economy. The Forum participants stated that in CIS countries digitalization is gaining momentum. Today the digital economy has become one of the key topics to be discussed by all CIS countries together in the nearest future. In order to harmonize the digitalization processes in CIS the Council of the CIS Heads of Government has worked out a Concept on states’ cooperation in the digital development and the plan to implement it. The CIS countries have also taken up programs for the digitalization of economy. Russia has approved and is carrying out the national program “Digital economy of the Russian Federation”. Its key aims are to increase internal expenses for the economic digitalization development, to create a sustainable and safe information and telecommunication infrastructure for the high-speed transfer, to process and store large data volumes available for all companies and households, to allow the governmental bodies,

local authorities and organizations to apply preferably national software. The President of the Russian Federation V. Putin has set the goal in the next six years to triple domestic investments into the digital economy, to create a safe IT infrastructure, to ensure the relevant technical capacities. Today every sector needs to revise effectiveness and to transform with the help of digitalization. Industry, agriculture and construction are expecting massive introduction of the key developments defining the future economy, as well as the management system based on the concept of internet-technologies and high-speed data processing. Anticipated are smart networks with industrial robots interacting there, the technology of 3-D printing, precision agriculture, system of production and energy administration, digital models of construction objects. Digital transformation of economy is also a national priority in the Republic of Belarus. The President of the country has set a challenge to transform Belarus into an IT country. With this aim Decree #8 “On the development of digital economy” was adopted in December, 2017. The document reflects the deep awareness of the current processes in IT-business development, its need to work within the frames of international law and provides opportunity for a leap in this sector. Huge opportunities are available for the residents of the Belarusian HighTech Park within the sectors of biology, medicine, aircraft and space. The number of residents registered in the Park by

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the end of the last year grew up to 454. The number of start-ups and the record pace of export growth show that the legislative changes to create favorable conditions for investments in the area have been effective and have attracted a number of national and foreign companies. Therefore the country is facing a task to educate experts who can professionally and smoothly introduce these technologies. Besides IT-experts training system it is necessary to improve the approach to the education of lawyers, economists, managers and other specialists so they could work in the context of mass digitalization of the economy of the Republic. It is worth mentioning – and it was mentioned by many participants of the Forum – that the development of information technologies directly influences the quality of interaction between CIS countries. The process of economic integration today has become impossible without the digitalization of economic platforms, new information flows, without relevant data bases and an organized cooperation between the countries. The digital integration has no sensible alternative these days. Global players, regional and international, are rapidly forming on this space. It becomes obvious that within one country it is impossible to carry out digital transformation effectively. The CIS states are facing a challenge to take its place in the row of the world technical leaders of the largest digital economies. For a growth spur the CIS countries should cooperate and move closely together in the issues of digitalization as well. The Forum also supported this idea. Within the coordination of the digital development of the economy in CIS and EAEU the focus areas of the implementation of digital agenda have been approved up to 2025. It is a program document to set the aspects of cooperation between states to form the digital economy and launch the up-to-date innovation projects. The stage has already been set for the application of digital and general processes, the information system of the Commonwealth has been integrated to provide for the interstate data and documents exchange. The build-up of the cross-border space of confidence is also at the latter stages. The interaction of all participants of economic relations is being digitalized. And this digitalization gains legal format which is very important too. As one of the promising elements of digitalization is the system of marking of goods – only within the EAEU for now.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

It is a necessary mechanism to ensure the goods turnover, equal conditions, consumer rights protection, fight against the “grey market”, infringing goods. This mechanism can “whitewash” the economy and create new principles of the goods turnover. According to experts today the “grey” turnover accounts for about 15% of GDP. The introduction of the single mechanism and digital solutions is interesting both for the state bodies and private business which will be able to control the fairness of their counterparts, raise sale proceeds at the account of the control and reliability of the goods delivery and early recognition of counterfeit goods. Digitalization will provide for the effective solution of the integration task to implement the “four freedoms” on the whole territory of CIS: free movement of goods, labour force, capital and services. With harmonized digital economies it will be much easier to introduce in CIS space the single standards, single registers, single approaches, data exchange etc. Apparently today the trade is still limited by cross-border barriers including administrative, customs, tax, legal, logistic. The digital technologies are expected to reduce and remove them. Some IT companies are ready to offer advanced technologies to their partners in this sector which raise the effectiveness of economic processes considerably.

However with all the advantages of the digitalization there is an aspect calling for special attention – cyber-security. The legislation is the weak part here: digitalization is rapidly developing with the laws lagging behind. It is also worth mentioning that the market is dominated by foreign solutions and products. For instance, the share of network traffic of the Russian segment on the Internet routed through foreign server systems in 2018 accounted for 50%; the value share of the purchased computer, service and telecommunication equipment of foreign manufacture in 2018 accounted for 94%, software – 50%. More often we face corporate data theft, industrial spying, hacker attacks and personal data handling. Thus the security issues of digitalization require a lot of attention and serious funding. The International Economic Forum of CIS member-states has become a considerable intellectual contribution to the formation of one of the backbones of integration – the digital economy. On March 13, 2020 the Business Center of CIS Economic Development supported by the Executive Committee of CIS is planning the International Economic Forum of CIS member-states “CIS + World” on the sidelines of the regular meeting of the Economic Council of the Commonwealth of Independent States. Digital integration remains on the agenda of the Forum.

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WORLD Trends

CHINA AND RUSSIA: MOVING TOWARDS A GREEN GROWTH MODEL In the late 70-s of the XX-th century, the Chinese government launched the transformation of the economic system in the People’s Republic of China. In December 1978, The Third Plenum of The Central Committee of The Communist Party of China (CPC) proclaimed a course to change the economic model of a centrally planned economy to a market one. According to Carlin W. and Mayer C. (2003), market-oriented systems have an advantage in the face of radical structural changes accompanied by deregulation and changing of technologies. The new model of economy of the People’s Republic of China required a transformation of the national economy management system, social modernization, and a policy of reform and openness.

China's economy has undergone three stages of industrialization on its way to a market economy. At the first stage, the Chinese government actively promoted the process of creating import-substituting industries in the country, at the second stage, the development of basic industries and support for export potential started, and, finally, at the third stage, the creation of science intensive industries began. To characterize the Chinese type of economic growth, as well as transitive economies growth, which include the Russian economy, we can use the relatively recent concept of resource-rich and resource-deficient economies. Transition economies that are resource-surplus (or resource-rich) show a special mechanism for transforming from a cen-

Qiang Wang, School of Economics and Management, China University of Petroleum

Zhanna Pisarenko, Saint-Petersburg State University, Economic Faculty, Department of Risk Management and Insurance

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tralist to a market economy system. They utilize the opportunities to convert the primary-products economy and extensive type of economic growth into an energy-innovative intensive one. The recent years events and, above all, the unfolding of the global financial crisis have shown the increasing role of large resource-rich countries that receiving rent from their natural resources and developing a model of rental capitalism. Against the backdrop of the ongoing global economic crisis, China has been demonstrating an unprecedented rapid pace of economic and productivity growth (pic. 1). China and Russia started their transition to a market-oriented economy at about the same time. However, the Chinese economy showed much less volatility compared to the economy of the Russian Federation. At the same time, over a period of 29 years, China's GDP growth has never fallen below the 3.907% (that was demonstrated in 1990). Of course, Russia has faced many problems, including the collapse of the country, but the figures show a consistent and correct economic policy of China. However, this growth requires energy consumption, and the use of large amounts of fossil fuels has a downside. In recent decades developed countries, against the background and of structural industrial shifts followed by priority development of the service sector, has been performing deindustrialization and the formation of a global network information economy based on knowledge. Therefore, many developing countries of catching-up development now dominate in most areas of industrial production. Major countries: China, India, and Indonesia have become leaders in supply of mass-market products - from electronics and textiles to automobiles and ships. Brazil and Argentina are important exporters of agricultural products. Saudi Arabia and Russia control almost a quarter of the world's oil production. In addition, against the background of geopolitical turbulence, Russia is restoring its military-industrial potential and trading positions in the military equipment and weapons world market. Until recently, both China and Russia were characterized by an extensive type of economic growth that was quite adequate to the resource-oriented centralist model of public administration (despite the declarations on the liberalization in Russia). China is the world largest country in terms of demographic potential (resource-rich). However, its potential in

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

Pic. 1. GDP growth (annual %) – China, Russian Federation

15% 10% China 5% 0 Russian Federation

5% 10% 15% 1990

1995

2000

2005

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2015

Retrieved from https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2018&locations= CN-RU&name_desc=false&start=1990&view=chart

operation with Russia China is planning to get the needed source in the nearby future of scarce energy resources. Russia is getting a strategic sales market for oil and gas. According to The World Bank and The International Energy Agency, energy consumption per capita in China in 2018 was only 2943,709 kW. Hour per person and in the Russian Federation 6430,623 kW. Hour per person. By 2050, it will increase and may approach or even outpace (according to positive scenario) the developed countries. At the same time, total final energy consumption in China is growing at a faster pace than in Russia and in 2015 exceeded such consumption in Russia by 4 times. (pic. 2). Pic. 2. Total final energy consumption1 (TFEC) in China and Russia, TJ

terms of natural resources is not as much as demographic. China belongs to large, but resource-deficient economies, while Russia is the opposite. There is a clear quantitative insufficiency of labor potential and huge reserves of oil and gas. The foregoing implies opportunities for expansion of mutually beneficial cooperation of China and Russia and possibilities of transformation to a green economy. Both the economies will receive an impetus for further development. The Chinese market is characterized by high competition and productivity growth. Its intensity, rapid digitalization, the development of information technology, fintech, the total factor productivity growth stimulate domestic demand and economic growth. From co-

million 80 70 60 50 40 30 20 10 0 1990 Russian Federation 1

1995

2000 China

2005

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Data from https://data.worldbank.org/

Total final energy consumption is the total energy consumed by end users, such as households, industry and agriculture. It is the energy which reaches the final consumer's door

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WORLD Trends

Despite the lag in growth of total final energy consumption in Russia, the most important concern for both China and Russia economic growth remains the same: environmental pollution and greenhouse gas emissions. China and Russia are among top five the biggest contributors to carbon emissions (along with The United States, India and Japan), and they together generate half of the world's carbon emissions (BP, 2019). This is why strengthening the role of intensive factors of economic growth, the use of clean energy, and moving towards a model of green economic growth meets modern needs and timely tasks. Green growth, on the other hand, implies a need for comprehensive government program to stimulate economic growth, aimed at reducing human impact by moving to environmentally safe, low-carbon and climate-sustainable development through environmental modernization of the economy, as well as social practices that affect a well-being of society. The crucial indicator of the movement towards a green economy is energy efficiency and energy consumption from renewable sources, which has a lower carbon footprint. However, as picture 3 shows that the overall share of renewable energy in the total energy consumption of Russia and China is quite small and it is declining. It is especially worth paying attention to China. While in 1990 renewable energy consumption was more than 34% of TFEC, in 2015 it was only 12.4 %. At the same time, the total volume of TFEC is constantly increasing (pic. 2).

Pic. 3. Renewable energy share of TFEC (percentage)

35%

34,08

30%

29,47

29,73

25% 18,20

20% 15%

12,88

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China Data from https://data.worldbank.org/

As we know, when transforming to market China chose strategy of extensive growth at the final stage of its implementation and preparation for the transition to intensive growth. Those included the adoption of foreign technologies, the formation of a knowledge-intensive international specialization, and the rapid improvement of the quality of the labor force while maintaining its low price. As the leaders of the CPC say, the Chinese economy is now moving from the stage of rapid growth to the stage of qualitative development and environment concern. For Russia, it is of much importance to stimulate its domestic R&D and ecol-

ogy-oriented production, that is, to reduce dependence on imported technologies and products. That will allow reaching a decent competitive level of development for the Russian economy and getting closer to a green growth. Moreover, the global movement towards a low-emission economiсs will increase the demand for cleaner energy resources, such as natural gas. All this will contribute to the development of the economy too. Thus, each state under consideration has complementary potentials and ratios of labor, technical, technological, and energy resources to move towards lowemission economics.

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RELEVANT PROBLEMS OF FORMATION AND DEVELOPMENT OF THE WORLD MARKET OF RECYCLABLES FROM PRODUCTION AND CONSUMPTION WASTES THE CURRENT GLOBAL MARKET FOR RECYCLABLES FROM PRODUCTION AND CONSUMPTION WASTES IS ESTIMATED AT $320–400 BILLION. MORE THAN 20% OF THIS VOLUME IS FOREIGN TRADE TURNOVER (EXPORT-IMPORT FLOWS).

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

Vladislav Donchenko, Honored Scientist of the Russian Federation, Doctor of Economics, Professor, chief research officer St. Petersburg research Center of environmental safety of RAS

Boris Boravskiy, expert of the Federation Council Committee on agricultural and food policy and environmental management

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WORLD Trends

The current global market for recyclables from production and consumption wastes is estimated at $320–400 billion. More than 20% of this volume is foreign trade turnover (export-import flows). Within the structure of the world market of recyclables (foreign trade turnover) the leading position is held by the traditional secondary raw material: ferrous and non-ferrous metals, waste paper, plastics, broken glass, scrap and other waste glass, and also the fastestgrowing segment of secondary raw materials from waste electronic and electrical equipment (e-waste or electronic waste to the international nomenclature), which is currently recognized as the most problematic segment-consumer waste. A distinctive feature of the current formation stage of the recycled materials world market is the requirement for its mandatory certification as a product. The buyer of this product can be guided by various preferences when making their choice. If recyclables produced from production and consumption waste are more expensive than those produced from natural resources, then preferences may have the goal of obtaining environmental competitive advantages. These advantages in a circular economy lead to additional costs today and benefits tomorrow. Moreover, the benefits can be in the form of additional advertising of target products (goods, works and services), which is expressed in increasing production volumes, creating additional jobs, and a positive response from regulatory authorities and the population.

Special attention should be paid to the rapidly expanding segment of the world market of recyclables from electronic waste According to the UN University's Global e-waste monitoring data, in 2016, 44.7 million tons of e-waste were generated in the world (+3.4% compared to 2015), of which less than 20% were recycled into secondary raw materials. It is predicted that by 2021, the volume of ewaste formation is expected to grow to at least 52 million tons. Factors contributing to the growth of e-waste formation are population growth, as well as a decrease in the" life "of it equipment, which, according to the UN, has recently decreased from six years to two (even less in the case of mobile phones-"before the new model is released"). The largest volume of e-waste is generated by the Asian region (41% in 2016), followed by Europe (28%), North and South America (25%).

The highest collection rate is observed in Europe (40%), operating under the Directive no.2012/19/EC of the European Parliament and the Council of the EU "on waste of electrical and electronic equipment (EEE)". The directive defines the standards for processing and recovery of EEE per capita. The industry's revenues are at the level of 1.3 billion euros. In America and Asia, the level of EEE collection does not exceed 15-17%. 38% of the market falls under small household appliances and equipment category (microwaves, vacuum cleaners, tools, etc.), 20% – under large equipment category (electric stoves, washing machines, copying equipment, etc.), 17% – refrigerators, etc. devices and equipment, 15% – monitors and TVs, 9% – small IT equipment (mobile phones, laptops, etc.). At the same time, household refrigeration equipment, large and small household electrical appliances demonstrate the highest growth rates in terms of the volume of EEE formation. The most acute problem for the ewaste segment is the lack of adequate statistical data on the volume of generation, collection and circulation. To solve this problem, the Global partnership Ewaste statistics was created in January 2017 on the basis of the UN University

(UNU), the International telecommunication Union (ITU) and The international solid waste Association (ISWA). Regional associations for the management of electronic waste are being created everywhere (including in Russia). However, it is known that the successful resolution of this problem will depend on the creation and practical use of an adequate reporting system for producers of recyclable materials from electronic waste, which will lead to a successful "whitewash" of this segment of the recyclable materials world market. Public policy efforts in developed countries are aimed at tightening legislation (including a ban on dumping) and increasing the attractiveness of circular economy sectors in order to reduce the amount of waste produced. Most developed countries have environmental policy measures that are currently being implemented in Russia (in particular, ROP – extended producer responsibility).

Examples of growth in European market of recyclables from production and consumption waste The main trend of the European environmental policy in the field of waste management of production and consumption are the institutional measures

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to increase the share of certified secondary raw materials obtained from waste. For example, the European waste Directive, adopted in 2008, aims to increase the share of household waste recycling to 50% by 2020. According to the amendments to the EU framework Directive on waste, 60% of household

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

waste will be processed in Europe by 2025 and 65 % by 2030. We will analyze the production of recycled materials in the process of handling Municipal Solid Waste (MSW) in some EU countries. Germany. The system of handling MSW in Germany has been constantly improved. This is evidenced by the constant growth in the amount of recycled materials obtained from MSW. From the resource part of the MSW, the largest part is processed for recyclable materials -24.9 million tons (48.4 %), 16.7 million tons (32.4%) are kept in the waste incineration plant and 9.4 million tons (18 %) are processed for compost. Finland. All activities carried out in Finland to improve the system of handling MSW, were carried out purposefully and well-organized using maximum of all modern approaches and techniques. It should be noted that forecasts for the further development of the MSW management system in Finland suggest that by 2030: the amount of recyclable waste will reach 2400 thousand tons.; the amount of incinerated waste at the plants will be 1100 thousand tons; the amount of buried waste in landfills will be 0 tons. The diverse and purposeful range of activities in the field of MSW in Finland since 1995 has provided a fairly high level of the MSW management system at the present time Results of MSW processing into recyclable materials for the last 30 years (from 1988 to 2018):

the amount of waste buried in landfills has decreased by 7 times (from 1380 thousand tons to 50 thousand tons); the amount of waste disposed of at the waste incineration plant increased 7 times (from 250 thousand tons to 1750 thousand tons); the amount of processed and used raw materials increased by 1.5 times (from 570 thousand tons to 860 thousand tons); the amount of compostable waste at the recycling plant increased by 1.75 times (from 80 thousand tons to 140 thousand tons). From the results of the calculation, we can conclude that in Finland, over the past 20 years, special attention has been paid to increasing the number of incineration of MSW and reducing the number of MSW buried in landfills. Also there was an increase in the amount of waste collected in the recyclable materials and in the composting of municipal solid wastes. In Finland, waste recycling is concentrated in large regional recycling centers, where it can be carried out more efficiently and economically. All centers have sites for disposal of waste that cannot be recycled. All of these activities in Finland aimed to improve the system of handling MSW over the past 30 years have allowed to create a fairly effective system, which now gives tangible positive results. Estonia. The strategic benchmark for the development of the MSW management system is to achieve 50% of secondary raw material selection by 2020.

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WORLD Trends

The task is quite difficult, since the existing technologies in Estonia do not allow efficient sorting of mixed waste, where there is food waste, plastic, glass, paper, metal, etc. Therefore, some of the MSW is burned or taken to landfills. Currently, there are only two types of separate collection containers: for bio-waste and waste paper. Estonia is one of the leading EU countries in terms of the number of mixed household waste per person, which is due to the frequent reluctance of residents to sort out MSW at the place of their formation. Only one third of the population sorts garbage. In order to solve this important issue, it is advisable to introduce prices for the export of sorted and unsorted garbage. However, according to the national audit Office, a system of organized waste reception has been established and is working, but it needs to improve its efficiency. Estonia is a country where 50% of garbage is burned. This project is being implemented at the waste incineration plant in Tallinn, the Yyelyakhtme landfill plant, and the waste incineration unit of the IRU power plant. Over the past year, 245 thousand tons of MSW were disposed of at this station, and 140 thousand tons were burned at other plants. The missing MSW is imported from Finland and Ireland. Often factories do not operate at full capacity and use construction waste.

Examples of growth in the Russian market of recyclables from production and consumption waste What's old is new again. The foundations of the circular model of the econo-

my were laid in the USSR. This was manifested in the fact that the USSR actively collected waste paper, glass containers and scrap metal. Collateral prices stimulated the delivery of secondary raw materials from the population and legal entities. Products were wrapped in paper or packaged in recycled glass containers. The leadership of a country with a planned economy did not set at that time the task of switching to circular economic models, in addition, the concept of business did not officially exist in the USSR at that time. However, some of the principles that successfully functioned in the planned economic model then are quite applicable to the market economy model of Russia today. It is worth mentioning that all the EAEU countries are undergoing a gradual transition to a circular economy in which waste is considered a secondary resource for obtaining certified commodity products in the form of secondary raw materials, so the experience of the USSR is of great importance. Among other countries, particularly noteworthy is China, whose waste-processing industry is based on the principles of a planned economy using principles and methods that combine state leadership and public-private partnership. The modern experience of China is a subject of independent study. The coordinated actions of the political leadership, public and private companies to battle the coronavirus have proved that the beautiful China program, which includes the transition to a circular economy and the creation of a waste-processing industry that ensures environmental conservation and prevention of environ-

mental damage by using production and consumption waste as a secondary resource for the production of goods certified according to international standards (secondary raw materials) and selling it on the domestic and foreign market. In January, 2018 the Russian Federation has adopted the "Industrial development strategy for processing, recycling and disposal of production and consumption waste for the period up to 2030" The main goal of the strategy is the formation and future development of the industry for processing, recycling and minimizing the amount of waste that is not subject to further disposal. It should be noted that the adoption of this strategy meets the global trends of integrated economic and environmental development with the application of the 3R principle – Reduce, Reuse, Recycle. The new Russian environmental policy in the field of waste management is based on the following principles: prevention and reduction of waste generation in the production of goods, works and services by implementing the best available technologies (BAT); recycling of generated waste in the system of material production and consumption into secondary resources; production of secondary raw materials from secondary resources for reuse or for sale on national or international commodity markets. For their implementation of the new environmental policy, a waste processing industry is being created in the country, whose target products are represented by secondary raw materials that are certified as a commodity product on the national and international commodity markets. Resolution of the strategic task of creating and developing the waste processing industry envisions the actual transition to the formation of a circular economy One of the practical tools of the new environmental policy was the creation of the Institute of regional оperators: a company that is selected on a competitive basis by each subject of the Russian Federation for a period of at least 10 years to coordinate the process of handling MSW. This entity becomes the legal entity with which the waste owners will have to sign a contract for the collection, removal and disposal of solid municipal waste. Accumulating all the cash flows from the population, management companies and other generators of household waste, the COMPANY enters into contracts with other market partic-

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ipants to carry out actual actions with waste, or does everything on its own if possible. It is assumed that the regional operator will help to streamline the relationship between all participants in the waste management industry. For the waste management industry, the new Institute, if successfully implemented, means that each region will have a wellestablished mechanism for the movement of raw materials, since the regional operator is responsible for creating infrastructure for collecting and transporting waste, as well as ensuring the construction of the necessary sorting facilities. Table 1 shows the structure of the main indicators of the Russian market of recyclable materials from MSW. The main indicators of production of recyclable materials (commodity product) on the Russian market of recyclable materials from MSW are presented in table 1.

Indicators of the volume of production and sale of recyclable materials (commodity product) on the domestic and global markets are presented in table 2.

ucational institutions do not use professional standards for training specialists, which are a characteristic of the qualification required for an employee to carry out a certain type of professional activity (and, as a result, there is a gap between theoretical knowledge and real professional activity in the field of environmental protection and environmental management, this often leads to a lack of demand for graduates of Universities and colleges in the labor market in a new branch of Russian industry. The special relevance of creating an industry coordinating body in the field of professional qualifications was noted. In conclusion, it should be noted that our analytical review covered the most relevant and debatable problems of the formation and development of the world market of recyclables from production and consumption waste. We hope for an active discussion and continuation of this topic in the «HERALD».

The problem of human resources in the Russian waste processing industry Currently, the most important conditions for the successful implementation of the Russian waste processing industry (as well as in other countries of the EAEU) is the training of specialists who have the appropriate professional competence and have passed the qualification assessment according to approved professional standards using evaluation tools. The new industry at the beginning of its formation faced a human resources problem. The analysis of educational programs showed that the training programs do not meet the requirements of the labor market due to the fact that ed-

Table 1.

Main indicators of production of recyclable materials (commodity product) Estimated volume of secondary raw material resource, million tons

Production Volume of recyclables (commercial product), million tons

Ratio of production efficiency of recycling (commercial product), %

Paper waste

12,0

3,23

Glass, sheet glass, etc.

4,0

1,13

All types of plastics in waste, including packaging

3,6

0,45

Rubber containing waste

0,73

0,095

Kind of wastes (secondary raw material)

Table 2.

Indicators of the volume of production and sale of recyclable materials (commodity product) in the markets

Type of MSW (secondary raw material resource)

Type of secondary raw material (certified commodity product)

Volume of production of secondary raw materials, million tons

Volume of sales of a commodity product from secondary raw materials in the markets, million tons Estimated consumption in the domestic market

External markets Export

Import

Waste paper

Waste paper Sorted waste paper

3,23

2,9

0,35

0,034

Glass

Glass Cullet, including untreated

1,13

1,2

0,002

0,063

Plastic

Plastic Crushers, flakes, granules, etc.

450

0,46

0,012

0,023

Tires, tires, cameras, etc. rubber products rubber crumb

Rubber crumb

0,076

0,0005

0,001

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

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ADVANCED technologIES

Sergey Pynzar, Founder of the company «J-Pass»

«J-PASS» TECHNOLOGY – A STEP TO «TOUCHLESS» FUTURE THE COMPANY «J-PASS» IS A SYSTEM INTEGRATOR OF TOUCHLESS AND WIRELESS TECHNOLOGIES APPLIED IN DIFFERENT AREAS AND SECTORS OF INDUSTRY. IN 2015 «J-PASS» SET TO WORK ON THE PROJECT OF MINIATURE AND TOUCHLESS NANO-MARKING, LONGPLANNED BY ITS FOUNDER. IN THREE YEARS EXAMPLE ITEMS WERE DESIGNED AND SUCCESSFULLY TESTED, A UNIQUE TECHNOLOGY OF CANNING THIS MARKING INTO THE OBJECTS WAS DEVELOPED TOGETHER WITH SPECIAL SOFTWARE.

The touchless marking of 1 mm size is designed for canning into different items and objects. The special features of this technology are the following: it is impossible to remove the marking without its fatal damage and it is impossible to copy the data from the marking due to special data encryption algorithm. Among other characteristics of this unique technological solution are: The chip works on the radiofrequency NFC/RFID and Power Line Communications (PLC); In-house software applicable with any

data bases and management systems; Working capacity and fail safety of the marking in extreme temperatures; No need of power source for the marking. At first the technology was applied in jewelry in order to identify the jewelry items, to control them, record, protect and verify. The process was of relevance due to these reasons: The state didn’t have the capacities to totally control and combat the “shadow” sector of jewelry; There was no on-line monitoring to

carry out a 100% verification of a jewelry item and to track all operations with it; There were a lot of risks in jewelry like counterfeit, copying, substitution and other small frauds of unfair workers at jewelry production, boutiques and pawnshops; The re-assessment procedure for jewelry items in jewelry shops and boutiques was time-consuming and expensive. The application of «J-Pass» technology allows to avoid these problems and

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gives obvious advantages both for the state and the consumers of jewelry. It means it helps to solve the problem of “shadow” turnover in jewelry in the Russian Federation forever, to create an instrument of control for all players of the jewelry market, to protect the producers of jewelry items from fraud, to reduce the re-assessment time in boutiques, to introduce computer online warehouse inventory control including the control of large wholesales, as well as to create a system which would inform about fraud with jewelry items and their undeclared export. It is worth mentioning that «J-Pass» is the first and the only company for now which has managed to implement the draft sample of canning the touchless marking into a jewelry item. However the company didn’t stop there and the team continued developing the marking and working on the extension of the application of this new technology. These efforts have made the marking extensible with almost endless capacities. Today the range of application of «JPass» technology is really wide. The marking can be used for identification and verification of different items, details and other elements, for the control of operations with them, for the account and management including the management of separate systems and complexes.

The main application areas for the marking are: The marking and verification of different items and their separate elements (jewelry items, valuable details, pieces of art, drugs, goods subjects to obligatory marking in the Russian Federation according to law, etc.); Electronic passport for different items recorded on the marking canned into the item; Systems “smart home” and “smart city”; The warranty of genuineness of securities and other valuable documents; E-passport of the citizen of the Russian Federation and other individual documents; Banking and payment systems; Fares payment on the public transport; Automated online warehouse and logistic control, freight control; Blocking and unblocking of different equipment and Automated Access Control System; Functional check-up and fault equipment detection. As you can see this technology can be applied in different sector of the Russian industry open for digitalization and innovative technologies. «J-Pass» technology can also be useful in energy sector. The company has developed a wide range of technical solutions for the sector. Here are some details.

1. Data transfer technology: radiofrequency and power lines As it was mentioned earlier «J-Pass» technology uses the radiofrequency (NFC/RFID) to download and upload data. Moreover it can carry out a twoway data exchange through power lines due to the technology Power Line Communications (PLC). To transfer data with PLC we use standard power lines where there are or can be installed an electric power network.

2. «Smart energy» The wide application opportunities of «J-Pass» technology allows to offer a universal conjugate algorithm of its own technology and PLC technology with different control systems (including the working systems of other designers after necessary agreements). For example it can be: Automatic system for accounting of/technical accounting of energy resources; Automatic process control system; Manufacturing Execution System (MES); Automated dispatch management system; Geographic information system (GIS) also for natural resources mining and control; Different monitoring and reporting systems.

SAFE TECHNOLOGY One of the main factors is absolute security of personal data and payment information

IT IS IMPOSSIBLE TO REMOVE THE MARKING WITHOUT DAMAGING IT

IT IS IMPOSSIBLE TO COPY THE MARKING DATA

IT IS IMPOSSIBLE TO COPY THE MARKING Every chip has its own unique code so two similar chips do not exist in nature

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ADVANCED technologIES

3. «Smart city». The application of «J-Pass» technology in «smart city» allows to transfer data from different counters, trackers and other devices online using the existing electric power networks. The received data can be integrated into any data bases and systems including online monitoring and management.

4. Marking of valuable details and their protection The technology allows to protect valuable details of different specialized equipment, to guarantee their genuineness and to minimize fraud. The touchless marking canned into the construction allows to monitor online the details in the equipment and to set the system of reporting in case of their absence.

5. Logistics and freight control The joint application of «J-Pass» technology and PLC allows to monitor online the cargo transfer by automobile, railway, sea and air transport. Besides you don’t need to open the packing of the product and even move it. And the in the short run information of all items with the marking is read at once and

constantly transferred to the monitoring system. You can also apply the reporting system here for instance if the cargo vanishes or is exempted unplanned. It minimizes the risks of loss and substitution and allows to control the cargo through all its way. Touchless marking in form of chips is not the only development of «J-Pass». Another focus area is a universal nanosubstance for marking – the so-called “liquid marking”. One of its usage areas is the marking of precious stones. However before we describe the principle of the liquid marking we should turn to such areas as Chemistry and Physics and revise some notions which would help to clear out the core of technology. Free radicals are particles with one or several unpaired electrons on the external electron shell. Here the main thing is that they have paramagnetic properties and are reactive. Paramagnetics are particles which become magnetized in the external magnet field and have positive magnetic susceptability. The particles of paramagnetic have their own magnetic moments which being subject to external field ori-

entate on the field and thus create resultant field greater than the external one. Without the external magnet field the paramagnetic is not magnetized. Spin label is an organic molecule with unpaired electron and the ability to link to other molecules. The unpaired electron provides for the control of electron paramagnetic resonance spectrum (EPR). Thus the spin label serves as a probe for EPR. EPR spectrums for the spin labels contain information about the local dynamic (for example the biological membrane, proteins), polarity and pH environment and also serve to measure distances on large molecules. Electron paramagnetic resonance spectrum (EPR). The concept is in resonant absorption of electromagnetic radiation by the unpaired electrons. Electron has a spin and an associated magnet moment. If you link paramagnetic center with the electromagnetic field with a certain frequency polarized parallel to the perpendicular vector of a magnetic field it will lead to magnet dipole transitions. If the energy of electric transition and the photon of electromagnetic wave coincide there will be a resonant absorption of MMW radiation.

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There is another interesting notion – EPR reader. This is an EPR detector based on the work of a spectrometer. There are two types of spectrometers: the first one is based on the constant, the second one – on the impulse action on the pattern. The spectrometer with constant radiation usually registers not the resonant absorption line but the derivative of this line. Firstly it relates to a better distinctness of some lines in difficult spectrums, and secondly with technical facility of registration of the first derivative. The resonant magnetic signature is relevant to the crossing of the first derivative with zero line, the linewidth is measured between the points of maximum and minimum. It is known that the resonant absorption of MMW energy is possible either if the wave length or i the magnet field strength changes. The EPR spectrums are usually registered with a permanent frequency of MMW radiation with the magnet field changes. It is stipulated by special features of MMW equipment with a narrow pass band. In order to enhance the sensitivity of the method people use the high frequency of the magnet field multiplexing at the same time fixing the derivative of absorption spectrum. The interval of EPR registration is defined by the frequency and length of MMW wave with a certain magnetic field intensity. Now let’s imagine that we need to install a marking into a diamond. In order to process the surface of a diamond we apply (or on the necessary part) a layer of transition metal (Fe, Ni, Co, Mn or other) on it. After that the pattern is put into a gas-flow chamber (hydrogen) and then the part of the diamond with a metal layer is laser heated for a short time and locally. As a result they form a spot of necessary size (1-2 mm or less) and the marking is inserted there. For the marking we are going to use paramagnetic spin labels on the basis of trityl or nitroxyl radicals or paramagnetic metal complexes. The measured spectrum of EPR marking with individual magnet-resonant parameters plays the key role here. This spectrum is detected by EPR reader or EPR spectrometer. There are two possible technical solutions for detecting system: 1. The use of a generally available small size EPR spectrometer. It ensures high sensitivity and spectral resolution (informational content of the spectrum) but limits the size of the pattern (maximum diameter 8 mm). 2. The development of an in-house small size EPR spectrometer at low frequencies with surface coil. In this

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Electron paramagnetic resonance spectrum (EPR)

case the permanent magnet field is created by the coil inside the mobile sensor as well as the resonant contour creating radio-frequency field. There are also requirements for the marking for example a narrow EPR band for better sensitivity, the possibility to ensure the high stability of marking with regards to temperature, photo-radiation and humidity as well as insolubility of the marking in a substance to be used as mastic. The amount of the marking is defined by the sensitivity of the detector and its resonant frequency. To put it simple the principle of the liquid marking is as follows. The molecule in the marking contains radicals, is charged by the magnet field and then if it is necessary to be detected, is removed by a spectrometer at a required frequency. If such charged molecule (or its imprints) is detected it evidences that there is the liquid marking and that the object under study is authentic. It is worth mentioning that it is impossible to fake or illegally detect the liquid marking because: The magnet field for charging is defined in the company; The radical is installed into the molecule so Nano-technologies are necessary; Only the company specialists know the frequency to detect this or that radical. There is no doubt that the technology of liquid marking has serious opportunities to be embraced and evolved in different technological areas. Summing up we would like to underline once more that the application

range of «J-Pass» technology is really wide, and the company is ready to cooperate with a large number of partners from different sectors of business and industry of the Russian Federation. The company is ready to integrate its inventions into different technological projects like control systems, accounting and management systems, remote interaction projects (touchless, wireless and even unmanned) and in many other innovative systems. It is also worth mentioning that «JPass» technology is crucial for work in the regions of Extreme North and the Arctic Circle where difficult climate and extreme temperatures can create serious obstacles for systems work and access for specialists and machines to the objects and resources. The use of touchless technologies in these conditions means safety, reliability and resource saving. Another important thing is that the state is interested in the technology as well: the tasks of economy digitalization, goods marking set by the President of Russia and the Government of the country are priority and the company «J-Pass» with its inventions can contribute a lot to their solution. For example recently the project has been completed on marking jewelry items initiated by the Government of the Russian Federation and the Ministry of Finance. In conclusion we need to say that currently it is becoming obvious that the world is rapidly developing, the progress can’t be stopped and the pace of technology application is constantly growing. But we can’t deny that our future lies with touchless technologies. And «JPass» has already made a step toward.

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Special opinion

RUSSIAN-GERMAN ECONOMIC RELATIONS IN THE FAST-PACED WORLD The beginning of this year put the world in a nearly pre-war situation affecting the global markets at once. The reason is well-known: by order of the President of the USA one of the leaders of the Islamic Republic of Iran General Qasem Soleimani was killed in Bagdad together with 10 military men from Iran and Iraq. Many were puzzled with the question: what is going to happen after this precedent when one country without approval of any other, without permission of the UN can now liquidate undesirable people and even whole groups on the territory of another sovereign country? Iran’s missile counterattacks on American military bases in Iraq turned out to be quite deliberative and precise. It allowed Washington to “save face” avoiding a large military conflict. However the critical voltage led to the tragedy of the Ukrainian airplane crash and the loss of many innocent lives. Despite the fact that the EU official bodies lined up with the actions of the American administration many people in the business circles of Germany were talking quite openly about the volatility and the forceful unilateral character of the US actions. Germany has long been worried about the threats of sanctions and the sanctions imposed by Washington towards the EU and some European

companies. And even some American public figures declare now that the sanctions against the project “Nord Stream2” are directed not against Gazprom and Russia but more against the European companies participating – financially and technically – in the construction of this object important for the energy security of the whole Europe. The sanctions hit one of the backbones of the German economy – automobile production as well as agriculture and processing sectors. Almost every communication with the European entrepreneurs begins with their complains of the “terrible Trump”. At the same time more and more people believe that if Donald Trump wasn’t the American President the Americans would still consider the European and first of all German industry as one of the bitterest rivals and not only as a partner in NATO and a like-minded liberal. Part of business society calls to turn to other markets first of all in the East. However on the one hand Germany fears the Chinese incentive “One Belt One Road” cursed as a Chinese overwhelming expansion by the Western mass media who secretly salute the trade war launched by Washington towards Beijing, and on the other hand the political class in Germany is not ready to change the sanction regime against Russia. And they

keep trotting out the requirement that Russia leaves Donbass as if after that all sanctions would be removed. At the same time there is still no answer to the question: What is going to happen if Donbass returns to Ukraine but the sanctions remain. The sentiments in the East and in the West of Germany are clear. Recently Michael Kretschmer, Prime-Minister of the federal land Saxony, Angela Merkel’s team-mate, demanded to remove sanctions against Russia as ineffective and counterproductive for the German economy. The Saxony industry has long been asking for broader economic cooperation with our country. Another latter example: Sigmar Gabriel, a prominent social democrat, former Vice-Chancellor has been recently elected to the Board of Directors of the largest German bank Deutsche Bank. Mass media reacted immediately: what if it’s a crack-down on democracy, a corruption scheme, and what does Gabriel know about banking management? Deutsche Bank CEO Christian Sewing in his announcement tried to calm down the irritated critics. He said that Gabriel’s priceless experience as the Minister of Economy, Foreign Minister and Environment Minister will contribute to the effectiveness of the credit institute. He also pointed out that Gabriel’s trans-At-

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Vladimir Kotenev, Ambassador i.r. of the Russian Federation, Managing Director, EURASIAN Strategic Consulting GmbH

lantic ties and his knowledge of Asia will also be useful on his new position. This evidences that many West-German managers and entrepreneurs do not consider the markets of Russia and CIS as priority. While those industrialists who realize the importance of these markets for the EU countries believe that in the current situation the drivers of our relations can be France and Italy but unfortunately not Germany with its discretion contained by the outgoing era of Merkel. At the end of the last year the International Economic Senate of Berlin was summing up the results of its work and working out lines for 2020. The ideas announced at the annual meeting of this German industrial club and the sentiments reflect political and economic controversies prevailing in the German society. The main focus today is green economy with a shift from traditional energy to the renewable sources of energy. In the nearest years Germany is going to drop nuclear energy and start dropping coal and brown coal energy. The replacement of gas-engine with electric motor is becoming the hottest topic in the auto industry. It can lead to historic changes in the German industry but at the same time to its meltdown as some critics say. The senators are concerned with the economic positioning of Europe be-

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tween the democratic but aggressive America and the heavy-handed China and Russia. Among other concerns is the policy of the European Central Bank keeping deposit rates close to zero. The key message was that economy must produce its own ideas and influence politics. As we remember five years ago the Senate and the Financial & Banking Association of Euro-Asian Cooperation (FBA EAC) signed a cooperation agreement. German entrepreneurs and financial experts participated in Moscow forums of the Association discussing different ways of effective cooperation. And we promoted some ideas from the Russian side at the annual meeting of the Senate. For example the long-discussed space from Lisbon to Vladivostok. Unfortunately neither party has taken any effective steps to give substance to these incentives. Twenty years ago Russia moved towards the European Union in many positions. We had a cooperation agreement, we were forming a road map, harmonizing the legislations, discussing a non-visa regime and a joint three-sided control over the Ukrainian gas transport system to ensure not only the energy security of Europe but also a sustainable development of the economy of Ukraine. However at that time a

massive American expansion started in the Middle East, in Europe (former Yugoslavia) and then in Eurasia. As a result our relations with the EU in the last 10 years have been driven back. The example of trade between Russia and Germany evidences that in 2010 its volume amounted to 60 billion Euros and in 2015 it dropped nearly two times. And only in the last 2-3 years it has started gradual but sustainable growth. Before the Ukraine crisis the EU accounted for almost 60% of the Russian trade turnover. According to West-European economists the losses of mutual sanctions reach billions of Euros with the EU countries lose even more than Russia. If we want to reverse the trend and strengthen the positions of both the EU and the EAEU on global markets we need not only to return to previous positive achievements but also go further in our economic and investment cooperation. So what does Europe think of new challenges and threats? Seemingly in the summer 2019 climatic sentiments were prevailing: instead of lessons the students went to the demonstrations, activists were blocking the traffic in the largest European cities, the Green Party in Germany was deciding who they can be proposed as the

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Special opinion

next Chancellor. However the latest polls show that people are concerned with their social security including pensions, illegal migration and integration of labour migrants to the European society, and only then with climate changes on the planet. Moreover Ms. Annegret Kramp-Karrenbauer, the Chair of the most influential German party Christian Democratic Union, Minister of Defense also considered as a possible successor in Merkel’s office has recently presented her vision of security in Germany and Europe in general. And as the main threats she stated international terrorism, Chinese expansion and Russia’s aggressiveness. Let’s try to puzzle out how real these threats are. Ecology. As it is well-known Russia is not only the largest country in the world by its territory, but also has colossal natural resources – drinking water, wood, certain sorts of peat applicable in agriculture to improve crop yield and, of course, petroleum commodities. Russia is carrying out a number of projects with Germany for the development of national parks. Meanwhile even investment environmental projects meet challenges when German banks refuse to finance them due to sanctions. At the same time there is a positive cooperation example: the work of the Austrian group company Mondi, one of the leading world producers of packing in Russia. In the Republic of Komi only Mondi rents 2 million ha of forest working in the wood processing and the production of paper and carton, heat and electric energy and makes up for the deforestation with new wood lines. Russia needs advanced technologies and recycling plants for urban and industrial waste. This is a colossal domain for investment and commercial opportunities for the European high-tech companies. Energy. Pivot of economy and industry. The investment opportunities in these sectors are truly exhaustless. As we know energy companies from Germany, France, Austria work successfully and profitably in Russia. Thanks to the pipeline oil supplies from Russia the EU

ensures its energy security. We have already mentioned the gas transportation system of Ukraine. It is an important link between gas transportation systems of Russia and the EU. Today some EU politicians make the gas transit from Russia through Ukraine a condition for the construction and future work of the pipeline “North Strem-1”. And in order to cut this Gordian knot it is necessary to return to the negotiations about the participation in the gas transportation systems of Ukraine of European and Russian energy companies to control and upgrade it. This will demand considerable investments from all parties but will help us to solve many economic and maybe political problems on the continent together, will allay fears of Russia’s aggressiveness. Agriculture. It is well-known that economic sanctions of the EU against Russia and Russia’s reprisals especially regarding food have led to considerable growth of agricultural production in our country. However regardless of bans on particular products and companies there is active cooperation in cattle breeding, processing and storage of agricultural products. But here we are just at the outset. Cooperation in the crop farming might be even more interesting. Russian scientists contemplate that farming enormous cultivation areas, processing of products into the industrial alcohol which can be used as a fuel for agricultural machines, auto transport and even motor ships allows to create a new sector of renewable energy and save natural resources such as oil, gas and coal for chemical, pharmaceutical and other productions. Transport. For several years we have been promoting new Russian high voltage wires and span wires for the railway contact system to the European market. They are of better quality than many Western analogues, besides Russia produces them faster and cheaper. Such products could help Europeans save huge money for the modernization of electric routes and railway equipment.

Real estate. Europe often looks into the trends of Russian investments in the real estate in the European Union states especially in France, Germany, Austria and Italy. This area has become an important part of relations between the EU and the EAEU and we can see the activity of investors from Russia, Kazakhstan and Ukraine. However mutual sanctions, restrictive measures of some European governments, social tenses and the attempts of state regulation of the rent often reduce the interest of investors from the East. Now some words about the Europeans’ fears of the Chinese economic expansion. The Chinese initiative One Belt One Road implies the development of new sea and land routes. It aims to enhance the cooperation and turnover with all Eurasian countries. Kyrgyzstan, Kazakhstan and Belarus are already carrying out this cooperation. These countries also express fears of the dominating Chinese companies in some sectors of industry and transport. While back in 2015 Russia and China signed a declaration of the interconnection between the EAEU and OBOR (initiative also known as the “Silk Way”). What stops Russia from launching the expert consultations on the EU involvement into the process while the roles are being distributed and the participants are being defined? Combined these potentials can implement crucial infrastructure projects, form new markets and become a driver of global economy growth. And my own experience in combining the efforts of the Russian and German transport and logistic companies and the willingness from both sides to work and cooperate on the Chinese market shows: building Eurasian structures is a promising thing. In general it is easy to notice that regardless of the “Russian threat” there is a sensible vector headed not to a standoff but to fruitful cooperation between the Russian Federation, Europe in general and Germany in particular. And the Eurasian space can become a good platform for fruitful relations.

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BG SHAFRAN L.t.d. VAT No. BG200485018 160, Doyran Str. 5800 Pleven, BULGARIA

Daniela Karadzhova Phone: +359 888 666 150 e-mail: info@shaffran.eu daniela.karadjova@gmail.com www.shaffran.eu

EUROPEAN SAFFRON – “RED GOLD” WITH A QUALITY CERTIFICATE The Bulgarian company BG SHAFRAN Ltd. was founded with the purpose to produce and put up for sale saffron bulbs, saffron products and the sale of high-quality saffron for culinary and medical purposes. Saffron crocus (Crocus sativus) is a perennial plant, flowering in autumn. The saffron spice is made of its red stigmas Crocus sativus making it the most expensive spice and medical plant in the world. Than is why its other name is “Red Gold”. Used as a spice, saffron has a slightly bitter flavor, semisweet, honey aftertaste, with fragrance of sea, flowers, perfume and hay. It gives bright yellow-orange color to dishes. Saffron is very good for human health and it is widely used as a medicine. It contains group B vitamins and minerals (potassium, calcium, magnesium, manganese, selenium and other). Saffron has anti-inflammatory, antiseptic, roborant effect. Medicines made of saffron are used for treatment of depressive disorders, throes, to improve the metabolism, etc. It may be directly administered as an additive to tea or other beverages.

BG SHAFRAN Ltd. offers saffron in its original form, as stigmas, which is one of the quality criteria. Conditions in Bulgaria are exceptionally favorable for its cultivation. Saffron produced by BG SHAFRAN Ltd. is certified by a specialized saffron testing laboratory in France, ANA SCAN and has 1st quality according to ISO 3632 - a world quality standard.

BG SHAFRAN Ltd. offers this product packages containing the necessary quantity and duly branded by wholesale. You may contact us in English, Italian, Russian and Bulgarian. EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

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Special opinion

PROSPECTS OF THE EU-EAEU DIALOGUE AND RUSSIA’S ROLE IN THE PROCESS THE CORRESPONDENT OF THE EURASIAN FINANCIAL AND ECONOMIC HERALD ASKED A FEW QUESTIONS TO THE CEO OF THE ASSOCIATION OF EUROPEAN BUSINESS DR. FRANK SCHAUFF

– What was the sentiment of the Association members going into 2020? – 2020 is a major landmark for the AEB as we are celebrating the 25th anniversary of the Association this year. The anniversary year encourages us to set the most ambitious goals, such as conducting several large-scale events involving representatives of the European Commission, Business Europe, Russian cabinet ministers and prominent business actors. The main event will take place in Moscow in October. Events will also take place in Saint Petersburg, Krasnodar, Kazan and Yekaterinburg during the year. The annual Northern Dimension Forum will be in Saint Petersburg. This year the Forum will focus on CONNECTIVITY. NOW—boosting flows of people, information, energy, goods and services. We have every reason to be proud of what our Association has achieved in these years. We have transformed from a small business club into the main representative body of foreign businesses in Russia and the Eurasian Economic Union. Since 1995, we have been promoting foreign investors' interests in Russia and shaping the business and investment environment together with the Russian and Eurasian government agencies. We will be happy to continue acting as intermediaries in this productive dialogue with the new Russian government. – Tell us a little about what 2019 was like for the European businesses – In 2019, the economic cooperation between Russian and the EU remained in-

tensive despite a complicated economic and geopolitical situation. On the one hand, in terms of the investment climate, the remaining political tension creates continued pressure on direct foreign investments which make up 0.2% of GDP in Russia, the lowest among emerging markets. On the other hand, we observe relatively high mutual demand of the Russian and European business communities for developing trade relations. According to the annual study Strategies and Prospects for European Companies in Russia conducted by the AEB and GFK Rus in March – April 2019, the AEB member companies have sufficient confidence in Russia's economic capabilities: 45% of the AEB member companies are expecting the Russian economy to grow in the short term. The mid- and long-term forecasts are more positive: 66% of the companies are expecting economic growth in the next 3–5 years, and 80%, in the next 6–10 years; 17% of the companies are expecting increased investments in their production in the next 2–3 years; 28% are expecting investment growth in Russia in general. European businesses are closely following the work on the Investment Code. It will create a framework of investment regimes to make the legal regulation predictable and the investment conditions more consistent, while encouraging investments. Considering the general trend for capital outflow from emerging markets, the ambiguities in the investment area clearly do not benefit the Russian economy. Consequently, a stable legal framework is virtually the

key determining factor in further investment. Another important initiative according to the business is the revision and abolition of obsolete and contradictory regulations, especially those from the Soviet period,—the so called 'regulatory guillotine'. Meanwhile, last year also raised a lot of concerns for European companies. The initiative to extend the responsibility of producers and importers for their waste that not only prevents the companies from using their own resources for waste disposal, but also obliges them to pay a new tax, produced mixed reactions. Although this draft law is still under development, European producers that have already invested big money in their own disposal infrastructure are looking at the possible scenarios with trepidation. The work on defining the requirements for mandatory labelling of goods will continue in 2020. In 2019, the AEB held extensive discussions about the technical support for this process with the representatives of the Ministry of Industry and Trade and the Centre for Development of Promising Technologies, first of all on implementing the Track and Trace System. We hope that the Association of European Businesses will act not only as a bridge between the Russian and European business communities in this respect but will remain a reliable communication channel between the European Union on the one hand and Russian and Eurasian authorities on the other hand. Over the entire last year, we have sup-

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ported a rapprochement between the European Union and the Eurasian Economic Union. We welcome the latest official contacts made in October between Sabine Henzler, Director of International and General Affairs at DirectorateGeneral for Tax and Customs Union of the European Commission, and representatives of the Eurasian Economic Commission. This, to a great extent, became possible thanks to the AEB's efforts to build relations between the two organisations. – What do you think of the future dialogue between the EU and the EAEU, and what is Russia's role in that process? – The Association of European Businesses feels quite strongly that a closer economic cooperation between the European Union and the Eurasian Economic Union is the key to restoring trust. It may serve as a platform to overcome the current dead end in the relations between Russia and the West, and economically benefit all participants. This is why we have been supportive of a rapprochement between the EU and the EAEU for the last few years. However, the expansion of cooperation between the EU and Russia, and the EU and the EAEU faces political obstacles. There have still not been any official negotiations between the EU and the EAEU, or any cooperation beyond harmonising technical standards. We need to change the situation and develop a strategy of mutually beneficial cooperation between the EU and the EAEU. Already now we have some promising ex-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

amples of such interaction: since 2017 the AEB has become a platform for facilitation of working contacts between the EAEU, DG Trade and DG TAXUD (Directorate General of Customs and Excise). The experts from the EU and the EAEU are able to exchange their experience and share best practices on a wide range of trade and customs matters. We believe that there are at least four more areas where the European Union and the Eurasian Economic Union could effectively cooperate with each other on specific technical issues: Cooperation in the Arctic, Digitalisation issues (5G mobile communication, personal data protection), Creating regional infrastructure, Developing a common policy within the Northern Dimension framework between the EU, Russia, Norway and Iceland. We believe that economic cooperation with the EAEU will increase the land transportation capacity and the Transeurasian flow of goods, raising trading efficiency and creating a range of possibilities for production and various supply chains. In our opinion, the EU could use its strategy for connecting Europe and Asia to engage the Eurasian European Union members in eliminating trade imbalances and barriers. We hope that, in 2020, the dialogue between the EU and the EAEU will transit from the current technical level to a political one. Such dialogue could involve coordinating multilateral cooperation that may provide an important synergistic effect in uniting the Eurasian continent.

Dr. Frank Schauff Dr. Frank Schauff was elected CEO in June 2007 and re-elected in April 2016 for the fourth term. Dr. Schauff’s professional and academic experience position the AEB to promote and expand recognition in Russian and expatriate circles of lobbying and policy advisory. Before joining the AEB, Dr. Schauff held the post of Advisor on Foreign Policy to the Party Executive of the Social Democratic Party of Germany (SPD) from 2001. Dr. Schauff has had a deep interest in Russia since his days as a student of Russian Studies at the University of Cologne and Volgograd State University (USSR). He went on to take a degree in Economic History and Political Science at the London School of Economics and Political Science (LSE) and a Masters Degree in The Government and Politics of Russia and Economic History. He obtained his doctorate in East European history from the University of Cologne in 2000, and spent a number of years as a lecturer in East European studies at the Free University in Berlin. Dr. Schauff's academic background is accompanied by a strong linguistic attainment – aside from his native German, Dr. Schauff speaks or understands English, Russian, Spanish, French, Italian, as well as conversational Bulgarian, Croatian and Serbian.

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Practice

DIGITALIZATION AS A STRATEGIC APPROACH TO INCREASING THE EFFICIENCY OF MINING ENTERPRISES

WWW.PROMTEX.RU

MINING ENTERPRISES ARE AMONG THE MOST COMPLEX IN TERMS OF MANAGEMENT. RISKS ARE CAUSED BY MANY DIFFICULT TO PREDICT PARAMETERS THAT AFFECT THE SAFETY OF MINING OPERATIONS, AS WELL AS THE INTENSIVE DYNAMICS OF THE DEVELOPMENT OF POSSIBLE EMERGENCY SITUATIONS. The complexity of management, first of all, lies in the stochastic nature of business processes inherent in the extraction of minerals, which complicates the use of predictive management methods. The latter raises the problem of making informed management decisions, as well as monitoring the implementation of management decisions at each level of enterprise management. A possible solution to this problem is the widespread use of digital technolo-

gy, which allows the enterprise to be provided with a comprehensive automation system, enabling managers to manage the mine as a single organism. The principle of "Integrated Automation" is inextricably linked with the trend of "Digitalization of production" and is designed to provide the company with competitive advantages, providing flexibility, controllability and transparency of production. Integrated automation is a set of ideas about the enterprise’s business

Alexander Kotlyarskiy, General Director of PROMTECH LLC Doctor of Technical Sciences

processes as a single whole, which allows using the synergy of hardware and human resources to solve the problem of increasing production efficiency. PROMTECH LLC has more than 25 years of experience in implementing automation systems. Aggregation of the intellectual potential of our employees and our own production lines, which allow us to produce reliable and unique automation equipment in terms of their characteristics, allowed our company to

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offer mining companies one of the most advanced integrated automation systems in Russia. All the existing business processes of the enterprise are involved in a single system, which allows us to solve the problem of ensuring the “observability” of production. The basis of the system is the Dispatch complex, which makes it possible to monitor all technological processes in real time, timely responding to a rapidly changing production picture. Unique software allows you to generate a large number of reporting forms for

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

various parameters of the process, which contributes to a significant increase in the efficiency of the enterprise. The system has a single server complex that provides computing power for all existing and future systems. The centralization of computing power made it possible to create a scalable solution with unique performance and reliability features, and the use of virtualization methods provides flexibility in the distribution of hardware resources. The developed data transmission backbone network, both in the under-

ground part of the mine and on its surface, which ensures guaranteed data transmission at speeds up to 10 Gb/s, using hardware and software backup solutions, allows you to connect any future automation system to the system. The solutions implemented by PROMTECH LLC allow you to get a powerful analytical system for analyzing the technological process, providing management personnel with the ability to instantly evaluate production stability.

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History of money

“

MOST RECENTLY, IN 2018, MOLDOVA CELEBRATED THE FIRST ANNIVERSARY OF ITS NATIONAL CURRENCY – MOLDOVAN LEU CELEBRATED ITS 25th ANNIVERSARY. DESPITE ITS SEEMINGLY SHORT CENTURY, THIS MONETARY UNIT HAS SURVIVED MANY CATACLYSMS THAT TOOK PLACE IN THE POST-SOVIET SPACE.

”

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MOLDOVAN LEU –

LEGACY OF CENTURIES Yeah, you shouldn't go for leu like a very young piece of money. Firstly, even earlier the name "lei" began to be actively used for the name of the Romanian monetary unit. And, secondly, if we go a little deeper into the origin of this word, we can find here an order of forgotten Western European roots. The word "leu" itself comes from the Latin "leo", which translates as "lion". This was the name given to the Dutch Thaler, widely spread in Europe in the XVI-XVII centuries, on the modern Moldovan and Romanian territories, one side of which was decorated with the image of a heraldic lion standing on its hind legs. This coin played a huge role in the economic development of many regions and countries of that period, which was reflected in the Moldovan language. It is also interesting that the coin exchanged in Moldova "ban" actually means "money". But its origin is not new, so from XVII century called the exchange monetary unit of the Lower Danube principalities. Thus, the appearance in 1993 of the new monetary unit of Moldova turned out to be not some accident or adoption of traditions of the European neighbor, but a tribute to the centuries-old traditions and culture of the land where Moldovan Leu was to start its circulation. There have been no changes either. Thus, the first issue of Moldovan lei, which replaced the Soviet rubles and Moldovan coupons in circulation, existed only until 1994 and was replaced by new banknotes. Many experts point out that the first banknotes nominated

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

in Moldovan lei and printed in Romania repeated with their design a Romanian banknote of 1966 model with a face value of five lei. The plot of the banknote turned out to be really unthinkable: on the front side was placed the portrait of one of the most famous rulers of the Moldavian Principality, Mr. Stefan III the Great, and on the back – a fortress founded by him on the right bank of the Dniester River in the town of Soroca. The new 1994 sample banknotes were made at a higher level, but many of the design elements chime with the first issue. For example, today banknotes of all denominations on the front side still have the portrait image of Stefan III the Great. On the other hand, the reverse side carries images of various cultural and historical objects significant for Moldova. A series of coins, launched in Moldova in 2018-2019, deserves special attention today. Four coins in denominations of 1, 2, 5 and 10 lei were produced in a single design. It is noteworthy that if the coins are positioned correctly, their obverse forms the coat of arms of Moldova, while the reverse forms the head of the tour, which has long been the central heraldic figure of the coat of arms of the Moldovan princedom. This approach once again emphasizes the importance of the Moldovan leu, not only as a monetary unit, but also as a significant cultural symbol of the country, its self-identity in the context of globalization.

Vitaly Krasnikov, Analyst

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Photo Contest

PHOTO CONTEST “THE WORLD THROUGH THE EYES OF A PHOTOGRAPHER” – 2019. RESULTS Photographic art became a routine long ago. The photography not only reflects the reality – it reflects the reality in accordance with the outlook of a photoartist, his idea reflected in the picture. Here we find philosophy, beauty; and here is no place for falsity like in any other art. Everyone has a chance to connect with the art of photography – everyone who wants to share the beauty of the world around, who can feel this world, often even more delicate than professional photographers. And it is great because creativity is an inherent part of people’s life and makes it worth living… That is why the idea of the contest appeared – for those who wanted to share their view of the world, to awake emotions and the sense of belonging to the beauty – and thus to make our life more interesting and diverse. For the second year the Editorial Board of the Eurasian Financial & Economic Herald organizes the international contest “The world through the eyes of a photographer” for non-professional photographers. There are different topics: «countries and cities», «native nature», «self-artist», «world of emotions», «snatch a moment»,

www.fbacs.com

«family album», «package of impressions», «incredible is close», «proactive attitude». During the last year magazine readers saw the works of non-professional photographers from different parts of the world. 15 authors from 11 countries have progressed to the finals having sent 119 works to the Editorial Board of the Herald.

WINNERS OF 2019:

The finalists of the contest were: ROZA IBRAGIMOVA – Russia ORLANDO REZUCCI– Italy KSENIA BIRKEN – Germany TSVETAN GEORGIEV STANKOV – Bulgaria MARK and ELENA LANDAU – Israel BERICK BAISHEV – Kazakhstan OLGA KUPCHINOVA – Belarus KATARINA AGIUS – Malta BERISLAV KUTLE – Bosnia and Herzegovina ANDREY BAGAEV – Bosnia and Herzegovina IRENA JAGER – Slovenia SEAD SASIVAREVIC – Bosnia and Herzegovina SRDJAN DUNDJEROVIC – Bosnia and Herzegovina FEODOR AFANASOV – Romania ALEXANDER MURYCHEV – Russia

The Editorial Board of the HERALD seeks for diverse formats of defining the prizewinners, from absentee to interactive voting. You can decide what the final of the contest will be like in 2020. The photo contest goes on! We are waiting for your ideas, proposals and of course new beautiful works to participate in the contest “The world through the eyes of a photographer”.

FIRST PLACE – Roza Ibragimova SECOND PLACE – Tsvetan Georgiev Stankov THIRD PLACE – Srdjan Dundjerovic PEOPLE'S CHOICE AWARD – Alexander Murychev

All works can be found on FBA EAC web site: http://www.fbacs.com/articles/raboty-fotokhudozhnikov.html Contacts: sgk@fbacs.com, bev@fbacs.com, office@fbacs.com +7 495 663-02-08, 663-02-13, 663-02-19

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ROZA IBRAGIMOVA She was born and lives in Kazan. At the moment she works as the editor-in-chief of the business edition

TSVETAN GEORGIEV STANKOV Born in Sofia (Bulgaria) in 1981. Occupation – landscape designer Sofia Airport

SRDJAN DUNDJEROVIC He was born in Sarajevo in 1983. Validation Group Manager in Retail Risk, Raiffeisen bank (Bosnia and Herzegovina)

ALEXANDER MURYCHEV Executive Vice-President of the Russian Union of Industrialists and Entrepreneurs

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(9) 2020

HERALD - MARCH 2020

Articles inside

HISTORY OF MONEY V. Krasnikov. Moldavan Leu – legacy of cen

V. Donchenko, B. Boravskiy. Relevant

PHOTO CONTEST

PRACTICE A. Kotlyarskiy. Digitalization as a strategic

SPECIAL OPINION V. Kotenev. Russian-German economic rela

F. Schauff. Prospects of the EU – EAEU dia

ADVANCED TECHNOLOGIES S. Pynzar. «J-Pass» technology – a step to

A. Kazakov. Digital Economy: the real back

A. Kuchinsky. Belarusian banks: trend on

A. Voylukov. Priorities of digital transforma

FINANCIAL SYSTEM OF THE COUNTRIES OF EURASIA Ernest Žejn. Digitalization: banks may be

North-East Asia Business Association: Russian entrepreneurs turn east

EXPERT OPINION M. Rodionova . Summarizing the Sixth

FOUNDER’S PAGE. FBA EAC

RSPP NEWS A.Shokhin . From the Arctic to Cape of Good

PERSONALITY K. Kelimbetov: “We see the AIFC as an

FOUNDER’S PAGE. IBC