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In the contemporary times, a diverse section of people quitting their jobs to find their true potential via entrepreneurship. It is a new form of employment where people no longer depend on the traditional means of employment but rather create their own streams of generating capital. Generally, an entrepreneur is an innovator who pitches an out-of-the-box solution to a complex societal problem, combines it with his skill set and brings solution-oriented business models to the market. The true spirit of Entrepreneurship thus lies in what is the organized combination of capital, labor, ideas and technology, fueled by engine of its growth which is a dedicated leadership and management.
Countries today rely heavily on creative minds capable of taking action by inventing novel approaches to solve societal concerns. Start-up enterprises, in particular, are multiplying in order to address key issues in their communities such as unemployment, migration, and political instability. In doing so, these start-ups also serve as a catalytic agent and contribute to the economic development and industrialization of the country. However, as the world becomes more interconnected in the wake of globalization, the global issues are adopting a more complex outlook. In this rundown, it is necessary for the world leaders to tackle these challenges with more apt solutions and look beyond their borders, and this is exactly where entrepreneurship plays a paramount role – as seen lately within the mini-laterals.
In recent past, there has been an evident rise in mini-laterals/QUADS. The fashion of these mini-laterals began to appear with the increasing success of the Indo-pacific QUAD which shifted the power paradigm from the Atlantic to the East. In parallel, another significant Middle Eastern Quad also took shape, known as the I2U2. The first summit of I2U2 grouping—comprising of India, Israel (I2) and US, UAE (U2)—took place virtually on Thursday, 14 July 2022, during US President Joe Biden’s visit to Israel. The joint statement released after the summit stated:
“This unique grouping of countries aims to harness the vibrancy of our societies and entrepreneurial spirit to tackle some of the greatest challenges confronting our world, with a particular focus on joint investments and new initiatives in water, energy, transportation, space, health, and food security.”
The heads of government of India, Israel (I2) and US, UAE (U2) during their virtual meeting pledged to tackle the challenges confronting today’s world with the combined spirits of entrepreneurship. It is noteworthy that the spirits of entrepreneurship are the USP—Unique Selling Product—of this grouping. Against the backdrop of war between Russia and Ukraine, there has been disruption in world food prices and supply chains, as both export quarter of the world’s wheat. Thus, with the vision to tackle food shortages in South Asia and Middle East, the UAE during the summit has pledged to develop a series of food parks worth $2Billion in India. The project intends to use green technologies to conserve fresh water, retain renewable energy sources, and reduce food waste. Being an agrarian economy, constituting a total of 42% employment, India will make available its land and farmers for the sound execution of the project. Concurrently, the private sectors in the US and Israel will provide technology related services to the initiative.
It is evident that the cross-regional cooperation between this mini-lateral is by and large facilitated by entrepreneurship. For instance, Israel owns 214 AgriTech startups which are going to be the leading tech service providers to the ‘Food Park’ Initiative launching in India. On the other hand, India has the third largest start-up ecosystem in the world and has been able to create 40,000 employment opportunities over the year. The United States in parallel is home to the well-known Silicon Valley – world’s largest bastion of tech-oriented startups and lastly, UAE too is picking up pace to tackle the challenges of the fourth Industrial Revolution via the application of robust technology. Thus, with economic cooperation at the heart of this QUAD, the idea of building partnerships and tackling issues via tech startups is a win-win situation because startups derive innovation and economic growth through their unique business models.
The basis of this cross-regional collaboration was laid down five years before this mini-lateral officially met in July, 2022 as a Middle Eastern Quad. It was during Narendra Modi’s 4-day visit to Israel during 2017 that, the Indiaspora made a high-level delegation appearance with its members from the US and India. The delegation’s visit was aimed at holding trilateral meetings in the realm of innovation ecosystem; mainly the entrepreneurship and venture capital. It was during this meeting that the idea of building a hi-tech triangle was proposed, encompassing the entrepreneurial potential of Tel Aviv, Bengaluru and Silicon Valley. However, what preceded the success of this trilateral alliance was the gathering among the entrepreneurs, government officials and investors of the former at NASSCOM’s tech-triangle summit.
Consequently, it was this former trilateral alliance that gave birth to the now established Quadrilateral I2U2 but, what further nurtured the viability here was the inclusion of UAE in the grouping. Nevertheless, the UAE has already been in close alliance with the Israeli entrepreneurial industry through initiatives like Synaptech Capital and UAE-Israel innovation office. Consequently, this fusion of Israeli technology with the Emeriti’s remarkable business ecosystem provides an opportunity for an accelerated regional economic development.
Resultantly, the alliances formed on the basis of entrepreneurship vis a vis innovative spirits have proven to be contributing well to the economic advancement and automation of many countries. Entrepreneurship over the years has seen a rapid boom even amidst Covid-19. However, the significant element in this rise could be the cross-regional cooperation among countries that could further augment not only country-relations but also boost the global GDP. Nevertheless, it is important for the alliances built on the basis of promoting innovation to remain firm on their stance. For instance, the formation of Indo-Pacific QUAD was perceived more or less likely to be a containment policy for China. However, in case of I2U2, it appears to be more unifying in terms of economic cooperation.
In any event, if the four countries put their focus entirely on the six identified dimensions, the alliance could succeed in myriad ways. Thus, it is necessary to note that, I2U2 seems to have a plethora of potential, with an increased ratio of rewarding outcomes. For instance, the UAE is luring start-ups, and is prepared to invest large sums of money. In contrast, the United States has immense capabilities in every imaginable domain; India has enormous human resources; and Israel has advanced technology in myriad fields. But, the stakes lie with UAE and Israel, being the key beneficiaries, to uphold the interests of the US and India and justify the continuation of this partnership.
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Today, the global economy is being put to the test. The list of challenges includes the special military operation in Ukraine, large-scale anti-Russian sanctions, an aggravated food crisis, disruptions in global supply chains, and globally rising inflation. Changes have not spared Kazakhstan, a country forced to seek out its place amid the new, constantly changing conditions of the global economy. To understand how deeply the country is integrated into the global economy, it is worth taking a look at Kazakhstan’s foreign trade in 2021. On the one hand, data suggests that its foreign trade is distributed fairly evenly among the three major regions, namely Europe (31%), Asia (32.6%) and the CIS (32.7%). On the other hand, the situation would be very different when the structure of exports and imports is analyzed. Almost 80% of goods are exported from Kazakhstan to nations outside the former Soviet Union—that is, to Europe and Asia. At the same time, about 50% of imports come from the former Soviet republics—primarily, Russia—while another 20% of imports comes from China. In fact, Kazakhstan sells minerals to global markets, and—with the currency earned—the country buys consumer goods, electronics, machinery, equipment, food and building materials from its nearest neighbors. In other words, such imports feature everything necessary for life. This model appeared more than 20 years ago to become the basis of the “Kazakhstani economic miracle”, turning the nation into the second economy of the post-Soviet space. Within this model, the drivers of economic growth are exports of minerals and services, which redistribute imports and financial flows, and create the bulk of jobs in the formal and informal sectors of the economy.
Over the past 10 years, Russia’s share of Kazakhstan’s foreign trade has steadily been increasing, while that of the EU has been declining. In 2011, Russia and the European Union accounted for 18.4% and 40.8% respectively. By 2021, the share of Russia rose to 24.2%, while the same indicator for the EU shrank to 29.6%. Today, Russia emerges as Kazakhstan’s key trade partner. Thus, it accounts for more than 40% of Kazakhstan’s imports. In 2021, more than 70% of timber and forest products, pulp and paper products, metals and goods from them, more than half of building materials and food products, more than 40% of chemical products, and a quarter of the machinery, equipment and vehicles imported into Kazakhstan came from Russia.
Under these conditions, Kazakhstan’s main interest is to maintain and diversify exports to an extent possible, as well as to secure sustained imports of food and key consumer goods.
Let’s take a closer look at Kazakhstan’s exports. Minerals, primarily crude oil, form the basis of exports. According to the Ministry of Energy of Kazakhstan, oil exports from the Republic in 2021 amounted to 67.6 million tons. Almost 80% of Kazakhstan’s oil is exported through the Caspian Pipeline Consortium (CPC). The consortium connects Kazakhstan’s fields with the port in Novorossiysk, from where oil is shipped to tankers for delivery to consumers in Europe, the Middle East, as well as South and East Asia. In 2021, the pipeline carried 53.1 million tonnes of oil from Kazakhstan’s largest field, Tengiz (26.6 million tonnes), as well as from Kashagan (15.7 million tonnes) and Karachaganak (10.3 million tonnes).
Kazakhstan is one of the five largest oil suppliers to Europe. At the same time, Kazakhstan’s oil is mainly shipped to southern European countries—namely, Italy, Greece, and Spain. In the first half of 2022, against the backdrop of Russia’s special military operation in Ukraine, Kazakhstan’s exports to Europe rose to $18.8 billion, as compared with only $11.6 billion over the same period last year.
Kazakhstani oil is also transported through Transneft’s pipeline system, being mixed with Russian oil, for loading on tankers in Novorossiysk and the Baltic port of Ust-Luga. According to the Central Dispatch Center of the Fuel and Energy Complex of the Russian Ministry of Energy, the volume of Kazakh oil shipped in 2021 in Novorossiysk amounted for 7.1 million tons, and in Ust-Luga 5.9 million tons respectively.
Another export route for Kazakh oil is deliveries by tankers from the port of Aktau (the design capacity is 11.6 mln tons a year, but in fact much less is exported) to Baku, and then pumping raw materials through the Baku – Tbilisi – Ceyhan pipeline to Turkey and subsequent delivery by tankers to buying customers. Kazakhstan also supplies oil to China. Transportation is possible through the Atasu – Alashankou main oil pipeline with a capacity of 20 mln tons a year. According to KazMunayGas, the supplies through it amounted to 12 million tons in 2021, of which 10 million tons were transported under the equivalent circuit, when Russia supplies oil to Pavlodar refinery in Kazakhstan, and the Kazakh side sends the same amount of oil to China.
Kazakhstan is trying to find alternative routes for oil exports through Azerbaijan and Russia amid numerous CPC disruptions in 2022. On July 7, 2022, a meeting on the development of transport and transit capacity of the country was held under the chairmanship of President of Kazakhstan Tokayev. The meeting was attended by the leadership of the government, heads of relevant ministries and agencies, as well as national companies. President Tokayev said it was necessary to take a set of measures to ensure safe and uninterrupted exports of Kazakhstani products. At the same time, the country’s leader called the diversification of oil supplies the most important task. Moreover, the Trans-Caspian Route is a priority. KazMunayGas was instructed to work out the best option for its implementation, including the possible involvement of investors in the Tengiz project. While the government of Kazakhstan was tasked to take measures together with the Kazakhstani investment holding Samruk-Kazyna to increase the capacity of the Atyrau – Kenkiyak and Kenkiyak – Kumkol oil pipelines to expand supplies in the eastern direction.
On August 24, 2022, Kassym-Jomart Tokayev visited Azerbaijan to meet with President Ilham Aliyev. The meeting took place against the background of negotiations of the Kazakh state oil company KazMunayGas with the trading arm of the Azerbaijani state company SOCAR on the sale of additional 1.5 million tons of Kazakhstani oil through the pipeline from Baku to Ceyhan (port in Turkey) and 3.5 million tons through the pipeline to Supsa (port in Georgia). This agreement will soon be signed.
It is obvious that it will not be possible to significantly increase the volume of oil transportation in other directions in the short term, on account of the limited capacity that the existing infrastructure has. The port infrastructure of Aktau and the neighboring port of Kuryk on the Caspian Sea would need to be reconstructed to transport such a volume of oil. Nevertheless, a strategic decision was made to gradually reduce shipments through the CPC and increase oil exports using infrastructure in other ways. Besides, it becomes clear that there is a need to increase the potential of non-commodity exports, which can compensate, at least partially, for the losses from the unstable operation of the consortium.
On the other hand, a threat to stable economic growth lies in the severe restrictions that international sanctions against Russia and reciprocal restrictions from the Russian side pose to Kazakhstan’s most important source of imports.
The military operation in Ukraine and anti-Russian sanctions imposed since the beginning of the year have led to disruptions in supply chains, exacerbating the global food crisis. Worldwide, food prices are skyrocketing. Climate change is no less of a threat to food security—heat wave and prolonged drought in Europe and China, floods in Pakistan.
The external environment has a rather grave impact on Kazakhstan’s economy. Alongside difficulties with exports, the country is experiencing problems with the purchase of basic goods, primarily food. One of the main problems is the global food crisis, followed by global price increases and shortages of goods. This summer, the deficit of some, such as sugar, has been notable. Export restrictions on sugar, wheat, flour, sunflower, large and small cattle, which were imposed in the spring and summer of 2022, are only effective in the short term. A systemic solution to food security in Kazakhstan requires comprehensive development of the country’s agro-industrial complex and its productivity. However, dependence on supplies of seeds and mineral fertilizers from Russia, which accounts for 80% of all imports of these products, stands in the way of transformation of agriculture in Kazakhstan.
After Russia imposed a temporary ban on the export of crops from March 15, 2022, the sowing campaign in Kazakhstan was jeopardized, as seeds were needed by Kazakhstani farmers for variety renewal and variety change. Only after the problem was raised at the level of deputy prime ministers in early April 2022 did Russia lift the temporary ban on exports of wheat, rye, barley, and corn seeds to the EAEU countries.
The fact that Russia imposed quotas on the export of mineral fertilizers, and later suspended their shipment for export due to logistical problems in the first half of 2022, also had a negative impact on agriculture in Kazakhstan. At an expanded government meeting held on July 14, 2022, President Kassym-Jomart Tokayev pointed to the critical dependence on imported mineral fertilizers, noting that the country needs to engage in the production of phosphate and potash fertilizers. This will reduce their import from abroad, primarily from Russia.
The key economic contradiction between Russia and Kazakhstan is that Moscow wants to use the EAEU in general and Kazakhstan in particular to expand parallel imports and financial transactions amid international sanctions. At the same time, Nur-Sultan is not interested in expanding re-exports of sanctioned goods and equipment to Russia, for fear of secondary sanctions. It is more important for the country to maintain the existing volume of purchases of Russian goods and food, as well as to establish stable channels of supply of minerals to global markets.
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For now and in the short term, Kazakhstan will have to tackle several challenges at once. First, there is the instability of the Caspian Pipeline Consortium as a key export channel, technological disruptions in its operation, real problems with the safe navigation in the Black Sea, as well as the planned increase of the Turkish side fees for passing through the Bosphorus and Dardanelles from October 7, 2022. Second, restrictions on exports of grain crops, mineral fertilizers, fuel, and some goods imposed by Russia and other countries will continue to push the prices up. Third, problems with payment for imports from Russia cannot be ruled out. Finally, the country is wanting large-scale investments to see the reconstruction and expansion of transport and logistics infrastructure, necessary to diversify its exports and increase transit facilities. All this will occur against the backdrop of the political transition, which should end with an early election of the president of Kazakhstan in autumn 2022 and the parliament of the country (the Majilis) in mid-2023. In a situation when the events of January 2022 are still strong in people’s minds and the decline in economic growth and living standards is acutely felt, the opportunities for successful implementation of the outlined plans are highly questionable.
From our partner RIAC
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Political leaders in the United States have touted economic sanctions as being less costly and more humanitarian than wars to affect the objectionable policies of an adversary. I beg to differ.
Prolonged sanctions can inflict pain, physical destruction and death, disrupt global supply chains, force sub-par and costly restructuring of the global economy, and reshape global alliances with fallouts that can last much longer than most conventional wars. It is a Neo-colonial instrument available to an exclusive club of two or three economic powers who also have a strong military to enforce their will. The United Nations and the global community must rein in sanctions before the world becomes fractured and adversarial beyond repair.
For America, sanctions are a silent weapon with little visible and immediate hardship. No soldiers going to war or shedding blood. No horrific images on TV screens. A sanitized war! The U.S. is seen as doing ‘something’ to take on an adversary. It is a weapon that the U.S. can use more than any other country because it has the biggest economy with the deepest financial sector and the dollar is the global currency for asset accumulation and trade. It is a weapon which can have dire and unknown fallout for many years to come.
A brief look at Iran, Venezuela and Russia may shed some light on some of the results of sanctions. The U.S. has sanctioned Iran longer than any country except Cuba, more heavily than any other country, including cutting off all its financial institutions from SWIFT (the international financial network), sanctioning the office of its Supreme Leader, its Revolutionary Guards Corps (IRGC), all foreign investments, exports of its oil, gas and oil products, imports of all military equipment, of commercial aircraft and parts, exports from the United States, and imposing secondary sanctions on entities and countries who help Iran evade sanctions. Iranians have suffered shortages of life-saving medicines. This undeclared war on Iran has gone on for over 40 years with no positive result for the United States.
The fallout of sanctions on Iran have reverberated around the world. This is most visible in the availability and price of natural gas (piped and liquefied), oil and petrochemicals. Iran is the logical competitor to Russian piped gas to Europe. The possibility of Iranian piped gas for Europe and expanded liquefied natural gas (LNG) output was killed by President Clinton in the mid 1990s; Iran had invited Bechtel (the company that developed Qatar’s LNG plants) for discussions to develop Iran’s North Pars Field, to pipe the gas and ship the LNG, but the enactment of the Iran-Libya Sanctions Act (ILSA) prevented this by limiting investment in and cooperation with Iran’s oil and gas sector. ILSA also prevented the development of Iran’s oil fields (at that time, specifically the giant Azadegan field by CONOCO). The U.S. “brain trust” understandably failed to see the future, such as Russia’s invasion of Ukraine and the acceleration of climate change. All the U.S. could see was its desire to isolate Iran there and then.
To gauge the impact of sanctions on alliances, the sanctions on Russia, along with those existing on Iran and Venezuela, should make the point. Principally, China, Iran and Venezuela have bonded with Russia. This alliance could adversely affect U.S. commercial and political interests for years to come. Russia has the largest reserves of natural gas (24 % of world reserves) followed by Iran (17%). This will result in a mighty global alliance in gas. China has the biggest reserves of rare earth metals (35%); Venezuela has the largest oil reserves in the world (18% of the total) with Iran ranking fourth (9.5%). China is the biggest manufacturer in the world. The combination of Russia, China, Venezuela and Iran poses an existential threat for U.S. interests in West Asia, the Far East, and Latin America and even in Africa. What we see is that U.S. sanctions can affect national interests and change alliances that could in time boomerang to hurt the United States. Why can’t we see this coming? Do we care?
A much ignored consequence of sanctions is that the fallout continues for years to come. Again, Iran provides a case in point. Today after over 40 years of sanctions, no matter what a U.S. president does, Iran will be effectively under the sanctions cloud for years to come. Today the United States is in negotiations to ‘lift’ some sanctions if the JCPOA, the nuclear agreement that the U.S. abrogated, is restored. Sadly this will do little for Iran besides providing some short-term relief. No international financial institution, no multinational corporation and no private investor is likely to make a massive investment in Iran for years, if not decades, to come. The reason is simple, they cannot trust the United States not to re-impose sanctions, in turn adversely affecting their investment. Iran has been severed from the global community for years to come. Wars, after they are over, have no such reverberations—witness Germany, Japan and Vietnam.
Yes, there’s no doubt, wars are horrific in term of loss of life, injuries, refugees and physical and economic destruction and loss. The loss associated with sanctions may be silent and opaque, but they are just as real and the fallout is not limited to the sanctioned country and the sender of sanctions because sanctions affect global supply chains, restructure the global economy and increase uncertainty and risk for years. Yet, there has never been a comprehensive accounting of the global economic cost of sanctions, in part because the fallout goes on for decades and may not yet be over. Sanctions that last for years poison relations between the U.S. and the sanctioned country for years, if not for decades. While wars must be avoided at all cost, sanctions are not a good substitute and don’t provide a sharp finality to the conflict.
It is urgent for the world to come together at the United Nations to rein in sanctions. To restrict sanctions beyond the import and export of military equipment. If we don’t act now, the world will become more divided, adversarial, uncertain and vulnerable to economic shocks with economic prosperity and scientific cooperation in peril.
From our partner Tehran Times
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The 7th Eastern Economic Forum held in Vladivostok, among others, seeks to address obstacles affecting tourism industry. Within the context of building internal tourism infrastructure, extra-budgetary investment is necessary for for its prompt realization. The Federal government and the Far East regional authority have also focused on this development programme these past years.
In general, unprecedented funding has been allocated to speed up the creation of tourism infrastructure. The government has provided the necessary conditions for the synergy of resources so that internal and foreign tourists can travel around at affordable prices and vacation in modern resorts and entertainment destinations.
But efforts have hit a number of setbacks, many political developments is sharply influencing aspects of the industry. Russia’s inbound and outbound tourism virtually collapsed, first due to the two-year Covid-19 lockdown and now largely due to Ukriane crisis that has brought unto business landscape hefty sanctions. The aviation industry is still struggling to float and maintain normal standard operations.
At the Eastern Economic Forum, the session entitled “Travelling to the East: Opportunities for Investors and Tourists” panelists distinctively noted negative external factors the tourism industry and argued for measures for its recovery. Russian Federal Agency for Tourism (Rostourism) head Zarina Doguzova is advocating to a review of policies negatively impacting in the industry. She considers Foreign Affairs Ministry’s consular services crippling the development of the tourism industry and that Russia is longer friendly due to its tit-for-tat responses to external countries.
Doguzova explained in an interview with Rossiya-24 (VGTRK) on the sidelines of the forum that the necessary measures to sustain the tourism including the launch of an electronic visa program for citizens of 52 countries, including those Russia has designated as “unfriendly” ones in the near future.
Russia earlier planned to launch e-visas for citizens of 52 countries, including European ones, she said. Certainly, there is the need to do some information work and launch an ad campaign. Many fear to visit us for various obvious reasons as a direct result of consistent confrontations and geopolitical changes.
“Foreign tourists help make dozens of billions of dollars around the world. These are big revenues which would stimulate the development of infrastructure and help create new jobs. It’s strategically important to communicate our position to the world, so that tourists, citizens of countries whose governments are taking unfriendly steps toward our country, would have a chance to see Russia,” Doguzova said.
Earlier during a meeting of the Russian State Council presidium dealing with the development of tourism on Septenber 6, Doguzova asked President Vladimir Putin to revisit the plans to launch e-visas for citizens of 52 countries, without following the reciprocity principle, which Russia usually sticks to as concerns visas.
Putin suggested elaborating on this proposal “without clinging to reciprocity.” while addressing the forum session, Putin said Russia would not respond symmetrically to the European Union’s decision to suspend the Visa Facilitation Agreement with Russia.
He expressed the desire developing the idea of expanding the practice of visa-free travel for citizens of specific countries, including those visiting Russia on organized group tours and further proposed developing bilateral cooperation on establishing a visa-free travel framework with foreign countries.
“I would suggest talking not about certain [nations with whom visa-free travel could be established]. Nothing should be imposed on anyone. One should just talk about cooperation on a bilateral track. As regards establishing visa-free travel on a bilateral basis in order to facilitate mutual visits, advice is needed from the Foreign Ministry,” he said.
“In principle, I wouldn’t be holding on to reciprocity in this case. I know the general principle that the Foreign Ministry has, which is the reciprocity principle. When it comes to serving our interests, all these principles should be used, where this is beneficial. If something creates obstacles for us, what are such principles for? One could be more flexible,” Putin said.
Russians have restricted their foreign travel due to the current global changes especially confrontation between the United States, Europe and Russia. According to the European Council decision published in the EU Official Journal, the European Union members suspended the visa facilitation agreement between the European Union and Russia.
“The application of the Agreement between the European Community and the Russian Federation on the facilitation of the issuance of visas to the citizens of the European Union and the Russian Federation (‘the Agreement’) is suspended in whole as regards citizens of the Russian Federation, as from 12 September 2022,” the statement says on its website. It is assumed that the cost of visas and terms of their registration will increase significantly, issuance of visas for tourist purposes will be the last priority of consulates.
Poland and Baltic states (Estonia, Latvia and Lithuania) have coordinated restrictions for Russians. In their statement, Poland and the Baltic states expressed concern “about the substantial and growing influx of Russian citizens to the European Union and the Schengen area through our borders. We believe that this is becoming a serious threat to public security and to the overall shared Schengen area,” according to the European Commission.
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