The Countries of Southeast Asia and the Chinese Initiative Belt and Road: a Model of Interaction

The choice of the countries of Southeast Asia as an example for analyzing the nature of interaction between developing countries and China within the framework of the Belt and Road Initiative is not accidental. The very logic of China’s stated goals of gaining dominant positions in the world economy and politics makes it inevitable that the countries of Southeast Asia located in geographic proximity to it are included in its long-term economic and political plans. The question, however, is to what extent do they meet the interests of the Southeast Asian countries themselves? The solution to this question is the main subject of research in the article. There are objective prerequisites for mutually beneficial cooperation. The Belt and Road projects are viewed by China as a tool for economic expansion into the region with the prospect of taking a leading position there, using the interest of Southeast Asian countries in the inflow of foreign investment to create modern infrastructure, the lack of which narrows their opportunities for further economic growth, maintaining competitiveness and developing integration ties within ASEAN Community. Expert assessments made by international organizations confirm the positive impact of OBOR projects on the economic development of Southeast Asian countries and although today it is too early to draw any conclusions, since the initiative is only at the initial stage of its implementation in the region, nevertheless the case studies presented in the article indicate a mismatch in the positions of the parties on a number of issues related to the financing of projects, their lack of transparency. non-compliance with environmental and social requirements. The support of the initiative on the part of the Southeast Asian countries does not automatically mean their acceptance of the terms of the agreements proposed by China, which are far from always consistent with their national interests and give rise to fears in society about its expansionist intentions. Therefore, in many Southeast Asian countries, participation in OBOR projects is turning into a subject of political discourse, which reflects the presence of disagreements in society and confrontation of interests regarding the advisability of rapprochement with China, given the associated economic and political risks. The countries of Southeast Asia can be conditionally divided into two groups according to their relation to the Belt and Road initiative. The first group includes Indonesia, Malaysia, Singapore, the Philippines, Thailand, Vietnam and Myanmar, whose position can be described as national pragmatism. While supporting the Chinese initiative in general, they nevertheless assess the possible risks of their participation in projects and seek to reduce them. The second group is represented by Laos and Cambodia, whose leadership unconditionally supports the Chinese initiative, guided by the interests of their own survival, which largely depends on Chinese assistance. Therefore, the prospect of falling into a debt trap and increasing economic dependence on the PRC and even the threat of losing sovereignty does not deter them from participating in highly controversial projects from a commercial point of view. Based on the analysis made, the author comes to the conclusion that, given the existing alignment of political forces in Southeast Asia, China can count on promoting its initiative in the region, which, however, does not automatically lead to an increase in its political influence and to the creation of a China-centric model of regional order. Acknowledgements. The article was prepared within the project “Post-crisis world order: challenges and technologies, competition and cooperation” supported by the grant from Ministry of Science and Higher Education of the Russian Federation program for research projects in priority areas of scientific and technological development (agreement № 075-15-2020-783).

Belgium on the Road to Confederation: Problems and Prospects

The article is about the Belgian federal system transformation, as well as the factors that aggravate or, on the contrary, restrain the centrifugal trends in the country. The specific nature of Belgian federalism determines its evolution from federation to confederation, but the answer to the question about the prospects of this transformation remains open. On the one hand, the Belgian Kingdom history, its geographical location, as well as economic and cultural-linguistic features predetermined the existence and deepening of dividing lines between the two main ethnic communities in the country – the Walloons and the Flemings. Decentralization, as a response to the aggravation of interethnic contradictions, allows political elites to partially control the process and minimize, as far as possible, the costs of this conflict of interest for the economy and the population, but at the same time, it feeds centrifugal tendencies. Reforms do not remove the problem of separatism from the agenda, but, vice versa, give the regions and communities all the necessary resources, reducing the central authorities’ competences. Each reform creates the basis for the next redistribution of power. The logic of the decentralization process predefines the dual, asymmetric, dissociative and improvisational nature of the federal system of Belgium, and contributes to its extreme complication. The main drivers of centrifugal tendencies remain Flemish nationalists when the institutions and mechanisms designed to unite the country do not function effectively enough. On the other hand, the scenario of a complete collapse of the Belgian federation is not something predetermined and inevitable. There are still internal and external factors unifying Belgians (the Senate, the King, the absence of a provision for a national referendum in the constitution, a special place in the federation of the Brussels-Capital region, the country’s membership in the EU), but their influence on the entire system is gradually decreasing. Belgium’s active participation in the European integration contributing to creation of a highly developed modern economic system and high living standards, as well as stable GDP growth (with exception of crisis periods), play an important role in stabilizing the Belgian federation. So, the European Union prevents a rapid development of separation process, but does not change its main trends. The EU accompanies the Belgian federal system transformation, in order to reduce its costs for society and the European integration, but does not set the task of inversing its evolution. At the same time, the unstable political situation in the country has a certain negative impact on the European integration, exacerbating the complexity of the decision-making process within the EU. The coronavirus pandemic became a catalyst for controversial political processes in Belgium, brought renewal of the social and environmental contract and a new view of European solidarity. However, the pandemic highlighted the main shortcomings of the existing federal system. The dissociation of the federation and its drift to a confederation is a peaceful and slow process, but the country’s unifying factors are gradually eroding. It is not yet clear whether and when a full-fledged confederate system will be created and the separation will be stopped, or whether the confederation will become the next stage on the Belgium’s way to the final division. It is impossible to completely exclude a rollback scenario of the strong federation restoration while reducing competencies of regions and communities, but it is obvious that its probability is extremely small.

The Trajectory of Development of Social Partnership

Profound changes in the social and labor sphere are followed by both emergence of the new opportunities associated with the development of flexible forms of employment, expansion of opportunities for employment, humanization and digitization of work, and the emergence of new threats: the occurrence of such phenomena as employment preсarization, growth of the informal components in the labor relations, distribution of practice of bringing the labor relations to the civil legal area, and so on. As a result, controversies between the main participants of the social and labor relations grow. An effective and worldwide recognized mechanism of resolving them is the social partnership which has the deep historical roots going back to outstanding thinkers of antiquity. During later historical periods the ideas of social partnership gained development in the works of domestic and foreign scientists, public and statesmen. In the Russian Federation social partnership has the specific trajectory of development which has developed under the influence of both historical and modern factors. The carried-out analysis allowed to reveal the following problems of formation and development of the social partnership system in the Russian Federation: sociocultural features, weakness of the trade-union movement, development of non-standard forms of employment, differentiation of the income of the population, low interest of the government. The designated problems which are slowing down the process of transition of the social and labor relations to partner type are manifested both on federal, and on regional levels. To research the extent of development of collective contract regulation and identification of the problems which take place in the system of social partnership at the local level sociological survey of workers of a number of the Russian organizations was performed. As a result, it was found that collective contract regulation of the social and labor relations in the Russian Federation at the local level demands improvement. The main problems of system of social partnership at the local level are: weak knowledge of trade-union members concerning the activity of those organizations, especially at the sectoral, regional, and territorial levels; unwillingness to resolve the issues of social and labor regulation at the organizational level without governmental support and lack of the developed practice of conducting collective negotiations; passivity and weak motivation of trade-union members in protection of their labor rights; weak feasibility of practical implementation of the collective agreement provisions. The results of the theoretical and empirical researches allow to predict the trajectory of further development of social partnership consisting in strengthening of the social component due to the extension of the database concerning the problems of the social partners.

Party System Transformation in Germany

This article is devoted to the changes of the party system of Germany. In recent years, the transformation of the party system has caused several political crises. Party spectrum is pluralized and polarized in Germany. Regional differences also increase. In this situation, the German parties are in search of new dynamics. The consequence of this is that all the main parties are now factional. The system that existed in Germany for more than half a century, with the dominance of two political forces (CDU/CSU and SPD), gradually evolved into the “one and a half” party system (only CDU/CSU dominates). The question is whether evolution will continue towards simple multi-party system, or the “one and a half” party system will remain. With a significant degree of certainty, one can say that a return to a “two and a half” party system is impossible. Changes in the party-political system lead to an increase in the diversity of the composition of the coalitions ruling in Germany. German political parties should learn how to create coalitions of three political forces, also at the federal level. The main trend of the coming years for CDU, CSU and SPD will be an attempt to return to their traditional platforms. However, a full return is impossible. More frequent red-red-green coalitions can be expected, including the federal level. But, nevertheless, serious changes in the German party system did not lead to its chronic incapacity – the system adapted to them.

Pandemic Testing of the Sustainability of Emerging Trends in Higher Education

The article is devoted to objectifying the consequences of the emergency transition to distance education in universities and the global decline in academic mobility during the 2020 pandemic through the prism of active implementation of the methodology of success and excellence in education. The author highlighted the current trends in education by the beginning of the second decade of the 21st century: increasing inequality in the education system; the predominance of the idea and methodology of success and excellence; a stable division into global and regional; the replacement of the model of internalization of values with the model of knowledge generation; refusal of targeted state subsidies in favor of self-financing; precarization of the middle teaching class; demonstration of the superiority of digital solutions in the translation of knowledge; creation of outsourcing chains of interaction in the educational sphere (research centers – universities, universities – commercial publishing houses, schools – career guidance centers, universities – online plaftorms, etc.). The article analyzes the aspects of changes in the modern model of higher education, taking into account the desire to position universities in the world educational rankings. The basis for a discussion of the choice of development priorities has been formed, taking into account the growing dissatisfaction of teachers with the need to match the model of success and excellence in their educational and scientific activities. It was found that pre-pandemic trends in education were multidirectional, and their impact on education systems and learning models (global or regional) was more stimulating for development, rather than mandatory for survival. The crisis has divided the manifestations of the new into two components: necessary renewal and sufficient improvement to ensure stability. It is noted that education is characterized by a fairly conservative approach to the organization of the educational process, so the extreme transition to distance learning during the pandemic actually replaced the evolutionary period of transformation of education, which would have lasted for more than one decade. Academic mobility, which has become widespread in the world, but which was forced to temporarily stop its activity during the pandemic, in the new conditions can continue to contribute to improving the ranking of universities, but can also carry threats of precarization to their working teachers and become a source of social tension, which should be taken into account when developing university development programs in the context of universal digitalization. Conclusions are drawn about trends have been tested by the pandemic reality, which will determine the vector of future development of higher education. Acknowledgements. The reported study was funded by RFBR according to the research project № 20-04-60109.

International Trade in the Aftermath of the COVID-19 Pandemic

The article examines the implications of the COVID‑19 pandemic for the development of international trade. The international trading system has demonstrated sufficient maturity and the ability to remain stable even in extreme conditions. The negative impact of COVID‑19 on trade was provided through a general drop in demand, disruptions in and business travel. Attempts to foster economic stability and enhance the resilience of global value chains through self-reliance and limiting supply network within national boundaries are counterproductive. The solution to the efficiency versus safety dilemma lies in the area of diversification. In the medium term after the expected rapid recovery growth the development of international trade is likely to slow down and the growth rates of trade and production will trend towards convergence. The long-term impact of the pandemic on international trade will be manifested through the impact of structural factors: the Fourth Industrial Revolution, trends in the field of transnational production, changes in the paradigm of social development, competition between economic policy models, rivalry between leaders of the world economy, and the results of efforts to regulate trade on the multilateral basis. The pandemic made more obvious the need for cooperation, not only in the narrow aspect of coordinating anti-epidemic measures, but also in the broader sense of promoting development and narrowing the gap in welfare, health care and the quality of life in general, both in different countries and within countries. In the area of trade policy, it highlighted the urgent need for closer cooperation in overcoming barriers to trade (lowering duties, removing technical barriers, mutual recognition of sanitary certificates, interfacing digital regulation systems). The disunity and noticeable confusion of governments during the pandemic emphasized the task of overcoming the WTO crisis.

Islamic Capital in Kazakhstan

Over the last decades Islamic Finance has been expanding its role in the global economy, including in the Post- Soviet Area. Who are the key players of Islamic Finance market? What are their investment strategies here? This paper considers above questions by investigating more than 250 deals involving Islamic investors over the period 1991–2020 in Kazakhstan Republic. The data on deals gathered from two main sources: i) M&A database Zephyr (Bureau van Dijk), and ii) open sources (information agencies, company annual reports, press-releases, presentations, interviews). We are analyzing the growth of the Islamic Finance industry in Kazakhstan, and dependency on two key investors – Islamic Development Bank and Abu Dhabi Government. Then We study the structure of Islamic Finance investments by the type of investors. We found that despite the small share of Islamic banks and Islamic leasing (ijara) companies they have become an important factor of the financial sector in Kazakhstan. We saw that the potential for issuing sukuk and developing Islamic insurance (takaful) have not yet been realized but Islamic Finance became one of the six pillars of the Astana International Financial Centre (AIFC). In addition, we have identified several factors critical to further Islamic Finance market development in the Central Asia. In conclusion there is a question whether Kazakhstan financiers and policymakers will be able to apply creative approach to Islamic Finance that not only allow to adopt the experience of other countries, but also bring something new. Acknowledgements. This study is funded by RFBR, project number 19-310-60002 “Islamic Finance in the Post-Soviet States: challenges and opportunities for investment growth in the CIS countries”.

“Path-Dependency” Effect in Japan-U.S. Trade

The paper addresses current issues in Japan-U.S. foreign trade following the signing of the Japan-U.S. Trade Agreement and the Japan-U.S. Agreement on Digital Trade in October 2019. By providing an overview of Japan-U.S. trade relations, analyzing current trends in bilateral foreign trade and outlining basic terms of new bilateral agreements, the authors conclude that “path-dependency” in Japan-U.S. contemporary foreign trade persists and trade relations between the two countries are to a greater extent influenced by the U.S. trade policy which aims to assure a broader access of American companies to Japanese markets – the situation that was typical for bilateral trade relations since the 1980s. “Path-dependency” in Japan-U.S. trade relations, conventionally categorized by the existence of numerous trade contradictions, is pronounced in the unchanged goals, strategy and tactics of foreign trade negotiations. The United States maintains its “attacking” role and dominates in the bilateral trade negotiations, while Japan, despite its enhancing influence in the multilateral trading system and regional trade agreements, is forced to “self-defend” and make concessions to a more dominant partner in order to maintain its automobile exports to the United States at the expense of its national interests in other industries, particularly in the agricultural sector. Thus, new trade agreements are unlikely to cause significant structural changes in Japan-U.S. bilateral trade in the shortterm as the problem of persistent trade deficits remains. In order to break the vicious circle of “path-dependency” Japan is to actively cooperate with the economies of the European Union which have large amounts of trade deficits with the U.S., can serve as a mediator in the U.S. – China trade conflicts, as well with other Asian countries via mega-FTAs which possess potential risks to the United States. Further development of foreign trade cooperation will depend on the initiatives of new governments in both countries.

The Aegean Sea of Contradictions (Part II)

The Aegean Sea as a common sea region for Greece and Turkey is not only an important source of aquatic biological and energy resources, but also a water area where both countries have their own interests in its economic development and use. Traditionally, this sea area, most of which is a high sea in terms of rules and provisions of the modern international maritime law, has been used by both states on a parity basis, and other extra-regional countries have had equal rights with them here. However, the desire of Greece and Turkey to extend their zones of sovereignty, sovereign rights and jurisdiction over maritime zones, seabed and subsoil has given rise to new maritime disputes. It is no coincidence that the problem of delimiting the continental shelf, i. e. the underwater margin of the continent where coastal countries are vested with rights to explore and exploit its resources, has accompanied the Turkish-Greek negotiations for decades. Greece has even initiated legal proceedings before the International Court of Justice on the issue, but for various reasons the Court found that it had no jurisdiction to hear the case. To date, the positions of the parties on this issue have not changed; they are directly opposite and mutually exclusive. This and other circumstances, as well as the fact that Turkey is not a party to either the 1958 Geneva Conventions or the 1982 UN Convention on the Law of the Sea, severely limits the possibility of a new trial. Moreover, the legal positivism of the Greek position on the entire spectrum of Aegean Sea problems, i. e. an appeal solely to the applicable rules and provisions of international law of the sea, not only fails to satisfy Turkey but also has negative consequences for other countries. First of all, this concerns issues related to the freedom of navigation. Greece’s claim to extend the outer limits of its territorial sea from 6 to 12 nautical miles around the huge number of Greek islands in the Aegean Sea would inevitably lead to a significant reduction of the high sea. Although at a minimum the right of innocent passage and at a maximum the more liberal rule of the law of the sea – the right of transit passage – will apply, the legal regime for these maritime areas will be fundamentally different and more heavily regulated. The passage of merchant ships and warships, as well as the overflight of military aircraft, including those of any foreign country, also of the U.S. and Russian Federation, will not be as free as on the high seas. All of these issues are dealt with in this (second) part of the paper. Acknowledgements. The article was prepared within the project “Post-Crisis World Order: Challenges and Technologies, Competition and Cooperation” supported by the grant from Ministry of Science and Higher Education of the Russian Federation program for research projects in priority areas of scientific and technological development (Agreement № 075-15-2020-783).

Servitization of Industry: New Evidence

A significant increase in the use of services is observed for some industries in GVCs (Global Value Chains). The paper has shed light on important dimension of the servitization which is the sale and export of services by manufacturing firms, often bundled together with goods. Firm-level data confirm that many firms are involved both in the production of goods and services and that there are complementarities between these activities. Not only manufacturing firms are involved in the distribution, transport and logistics services needed for their international operations in GVCs but also, they provide installation, maintenance, repair services as well as a variety of other business support and complementary services that increase value for their customers. The servitization has important policy implications, particularly when taking into account the fact that trade in services is generally more restricted than trade in goods. As the lines between goods and services are blurred, economic policy today might be more challenging than in the past, particularly for companies moving to new business models that imply more interactions with customers and a more intensive use of digital technologies. Services themselves are split into different modes of supply for which there are different levels of economic policy. A closer look at the mechanisms of value creation in the case of services suggests that there are still the needs of new economic policy addressed at business models described as value networks or value shops. As technologies become more disruptive and more companies move to ‘servicified’ GVCs, the need for a more consistent international economic policy regime, particularly at the multilateral level, will become more urgent.