Ben Aris in Kazan -
Russia's relationship with the Arab world has been the focus of attention recently, but the reporting is mostly negative, with Syria in particular described as a Russian "client state." However, at the start of October, high-level delegations from Qatar, the United Arab Emirates (UAE), Singapore, Malaysia and other countries of the Organization of Islamic Cooperation (OIC) gathered in Kazan, the capital of Tatarstan, to sign off on about $1bn worth of investment deals. Despite the hyperbole, Russia is building deep economic ties with the Muslim world and Kazan is leading the way.
Kazan is special in several ways. First, it is the capital of the Tatarstan autonomous republic in the heart of Russia and as such enjoys a lot of independence from the federal government. It even has its own president and parliament, and runs an investment policy pretty much independently from the Kremlin.
Second, it is a predominately Muslim region, which adopted Islam just over 1,100 years ago. Like the rest of the Russia, the local Muslims live cheek by jowl with their Orthodox brethren, symbolised by the minarets of the main mosques rising above the walls of an equally ancient Kremlin at the heart of the city. Investors from Islamic countries are likely to feel more comfortable investing in Kazan than in any other Russian city. "There are foreign investors and several projects already in Tatarstan and other regions of the Russian Federation," said Linar Yakupov, chief executive of the Tatarstan Development Agency (TIDA). "But the time has come to move on and deepen those relations between our countries."
Link between east and west
The Tatarstan government identified the notoriously cautious Arab investment as a potential partner five years ago when the first "Kazansummit" was held at the instigation of the republic's first president, Mintimer Shaimiev.
From a humble start in 2009 when only 50 delegates made the trip (including your correspondent), the summit has emerged as the main nexus for economic ties between Russia and the Islamic world. This year the numbers swelled into the hundreds, including 250 foreign delegates from 43 countries, many of whom were sporting the traditional thawb robe and headscarf of their home countries. "This is the fifth year of the 'Kazansummit' and our city is turning into a key link between east and west," said Tatarstan's current president, Rustam Minnikhanov, in his keynote speech.
"Tatarstan adopted Islam in 922AD and today we are building a city to celebrate this heritage - a spiritual and cultural monument that is embodied in the Kazan Smart City," the president said, referring to a new high-tech development that just broke ground a few miles to the south of the city centre, which will be a $10bn focal point for new investment.
To underline the region's openness to Sharia-compliant investment, an imam, who recited from the Koran, opened the main session. And the region has already made a lot of progress. It has two halal food-processing factories that were the first from Russia to be accredited for export to the UAE and the region has been working on setting up Islamic banking, which is still an uncomfortable fit with current Russian banking regulation.
This year saw ministerial delegations from Qatar, the UAE, Malaysia, Morocco, Sudan, Senegal, Saudi Arabia, Pakistan and Turkey in attendance. These countries are members of the OIC and the theme of the conference was building business and investment ties between the OIC and Tatarstan. "In Russia, Kazan is a new site that can bring together Russia and the Islamic world," said Minnikhanov at a business breakfast that opened the first day of the event.
Moreover, this year the Russian Ministry of Foreign Affairs sent its ambassador-at-large, Konstantin Shuvalov. In the increasingly aggressive competition with the US to foster spheres of influence, Russia's relations with the Muslim world have become more important, and the foreign ministry's job has been made easier by the government of Tatarstan already breaking the ice. The "Kazansummit" is emerging as the key event in the calendar for promoting Russian-OIC relations.
"Developing cooperation with the Islamic world is a priority for the Russian Federation," said Ambassador Shuvalov. "This is not just empty words; it is the result of building up long-term strategic interests. And it is important as we can see everywhere Islamic nations are going through a period of deep transformation - sometimes dramatic, sometimes tragic - but it is leading to a new economic reality. So it is important for us not to waste time, but to act now and build the economic foundation for a new partnership."
The foreign trade turnover of Tatarstan with the countries of the OIC has soared in recent years. The main guest was OIC Secretary General Ekmeleddin Ihsanoglu, who said in his speech that trade between OIC member countries and Russia has grown from $6bn in 2010 to $8bn today, again with the lion's share coming to Tatarstan. "Trade with the OIC countries has already tripled in recent years and we can participate in the building financial infrastructure and contribute to the economic development of Tatarstan and the Russian Federation as a whole," Ihsanoglu said.
Trade with the UAE alone reached $2bn last year, or 9% of the region's total foreign turnover, and the UEA is now one of the ten biggest investors in Russia, much of which has been directed at Tatarstan. "The UAE has already invested some $8bn into the Russian Federation, which makes us one of the top ten biggest investors into Russia," said Abdullah Al Saleh, undersecretary of the UAE's Ministry of the Economy. "Our relations are built on mutual cooperation and will continue to flourish."
However, it is Turkey where the most progress has been made. Turkey and Russia have been trading partners since Soviet times and the more secular Turks are already big players in Russia's real estate sector, among other things. Trade with Turkey is also running at about $2bn a year, making it one of Russia's and Kazan's biggest trade partners. "Tatarstan's contribution to building new ties has been very valuable in helping to build new economic ties with Islamic countries," Ambassador Shuvalov said. "Tatarstan is a pioneer and the initiator of this effort."
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