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Dark clouds gather on Russky Island

Sunday 09 Sep 2012 3:12p.m.

Dark clouds gather on Russky Island

Opinion by Political Editor Duncan Garner, in Vladivostok

Russky Island used to be a military base, with guns pointed toward the West. The guns are still there, still pointed toward the West, but they're no longer manned or look vaguely operational. It's certainly a weird place for an APEC. It feels like a military camp we can't leave.

In three years, the Russians hurriedly built this massive university campus to host this APEC. It's sterile and barely finished. Some rooms have no hot water. The staff can't work the eftpos. The lifts break down and people get locked in their rooms from the inside. And that's the exciting bit.

They've also built this massive $1.3b suspension bridge to get us there.

But what happens tonight when we all leave? Students will flock into this campus next year, but they're hardly the car-owning type. The bridge to nowhere will be empty but nonetheless impressive if a little under used.

It would be like building a massive bridge to Rangitoto Island rather than the North Shore. What are the Russians thinking?

It's actually not a bad symbol for APEC really – trying to look impressive, but scratch the surface and see all the imperfections from this weird grouping of Asia-Pacific leaders.

Russia is so desperately trying to shed its Soviet-style past. We should be excited when they do though. That's why New Zealand wants a free trade deal with President Putin's lot.

Yes this is still a relatively poor country, but they have a growing middle class and a large number of billionaires. They want good food, they need to be fed, and our Government knows it.

Mr Key wants to future-proof the New Zealand economy. We will not get rich selling to ourselves. We always need new markets. And this market is exciting – corrupt still, yes, but so are other countries we sell to.

Russia is finding minerals in places where no one moans. They are starting to get their hands on real money. They are building a $14b pipeline to take gas into China from southern Russia. There is no RMA here as John Key points out. If they have an iwi or a Green Party that objects, then they get crushed and no one knows. Russia is opening up, economically at least if not slowly, and we want a slice of the action.

So will it happen? The answer is yes, one day. But the Russians are worried and Mr Putin has made that clear.

Yes, he's talking about free trade loudly and clearly, but putting it in place ain't that easy. He says serious compromises have to be made. He's worried about small and inefficient Russian farmers being put out to pasture by New Zealand farm products flooding his country.

For a start, that's unlikely to happen. New Zealand doesn’t have the supply right now to flood this market even if the 20 percent tariffs came off immediately.

But Fonterra is farming now around the world and is picking up new supply lines. We need new markets and this is one of them. At the earliest, this deal might be signed in Moscow next year. It won't happen this year. Mr Key has made that clear.

So what about the rest of the conference and how should APEC be judged this year? A five out of ten. 

US President Barack Obama couldn't make it. Australian Prime Minister Julia Gillard went home after her dad died. The 11 countries negotiating the Trans-Pacific Partnership didn't even meet because Mr Obama was absent. That's not a great message. It proves it's a US-led initiative. The Chinese and the Russians won't sign up. They're looking elsewhere for other multi-lateral deals.

Mr Key says it's got momentum, but who would really know?

He won't say what New Zealand is giving away but he also says “we have to give a bit to get a bit”. What do we get? What are we giving away? Kiwis need to be told, and soon.

And finally the world economy – the best thing the leaders could say was that it's faltering, slowing and getting slower. That's hardly good news.

And their response? We need more trade integration.

But even APEC leaders can't agree on signing up to their own solution. It's clear there are competing agendas here and while they all claim they want trade barriers abandoned, they've all been saying it for 20 years. But billions and billions of dollars of subsidies remain firmly locked in place, just not in New Zealand. We dropped our pants years ago, and everyone else is only inching towards us.

Progress has been made, but in these times of recession – as many here said this weekend – protectionist barriers in some countries are going up, not coming down.

So the message is sobering.

China is slowing. It’s our second largest export market. That's a huge worry for us. Thousands of jobs in New Zealand now rely on China staying buoyant, and it's sliding. Europe is tanking fast and no one knows how deep this next recession will go.

So the Russians may have built the bridge and put on the fireworks, but when the rain poured down last night you couldn't help but think for the little person in the street. For them this conference is a damp squid. It means very little and is irrelevant to their daily lives.

Leaders were stuck so far away from normality they literally were marooned on an island. They never saw real people and real people never saw them.

This is a shame because the storm clouds are gathering for the world's economy and little people feel the effects of that more than anyone. As some of the top chief executives said at their APEC retreat this week, we need to brace ourselves. That means workers watch out.

No one knows how bad it will be and when it will end.

 
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