The French economy and finance minister has said that France is moving toward a period of rebalancing, aiming to create a trade ‘backbone’ with Beijing via Russia.
Bruno Le Maire made the statement in an interview with the Wall Street Journal, given in December, during the minister’s visit to Moscow. “We are moving from a world dominated by very exclusive transatlantic relations toward a rebalancing,” Le Maire said.
“The US is a close ally and Europe’s principal trading partner, but we can clearly see the difficulties,” the minister said, criticizing the US for maintaining the threat of “extraterritorial sanctions” – legislation that lets Washington penalize foreign companies with US operations for doing business in Russia. “That is contrary to our vision of a multilateral global organization,” Le Maire said, expressing hope that French sanctions against Russia will soon be lifted. “The conditions are not met for us to lift or alleviate sanctions, but I hope – I really hope – that it will evolve,” Le Maire declared.
French President Emmanuel Macron is set to launch the initiative after his visit to China in January and the St. Petersburg International Financial Congress in May.
France has every motivation to increase its trade with both Russia and China. In 2016, Russia’s trade with France amounted to $13 billion, an increase of 13.80 percent compared to 2015. Regarding China, France remains the second-most valuable business partner with a combined trade volume of €167 billion ($200 billion).
While France has the power to lift sanctions against Russia on a national scale, it is unlikely to do so unilaterally without the backing of Brussels. Since 1997 the EU’s political and economic relations with Moscow have been based on a Partnership and Cooperation Agreement (PCA). While trade between the EU and Russia continues, it has seen a decline in recent years in the wake of the Western sanctions. In 2016, EU-Russia trade stood at €191 billion, according to figures from the European Commission. In comparison, China and Europe trade on average over €1 billion a day.
Any decision to further open up trade will likely be dictated by policymakers across the Atlantic. China has previously been accused by the Trump administration of being a currency manipulator, although the belligerent economic stance towards Beijing has been toned down, as the US continues to seek China’s help in solving the Korean crisis.
At the same time, Washington does not appear afraid of continuing to wield a stick. In late November, the US sanctioned three Chinese trading companies as it seeks to disrupt funding of North Korea’s nuclear program. President Donald Trump also intervened in August to deny the Chinese-backed private equity firm Canyon Bridge Capital Partners from acquiring a US-based chipmaker, Lattice Semiconductor Corporation, for $1.3 billion.
In early August, the US passed legislation imposing new economic sanctions against three nations, including Russia, which virtually made it impossible for Trump to lift any restrictions introduced against Moscow without congressional approval. By January 29, Washington could issue new economic restrictions to include the potential exclusion of Russian banks and corporations from the SWIFT payment system – the global network of secure financial messaging services.