44 - aei.pitt.eduaei.pitt.edu/58860/1/pw_44_turn-to-east_net.pdfkatarzyna kazimierska, anna...

44

Witold Rodkiewicz

The Turn To The easT

The flaWed diveRsificaTion of Russian foReign policy

NUMBER 44WARSAWNOVEMBER 2014

The Turn To The easTThE flAWEd diVERSificATiON Of RUSSiAN fOREigN pOlicy

Witold Rodkiewicz

© copyright by Ośrodek Studiów Wschodnichim. Marka Karpia / centre for Eastern Studies

content editorsAdam Eberhardt, Marek Menkiszak

Editorhalina Kowalczyk

co-operationKatarzyna Kazimierska, Anna Łabuszewska

TranslationJim Todd

graphic design pARA-BUch

dTp groupMedia

photograph on cover Shutterstock

pUBliShERośrodek studiów Wschodnich im. Marka Karpia centre for Eastern Studies

ul. Koszykowa 6a, Warsaw, polandphone + 48 /22/ 525 80 00fax: + 48 /22/ 525 80 40osw.waw.pl

iSBN 978-83-62936-50-2

Contents

ExEcUTiVE SUMMARy /5

I. ThE iNTENSificATiON Of RElATiONS WiTh ThE EAST ANd iTS pREREqUiSiTES /7

II. ThE pOlicy Of ENgAgEMENT – ThE RUSSiAN REAcTiON TO ThE RiSE Of chiNA’S pOWER /12

III. MOScOW–dElhi: A gEOpOliTicAl cONSENSUS /22

IV. RUSSiAN-JApANESE RElATiONS: A fRUiTfUl ‘STRATEgic pATiENcE’ /25

V. RUSSiA ANd ThE MUlTilATERAl STRUcTURES iN ThE REgiON /29

VI. ThE RUSSiAN RESpONSE TO ThE ASiAN chAllENgES /31

VII. ThE lAME EcONOMy /34

PO

INT

OF

VIE

W 11/2014

5

ExEcutivE summary

• The ‘turn to the East’ in Russian foreign policy announcedin 2010 has failed to bring about the heralded fundamentalchangeinrelationsbetweenRussiaanditsAsianpartners,norhasitsignificantlyreinforcedRussia’spositioninEastAsia.Ithasalsofailedtocreateaneffectivemechanismforharness-ingtheeconomicdynamismoftheAsia-PacificregionforthepurposeofmodernisingRussia’sFarEasternterritories.

• However,the‘turntotheEast’hasnotbeenmerelyrhetorical.Moscowhasgenuinelybecomemoreactiveandvisibleintheregionalmultilateralstructures,andithasbeenconsistentlydevelopingbilateralrelationswithanumberofmajorregionalactors.Oneresultofthisactivityisthediversification(albeitso far limited) of Russian foreign policy,which is graduallybecomingless‘West-centric’.ThisdiversificationhasallowedtheRussianpolitical elite toavoida feelingof isolationdur-ing the recent serious crisis in relationswith theWestoverUkraine.However,thisdiversificationhasbeenrestrictedtothepoliticalanddiplomaticdimensions,anddoesnotextendtotheeconomicrealm.TheshareofAsiancountries inRus-sia’sforeigntradeandforeigndirectinvestmentshasnotin-creasedsignificantlycomparedtothestillpredominantshareofWesterncountries.ItistooearlytoascertainwhetherthelimitedsanctionsimposedbytheWestinresponsetoRussianpolicytowardsUkrainewillchangethisproportioninfavourofAsiancountriesattheexpenseoftheWest.

• Moscow’s response to the challenge posed to Russia by theriseofChinesepowerconsistsofthreecomplementarycom-ponents:thecontinueddevelopmentandenhancementofco--operation with China, especially in the energy sector; at-tempts to diversify economic ties and political contactsthroughintensifyingrelationswithotherAsiancountries;andostentatiously distancing itself fromWashington’s attempts

PO

INT

OF

VIE

W 11/2014

6

orintentionstoadoptapolicyofcontainment–evensoft,letalonehard(military)–withregardtoBeijing.

• RelationswithBeijingarebecomingmuchmoreimportanttotheKremlinthanco-operationwithotherAsianpartners.In-creasingly,Moscow’scontactswithotherAsiancountriesarebeing subordinated to its relationswithBeijing.As its rela-tionswiththeWest,andespeciallytheUnitedStates,arede-teriorating,relationswithChinamaysoonbecomethecentralaxisofRussianforeignpolicyasawhole.

• The relations theKremlin is buildingwithChina and Indiaareexpectedtoserveasamodel forrelationsbetweenpow-ersinanew,polycentricinternationalorder,aspostulatedbyRussiandiplomacy.Thisorder,unlikethepost-ColdWarorderbasedonUShegemony,should(inMoscow’sview)bebasedonanoligarchicconsensusofgreatpowers,civilisationalplural-ism,thede-ideologisationofinterstaterelations,theabsolutenon-interference in the internalaffairsof ‘greatpowers’,re-spect fortheirspheresof influence,andtheprioritisationofbusinessco-operation.

• TheKremlinhasbeensuccessfullyplayingasubtlegamewithJapan in an attempt to convince it that in view of the rapidgrowthofChinesepower,Tokyoshouldbeinterestedinculti-vatinggoodrelationswithMoscowandthereforemustacceptRussianconditionsforsettlingthedisputeovertheKurilIs-lands,aswellasincreasewithoutpreconditionsitseconomicengagementwithRussia.Bymakingeffortstointensifypoliti-calandeconomicrelationswithJapan,theKremlinwantstoreinforceitspositionwithregardtoBeijing,diversifyitseco-nomiccontacts in theregion,andcreatemoreroomforma-noeuvreforTokyointheinternationalarena,thuscontribut-ingtoalooseningoftheJapanese-USalliance.

PO

INT

OF

VIE

W 11/2014

7

i. thE intEnsification of rElations with thE East and its prErEquisitEs

Since2010RussianofficialsandexpertshaveregularlycalledforRussianforeignpolicytostrengthenits‘Easternvector’bybecom-ingmoreactivelyinvolvedinpoliticalandeconomicprocessesintheAsia-Pacificregion.AdirectstimulusforthiswasprovidedbyaspecialmeetingheldinKhabarovskon2July2010bythethenpresidentofRussia,DmitryMedvedev.During thismeeting,hesettwogoals:intensifyingeconomicco-operationwithcountriesfrom theAsia-Pacific region, and strengtheningRussia’s role inregional organisations. Medvedev ordered the development ofa “comprehensive action plan to reinforce Russia’s position intheAsia-Pacificregion”1.Afewdays later, theheadofthestate-controlledRusskiy Mir foundation,VyacheslavNikonov,present-eda‘RussianstrategyintheAsia-Pacificregion’asdevelopedbyagroupofdiplomatsandacademicsfromtheMoscowStateInsti-tuteof InternationalRelations (MGIMO),withasuggestionthatRussia should be transformed into a ‘European-Pacific’ state2.At the same time the term ‘turn to theEast’ (povorot/razvorot)3,began to appear in Russian foreign policy discourse, signallingaradicalchangeinRussianforeignpolicy.AsoneRussianexpertputit,Russia“hassetitselfthefundamentalgoalofbalancingthe

1 ‘Stenograficheskiy otchet o soveshchanii po sotsialno-ekonomichesko-mu razvitiyu Dalnego Vostoka i sotrudnichestvu so stranami Aziatsko--Tikhookeanskogo regiona’, pp. 2, 10; www.kremlin.ru/transcripts/8234.Theagendawasonly signed inApril 2011; ‘Svostochnostyudonaoborot’,Kommersant,29November2011.

2 ‘TikhookeanskayastrategiyaRossii’,8July2010,p.1;http://russkiymir2.ru/export/sites/default/russkiymir/ru/events/adver-tisement/docs/Nikonov_080710.pdf

3 Forexample,thistermwasusedbyVyacheslavNikonovduringthe‘roundtable’ entitled ‘Russia’s Foreign Policy in the Pacific Region’ held by thePIR-Centre on 6 December 2010, Index Bezopasnosti No. 2 (2011); http://www.pircenter.org/en/articles/102-russias-foreign-policy-in-the-pacific-region.SeealsothereportfromtheRussianInternationalAffairsCouncil‘Aziatsko-TikhookeanskiyeOrientiryRossiiposlesammitaATESvoVladi-vostoke’,2013,pp.5,7;http://russiancouncil.ru/inner/?id_4=1523#top,andViktorKuvaldin,‘Razvorotnavostok’,Izvestia,29March2011.

PO

INT

OF

VIE

W 11/2014

8

EuropeanandthePacificvectorsinitsforeignpolicy4.”Ina2013report assessing the results of this policy turn, theRussian In-ternationalAffairsCouncilconcludedthat“neverbeforehastheRussianFederationdedicatedsomuchattentiontoitsFarEasternregionsandtoissuesofco-operationwithAsia-Pacificcountries5.”

TheideaofintensifyingrelationswiththeEastisnotacompletenovelty in Russian foreign policy rhetoric. In the late 1990s, itwasforcefullyputforwardandpromotedbyYevgenyPrimakov,thethenministerofforeignaffairs.Inimplementingtheideaheinitiatedregularmeetingsoftheso-called‘Moscow-Delhi-Beijingtriangle’.The ‘ConceptfortheforeignpolicyoftheRussianFed-eration’signedbyVladimirPutininJune2000attheonsetofhisfirstpresidencyalsospokeaboutthenecessityofpayinggreaterattention to the Asian vector in Russia’s foreign policy, linkingthiswith the need to ensure economic development inRussia’sFarEast.ItalsoincludedaproposaltoraisethelevelofeconomicrelationswithChinauptotheexisting(implicitly‘high’)levelofpoliticalpartnershipwiththiscountry6.Inautumn2000,Putinhimselfwrotethat“thetimehascometomove,togetherwiththestatesfromtheAsia-Pacificregion,fromwordstoaction,andtoenhance(narashchivat)economic,politicalandotherbonds”7.

In practice, Putin has paid the greatest attention to China andcontinuedtheconsistentdevelopmentofrelationswithBeijinginmanyfieldswhichhadbeeninitiatedbyBorisYeltsin.Atthesametime,Moscowretainedthecloseandfriendlydiplomaticrelationsaswellasmilitary-technicalco-operationwithDelhiwhichithad

4 VladimirOrlov,thepresidentofPIR-Centre,‘Russia’sForeignPolicyinthePacificRegion’, Index Bezopasnosti No.2 (2011),p.90.

5 ‘Aziatsko-TikhookeanskiyeOrientiryRossiiposlesammitaATESvoVladi-vostoke’,p.7.

6 Accordingtothisconcept,Russiawoulddevelop‘friendlyrelations’inAsia,“aboveallwithChinaandIndia”,Nezavisimaya Gazeta,11July2000.

7 ‘Rossiya:Novyievostochnyieperspektivy’,Nezavisimaya Gazeta,14Novem-ber2000.

PO

INT

OF

VIE

W 11/2014

9

inherited from Soviet times. In contrast, relations with Japan,which–givenitssecurityalliancewiththeUnitedStates–wasviewedinMoscowasanintegralpartoftheWest,remainedcool.Any fundamental improvement inrelationswasblockedby theunresolveddisputeovertheKurilIslands.(Theseislandswereoc-cupiedby theSovietUnionduringWorldWar II, and Japanhasbeendemandingthattheislandsbereturnedtoiteversince.)

The intensification of Russian discourse concerning policy to-wardstheAsia-Pacificregionseensince2010hasbeenaccompa-niedbyamajorevolutionintheRussianelite’sperceptionofthebalanceofpowersintheinternationalarena.Thekeystimulusforthisevolutionwasprovidedbytheeconomiccrisisof2008–2009,andmorepreciselybytheconclusionstheRussianpoliticalelitedrewfromit.Theysawthecrisisasamanifestationoffundamen-talchangesintheglobaleconomy,theessenceofwhichistheap-proachingdeclineoftheglobaldominationoftheWest.Accordingtothisinterpretation,EastAsiaisgraduallybecomingthecentreof theglobaleconomyby increasing its share in industrialpro-duction,tradeandfinancialassets,attheexpenseoftheWest.Asone reportpreparedbyprominentRussian expertsput it, “TheAsia-Pacificregionisincreasinglybecomingtheengineofglobalcivilisation,takingovertherolewhichEuropehasbeenplayingoverthelastfivecenturies.”8

In the opinion of the Russian political elite, the economic riseof theAsia-Pacific regionwill gradually be converted byAsianpowers,especiallybyChina,intogreaterpoliticalinfluenceandmilitarypower.Asaresult,withinadecade,ChinamaybecomesufficientlystrongtoassumeapositionasAmerica’sgeopoliticalrivalonequalterms9.ForMoscow,theUS-Chinarivalry,whichis

8 ‘TikhookeanskayastrategiyaRossii’,8July2010,p.1.9 The authors of the collective report developed under the auspices of the

RussianInternationalAffairsCouncil(whichatpresentistheleadingsemi-official Russian think-tank specialising in international relations)write:“ItisalmostuniversallyrecognisedthattheAsia-Pacificregionisbecoming

PO

INT

OF

VIE

W 11/2014

10

todaystillrestrictedtotheAsia-Pacificregionbutwillsoonreachaglobalscale,hasalreadybecomethemain‘axis’determiningthenatureofinternationalrelations.

ItiscommonlybelievedinRussiathattheriseofthenewAsianpowersisinevitablyleadingtofundamentalchangesintheglobalbalanceofpowers.TheRussianpolitical establishmentbelievesthattheinternationalsystemiscurrentlyinatransitionalphasebetweenthepost-ColdWarorderbasedonUS(andmorebroadly,Western)hegemony,andapolycentricorder(theterm‘multi-polarorder’isfrequentlyusedinRussianexpertandofficialdiscourse,despitethelogicalabsurdityofthisphrase:therecanonlybetwopoles),basedonarelativebalancebetweenseveralgreatpowers,moreor lessequalasregardsstatusandstrength,eachwithitsown zone of influence, and each interactingwith the others aspartofa‘concertofpowers’.Moscowhasemphasisedforseveralyearsnowthatthiskindoforderprovidesnotonlyforaplural-ismofpolitical andeconomicdecision-makingcentres,butalsoforapluralismofvaluesystems(civilisations).

Some Russian experts view East Asia as an attractive politicalmodel,providinganalternativetothatoftheWest.AsVyacheslavNikonov10,aleadingRussianexpertininternationalaffairs,hassaid,Asia today is“themost importantglobal testinggroundof

themainplatformforglobalinternationalrelationsinthe21stcentury.Theglobalorderanditsmostimportantcomponent,thelinksbetweenthekeypowers,willbedefinedby thesituation in theAsia-Pacificregion,whichischangingprimarilyundertheinfluenceoftherelationshipbetweenthepresentgloballeader,theUnitedStates,andtheemergingglobalpower,thePeople’sRepublicofChina.”‘RossiyskiySovetpoMezhdunarodnymDelam,Interesy Rossii v Aziatsko-TikhookeanskomRegione: Bezopasnost’ i Raz-vitiye’,2012,p.18;a“sharpeningofChinese-UScontradictionsoverabroadspectrum of issues” was also mentioned in another report from RSMD,‘Aziatsko-TikhookeanskiyeOrientiryRossiiposlesammitaATESvoVladi-vostoke’,2013,p.13.

10 Nikonov is currentlyamemberof the lowerhouseof theRussianparlia-ment,andthedirector(nominatedbythePresident)ofthestate-controlledRusskiy MirFoundation.

PO

INT

OF

VIE

W 11/2014

11

amodelforpoliticalmodernisation,whichdoesnotinvolveWest-ernisationbutrepresentsauniquepathofdevelopmentbasedonthesynthesisofdemocraticformsofgovernmentandlocalpoliti-calculture.”11ItissymptomaticofthemoodprevailinginMoscowthatthe‘Asianmodel’ispresentlyalsoappealingtosuchmoder-ateWesternisersasSergeyKaraganov,whoregardRussiaasanintegral part of European civilisation.A report he edited char-acterisesthe“Asianpathofdevelopment”as“anexampleofthemostsuccessfulstrategyforimprovingcompetitivenessinglobaleconomy”andemphasisesthe“objectiveadvantagesoftheAsianstategovernancemodel and socio-economicdevelopment.”ThispositivepictureofAsianmodelsisjuxtaposedinthereportwithassertions about a crisis of “traditionalWestern economic andpolitical institutions”andtheincongruityoftheexistingmodelof“developeddemocracy”,whichisincapableofcopingwiththehighlycompetitivenatureofthecontemporaryinternationalen-vironment12.

AdistinctivefeatureofRussianforeignpolicyisitsextremefocusonrelationswithgreatpowers;thisisaconsequenceofthinkingin terms ofRealpolitik,which is characteristic of the post-Sovi-etpoliticalelite.For this reason, thisanalysisofRussianpolicyconcentrates onMoscow’s relationswith its three largest East-ernpartners,China,IndiaandJapan.ThiswillallowustodrawanumberofconclusionsregardingthenatureandtheresultsofRussia’sEasternpolicyasawhole.

11 VyacheslavNikonov,‘Russia’sForeignPolicyinthePacificRegion’,Index Be-zopasnostiNo.2(97)(2011),p.90.

12 SergeyKaraganov,OlegBarabanov,TimofeyBordachev,K Velikomu Okeanu, ili novaya globalizatsiya Rossii,Moscow,July2012,pp.12and16.

PO

INT

OF

VIE

W 11/2014

12

ii. thE policy of EngagEmEnt – thE russian rEaction to thE risE of china’s powEr

Over thepast fewyears, relationsbetweenMoscowandBeijinghaveacquiredaspecial,privilegednature.TheRussianpresidenthasbeenmeetingwithChineseleadersmorefrequentlythanwithleadersofanyothercountry(withtheexceptionofCIScountries)as frequentlyashedoeswith leadersof thePeople’sRepublicofChina. In2013, theChineseandRussian leadersmetonfiveoc-casions,as theywill in201413.Thenetworkofcontactsbetweenhigh-rankingofficialsandpoliticiansfromthesetwocountriesissimilarlydense.Overthirtymeetingsatthelevelsofprimemin-isters,ministers,parliamentaryspeakersandseniormilitaryof-ficialswereheldin201314.Since2003,thearmedforcesofthetwocountrieshaveheldjointexercisesalmostannually(theseexer-ciseshavebeeneitherbilateraloraspartoftheShanghaiCo-op-erationOrganisation)15.Theseevercloserdiplomaticandmilitarycontactshavebeenaccompaniedbytheintensificationofeconom-icrelations.Symptomatically,since2010ChinahasbeenRussia’slargesttradepartner,outpacingGermany.

TheKremlinclearlyviewsitsrelationswithBeijingasincompa-rablymoresignificantthancontactswithanyotherAsianpart-ner.MoscowisincreasinglyinstrumentalisingitsrelationswiththeotherAsiancountriesinordertoenhanceitspositionindeal-ingwithBeijing.OnecouldevenriskthethesisthatrelationswithChinaaregraduallybecomingthemainpivotinRussianforeignpolicyingeneral.

13 An interviewwith the ambassador of the Russian Federation to Beijing,AndreyDenisov;http://www.rg.ru/2014/03/31/obmen.html

14 CalculatedonthebasisofdatacompiledbyYuBininComparative Connec-tions. A Triannual E-Journal on East Asia Bilateral Relations,vol.15,no.1,pp.146–147;vol.15,no.2,pp.142–144,vol.15,no.3,pp.133-135.

15 Theexerciseswerenotheldin2006,2008and2011;howevertheywereheldtwicein2009,2012and2013.FordetailsseeYuBin,‘SummerHeatandSino--Russian Strategizing’ in: Comparative Connections. A Triannual E-Journal onEast Asia Bilateral Relations,volume15,no.2,p.141.

PO

INT

OF

VIE

W 11/2014

13

RussianelitesareimpressedbytherapidgrowthofChina’seco-nomic, political andmilitary power seen over the past decade.Theyarealsoawareofthereversalinthepowerratiobetweenthetwocountries.Bearingthis inmind,theKremlinhasapparent-lycometotheconclusionthatavoidingopenconfrontationwithChinashouldbeanabsoluteimperativeinRussianpolicy.Forthisreason,itformulatedanofficialsloganthatthepolicyofpartner-shipandbuildingcloserbondswithChinahas“noalternative.”Moscow officially stresses that presently its bilateral relationswithBeijingareexemplary,anddenies that increasingChinesepowercouldposeanydirectthreattoRussia.VladimirPutinhasonseveraloccasionsemphasisedinpublicthatgrowingChinesepowerdoesnotconstitutea threat toRussia. InNovember2011,while answering a question concerning the Chinese threat, heexplainedthatalthoughthenaturalresourcesinSiberiaandtheFarEastcouldbeveryattractive,the“mainstruggleisforgloballeadership,andwedonot intendtogointodisputeswithChinaover this.Chinahasothercompetitors in thisarea.So let themcontendwithone another.”16 In otherwords,hewas suggestingthatChinadidnotposeathreattoRussiabecauseitwasengagedinrivalrywiththeUnitedStates.Putinreiteratedthisdiagnosisafewmonthslater,arguingthat“China’sbehaviourontheglobalarenahasgivennocausetospeakaboutitsaspirationstodomi-nance”andaddedthatthegrowingChineseeconomydidnotposea threat,but insteadcreated theopportunity “tofill ourecono-my’ssailswiththeChinesewind.”17BeforetheShanghaisummitinMay2014,theRussianpresidentdescribedrelationswithChi-naas“exemplaryco-operationwhichshouldserveasamodeltogreatglobalpowers.”18

16 AninterviewfortheRussianmedia,17November2011;http://archive.pre-mier.gov.ru/events/pressconferences/16755/

17 ‘Rossiyaimenyayushchiysiamir’,Moskovskie Novosti,27February2012.18 AninterviewfortheChinesemedia,19May2014;http://news.kremlin.ru/

transcripts/21031.

PO

INT

OF

VIE

W 11/2014

14

ExpertsclosetotheKremlinbackthethesisthatChinaposesnodirectthreattoRussia.VyacheslavNikonovevenclaimsthat“di-rectdiktatanddominancearenotpartoftheChinesetradition.”19Similarly, inareportpreparedfortheValdaiClub,thegroupofauthors ledbySergeyKaraganovmaintainthatChinawillposenomilitary,politicalordemographicthreattoRussiaintheshortormediumterm20.

WhiledownplayingorevennegatingtheexistenceofthethreatsposedbyChina,theRussianleadersseemtobeapplyingastrat-egytowardsBeijingbasedonthreeelements:

(1) developing economic co-operation with China, especially intheenergysector;

(2) searching for a diversification of economic andpolitical tieswith China by developing contacts with other Asian countries(India,Japan,VietnamandSouthKorea);

(3)ostentatiouslydistancingitselffromWashington’sattemptsorintentionstoconductapolicyofsoft,letalonehard(military)con-tainmentwithregardtoBeijing,whileatthesametimepromot-ingaregionalsecurityconceptwhichboilsdowntoremovingtheUSmilitarypresencefromtheregion.

Ithasbecomealmostaritualfortheleadersofthetwocountriesto emphasise that economic co-operation is the foundation ofRussian-Chineserelations.Asmentionedalready,ChinahasbeenRussia’slargesttradepartnersince2010.Bilateraltradehasbeengrowing rapidly over the past few years (43% in 2010, 42.7% in2011,11.2%in2012and1.7%in2013)toreachavolumeofUS$88.8

19 ‘TikhookeanskayastrategiyaRossii’,8July2010,p.6.20 SergeyKaraganov(ed.),K Velikomu okeanu–2, ili rossiyskiy ryvok k Azii,Mos-

cow,February2014,p.25.

PO

INT

OF

VIE

W 11/2014

15

billionin201321.However,thesetraderelationsareasymmetricalinawaywhichisunfavourabletoRussia.China’sshareinRussiantradeis10.5%,whileRussia’sshareinChina’stradeonlyslightlyexceeds2%.Atthesametime,despiteRussia’sfrequentlyreiter-ateddeclarations,Russiahasbeenunabletochangethestructureof bilateral trade where it predominantly supplies oil and gas(in2012,theyaccountedfor70%ofthevalueofRussianexports,whilemachinesandequipmentonly0.7%)22,andimportsindus-trialgoods,including,increasingly,machinesandequipment.

Energyco-operationhasbeyondanydoubtbecomethestrategiccoreofRussian-Chineseeconomicrelations.Themostimportantelementofthisco-operationisthelong-termcontractssignedbyRussia’s state-controlled company Rosneft, which envisage oilsupplieswithprepayments(seeTable1).

Table 1.Rosneft’scontractsforsupplyingoiltoChina

Year Partner timeframeoilquantity(millionsoftonnes)

estimatedcontractvalue(US$billions)

prepaymentvalue

(US$billions)

2009 CNPC 2011-2030 180 65 15

2013 CNPC 2013-2038 360 270 60

2013* SINOPEC 2013-2023 100 85 20

*Aframeworkagreement

As regards the gas sector, in contrast, larger-scale Chinese--Russian co-operation had until recently remained at the plan-ning level. Russia would sporadically export relatively small

21 http://en.ria.ru/business/20130110/178687770/China-Russia_Trade_Up_11_to_88_Bln_in.html;10January2013.

22 YevgenyNovozhilov,Vneshniaya torgovla Rossii i Kitaya: polgoda i tri kvartala,17October2013.

PO

INT

OF

VIE

W 11/2014

16

amounts of liquefiednatural gas toChinaunder spot contracts(e.g.around500millionm3in2012).Thelong-term,30-yearcon-tractsignedbyGazpromandCNPCon21May2014inShanghai,whichprovides for supplyofup to38bcmofnaturalgasannu-allyfromtheKovyktaandChayandagasfieldsinEasternSiberia,markedarealbreakthrough.Thecontract’stotalvaluestandsatUS$400billion,andenvisagesa total supplyof 1032bcmofgas.Deliveriesareplannedtostartin2018,buteachofthepartieshasthe right topostpone the start ofdeliveriesby twoyears23.ThecontractprovidesfortheoptionofprepaymentatUS$25billion24.Onedaybefore this contract,Russia’sNovatek signeda 20-yearcontracttosupply3milliontonnesofliquefiednaturalgas(start-ingin2017).ItisworthnotingthattheChinesepartner,ChinaDe-velopmentBankCorporation,isexpectedtoplaythemainroleinfinancingtheproject,andisreadytoinvestUS$20billion25.InhisaddressattheSaintPetersburgInternationalEconomicForumon23May2014,PresidentPutinsuggestedthatChinahadagreedtostarttalksonthepossibilityofsupplyingRussiangasfromWest-ernSiberianfields“viathewesternroute”)26.

ThefactthatGazpromandCNPCfinallystruckthedealaftertenyearsofnegotiations,whichwerestillongoing thenightbeforethedateof itssigning,wasundoubtedlyduetopolitical factors,namely Russia’s ongoing conflict with the West over Ukraine,and especially the associatedWestern sanctions and the threatthat theycouldbeextendedfurther,aswellas the intensifying

23 http://www.vedomosti.ru/companies/news/26938871/kontrakt24 http://www.vedomosti.ru/companies/news/26876561/gazprom-i-kitaj-

predvaritelno-soglasovali-avans-na-25-mlrd25 www.vedomosti.ru/newsline/news/26697541/novatek-dogovorilsya-s-cn-

pc-o-postavkah-3-mln-t-szhizhennogo;www.vedomosti.ru/newsline/news/26837031/yamal-spg-mozhet-poluchit-do-20-mlrd-ot-kitaya. It isworthaddingthatCNPCholdsa20%stakeintheYamal-LNGproject.

26 http://news.kremlin.ru/transcripts/21078. Lack of confirmation from theChinesesidesuggeststhatthisstatementwasaimedatputtingpressureonEuropeanbuyersofRussiangas,andtheprojectitselfremainsattheplan-ningstage.

PO

INT

OF

VIE

W 11/2014

17

discussionontheneedforEuropeanUnionmemberstatestore-duceimportsofRussianoilandgas.Giventhissituation,Russiawantedespecially strongly todemonstrate its capabilitiesofdi-versifyinggasexports.Furthermore,thesigningofthecontractwasmeanttosendapoliticalsignaltotheWest,provingthattheWesternrhetoricof‘isolating’Russiawasunrealistic.

OnecouldputforwardthethesisthatRussiaisgraduallybuildingupanenergyalliancewithChina.Thisalliancewillbebasedonlong-termcontractsforsuppliesoflargequantitiesofoilandgas,whichwill bepartlyprepaidbyChina.Russia also seems tobeinterestedinhavingtheChineseprovideinvestmentsforthede-velopmentofRussianoilandgasfieldsasanintegralpartofsuchanalliance27.Traditionally,thisalliancewillalsoincludeRussia’sparticipationinconstructingnuclearpowerplantsinChina28.

TheeconomicdealsstruckduringRussianPrimeMinisterDmit-ryMedvedev’smostrecentvisittoChinainautumn2013suggestthatChinaandRussiaaretryingtograduallyshifttoamodelofeconomicco-operationinwhichChinesecompanieswouldinvestin projects located in the Russian Federation29. The recent an-nouncementbythechairmanoftheChinaChamberofCommerceforImportandExportofMachineryandElectronicProductsthat

27 AsapartofthecontractwithNovatekforLNGsupplies,China’sstate-con-trolledcompanyCNPCboughta20%stakeintheYamalSPGproject,whichis planned to provide the natural gas to be supplied under the contract;Rosneft reached an agreement with CNPC in autumn 2013 under whichajointventurewasestablishedtooperatetheoilandgasfieldsintheSred-nebotuobinskoyeprojectinEasternSiberia.Rosneftwouldown51%oftheshares,andCNPC49%.

28 An intergovernmental agreement on the construction of two nuclear re-actors(worthUS$1.8billion)fortheTianwannuclearpowerplantbuiltbyRussia in 1997–2007 was signed in December 2012; http://en.ria.ru/busi-ness/20100209/157817046.html

29 ThefirmMetallyVostochnoySibirisignedanagreementwithChina’sNFContheconstructionandjointoperation(on50:50basis)oftheOzernoyerareearthmetalsmineandprocessingplantinBuryatia;inturnVneshekonom-banksignedthreeloanagreementswiththestate-controlledChinaDevel-opmentBankworthUS$1.9billionintotal.

PO

INT

OF

VIE

W 11/2014

18

ChinawouldliketoincreaseitsinvestmentsinRussiatoalevelofUS$12billionby2020(thepresentlevelofChinesedirectinvest-mentsisUS$3.5billion)indicatesthatChinaisreadytointensifyitsinvestmentinvolvementinRussia30.

The development of co-operation in the energy sector and thespectaculargrowthinbilateraltradevolumeshavetosomeextentovershadowedRussian-Chinesemilitary-technicalco-operation,whichusedtoformthemostimportantcomponentofmutualeco-nomicrelationsinthe1990s.Still,Chinacontinuestobethethirdlargest client of theRussian arms industry. It canbe estimatedonthebasisofavailabledata that thevalueofRussianmilitaryexports toChina in 2008–2011 stoodonaverage atUS$800–900millionannually(thisaccountedforaround10%oftotalRussianarmsexportswithinthistimeframe),androsetoUS$1–1.5billionannuallyin2012–2013.Negotiationsontwomultibillioncontractsforcombataircraftandsubmarinesareunderway31.

The scope ofmilitary-technical co-operationbetweenMoscowandBeijinghasbeenquitenarrowoverthepastfewyears.Rus-sia exports mainly aircraft engines and helicopters. Further-more, a programme envisaging the production in China onRussian licenceof theTigr armouredvehicle isnowbeing im-plemented32.However,twohigh-valuecontractsarebeingnego-tiatedatpresent:oneonthesaleof24Su-35fourth-generationcombataircraft;andanothertosupplytwosubmarines,aswell

30 http://itar-tass.com/ekonomika/69557531 Tsentr Analiza Mirovoy Torgovli Oruzhiyem, Kitay v strukture mirovogo

importa vooruzheniy, 2012, table 7, p. 5; http://www.armstrade.org/files/analytics/304.pdf;http://www.armstrade.org/includes/periodics/main-news/2012/1120/103015758/detail.shtml,20November2012;VassilyKashinfromtheCentreforAnalysisofStrategiesandTechnologies,quotedbyIn-terfax-AVN,13 January2013;DavidLague, ‘Chinaeyes$3.5billionRussianarmsdealdespiteireoverSukhoicopy’,27March2013;http://www.reuters.com/article/2013/03/27/us-china-russia-arms-idUSBRE92Q0PE20130327

32 http://www.armstrade.org/includes/periodics/mainnews/2012/1120/103015758/detail.shtml,20November2012.

PO

INT

OF

VIE

W 11/2014

19

asthelicencetobuildmoreinChina.IthadbeenannouncedthattheSu-35contract,wortharoundUS$2billion,wouldbesignedinNovember2013,butRussian sources reported inSeptember2013 that thiswould not happen before 2014. The contract forsubmarine construction is expected to befinalised in 2015; itsestimatedvalueisUS$1.5billion33.

However, Chinese-Russian military co-operation extends farbeyond the export ofRussian equipment and technologies. It isworth noting the frequency and the scale of Russian-ChinesemilitaryexercisesconductedeitherundertheaegisoftheShang-haiCo-operationOrganisationoronabilateralbasis.Withregardtonootherstate(outsidetheCIS)doesRussiademonstratesuchadegreeofopennesstomilitaryco-operation.Between2003and2013,RussiaandChinahaveheldtogethertenmilitaryexercisesinwhichbetween1300and10,000militarypersonnelparticipatedeachtime.Twolargetrainingeventswereheldin2013:maritimeexercises(inthePacificOcean)withtheparticipationofnineteenships; and land exercises at the Chebarkul training ground inRussia.TheChinesePresidentXi Jinping’stourofthecommandcentreoftheRussianarmedforces,unprecedentedforaforeignleader, duringhisvisit toMoscowinMarch2013wasmeant todemonstrateRussia’sopennessandthespecialnatureofmilitarycooperationbetweenthetwocountries.Althoughbothsideshaveemphasisedtheyhavenointentionofenteringamilitaryalliance,onemaycomeacrosstheopinionthat“basicconditionsarebeingcreatedforsuchanallianceinthemilitaryandtechnicalspheresthroughholdingmoreandmorecomplexandextensivejointmili-taryexercisesandthroughenhancementofcontactsbetweenthemilitarypersonnelofthetwocountries.”34

33 Interfax-AVN,6March2013;http://ria.ru/defense_safety/20130907/961478852.html,7September2013.

34 VassilyKashin, ‘Summavsekhstrakhov.Faktorkitayskoyugrozyvrossi-yskoypolitike’,Mirovoy Poryadok,March-April2013,p.78.

PO

INT

OF

VIE

W 11/2014

20

Itisworthnotingthatforthesakeofmaintaininggoodrelationswith China, the Russian political establishment is ready to ac-ceptakindofcondominiuminCentralAsia35.AlthoughMoscowisawareofChina’sincreasingeconomicpresenceintheregion36andisconcernedthatthiscouldleadtoanunderminingofRus-sia’spoliticalinfluencetheretoChina’sbenefit,ithasstrenuouslyavoidedvoicingitsconcernsinpublic.TheKremlinseemstoas-sumethatbothRussia itselfandChinaaresufficiently interest-edinmaintaininggoodmutualrelationstolimittheirrivalryinthisregionandtofindamutualaccommodationoftheirintereststhere37. Although the Kremlin has not given up its attempts tocounteracttheChineseeconomicpenetrationofCentralAsia,andhasbeenmakingeffortstoincludeKyrgyzstanandTajikistanintheEurasianUnion,atthesametimeitappearstohaveacceptedtheneed to tolerate it. It seemsdetermined tofindamodus viv-endiwithChinainthisregion,basedonadivisionofresponsibili-tiesandoffieldsofactivity:Russiawouldmaintainitsprevalentpolitical influenceanditspredominanceintheareaofsecurity,whileChinawouldpredominateintheeconomicarea,eveniftheregionremainsinstitutionallyboundtotheRussianeconomybymembershipoftheEurasianUnion.DuringVladimirPutin’smostrecentvisittoBeijing,RussiaandChinasignalledtheirreadinesstoaccommodatemutualinterestsinCentralAsia,byincludingina joint declaration a positive evaluation of each other’s flagshipeconomicintegrationprojectsintheregion,i.e.Russia’sEurasian

35 SeeforexamplethereflectionsinthememorandumK Velikomu Okeanu, ili novaya globalizatsiya Rossii, pp. 57–58 and60–61,writtenbypolitical ana-lystscloselylinkedtotheRussianestablishmentandpublishedundertheauspicesoftheValdaiClub.

36 SeeAleksandra Jarosiewicz,KrzysztofStrachota, ‘Chinavs.CentralAsia.Theachievementsofthepasttwodecades’,OSW Studies,4November2013.

37 Theauthorhasbeenledtobelieve,onthebasisofconversationsheldinBei-jing(9–10June2014)withChineseexpertsfromtheChinaInstitutesofCon-temporary International Relations and the Eurasian Social DevelopmentResearchInstitute,thattheKremlin’sopinionthatChinaisreadyforamu-tualaccommodationofinterestsinCentralAsiaand,likeRussia,doesnotwantaconflictofinterestsintheregiontounderminethe‘strategicpart-nership’ofMoscowandBeijing,isaccurate.

PO

INT

OF

VIE

W 11/2014

21

UnionandChina’s ‘SilkRoadEconomicBelt.’38Furthermore,theChinesesidemanifesteditsreadinesstosootheRussianconcernsbypromisingtotakeRussianinterestsintoconsiderationduringthepreparationandimplementationofitsproject.

38 Sections20and21ofthe‘Jointdeclaration’signedon20May2014,http://news.kremlin.ru/ref_notes/1642

PO

INT

OF

VIE

W 11/2014

22

iii. moscow–dElhi: a gEopolitical consEnsus

Russia’s relations with India draw upon the strategic alliancewhichexistedduringtheColdWarbetweenIndiaandtheSovietUnion.Thesecanbesummedupasextremelycomfortable–withnoothercountrydoesRussiaenjoysuchunproblematicpoliticalrelations. To emphasise this state of affairs, Russian diplomacyreferstothemasa“speciallyprivilegedstrategicpartnership”39.Russia and India have no conflicting interests in internationalpolitics, while having converging regional interests. The twocountriesareinterestedinthestabilisationofCentralAsia,andespeciallyofAfghanistan;andtheybothviewtheintensificationofIslamicradicalismintheregionasaseriousthreat.Theyalsoboth perceive China’s growing power as a problem in the longterm.RussiaformallysupportsIndia’saspirationstoapermanentmembershipontheUNSecurityCouncil.VyacheslavTrubnikov,aformerambassadoroftheRussianFederationtoIndiaandcur-rentlyakeyfigureontheRussianInternationalAffairsCouncil,which is closely linked to theRussianestablishment, intimatedpubliclyduring thevisitby the IndianprimeministerManmo-hanSinghtoMoscowinautumn2013thatIndiashouldbegrantednotonlyapermanentmembershipintheUNSecurityCouncilbutalsotherightofveto40.ThismightportendarevisionoftheofficialstanceofRussiandiplomacy,whichhassofaropposedthevestingofpossiblenewpermanentmembersoftheSecurityCouncilwiththe power of veto, as increasing the number of such countrieswouldmeanarelativeweakeningofRussia’sownposition.

Russia’seconomicrelationswithIndia,whencomparedwithRus-sia’s relations with China, display both similarities and differ-ences.Whatissimilaristhatinbothcasesitistheenergysectorandmilitary-technicalcooperationthatplaythecentralrole.The

39 Seeforexample:Osnovnyie vneshnepoliticheskiye sobytiya 2013 goda,section13,www.mid.ru.

40 Krasnaya Zvezda,29.10.2013.

PO

INT

OF

VIE

W 11/2014

23

differencesincludethescaleoftrade,whichinthecaseofIndiaismuchsmaller:in2012,Russian-IndiantradevolumereachedonlyUS$11billion.Thetradestructureisalsodifferentand(fromRus-sia’spointofview)healthier.ThetradebalanceispositiveforRus-sia,andRussianexportsconsistpredominantlyofproductsofthemachine-buildingindustry(almost49%in2012)41.TheexportofweaponsandmilitarytechnologiesplaysamuchmoreimportantroleineconomicrelationswithIndiathaninRussian-Chinesere-lations.IndiahasbeentheRussianarmsindustry’sbiggestclientforyears:thevalueofcontractsimplementedin2008-2011stoodatUS$7.2billion,andin2012aloneitreachedUS$7.3billion42.ThissumnearlyequalledthevalueofcivilianRussianexports(US$8billion).TheportfolioofordersforMarch2013wasworthUS$10.3billion43.Accordingtosomeestimates,Indiaaccountsforaround30%oftotalRussianarmsexports.Theestimatedannualvalueofsupplies is aroundUS$3billion.The contractswhichhavebeensigned and are currently being implemented areworth aroundUS$20billion44.

To no other country, except for India, does Russia sell equallyadvanced military technologies and an equally broad range ofweapons,fromsmallarmstowarships.InNovember2013,theIn-dianflagwashoistedonanaircraftcarrierboughtfromRussia,after it had been thoroughlymodernised and re-fitted. In 2012,India leased aRussiannuclear-powered submarine.Russia alsosupplies India with shipborne fighter jets (MiG-29K/KUB) andMi-17B-5transporthelicopters.

Furthermore,co-productionbasedonhightechnologiesoccupiesa significant niche in the areas of both military-technical and

41 Torgovo-ekonomicheskoye sotrudnichestvo mezhdu Rossiyskoi Federatsiyei i Indiyei za 2012 g.,http://www.ved.gov.ru/files/images/kai/TES_Rus_Ind_2012.pdf

42 Tsentr AnalizaMirovoy Torgovli Oruzhiyem, Osnovnyie programmy mod-ernizatsii VS Indii v 2011-2012 gg.,2012,pp.3-4.

43 RSMD,Tezisy o rossiysko-indiyskikh otnosheniyakh,p.18.44 Interfax-AVN,15November2013.

PO

INT

OF

VIE

W 11/2014

24

‘civilian’ co-operation.Currently,anumberof jointprojectsarebeing implemented, involving jointdesignand futuremanufac-tureofcombataircraftandguidedmissiles.Indiaalreadymanu-facturesSu-30MKIfighterjetsandtanksonRussianlicence.

Co-operationintheenergysectorinRussia’srelationswithIndiaplaysa significantly smaller role compared to its relationswithBeijing.Thenatureofthisco-operationisalsodifferent.Indiaim-portsonlysmallamountsofRussianoil,but itsstate-controlledcorporationONGCVideshLtd.hasinvestedaroundUS$4.3billioninoilextractioninRussia.Videshhasacquireda20%stakeintheSakhalin-1 project, and has bought Imperial Energy, a firm en-gagedinoilproductioninWesternSiberia.Gazpromisplanningtostartexporting liquefiednaturalgasunderacontract signedwithIndianfirmsenvisagingannualsuppliesofbetween7.5and10bcm45.

During the most recent visit by then-PMManmohan Singh toMoscow in autumn 2013, Russia suggested building a gas pipe-linethatwouldrunfromWesternSiberiatoIndiaviatheChineseprovinceofXinjiang.TheestimatedvalueofthisprojectisUS$30billion;aRussian-Indiangrouphasbeenestablishedtostudythisproposal,andIndia’slargestoilandgascompany,ONGC,hasex-pressedinterestintheproject46.

45 This informationcanbe foundonthewebsiteof India’sembassy inMoscow;http://www.indianembassy.ru/index.php/en/economic-cooperation/overview

46 JohnDalym, ‘Russia,IndiaPlanning$30BillionOilPipelineThroughXin-jiang’; http://oilprice.com/Energy-General/Russia-India-Planning-30-Bil-lion-Oil-Pipeline-Through-Xinjiang.html

PO

INT

OF

VIE

W 11/2014

25

iv. russian-JapanEsE rElations: a fruitful ‘stratEgic patiEncE’

Unlike the warm and close political contacts with Beijing andDelhi,Moscow’s relationswith the third regionalAsianpower,Japan,have longbeen overshadowedby theunresolved territo-rial dispute over the Kuril Islands. Russian-Japanese relations,albeit correct, have remained cold. The Russian side, followingPresidentPutin’sunsuccessfulattemptin2001toresolvethedis-putethroughacompromisebasedonthejointdeclarationsignedin 1956 and envisaging the division of the disputed archipelagobetweenRussiaandJapan47,hasevidentlyadoptedthemethodof‘strategicpatience’,hopingthatTokyowillsoonerorlaterbecomereadytoacceptthecompromise.Moscowhasnotseemedparticu-larlyconcernedthattheunresolvedconflicthashamperedthede-velopmentofeconomicco-operation,andinparticularrestrictedtheopportunitiestouseJapanesecapitaltoimprovetheeconomicsituationinRussia’sFarEast.Instead,ithasconsistentlysuggest-ed to Japanthateconomicco-operation issuesshouldbeviewedseparatelyfromtheterritorialdispute.

TheKremlinappearedtohopethat,asChina’spowergrewandtheJapanese-Chineseterritorialdisputebecamemoreserious,TokyowouldbecomesufficientlyinterestedinimprovingrelationswithMoscowthatitwouldbereadytoaccepttheRussianterms.

The Russian strategy has turned out to be successful. A ‘smallbreakthrough’ regarding the disputed islands was seen dur-ing the visit by Japan’s primeminister, ShinzoAbe, toMoscowinApril2013.GiventhegrowingChinesethreat, Japanacceptedthe Russian terms for resolving the dispute: the parties agreedto separate the issuesof economicco-operation from territorialproblems,toresumeformalconsultationsprecedingthesigning

47 Accordingtothisdeclaration,twoisletsinthedisputedarchipelago,Shiko-tanandHabomai,couldberelinquishedbytheSovietUnion.

PO

INT

OF

VIE

W 11/2014

26

ofapeacetreaty,andtoraisethelevelofmutualrelations.Itwasalsoagreedthattheministersofdefenceandforeignaffairswouldmeetperiodicallytoholdconsultations(inthe2+2format)48.

The first consultations since 2006 concerning the peace treatywereheldinAugust2013,andthefirstministerialmeetinginthe2+2formatfollowedinNovember2013.

Inhiscommentonthismeeting,whichwasasignofasignificantimprovement of relations betweenMoscow and Tokyo, Russia’sforeign minister Sergey Lavrov characteristically denied out-right that a Russian-Japanese rapprochement could in anywaybedirectedagainstBeijing.However,heimpliedthatbybuildingconstructiverelationswithTokyo,MoscowishelpingJapantore-duce itsdependenceonWashington. Inotherwords,MoscowisstrengtheningitspositionwithregardtoBeijing,butatthesametimeitisalsoactinginitsowninterestbylooseningtheUS-Japa-nesealliance49.

Despitetheongoingterritorialdisputeandcoolpoliticalrelations,economic co-operation has been developing very dynamically.Mutualtradevolumeincreasedby59%in2010,by29%in2011,by5%in2012andby6.6%in2013,reachingUS$33.2billion.However,thetradestructureisextremelyunfavourableforRussia,atleastfromthepointofviewofMoscow’sdeclaredambitionstomakeitsexportsmore‘sophisticated’.Russianexportsconsistalmosten-tirely(98%)ofrawmaterials:crudeoil,naturalgas,coal,metals,woodandmaritimeproducts. Inturn,mostof its imports(85%)areproductsoftheautomotive,machine-buildingandelectronicindustries.

48 Dmitry Kosyrev,‘Yaponsko-rossiyskaya perezagruzka s perezapuskom’,Nezavisimaya Gazeta,29April2013.

49 ITAR-TASS,2November2013, ‘TokyoishchetkompromissMoskvoi’,Rossiys-kaya Gazeta, 27December2013;http://www.rg.ru/2013/12/27/peregovory.html

PO

INT

OF

VIE

W 11/2014

27

Paradoxically,whilepoliticalrelationsbetweenMoscowandTo-kyohavebeenfarfromthelevelMoscowhasachievedinitsrela-tionswithBeijingandDelhi,JapanisthelargestAsianinvestorinRussia. In 2012, total Japanese investments reachedUS$10.7billion50.

Co-operationintheenergysectoristhecoreofRussian-Japaneserelations.ThemajorityofJapaneseinvestments(86.3%)aremadeinthissector51.Japan’slargestinvestmentshaveincludedpartici-pationinoilandgasproductionconsortiumsinSakhalin:Sakha-lin-1 (30%) andSakhalin-2 (22.5%).As a consequence, Japanhasbecome the main recipient (76%)52 of Russian liquefied naturalgasexportsandamajorimporterofRussiancrudeoil.Between2005and2010,RussianoilexportstoJapanincreasedbyoverfivetimes,reaching13.1milliontonnes(7%ofJapaneseoilimports)53.

Bothsideshaveshowninterest inenhancingtheirco-operationinthisarea.GazpromneftrevealedinJune2013thatJapan’sstate-controlled company JOGMEC had acquired a 49% stake in theChonskoyegasfieldsandwouldinvestUS$100millionintheop-erationofthesefields54.InMay2013,RosneftsignedanagreementwithJapan’sstate-ownedcompanyINPEXsettingupajointven-ture inchargeofoperatingoilfieldson theSeaofOkhotsk55. InJune2013,GazpromandtheJapanFarEasternGasCo.consortiumsignedamemorandumofco-operationtostartanLNGprojectinVladivostok.Thisplantwillproduce15milliontonnesofgasan-

50 ‘O rossiysko-yaponskikh ekonomicheskikh otnosheniyakh’, 7 November2013;http://www.russia-emb.jp/embassy/economic.html

51 According todata for2010;http://www.ved.gov.ru/exportcountries/jp/jp_ru_relations/jp_rus_projects/

52 http://www.eia.gov/countries/cab.cfm?fips=rs53 StanislavZhukov,‘Vostochnyazimutrossiyskoienergetiki’,17January2012;

http://www.ecpol.ru/2012-04-05-13-42-46/2012-04-05-13-43-05/144-vostoch-nyj-azimut-rossijskoj-energetiki.html

54 http://ru.reuters.com/article/businessNews/idRUMSE95602C2013060755 ITAR-TASS,29May2013.

PO

INT

OF

VIE

W 11/2014

28

nually,beginningin2018,70%ofwhichwillbesoldtotheJapanesemarket56.Inturn,theCEOofRosneft,IgorSechin,declareddur-ingthefourthRussian-JapaneseinvestmentforuminApril2014thathis companywas ready toprovide Japanese investorswithaccesstoitsoilandgasfieldsaspartofanassetsswap57.

56 Céline Pajon, ‘Japan-Russia: Toward a Strategic Partnership?’,Russie.Nei. Visionsno.72;September2013,p.8.

57 RustemFalakhov,‘JaponiiKrymnepomekha’,19March2014,http://www.gazeta.ru/business/2014/03/19/5955961.shtml

PO

INT

OF

VIE

W 11/2014

29

v. russia and thE multilatEral structurEs in thE rEgion

Moscow’s consistent efforts to join themultilateral regional or-ganisations, or establish a formal partnership with them (theAsia-PacificEconomicCo-operation (APEC) forum, theASEAN–ARFRegionalForum,theDefenceMinistersMeetingASEAN+8,theEastAsiaSummit(EAS),the‘Asia-Europe’Forum),havebeenanotherelementofRussia’sstrategyaimedatreinforcingitspo-sition in the Asia-Pacific region. Formally, Russia has achievedspectacularsuccessesinthisarea:in2011it(alongwiththeUnitedStates)wasgrantedmembershipintheEAS,thelastmultilateralorganisationitwasstillnotamemberof,andithostedtheannualAPECsummitinVladivostokin2012.

Regardlessoftheseformalsuccesses,andofRussia’sundoubtedlymoreactivepresence intheregionalstructures,onecouldhavetheimpressionthatRussiahasnoclearvisionofhowitcouldtakeadvantageof this engagement.Russiandiplomacyhasbeenun-abletogenerateanymajor initiativestomakeRussiatobeseenasa“modelcitizenof theregion” forothercountries,andasanintegralpartoftheAsia-Pacificregion58.

The onlymajorRussian initiativewas the 2010 proposal to im-prove regional security through developing framework proce-duresbytheregion’scountriesinthisfield.Howevertheserules,whicharebythewayverysimilartothoseputforwardbyRussiandiplomacyfortheEuro-Atlanticarea,seemabovealltobeaimedatweakeningUSmilitaryalliancesintheregion.Thisinitiativecannotbeappealingtomostcountries inthisregion,whichareconcernedaboutChina’sgrowingpower,includingmilitarypow-er,sinceitfailstoofferthemanysecurityguaranteesasopposedto those theyhavebeengivenby theUSA.For this reason, this

58 AnapttermandobservationbyBoboLo,‘Russia’sEasternDirection-Distin-guishingtheRealfromtheVirtual’,January2014,p.21.

PO

INT

OF

VIE

W 11/2014

30

initiative–which(notcoincidentally)wasannouncedjointlywithBeijingandreiterated(alsowithBeijing)in2012attheEASsum-mitintheformofaproposaltostartmultilateraldialogueinor-dertocreatea‘securityarchitecture’intheregion59–hasputRus-siainthepositionofBeijing’sassistant,ratherthanthatofastatewhichcouldhelpresolvetheproblemscausedbythedisturbanceoftheregionalbalanceresultingfromChina’sgrowingpower.

59 Speechby theRussiandeputyminister of foreign affairs, IgorMorgulov,5 July2013;http://www.mid.ru/bdomp/brp_4.nsf/fa711a859c4b939643256999005bcbbc/9668ef80b55334ad44257b82003e03d0!OpenDocument; Speechby the Russian minister of foreign affairs, Sergey Lavrov, 20 November2012; http://www.mid.ru/bdomp/brp_4.nsf/997e7b027bbf661cc3256f6d00540731/5fcfa53c9c52b32244257abc003a55e6!OpenDocument

PO

INT

OF

VIE

W 11/2014

31

vi. thE russian rEsponsE to thE asian challEngEs

RussiaseesthenewbalanceofforceswhichhasbeguntoemergeontheinternationalarenaasaconsequenceofthespectaculargrowthoftheAsiancountries’,andaboveallChina’s,economicpotential,aspresentingbothnewchallengesandnewopportunities.

OneofthechallengesistheincreasingcontrastbetweentheRus-sianFarEast,whichisstuckineconomicstagnation,andtherapid-lydevelopingcountriesinthisregion(withtheexceptionofNorthKorea),whichhascreatedtheriskofeconomicmarginalisationforRussia.TherapidgrowthofChina’spowerisseenasanotherchal-lenge. The deepening asymmetry – to Russia’s disadvantage – ofthetwocountries’potentialsgivesrisetotheriskthatinthelongrunRussiamightbecomeunilaterallydependentonChina,andasaconsequenceloseitspositionasanequalpartnerofBeijing.

Ontheotherhand,Russiahasbeenofferedtheopportunitytoex-ploittheeconomicdynamismoftheAsia-PacificregionnotonlytoboosttheeconomicdevelopmentofitsFarEastregionbutalsotodiversifyitssourcesofinvestmentsandtrademarkets;thismightreduce Russia’s economic dependence on itsWestern partners.ThegrowingpowerofChinahasalsoopenedupnewopportuni-ties forRussia.Anever strongerChinesepartnercouldbecomeakindofaninsurancepolicyagainsttheWest.Furthermore,in-tensifyingdisagreementsbetweenBeijingandWashingtonhaveputMoscow ina convenientposition; even ifboth rivalpowersarenotcompetingforRussia’sfavours,atleasttheycannotallowthemselvestotreatitinawaywhichcouldpushitintotheirri-val’sarms60.IntheAsia-Pacificregionitself,risingChinesepowerautomaticallymakesRussiamoreappealingasapartnertoother

60 See for example statements by Gennady Chufrin (IMEMO RAN), SergeyLuzyanin (RAS Institute of Far Eastern Studies), Igor Zevelev (MoscowbranchoftheMacArthurFoundation),‘ProtivoborstvoKitayaiSShAvAzii:VyvodydlaRossii’,Index Bezopasnostino.2(101),vol.18,pp.104,108,111,112.

PO

INT

OF

VIE

W 11/2014

32

countriesinthisregion:India, Japan,theRepublicofKoreaandtheASEANcountries(aboveallVietnam).

TheKremlin’s response to this situationhas been equally com-plex, and consists of three parts. Firstly, theKremlinhas beenmakingeffortstodeepenitspoliticalandeconomicrelationswithBeijing,inordertosafeguardRussiafromthepossibilityofcon-flictwithChina.BybecomingBeijing’svaluedpartner,MoscowhasbeenmakingChinamoreandmoreinterestedinmaintaininggoodmutual relations,andhasbeen increasing thecostBeijingwouldhavetopayshoulditcomeintoconflictwithRussia.Sec-ondlytheKremlin,bycapitalisingontheotherAsiancountries’concernwithChina’sgrowingpower,hasbeenactivelydevelop-ingpoliticalandeconomicrelationswiththem,aboveallwiththeregionalgreatpowers,IndiaandJapan.ThusithasbeenstrivingtowordsgeopoliticalandgeoeconomicdiversificationinordernottobecomeunilaterallydependentonBeijing.Thirdly,theKrem-linhasbeenmakingattemptstouseitsrelationswithAsianpart-ners,aboveallChina,togiveitselfmoreroomformanoeuvreinitsrelationswiththeWest,includingfirstofallwiththeUnitedStates.Inotherwords,bydevelopingitsrelationswithitsEasternpartners,Moscowhasbeenaimingatachieving thegoal that ithadalreadyproclaimedinthe1990s: theconstructionofanew,polycentric international order to replace the US-centric post-ColdWarorder.

FromtheKremlin’spointofview,relationswithBeijingandDelhireflecttothegreatestextentitsvisionofwhatrelationsbetweengreatpowersshouldbelikeintheneworder61.Itispreciselyin

61 Forexample,seethecharacteristicsofRussian-Chineserelationspresent-ed in the statement from the Russian ambassador in Beijing, Sergey Ra-zov: ‘Pragmatizm vmesto pretenzii i nedoveriya’,Mezhdunarodnaya Zhizn11(2009),orthedeclarationmadebytheRussiandeputyministerofforeignaffairs, IgorMorgulov,duringthe ‘roundtable’meetingregardingthese-curityoftheAsia-Pacificregion,5June2013,andRussian-Chineserelationswhich“canbecomeamodelforinterstaterelationsoftwogreatpowersinthe21stcentury”;www.mid.ru.

PO

INT

OF

VIE

W 11/2014

33

itsrelationswiththekeyAsianpartnerswhereMoscowwantstodevelopthe‘exemplary’modelforthecoexistenceofthemainpo-liticalcentresoftheemerging ‘polycentric’ internationalorder.Thismodelprovidesforamutualrespectofstrategicautonomy(i.e.notbeingboundby formal obligations as allies) andzonesofinfluence,mutualnon-interferenceineachother’sinternalaf-fairs,refrainingfrom‘exporting’one’sownvaluesandpoliticalsystems, pragmatic economic co-operation (i.e.without regardto any ideological restrictions), and the search for compromiseinregional issues. In its relationswithBeijingandDelhialike,Moscow has emphasised the complete political harmony andsimilarityofinterestsandviewsonboththefundamentalrulesof operationof thenew international order aswell as regionalcrisesandproblems.ThusMoscowhasbeensuggesting,moreorlessobliquely,thatthemainthreattothenewinternationalor-derwhichisdesiredbyallthreecountriesisposedbyWashing-ton’saspirationstohegemony,andmorebroadly,by ‘messianic’impulses from the West. In practice this means coordinatingtheirpositionsattheUNandotherinternationalorganisations.Forexample,RussiaandChinause theirvetopower in similarsituations,andusuallyjointly,intheUNSecurityCouncil.Overthepastfewyearsallthreestateshavedemonstratedthedesireto create international formats and organisations: BRICS, theShanghai Cooperation Organisation and RIC (trilateral Russia-China-India consultations), with an intention of making theminto alternatives to the institutions created and dominated by“theWest”.Moscowvestsparticularhopes in theBRICS struc-tureasa“platformforpromotinganon-Westernagenda”intheglobalcontext62.Atthesametime,allthreecountrieshavebeenpressing forreformof internationalorganisations like the IMFandG20,sothattheirrulesofoperationincreasinglycorrespondtotheinterestsofthenewnon-Westernpowers.

62 Dmitry Trenin, ‘New era of Sino-Russian tandem begins’, Global Times,21March2013;www.globaltimes.cn

PO

INT

OF

VIE

W 11/2014

34

vii. thE lamE Economy

IftheRussianpolicyof‘turningtotheEast’canberecognisedashavinghadmoderatesuccessintheareaofpoliticsanddiplomacy,ithasfailedtobringtheexpectedeconomicresults.Eveninvest-ingUS$21billioninthespectacularpreparationoftheAPECsum-mitinVladivostokin2012hasnothelped63.

RussiahasnotsucceededinsignificantlyincreasingtheshareofAsiancountriesinitsforeigntradeorinimprovingitsstructure.In2008–2013,theshareofcountriesfromtheAsia-PacificregioninRussianforeigntrade(excludingthetwoAmericasbutinclud-ing India) rose from 17.1% to 21.9%,while theEuropeanUnion’sshare fell from52% to49.4%64.Asianmarkets still absorba rel-ativelysmallpartofRussianoilandgasexports.In2012,15%ofRussianoilexportsweresoldtoAsianmarkets (ascomparedto6%in2009),7%ofnaturalgas,10%ofpetroleumproductsand23%coalexports65.TheAsianmarkets’shareinexportshasbeenin-creasing,butquiteslowly,andeventhefactthatthelargegascon-tractwassignedwithChinainMay2014willnotradicallychangethepicture.

TheRussianeconomicoffertoAsianpartnersdoesnotseemtobechangingeither.Itisstillrestrictedtotheenergysector(oilandgasexports,oilandgasproductionandprocessing,theconstruc-tionofnuclearpowerplants)andthearmstrade.

ItseemsthatMoscowhopesthattheAsianeconomicgiantswillbecomeanimportantalternativetoWesterneconomicpartners,

63 SeetheevaluationsinthereportoftheValdaiClub:SergeyKaraganov(ed.),K Velikomu Okeanu–2, ili rossiyskiy ryvok k Azii,Moscow,February2014,pp.5,11and13.

64 MyowncalculationsbasedonforeigntradestatisticsfromtheFederalSta-tisticalServiceoftheRussianFederation;www.gks.ru

65 Aleksandr Panov, Integratsiya Rossii v Aziatsko-Tikhookeansky region. Pers-pektivy 2020,2April2013;http://russiancouncil.ru/inner/?id_4=1641#top

PO

INT

OF

VIE

W 11/2014

35

offeringoutlets thatwill guarantee a growing revenueflow fortheRussianbudgetaswellastheinvestmentcapitalnecessarytoexploitanddevelopRussiannaturalresources. In theKremlin’sopinion,theintensificationofeconomicrelationswithIndiaandChina, unlike its co-operationwithWesternpartners, doesnotentail any political risk in the form of open or covert pressureon Russian elites to adoptWestern rules in business and poli-tics(democratisation),orofWesternvaluespermeatingRussianelitesandsocietyatlarge.Itisprobablyrelevantthatthemodelofstate-businessrelationsinallthreecountriesprovidesforamuchgreaterdegreeforthe‘manualsteering’oftheinternationaloper-ationsoflargecorporationsthanisthecaseinWesterncountries.TheRussianelitemaythusfeelmoreathomedoingbusinesswithpartnerswhichoperatewithinasimilarbusinesslogic,whereinpoliticsiscloselyintertwinedwiththeeconomy.

The lackofa solideconomic foundationmaymean that theun-doubted achievements of the Russian policy of ‘turning to theEast’,suchasthereinforcementofRussia’spoliticalanddiplomat-icposition,mayinthelongertermprovetobeillusory.

witold rodkiEwicz