Posts Tagged ‘China-Russia’

Things are slowing down a bit now in the wake of the Paris atrocity, though unfortunately am sad to say the story is likely to not go away. Still some interest around the topic though, and spoke to the Sunday Times about the noisy Sally Jones, to the Huffington Post about how ISIS compares to historical threats, as well as the South China Morning Post about China’s view on the downing of the Russian plane and the Straits Times about what China might do to contribute to the anti-ISIS coalition. More on all of this am sure as ever. In the meantime, a new piece which was acually published prior to the Paris atrocity about China-Russia relations globally for the China Economic Quarterly. Huge thanks to the editors for their patience and invitation to do this. Greatly appreciated and definitely a subject that will be returned to.

China And Russia: Locked In Reluctant Embrace

china russia image

The dynamic of the Sino-Russian relationship is one that has long perplexed Western decision makers and thinkers. At a geopolitical level they appear in lockstep in an anti-western front, but below the surface they seem willing to engage with the west against each other’s interests while also sharing some fundamental disagreements. The reality is that Moscow and Beijing have a sophisticated modus vivendi that both allows for a clear disparity in the relationship in Beijing’s favor, while at the same time retaining an equal sense of importance of the broader strategic relationship. The overriding priority for both remains to ensure that they have an ally against the West and as long as this need remains the axis of authoritarianism will persist.

The archetypal space to explore this complex divergence is Central Asia. On the one hand it is a region where China has gradually increased its footprint to become the most consequential actor on the ground, while on the other it remains linked inextricably to Russia through multilateral vehicles and long-standing ties. And while in other parts of Eastern Europe or the Caucasus Russia has reacted negatively to encroaching external influences with armed conflict (like Georgia or Ukraine), in Central Asia the slow creep of Beijing’s influence has happened largely with Moscow’s acquiescence, though not without some counter-reaction.

China’s interest in Central Asia stems from a desire to improve the economic situation in Xinjiang. Seeing economic development as the answer to ethnic tensions between Han and Uighur in the region, Beijing has embarked on numerous large-scale economic projects to develop the western region of Xinjiang. However, for effective economic development to take place in Xinjiang there is a need for the region to have greater connectivity outwards. A fivehour flight from Beijing, Urumqi is as landlocked as the Central Asian countries it is near, and for it to prosper adequately, it needs to develop routes and roads into the region and ultimately to European markets. Consequently, as Beijing has poured money into the region, there has been an ancillary push into Central Asia with policy banks, state owned enterprises and private citizens all seeing the opportunity and need that lies in developing routes and markets into the Russian space.

Chinese cash displaces Russia in Central Asia…

The consequence of this has been a steady growth of economic influence across the region as Chinese capital and companies move into the region to repave, rebuild and open up Central Asian markets while also taking advantage of the region’s natural wealth to feed the Chinese economic machine. Previously a region largely the domain of Russian extractives firms, and, in the post-Cold War period, large Western players, Central Asia has seen CNPC and other Chinese energy firms moved in to stake claims. But significantly, Chinese firms have not stopped at only extracting energy, with firms showing up re-metering national gas infrastructure, re-developing solar furnaces, and building new power plants, refineries, and transmission lines across the region. The most rapid global pipeline growth of the past decade can be seen in the region, as Chinese firms plan, fund and built in quick succession a series of pipelines bringing hydrocarbons back to China from Turkmenistan, Kazakhstan and Uzbekistan.

All of this has largely been done to the detriment of Russian firms, who retain key stakes in most regional energy efforts but find themselves unable to compete with China’s easy funding and rapid construction. The American evacuation of the Manas airbase is a case in point. Initially awarded to a Russian firm linked to Rosneft, the company had to withdraw due to lack of funding, leaving a Chinese firm to step in and take over the contract. In Turkmenistan, a longstanding animosity between Moscow and Ashgabat culminated with the main pipeline to Russia blowing up and not being rebuilt. Instead, Chinese pipelines appeared and China is now the nation’s key partner—so much so that Turkmenistan might question the wisdom of its almost complete dependence on China.

…but Russian weapons are still welcome

Despite China’s economic incursions, Russia remains the most credible security provider. Untested by conflict outside its borders, China’s military is still a relatively timid force that is wary of launching direct confrontations or placing themselves in situations that would lead to such conflict. Whenever there is security trouble in the region, the powers look more to Russia to provide them with support – in particular in the more unstable nations of Kyrgyzstan and Tajikistan, both of whom have looked to Russia to help provide some stability in the wake of interethnic violence (Kyrgyzstan) and to strengthen their border with Afghanistan (Tajikistan).

Moscow has also made better use of regional organizations than has Beijing. The Shanghai Cooperation Organization (SCO), sponsored jointly by China and Russia, is in the most externally observed, but least effective regional multilateral vehicle. The Moscow-driven Common Security Treaty Organization (CSTO), Commonwealth of Independent States (CIS) and Eurasian Economic Union (EEU) are all more active in changing the context on the ground. The EEU in particular is seen as an attempt to recreate the Soviet space and is driven by Moscow as a specific attempt to reclaim the economic dominance and influence it used to hold. Encompassing Russia, Kazakhstan and Belarus, with Armenia and Kyrgyzstan the latest joiners, the EEU gives Moscow the power to dictate border tariffs and standards across the entire region.

In Central Asia the EEU is seen as direct push-back to Beijing’s growing influence. Yet the reality is that the EEU can do little to stem the rising influence of Chinese cash. And for Beijing’s traders keen to take advantage of Xi Jinping’s vision to create a New Silk Road Economic Belt through the region to European markets, the existence of a single tariff zone from Kazakhstan to Belarus will save them money and time in getting goods from China to Europe. Direct trade with Central Asia may be down, but, as traders in Kyrgyz markets at Kara Suu and outside Bishkek pointed out during a visit in early 2015, these markets had been shrinking for years due to closed local borders and weakening local economies. The addition of a failing Russian economy only further softened local currencies and further reduced remittances from Central Asian laborers in Russia, which in the case of Tajikistan or Kyrgyzstan account for almost a third of GDP.

On the whole, Beijing policymakers seem to view the EEU as complementary to their Belt-and-Road strategy; and even if they did not, they have reason to be skeptical of the EEU’s longevity. Belarus and Kazakhstan have already blocked some trade across their borders, and it remains unclear how Kyrgyzstan is going to be able to effectively integrate and thrive in an economic union where it has few advantages.

China has the upper hand in bilateral affairs

All of this takes place against a backdrop of a failing Russian economy that is increasingly looking to Beijing for growth. Whilst previously resistant to letting Chinese firms invest in upstream energy assets, Moscow allowed the Chinese Silk Road Fund to invest in the Yamal gas field. In a sharp turnaround from previous paranoia of Chinese expansion into Russia’s east, Moscow has actively encouraged cross-border trade between Heilongjiang and the Amur region, with the governor of the region going so far as to say that he would welcome Chinese workers coming into the region to help repopulate it. The Russian press is increasingly full of stories of actively encouraging trade across the border, something that stands in stark contrast to speeches by President Putin in 2000 about losing Russia’s East to Asia.

In all this investment, China clearly retains the upper hand. The Power of Siberia pipeline remains a project largely on paper as CNPC lobbies aggressively to get the deal finalized on its terms. And although the large gas deal signed between Russia and China was supposedly resolved earlier in the year after almost 15 years of haggling, the reality is that the agreement was largely cosmetic. It came at a moment when President Putin wanted to be able to show the world that he had strong allies in the face of a growing animosity between Moscow and the west over Ukraine. Within hours of the deal being signed, stories surfaced of re-negotiations taking place and a continuing lack of agreement over the pricing structure of the deal.

At a geostrategic level there are further tensions between the two great powers. Vietnam is a long-time client state to Russia that depends on Moscow for military equipment, including naval assets that Vietnam feels it needs to bolster its claims to islands in the South China sea that it disputes with China. India is another long-term Russian ally that has border disputes with China and a long-standing inferiority complex to its neighboring Asian giant.

It is also clear—despite its lack of public criticism—that China is displeased by Russia’s adventures in Ukraine and Georgia, as it worried about the precedent of annexing parts of neighboring countries and recognizing break-away provinces. Nor is it enthusiastic about Russian intervention in Syria where it seems unlikely that more combatants on the field will resolve the situation. As a status quo power that sees the future as firmly within its grasp under the current world order, Beijing disapproves of Russia’s efforts to undermine current structures.

The SCO was supposed to be a vehicle for joint maneuver in Central Asia, but has bogged down in disagreements. Beijing’s interest in having it focus more on economic issues has been blocked by Moscow. And in turn Moscow has promoted a rapid expansion of the group, against China’s wishes. Unwilling to directly confront and exclude others, China has found itself forced to bow to external pressure in letting the organization expand against its better judgment.

Authoritarian birds flock together

Notwithstanding these tensions, the two powers retain a tactical geopolitical alignment. Partially this is for the purpose of mutual support in the UN Security Council. As two of the permanent five members, knowing that they will consistently support each other (by either veto or abstention), means that they need never feel isolated in the body.

Shared political insecurity also draws them together. Both governments are equally paranoid about the overthrow of authoritarian regimes. Both speak equally acerbically about the negative influence of democracy and the wave of color revolutions that swept through the former Soviet space in the mid-2000s and the subsequent ‘Arab Spring.’ Watching as chaos came in the wake of the civilian overthrow of regimes from Georgia, Ukraine, Kyrgyzstan and then later Tunisia, Egypt, Libya and Syria, both ascribe these incidents to a missionary foreign policy advocated by western capitals. Fearing that ultimately this wave of civilian insurrection ends up with regime overthrow in Beijing and Moscow, both see each other as fundamental allies in a world divided between western democratic zealots riven with uncertainty and stable one-party states ruled by strongmen and parties.

These underlying geopolitical realities outline why this axis of authoritarianism continues to function as a genuine alliance of sorts despite fundamental differences and an ever-growing imbalance in power between the two. Russia may increasingly be selling itself to China in a manner that will become irreversible, but it is doing this to a power that it fundamentally sees itself locked in step with. It was President Putin who first enunciated in 2000 the fear that Russia would lose its east to Asian influences, but it is also President Putin under whose reign China has become the Russia’s biggest geopolitical friend.

More catch-up, this time a longer magazine sized piece for the excellent current affairs journal Current History. This explores the China-Russia relationship with a particular focus on Central Asia sitting in between them. Clearly more on this topic to come – including a piece soon focused a bit more on the econ and geopolitical equation more broadly. I have pasted the first paragraph below to give you a flavour, but the whole thing is available as PDF below as well.

China and Russia’s Soft Competition in Central Asia

China and Russia have a long history of conflict and competition in Central Asia. Sitting between the two great superpowers, the landlocked Central Asian nations appear to have little choice or control over their destiny, and are often considered to be pawns in a perpetual great game. Yet this narrow view misses the broader picture of the Sino-Russian relationship. It is undeniable that the region has been slipping out of Russia’s immediate economic sphere of influence for some time, but China has been making inroads with Russia’s full acquiescence. For Moscow and Beijing, Central Asia is increasingly a region of soft competition where they are very aware of and attentive to each other’s interests, rather than a source of conflict and tension.

Overriding any differences concerning the steppe are the larger realities of the Sino-Russian strategic relationship on the international stage, where the two permanent members of the United Nations Security Council continue to support each other’s refusal to bow to a Western-dominated global order. Russia may appear to be the loser in Central Asia, but the two powers have established a modus vivendi that suits the interests of both. The real geopolitical losers are likely to be the Central Asians, slowly slipping from Russia’s orbit into China’s.

Please follow for entire article

 

Finally posting my second piece from last week around the SCO Summit, this time for the South China Morning Post. Focuses more on the China-Russia side of things. Beyond this, spoke to the Independent about the elusive Abdel-Majed Abdel Bary, the Daily Mail about ISIS and women, and Reuters about Chinese intelligence dealing with the counter-terrorism questions outside the country.

Russia holds the door to Central Asia open for China

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Raffaello Pantucci says to a region in need, the Chinese offer of funds and expertise is too attractive to resist, as agreements at the Moscow-hosted BRICS and SCO meetings show

PUBLISHED : Wednesday, 15 July, 2015, 12:05pm

Late last week, the leaders of almost half the world’s population gathered in Ufa, Russia. The collision of the BRICS and Shanghai Cooperation Organisation (SCO) summits was orchestrated by Russia to guarantee exposure and attention, and highlight to the world how many friends Russia has. Dig below the shallow surface, however, and the links between the countries of the two international organisations are barely skin deep, with everyone attending for their own reasons.

For China, the two summits provide another opportunity for global engagement, as well as helping Beijing advance two international financial institutions. A timid player in many ways on the international stage, Beijing has found that its capital is one lever that it can use without raising too many hackles, and the meetings in Ufa gave it another opportunity to flex these financial muscles.

Fixating on the slow path to SCO membership for India and Pakistan, the world largely missed the key takeaway from the summits: China’s growing financial domination of Russia and its immediate backyard.

In the wake of the first Ufa summit, greater clarity was cast around the BRICS development bank, a new financial entity to emerge from the grouping of Brazil, Russia, India, China and South Africa, with an initial market capitalisation of US$50 billion. The leaders also created a US$100 billion currency exchange reserve, of which US$41 billion was offered by China, while Russia, Brazil and India each gave US$18 billion, and South Africa contributed US$5 billion.

A day or so later, the SCO members agreed once again to try to advance the concept of an SCO development bank or at least a joint fund.

China has been pushing the idea of an SCO financial institution for some time.

Seeing economic engagement as its major advantage in Central Asia, many years passed before Chinese interlocutors first presented the idea of an SCO development bank.

However, the idea has never quite taken off, with Russia in particular concerned that the vehicle would simply leave the door to Central Asia wide open for Beijing.

We live now, however, in different times, and, rather than be concerned, Russia has opened the door to Beijing. Indeed, Moscow appears to be helping to hold the doors open as China uses its lever in Russia’s backyard. Already endowed with the Silk Road Fund (focused on China’s western partners in Central and South Asia) and the Asian Infrastructure Investment Bank, China’s external constellation of economic firepower has been further enhanced by Ufa.

Russia itself has further opened up its own economy to Chinese investment, offering Chinese state-owned firms majority stakes in its oil and gas fields.

Eager for foreign investment and unable to look west anymore, Moscow is reaching east and apparently willing to throw open not only its backyard, but also Central Asia’s.

The result is a further strengthening of China’s hand in Central Asia, as the country pours finance and infrastructure into a part of the world that is crying out for it.

While in the short term there is little to worry about this investment (these are infrastructure-poor countries that will benefit from China’s appealing combination of low-cost construction firms and cheap loans), over the longer term, Chinese leverage will certainly offer Beijing a grip over the region. The lesson from Ufa is that the region’s one great resistor, Russia, has largely lifted its objections and is now welcoming all the Chinese investment it can attract.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute

This article appeared in the South China Morning Post print edition as Russia holding the door to Central Asia open for China

A new op-ed in the South China Morning Post with Lifan looking at China and Russia’s relationship and China’s foreign policy more grandly as part of the discussion around the Conference on Interaction and Confidence-Building Measures in Asia (CICA) currently going on in Shanghai. I also spoke to Agence France Presse about the meeting.

China relishes its new role fostering regional cooperation

Li Lifan and Raffaello Pantucci study China’s rising profile as a big power

PUBLISHED : Monday, 19 May, 2014, 9:12pm

UPDATED : Tuesday, 20 May, 2014, 4:02am

The Conference on Interaction and Confidence Building Measures in Asia, which begins today in Shanghai, largely passes unnoticed most years. But this year it is being touted as a major global event, largely due to Russia’s current awkward relationships elsewhere and China’s growing global profile.

It also offers a window into President Xi Jinping’s vision for China’s foreign policy.

First proposed by President Nursultan Nazarbayev of Kazakhstan in 1992, it took 10 years for the conference to hold its first summit in Almaty. Now with 24 members, nine observer states and four observer organisations, the conference offers an interesting forum where countries with difficult relations can interact.

This year, there are high expectations of what it might mean for regional engagement in Afghanistan in the post-drawdown world.

The group’s first summit in 2002 was held in the shadow of the September 11 attacks and concluded with a declaration on eliminating terrorism. Non-traditional security threats have always been high on the agenda; in the current environment, they remain a priority.

But in many ways, this year’s event will be overshadowed by the interaction between Russia and the various members.

Both China and Russia have already hinted that this is finally the year when they will resolve their long-standing gas pricing dispute, and both have indicated they will have substantial bilateral interactions, including military exercises near the time of the conference.

The benefits for Russia are obvious. At a time when its relations with Europe and the US are soured over Ukraine, this is an opportunity to interact with a friendly community of nations and show how Russia has other geopolitical options.

One has to take a step back, however, to appreciate the benefits for China. For China, the conference is an opportunity to showcase itself as a major power at the heart of a number of different international forums (China is host this year), as well as a moment where Xi can offer a glimpse into his vision for China’s foreign policy.

This vision needs to be understood in the context of Chinese strategic considerations. One is the four trade corridors: the Silk Road economic belt (through Central Asia); the China-Pakistan Economic Corridor; the Bangladesh-China-India-Myanmar Forum for Regional Cooperation; and the maritime Silk Road. These are really four strings of the same instrument – one that flows from Xi’s comments about the importance of China’s border relationships late last year.

Foreign policy under Xi is one in which China will play an increasingly proactive role, founded on practical economic relationships, but also one that is heavily focused on multilateral cooperation. Xi wants his foreign policy to be seen as all about regional cooperation and integration.

For China, the meeting is in many ways an expression of this. Bringing together contentious partners and old friends alike, it highlights China as a major power that can convene important conferences with all sorts of actors around the table. Its concepts of “peaceful development” and “new great power relations” are both captured within this bigger vision.

The reality, of course, is that this is the natural state of international relations between states, where contentious relations sit alongside necessary cooperation. But it is significant that Xi has seen it as such a critical concept.

Li Lifan is secretary general of the Centre for SCO Studies at the Shanghai Academy of Social Sciences. Raffaello Pantucci is senior research fellow at the Royal United Services Institute.

An earlier version of this piece appeared in the South China Morning Post and was re-posted on China in Central Asia, however, this expanded version was done for my institutional home RUSI. An interesting topic a bit adjacent to my core interests, an aspect I may return to is the impact of events in Ukraine on Central Asia and China’s relations with the region.

Tensions Over Ukraine: Where Does China Sit?

RUSI Analysis, 11 Apr 2014

By Raffaello Pantucci, Senior Research Fellow

On the growing crisis over Ukraine, China has remained quietly supportive of Russia. Yet, Russia overestimates and exaggerates China’s level of support that is closer to acquiescence rather than actual support for the turmoil that Russia is engendering.

Putin and Xi Jinping

China has largely sat on the sidelines of the current dispute over Ukraine. Hawkish Chinese commentators have stated that this approach of standing aside and watching is part of a bigger Chinese strategy to encourage a multipolar world, while the official position has largely been quite bland. In contrast, Russian commentators and officials have used every opportunity to highlight the fact that Beijing was on the same page as Moscow.

Recently, in an interview on Russian state television, Foreign Minister Sergey Lavrov characterised China as ‘our very close partners’ of whom he has no doubts. For Russia, asPresident Putin put it when he formally announced Crimea’s annexing in the Duma, ‘we are grateful to the people of China, whose leaders have always, when considering the situation in Ukraine and Crimea, taken into account the full historical and political context.’

Chinese Conern

On the face of it, these interpretations of China’s support are accurate, but the reality is far more complex, with China uneasy about Russia’s actions though it may share Moscow’s concerns.

For all the bombast in its Pacific seawaters, it could be argued that China remains largely a status quo power that sees advantage in letting the current global order proceed along what it perceives as a natural trajectory in which it is ascendant. For policymakers in Beijing, this is a path that ends with China atop a constellation of new and old power centres from the UN Security Council to the G20 and BRICS.

China can see that its economic might and physical size places it in a position that current global trends favour. The question is how to manage this rise in a smooth manner so as to ensure the Communist Party can maintain supremacy in this complicated world.

Russia’s actions in Ukraine do little to smooth this path. In fact, they cause chaos and instability in a number of key Chinese markets, from Russia to Europe, as well as stirring up concerns in adjacent Central Asia.The former Soviet states of Central Asia worry about Russia’s long-term intent and the implications to them of sanctions. They have little interest in becoming involved in Russia’s spats with the West and are concerned that Moscow may try to exert its considerable leverage over them in some manner contrary to their interests.

China is the ascendant power in the region, but the Central Asians have little interest in completely re-aligning themselves towards Beijing and, in any case, China lacks the weight (and interest) to become the main regional security guarantor. In Europe, markets are in turmoil as leaders fret about how to punish Russia in a way that is not damaging to themselves while also worrying about the longer term implications of growing tensions between themselves and Russia.

All of this will doubtless have a knock-on effect on Chinese markets, be this through shrunken global trade or weakened regional trade: these factors might damage China’s already slowing economic growth. The Chinese leadership has little interest in such tensions that do nothing but disrupt markets.

Moreover, China does not look favourably on people recognising separatist states and has traditionally maintained, at least rhetorically, to its sacred non-interference principle (though this is in fact an increasingly obsolete principle). China fears the dangerous precedent that has been set in recognising a separatist province. Previously, when Russia carried out similar behaviour in Georgia in 2008, China was clear in using the Shanghai Co-operation Organisation (SCO) to block a call of support for Russia’s actions. Both China and the Central Asian members of the SCO have their own set of concerns about separatist or minority communities – the last thing that they are interested in is supporting a new international trend of recognising breakaway states.

Explaining Chinese Acquiescence

Yet behind all these concerns, there is also a sense of agreement with Russia’s actions, something that helps explain China’s quiescent pose on Ukraine.These are captured in an attentive reading of Lavrov’s comments. As he put it: ‘Our contacts with Chinese partners have shown that they not only understand the lawful interests of Russia in this entire affair but that we have the identical understanding of the initial causes of the current deep crisis in Ukraine’

This is a more nuanced comment than it might sound, explaining in part how China recognises the validity of Russian concerns, but does not express its own views of Russian actions. China fundamentally agrees that the chaotic governance that led to the collapse of the Yanukovich regime and subsequent trouble is a bad thing. China, like Russia, sees great potential danger in public protests that culminate in the overthrow of a government.

Both countries were appalled at the chaos stirred up by the ‘colour revolutions’ in Ukraine (2004), Georgia (2003) and Kyrgyzstan (2005) and have looked on unhappily as the West has watched the Arab world implode in response to public protests during the Arab spring:as emphasised in particular in Syria. The Arab world has yet to really recover, while arguably, the ‘colour revolutions’ in former Soviet countries are still resonating today with difficult governments in all three.

In this analysis, Ukraine today is merely the latest iteration of this trend, and it is one that both China and Russia fear might lead to repercussions or even emulation at home. This fear, added to China’s unwillingness to turn completely against Moscow seeing it as a long-term geostrategic ally on important international issues like Iran, Syria or others, will ultimately bind the two countries together and will see China continuing to play a largely observer role in events in Ukraine.

For outside observers, the lesson is an important one. China is a passive ally of Russia over Ukraine, something borne out of an ideological and geopolitical concerns rather than an appreciation of the Russian heavy-handed response.

How Best to Appeal to China?

This difference is key to note if the West is going to find a way to get China to grow into a bigger role internationally. China is not the same sort of difficult global power like Russia, it is rather a power that sees trends going in its direction and is happy to continue to nurture them along.

This means that China’s interests can be appealed to if care is taken to understand China’s motivations. In the longer-term China wants a stable Ukraine, Europe and EU-Russia relationship. All of these will provide it with the sort of economic partners that it can profit and grow from. China may be sitting on the sidelines in the current difficulties, but their eye is on longer-term global picture where they see themselves triumphant.

Somewhat belatedly, I am reposting here an article that I had published in the Chinese 东方早报 (The Oriental Morning Post) during Xi Jinping’s visit to Moscow a week or so ago. The article does not seem to have been put online, so I have posted the English text that I submitted below. I currently cannot figure out how to attach a PDF here, so cannot add the tear page, but if you are interested, please drop me a line and I can send it over. Related, I did an interview for Danish radio on the visit, focusing in particular on Central Asia. I am also going to use this opportunity to highlight interviews I did for the Italian AGI and The Atlantic on China in Central Asia. As ever for more on my work in this direction, please have a look at the site I manage with Alex focusing on our project on China in Central Asia.

China and Russia will maintain a pragmatic partnership

There has been a great deal of speculation in the press about the significance of Xi Jinping’s decision to make Russia his first foreign trip as leader of China. The implication of much of the discussion is that China is about to reorient itself to turn Moscow into a priority ally, creating some sort of a new axis in international affairs. The reality is that little is practically changing in this relationship beyond reaffirmation of the fact that both sides see the other as a power with which it suits them to be perceived as being aligned.

The relationship in the past few years has evolved substantially. Discussions about enhancing military cooperation and the prospect of joint technological development projects were highlighted during Defence Minister Shoigu’s visit to Beijing late last year, national energy giants CNPC and Rosneft have signed deals to build refineries near Tianjin and explore similar opportunities in Russia as well as looking at doing a large $25-$30 billion loan for oil deal – the Russian firm is believed to be seeking the loan from the Chinese firm in a repeat of a deal from a few years ago. At a political level, President Putin visited Beijing very soon after his election victory, so in some ways this is reciprocating. And on the international stage, China and Russia broadly find themselves in agreement with regards their postures on issues like Syria or Iran and generally prove willing to support each other’s positions in the United Nations Security Council. They both found the ‘colour revolutions’ of a few years ago alarming, and view the ‘Arab Spring’ in an even darker light. Trouble from rebellious provinces is an issue they both share, and they see western plots inside domestic problems.

But beneath this cordiality there is a tension. In the run-up to President Xi’s visit, much has been made in the Chinese press that some final agreement may be about to come about on the topic of gas pricing, a discussion that has been ongoing between China and Russia for over a decade. Unable to reach an agreement, we have seen a number of high level visits come and go with no conclusion in sight of the deal. This time, we are told, it may actually happen. And the logic may finally be there: China’s growing gas relationship with Turkmenistan means that it is going to be less reliant on finding Russian sources, something that will in turn pressure Russia to come to some agreement to not lose its hand in the discussion with China.

This aside, there is the question of Central Asia more broadly. A region that Russia has traditionally seen as its strategic backyard, but where China is increasingly becoming the more relevant actor. Economically, this is displacing Russian interests, though it remains clear that the Central Asian powers continue to see Russia as the more important security guarantor regionally. The story of the past decade, however, is the money and investment flowing in mostly from Xinjiang rewiring Central Asia so its roads all lead to China. Russia is seen to be pushing back against this through the institution and implementation of the Customs Union that at the moment only encompasses Belarus, Kazakhstan and Russia. But this is a still developing project and it is unclear how it will ultimately impact Chinese economic growth in Central Asia.

Looking beyond Central Asia, there is the dilemma of Afghanistan and the tensions between India and Pakistan. This triumvirate of countries is a complicated one with both Moscow and Beijing having very different views. Russia has always supported ally India, while Beijing retains strong ties with Islamabad. A delicate balance that has the result of keeping both India and Pakistan out of the Shanghai Cooperation Organization (SCO). And on Afghanistan, while there is evidence that China is slowly coming to the realization that more must be done and soon, Russia remains trapped in the shadow of its history in that country and refuses to commit much.

The point is that China and Russia are not an easy pairing. They may concur on a few things, but disagree on others too. But what they do share is a concern about western dominance in international affairs and a feeling that the American approach is not always necessarily the right one. And it is maybe here that we should look for deeper meaning in the Russia-China relationship. It is not so much that they are partners of principle, but they are partners of utility. Each sees the value in having a strong counterpart whom is willing to stand up to the United States and the West. Left alone, they would end up being isolated in international affairs and have to deal with the brunt of international wrath when they stood up for unpopular issues. But united they are able to provide some cover for each other and extend the travel schedule of any western foreign minister seeking to lobby their support for issues at the UNSC or elsewhere.

China and Russia remain partners of convenience. Their tentative gestures towards a real strategic partnership are likely to continue to edge gradually forwards, and mutual support will continue on the international stage, but the reality is that this is never going to be a holistic and firm axis in international affairs. Instead it will remain a utilitarian partnership that will provide each other with a useful ally when facing down against perceived western interventionism.

 

Raffaello Pantucci is a Senior Research Fellow at the Royal United Services Institute (RUSI) in London

Slightly delayed posting of my latest piece, this time with my sometime co-author and friend Li Lifan looking again at China-Russia and Central Asia. This was part of a series that Ben edited at Open Democracy Russia which seems to have attracted some attention. As usual, a lot more on this topic coming soon as part of mine and Alex’s project on China in Central Asia.

Decision time for Central Asia: Russia or China?

LI LIFAN and RAFFAELLO PANTUCCI 24 January 2013

Vladimir Putin’s attempts to draw the countries of central Asia into his fledgling Eurasian Union creates a dilemma for some of them: if they take up his offer, they might lose their valuable trading links with China. Li Lifan and Raffaello Pantucci discuss their options.

If one turns enough of a blind eye, it is easy to be optimistic about Central Asia. Wily diplomats from Kyrgyzstan and Tajikistan are masterfully playing off the great powers. Kazakhstan and Turkmenistan are turning into hubs in their own right – and nobody can tell plucky Uzbekistan what to do. This is nobody’s backyard, and attempts by neo-imperialists in Moscow, Washington and Beijing to play games in the region are only strengthening the hands of the Central Asian states themselves. This is a comforting picture – which is why Western policymakers love it – but it looks increasingly false as President Putin tightens the screws.

Why a Eurasian Union matters

Russia’s desire to strengthen its sphere of influence in Central Asia seems to be intensifying. The first sign came in October 2011 when Russia’s ‘national leader’ published his vision for a Eurasian Union in the Gazprom-Media owned daily Izvestia. Here Putin stated that the Customs Union with Belarus and Kazakhstan that would come into force on 1st January 2012 was just the beginning – and that it would expand ‘by involving Kyrgyzstan and Tajikistan. Then, we plan to go beyond that, and set ourselves the ambitious goal of a higher level of integration – a Eurasian Union.’

The Russian president is said to dream of his third term being his ‘geopolitical presidency,’ where he will make up for the lost ground and lack of achievement in foreign affairs that he views as his main failing. The transformation of the fledgling Customs Union into the Eurasian Union of his dreams is the centrepiece of this strategy. Whilst Kazakhstan seems to have already decided that it wants to be a part of the Union (and its president, Nursultan Nazarbayev is credited for first raising the idea of a Customs Union back in 1995), for the Central Asian states of Kyrgyzstan and Tajikistan this is a potential turning point, forcing a decision on which partner they want to prioritize: China or Russia?

The way Central Asian states will turn — to Russia’s Eurasian Union or to China — is the test for influence in the region. Photo: (cc) Wikimedia/IvaNdimitry

Deciding whether to follow Putin into the Eurasian Union will be a decisive choice for both states in the year ahead, as it will force them to choose which they want to risk: the GDP they get from trade with China or the GDP generated from remittances from their nationals working in Russia. Putin has thrown down the gauntlet – they will now have to make up their minds whether their economic future is going to be closer to Moscow or Beijing. Their dichotomy is not quite as black and white as this, but this is nevertheless a power test. The choices they make will decide whether Russia or China has a stronger say in Central Asia.

Kyrgyzstan’s dilemma

There is a simple reason why Putin’s union matters so much to Kyrgyzstan and Tajikistan: trade with China. Unlike energy rich Kazakhstan, already in the Customs Union, Bishkek and Dushanbe’s economies are dependent on business with Beijing. Kyrgyzstan’s ‘shuttle trade’ business with China, where small traders cross borders as ‘tourists’ with their goods in suitcases in order to avoid Customs duties, accounts for roughly a third of its GDP.

On the other hand there is fear in Bishkek that if they do not deepen integration with Moscow then the millions of migrant workers it exports to Russia – whose remittances are also equivalent to a third of GDP – will be forced to carry international passports, or suffer far reduced quotas. The nightmare is that they will eventually end up barred from Moscow’s labour market by a full visa regime – something nationalist elements in Russia, including charismatic opposition leader Alexey Navalny, have been calling for.

These fears are well grounded: in December 2012 Putin warned that within three years he wanted to end the post-Soviet practice of migrants from the CIS being able to come to Russia on their internal passports, effectively ID cards – but Customs Union members will be exempted from the new requirement for international passports. Polls conducted by the independent Levada Centreshow over 60% of Russians supporting tighter immigration controls.

Visa-free admission to Russia and access to the Russian labour market may be soon be a thing of the past for Kyrgyz migrants. Photo: (cc) Shutterstock/FotograFFF

That free access to Russia can no longer be taken for granted is not lost on Kyrgyzstan. But at the same time the Kyrgyz elite fears that joining a Eurasian Union would mean effectively losing control over its border tariffs and regulations, and would destroy the rich network of new trade routes that are tying them into China, bringing them cheap goods and enabling a substantial re-export economy. These trade routes are economic lifelines for this fragile state – and for this network the Customs Union has all the potential to be a total disaster. As a former Kyrgyz cabinet minister put it to one of us in Bishkek last year, it would ‘decimate’ the country’s key markets in the south at Kara Suu and Osh. In his words, ‘almost every’ small business in Kyrgyzstan is reliant on trade with China and any new tariffs or rules would entirely change the local economy.

China: vulnerability and official indifference

Chinese officials insist that the expansion of the Customs Union matters little to them. Ambassador to Bishkek Wang Kaiwen put it succinctly to reporters in late November when he said: ‘Kyrgyzstan’s entry into this Customs Union will not affect trade relations with China.’ Kyrgyz-Chinese trade, he pointed out, oscillated somewhere between $5-$10 billion per annum, a figure that was ‘a small problem’ dwarfed by China’s overall foreign trade of $3 trillion. The question of whether ‘to join or not…should be your decision.’

This blunt response hides a complex reality. It is true that in the grand scheme of things, China’s trade with Kyrgyzstan is a drop in the ocean. The problem for China is that it is a drop that comes from one of the most troubled parts of one of its most restive provinces. China is not investing massively in its trade infrastructure with Central Asian countries for reasons of charity – but to stabilize its own restive Xinjiang Uygur province by turning it into a trade hub for this region.

The Eurasian Union would have a potentially damaging effect on the substantial investment China has made on both sides of its border. The erection of a Russia controlled tariff barrier between China and Kyrgyzstan is likely to have a chilling effect on trade coming out of Kashgar, at a time when the Chinese government has invested a great deal into trying to develop the southern city. Capital of a part of Xinjiang that has faced heightened ethnic tensions for decades, the government has spent a lot of money re-developing the old city and establishing a Special Economic Zone with the aim of turning it into a hub for Central Asian trade.

According to recent figures China invested some $91.91 billion into infrastructure in its ‘western provinces’ – an area that covers Tibet, Guizhou and Xinjiang. This is a focused strategy and Xinjiang sits in the middle of it. All of this will be threatened if suddenly traders no longer find it profitable to send their goods along the roads winding into the CIS from Kashgar. At the same time these traders’ choice of markets is surprisingly limited: without a route through Kyrgyzstan or Tajikistan they would have to travel through the Khunjerab Pass to Pakistan. The problem there is the roads on the Pakistani side remain woefully under-built. Their only other possible border crossing would be with Afghanistan, which remains firmly closed at time of writing.

Seen from China, these are unanswered questions. When one of us asked a group of academics in Urumqi, the capital of Xinjiang, what they thought of the Customs Union’s impact to China, they shrugged and in vague terms said they were ‘waiting to see’ if the Customs Union would actually come to pass across the whole region. In Shanghai and Beijing, everyone has stories of friends who have conducted surveys in the region that highlight its unpopularity. But this is largely behind closed doors. The official line is that espoused by Ambassador Wang, that ‘Kyrgyzstan’s entry into Customs Union will not affect trade relations with China.’ Nothing to see here, keep moving on…

A losing game for small states?

This used to be the sort of situation where Central Asians were in their element, masters of the game of playing one partner off against another. Kyrgyzstan in particular has cannily used access to its Manas airbase to extract large chunks of money from both America and Russia. This time it seems as though Moscow is playing a much harder game, forcing Bishkek into a decision that could ruin one aspect of its economy or another. How this plays out may end up determining the shape of the Kyrgyz economy. For all the talk about China in Central Asia, Putin is still able to compete with Beijing – and the choices made in Bishkek and Dushanbe will make it clearer whether Moscow is still the world power it dreams of being.