Country Report: Russia (October 2016)

Russian articles in the late summer of 2016 found multiple reasons to take heart. The Sino-US relationship appeared more troubled, opening more space for Russia. Plans for transit between the Russian Far East and Northeast China are showcased as advancing. The Eastern Economic Forum in Vladivostok’s success, especially due to Abe Shinzo’s enthusiastic support for Russia’s economic objectives, is stressed. Vladimir Putin was the guest of honor in Hangzhou, when Xi Jinping hosted the G20. Putting the most positive spin on developments with little obvious payoff, Russian media was quiet about the challenges of a sputtering economy and polarized region, where Russia is trying to distance itself from Beijing in ties with Hanoi and Tokyo. In this context, a broader concept of regionalism is being highlighted, especially with India as an indispensable partner, even if that means minimizing talk of the growing Indo-US  cooperation and of the persistent strategic divide between India and China.

The Valdai Club reviewed the contents of the September 2 panel at the Eastern Economic Forum, chaired by Sergei Karaganov, on integration into Greater Eurasia and the Asia-Pacific region and on where interests intersect. Talk of de-globalization and regionalization was heard with an emphasis on urgency in light of the expected TPP. Karaganov warned that old forms of cooperation do not work and returning to them could halt the new convergence. Boosterism persisted with little on problems.

E. Denisov and I.A. Safranchuk conveyed a discussion on the SCO in April 2016 in Dushanbe in the Vestnik of MGIMO, the international studies institute’s compilation of articles. The discussion covered security, economic cooperation, and the expansion of the SCO in the context of a new stage in the SCO’s development. The participants agreed that the greatest successes of the SCO have come in resolving problems of security and coordination against terrorism, and without turning the SCO into an anti-Western organization this direction should be intensified. Stress was placed on dealing with the impact of ISIS in Afghanistan and the worsening situation in its northern provinces, as noted by a Chinese expert, who called for socio-economic development to reduce the domestic factors that lead to extremism. Yet, past efforts to work together in the SCO on Afghanistan had been bypassed as states dealt with the issue outside the SCO, the authors regrettably acknowledge.

Sino-US Relations

In Rossiya v Global’noi Politke, no. 5, Vasilii Kashin disagreed with those who think that Sino-US ties are manageable due to economic ties and mass American culture in China. He asked how far will contradictions grow? Looking back, Kashin saw Mao as driven from the 1940s by the goal of a multi-vector policy, turning to communism as a means to restore the greatness of China but ready to end dependence on the USSR at the first opportunity and seeking ties with the United States. Only the McCarthyist panic prevented early reconciliation after 1949, and the China lobby kept the US rigidity until the 1970s, he added. The story continues after the crisis in relations of 1989, when US business saved the relationship, and US ideology contributed too by losing interest in the “Cold War” while assuming that China was drifting away from communism. Such illusions and romantic expectations gathered force in the 1990s, Kashin observed, concluding that the United States was not prepared to make peace with China’s existence in its real form. Rather, its fundamental misunderstanding of China let illusions persist for a time. As China grew stronger, some notice was taken, but US preconceptions led to underestimating it until the end of the 2000s, while China consciously reinforced those illusions with contrasting rhetoric for domestic and foreign audiences. Finding that China is already the third military-industrial power in the world after the United States and Russia and, in some areas, surpasses Russia, Kashin saw its foreign policy beginning to change in 2013, even if further transformation remains cloudy given difficulties in reforming its economic model.

For Kashin, the US awakening from illusions came especially in 2015, when David Shambaugh abandoned the theory of “transformation,” to argue that the only chance for real change is chaos and collapse, which may come sooner than expected. The US focus had turned in 2001 to the Middle East, and some expected that again in 2014 it would turn away from China to Ukraine, but Kashin doubted this since the situation there has stabilized, while the western Pacific is the focus. Close economic partners can go to war, as seen in WWI. As in Europe before WWI, the forces of confrontation are growing, while people again insist that in our civilized times trade, investment, and progress make direct conflict between great powers impossible. This pessimism reinforces thinking, viewed in the West as greatly distorted, that Washington insists on regime change in China (as in Russia and North Korea) and is at fault for failing to find common ground. The notion of illusions driving policy is the key to this outlook, but its misrepresentation of US foreign policy flexibility is the illusion in this piece.

Alexander Gabuev asked on July 15 in whether war would begin in the South China Sea. The key to the transformation of the sea is China becoming a military power, aspiring to leadership in the region and intent on turning the sea into a military fortress, from which China could project power into the Malacca Straits and expel the United States from Southeast Asia. China’s actions depend in part on the use of the sea for an image of China as a strong state, projected since Xi Jinping came to power. Emotions have been so aroused over the court ruling that online voices blame weak neighbors for making a pact with the devil, i.e., the United States. Thus, the sea is closely linked to Xi’s prestige, Gabuev adds, and he cannot look weak. In the end, this drives more and more countries to Washington as their protector. If Beijing chooses to double down on recent policies, the situation will escalate and raise the prospect of a military incident, possibly leading to serious conflict. For Russia, which has been quite able to steer between China and its important partners in ASEAN, a conflict scenario is the most dangerous, damaging trade as well as the economic rise of a region it wants to become a big market for Russian production. The Gabuev analysis prioritizes economic objectives and puts blame on China in contrast to many other articles emphasizing geopolitics and China’s partnership.

On the same theme on July 13 in, Aleksei Verkhoiantsev also called for Russia to avoid in any form becoming involved in territorial disputes around the islands in the South China Sea. All it is already doing is offering indirect support for China, since China supports an order in which disputes are settled without the participation of non-regional powers, and criticizing US actions. There is no need to go further, he adds, warning that this arena could soon become a more important and serious problem than the Middle East. The appeal is to lean to China, but, it seems, to avoid entrapment by it.

China-Russia Relations

On August 26 TASS reported on prospects for transit through the Russian Far East as part of connecting the Silk Road and the EEC. China it says, regards transit via Russia to Asia as necessary for the development of its least developed provinces with two routes in mind: the western one via Xinjiang and the northeastern one via Heilongjiang and Jilin. TASS also reports that it seeks a guaranteed route to Europe in light of tensions in the South China Sea. In turn, Russia and Kazakhstan will gain by easier access to markets in China and through the transit trade. According to the article, the turning point came with China’s Silk Road Economic Belt and the crisis devaluation in Russia and its neighbors, which lowered the cost of trans-shipments via Russian Far East ports or the Sino-Russian border to Europe to the level of sea shipments from Shanghai. The ports of Primorskii krai have added capacity, which is only being half used. Along with other increases in capacity, Russia is ready, if some supplementary investments on parts of the route are still needed, readers are told. Yet, the author, who suggests that all that remains is a marketing problem, observes that China only, in theory, is ready to begin transit through Primorskii krai of goods from Northeast China to southern Chinese ports. Russia has established a free port, and Chinese companies are inspecting the corridor. There are 2 routes: Primor’e 1 (Suifenhe, Ussuriisk, Vladivostok, and Nakhodka, only requiring a worthy border terminal) and Primor’e 2 (Hunchun, Zarubino, Slavianka, still needing considerable infrastructure development, although distances are shorter). Optimism seems high in this review of preparations for a major expansion of cross-border transit trade.

Vasilii Kashin in on September 1 wrote about the Sino-Ukraine agreement to sale the AN-225 (Mriia airplane), a Soviet technological legacy, to China along with the documentation for it. Called a symbol of the industrial might of the USSR, its sale is equated with that of the 70 percent completed aircraft carrier Variag in 1998 for USD 20 million, which enabled China, almost for free, to acquire a colossal military-technological achievement and finish the job as the Liaoning. While the task of resuming production after 30 years on the basis of a lone assembled plane from 1988 is daunting, it is not likely to result in an export market. Kashin concludes that the Russian aviation industry’s interests will not be affected, and Russia should be pleased that one of its megaprojects has fallen into good hands and will finally serve the progress of humanity. This positive twist on a deal that could have been viewed, given strained Russo-Ukrainian relations, as hostile, is a sign of how much Russians are trying to put the best light on China’s actions and on Sino-Russian relations.

The South China Sea verdict led Russians to reassess the growing threat to peace. Kommersant the week after the decision argued that this dispute will decide the fate of the future world order. It is testing the US hegemony in Asia, the ambitions of China as a great power, and the contemporary structure of international relations. Yet, given the new, less “anti-communist” leadership in the Philippines, the article raises the possibility of a flexible variant emerging through compromise.

Russia-Japan Relations

On September 6 in Nezavisimaya Gazeta, Elena Kuz’mina wrote about an energy bridge to Hokkaido as a factor for forging peace with Japan. She asked if the EEU would succeed in building an energy super-bridge including China and South Korea as well as Japan, while discussing the significance of the Eastern Economic Forum. In line with Putin’s call at the forum for economic integration without political dictates, she said that it was already taking shape with the first step the EEU free trade zone with Vietnam, and she cited South Korea as another interested party, pursuing its Eurasian Initiative. Separating economics from politics and vigorously proceeding to integration appears as a kind of panacea, welcomed by states in East and Southeast Asia, on the path to Putin’s “Greater Eurasia.” Given that Japan and South Korea lack their own energy resources, Kuz’mina is optimistic, while warning that Russia must proceed with its own hydroelectric expansion and should start with China and then proceed to Japan. Yet, her stress is Japan. Russia will get jobs, and Japan will receive a reliable source of electricity. In contrast, she is on the defensive about the failure to attract much Chinese investment in production beyond small processing plants. The article ignores what Park Geun-hye said days before about the problems posed by North Korea for the Eurasian Initiative and what Abe on the same panel said about the importance of a territorial agreement. It offers no basis for its optimism even with China on an energy super-bridge and on Russia’s role in Greater Eurasia.

On September 6 in Kommersant Mikhail Korostikov wrote in praise about Abe’s new system of relations with Russia, evaluating his presentation at the Eastern Economic Forum as proof of an entirely new quality of bilateral relations. The article argues that Abe has stopped considering resolution of the territorial dispute as a necessary condition for the development of relations. The majority of contracts concluded at the forum by the Japanese were an advance to the Russian government, which had promised to improve the investment climate. Thus, things were not assured, but the article takes note of the nervousness in Washington and Beijing about this new relationship. Above all, it stresses the seriousness of Japanese intentions, as Abe shifted to the “ty” form of “you” in Russian translation, evoking a burst of applause from the audience in Vladivostok, and he struck a welcome chord by appealing to work together to make the Russian Far East into an Asian export base while also emphasizing his support for the goals of improving the well-being of the people.

Mentioning the challenge of getting around sanctions, given the close ties of Japan’s financial system to that of the United States, the article suggests that this would be addressed and notes a promised credit of USD 400 million to NOVATEK, which is under sanctions. When an advisor from Abe’s circle was asked if there would be a negative US reaction, the answer reported is that this moment was specially chosen as the US election period. Given that Honda hires many in the key state of Ohio—one of many similar examples—, Washington at this time would not get into any real squabble with Japan. After the election prior to the formation of a new administration, it will also be hard to organize pressure on Japan, Alexander Gabuev was reported as saying. As for China’s reaction—seen as no less important—, Igor Denisov was said to have responded that there is no need to dramatize the situation, since China’s leaders have learned to separate the economy and politics, and they will see no threat to their interests from Russo-Japanese economic projects. The article ends by asserting that Tokyo’s motives remain a question. Russia is not a big trade partner for it, and trade fell 30 percent in 2015 and another 36 percent to USD 14.5 billion on an annual basis in the first half of 2016, and Japan is a US military ally and opposes the domination of Russia’s friend China. The final objective of Abe is still to resolve the territorial question in a way desired by Japan, and it has only changed its tactics. Yet, Aleksandr Panov suggested another motive: Japanese business is searching for new markets around the world, and Russia is a natural choice, while Abe wants to be seen as a powerful and independent leader. It is fully possible that Moscow is hoping to be able to use Japanese money without transferring any islands, readers are told.

Ambassador Andrei Denisov on August 31 in Kommersant was interviewed about unhealthy expectations in Sino-Russian bilateral relations. He described the Eastern Economic Forum as a time when Russia regularly reports the results of its “turn to the East.” While the Chinese delegation this time will be smaller than those of Japan and South Korea, Putin will proceed to the G20 as the “main guest.” Denisov noted differences between Russia and China in assessing the nature of their cooperation: Russians await, if this is not to be a military alliance, trade on conditions better than market relations—a sign of regularly helping each other politically and economically, while Chinese are fully satisfied with mutual support on the international arena, but apart from that, consider relations an obligation, not to be built on the basis of a partnership. While Russian authorities have grasped this for a year and a half and tried to lower expectations, the public wonders why this is not a “partnership.” For Denisov this is a reflection of the divide in mentality—Russian dreaminess and going from side to side versus Chinese pragmatism and sticking to their plans; so they must make use of each other economically and politically. Their interests closely correspond to each other’s. Who you like is secondary in relations between states, he adds, but he also claims that Russian culture has become close to the Chinese. In the past year three main areas of cooperation have taken shape: tradition—oil and gas, military-technology, and agriculture. Denisov explains that China is the first to receive the S-400 and SU-35, while the two are working together on a new airplane and a heavy helicopter, despite Russian specialists thinking that Russia is selling its scientific-technological achievements, and soon none will remain, leaving Russia only as a natural resource supplier to China (avoiding being such to Europe) while China becomes an industrial supplier to Russia’s resource base. A process exists through cooperation with China for Russia to transition to supplying the products of oil and, in any case, dependency is two-sided. Insisting that Russians are interested in long-term, stable supplies and contracts that reduce the level of risk for both sides, but it is difficult to fix a price when that of a barrel of oil has dropped abruptly. As for Russia losing its technology, it is not a leader, and China is much more eager for US and Japanese technology with civil uses. If Russia is planning on long-term and large-scale military cooperation with a country we consider does not pose any threat at all, then it must proceed according to the rules of this sector. Above all, Denisov is defensive of China, answering skeptical questions about it not doing enough or seeking some unfair advantage. One question asked about a late July article in Global Times on the construction of a crossing from Nizhneleninskoe to Dongjiang, complaining that the Russian side has not even started on the project, while China is rapidly proceeding. What is holding back half of a bridge for USD 142 million? Denisov explains that for private firms in newly straitened circumstances in financial markets the sum can be large. The fact that this will be the first bridge across the 1000-km Amur, separating the two states, is disturbing, he adds, leaving a situation where people wait for the river to freeze over in order to cross. Meanwhile, Chinese presume that the project is on hold because no political decision has been taken by Russian authorities, who are afraid of Chinese expansion across the bridge. Denisov acknowledges that the bridge has significance for the Chinese beyond its commercial role as an international transport and expresses confidence that the Russian fund for the development of the Far East sill soon lead to a welcome result and that this will play a role in the transportation corridors Primor’e 1 and 2, which will help to move goods from north to south in China, when its railroad lines are overused. Denisov was also asked about Putin’s declaration at the end of 2015 that Russia would initiate a large-scale project to integrate the EEU, SCO, and ASEAN, in light of the fact that within the EEU and the EEU and SREB, problems remain. His answer is to think big beyond today’s horizons, and China welcomes such projects. Now China is interested in exporting some of its production given the cost of labor.  Denisov also cites the benefit of economies of scale from a larger market. He also counters rumors that China’s anti-corruption campaign has stopped cooperation with Russia since officials fear big projects, which have higher risks, even justifying such payoffs as necessary to run such a large country.

A conversation with Denisov was presented in Mezhdunarodnaya zhizn’. He stressed massive economic cooperation within a large region, including the EEU and SREB. If the latter is a concept advanced by China, it must be realized through cooperation with other countries. There is an image of Russia as indispensable and of large-scale investment projects, first of all in infrastructure, as critical to the conception. Also central to Denisov’s thinking is an expanded SCO, inclusive of India and Pakistan and involving a north-south vector as well as an east-west one, as well as revitalization of the idea of the Russia-India-China triangle along with their cooperation within BRICS. He contrasts the decline of integration in the West, given BREXIT, with the transformation of world geometry via new vectors of development outside the West.

In the same “Conversations in the Corridors,” ambassador to India Aleksandr Kadakin responded as well, observing that no matter how titanic the changes on the international arena and within countries, Russo-Indian relations remain stable based on the highest trust. He adds that both sides are confident that in the future national interests could not conflict. Only with India will Russia produce fighters of the fifth generation, he observes, refuting the information that Russia is being displaced by the United States in military-technological cooperation with India, while asserting that 70 percent of Indian armed forces and 80 percent of its navy are equipped with Russian technology. India is increasingly showcased in claims that Russia is succeeding without clarity about both Indo-US and Indo-Chinese relations.

In a joint article on BRICS in Mezhdunarodnaya zhizn’, the aims and problems of Russia, India, and China are juxtaposed. Russia is seen as providing the inspiration for BRICS, dating from Evgenii Primakov’s appeal for a strategic triangle of Russia, India, and China. While acknowledging that BRICS helps Russia to realize economic cooperation, its main purpose is foreign policy as an instrument against US influence and that of its western partners in regions belonging to the traditional zones of Russia’s influence. It contributes to the defense of sovereignty and national security. The article notes that expert society considers BRICS developing countries in their political and economic indicators without real potential for innovation and with the problems in Russia of high levels of state control, corruption, and a lack of appeal to investors, it is in danger of becoming a natural resource supplier to the BRICS. The skeptics do not take into account the geopolitical, socio-cultural, and military potential of Russia, and the fact that Russia’s GDP per capital and educational level puts it at the top of the BRICS members. Moreover, its international authority, all are told, without doubt puts it in the forces deciding the agenda in international life. The conclusion is that Russia has the experience and strategic culture to establish at the regional level a new system of international relations and plays the role in BRICS of supplying clear foreign policy concepts and a model of behavior for the new system.

India is described as one of the main players in contemporary international life. It plays a big role in the balance of global and regional forces due to its rate of growth and its diverse potential. It looks first to the circle around it, then to the circle of the Indian Ocean, and third to remaining world to acquire the status of a global power. India’s takes the strategic triangle idea of Primakov as the basis of its long-term foreign policy planning and attaches importance to BRICS, showing solidarity on the goal of democratization of the world financial system, but it interprets issues in a local and regional perspective. The article observes that its bilateral relations with BRICS partners concentrate on economic matters, but it omits any mention of how India is working with the United States and other countries in balancing China.

China is praised in the article for seeking through BRICS the formation of a new, just, and rational world order. There are no reservations in treating China as a country hostile to the existing order, i.e, in no way a status quo power.  As its economic power has grown and its political influence has strengthened, China finds in BRICS a way to make its successes appear less unsettling for the rest of the world. Cooperation with the countries of BRICS is an important priority, and it is preparing for cooperation with these countries in all spheres. Absent here is any mention of China’s problems with India.

The authors pose two possible scenarios for BRICS: institutionalization into a full-fledged international organization or broadened cooperation though informal dialogue. The first is preferred, to realize objectives BRICS has identified and to raise the authority of developing countries, but it is seen as beyond real possibilities due to: the presence of other platforms that would lose significance; the diversity of civilizations; the low level of mutual trade and even the competitive nature of trade in some sectors; problems of currencies in trade relations; and the potential for Sino-Indian conflict. Yet, the authors also find positive tendencies, as in the 2014 formation of the BRICS bank, which was to begin offering credit in April 2016. In seeking compromise approaches positive for the organization, the article points to the need for a common position on: 1) reform of the Security Council, to which India, Brazil and South Africa seek permanent membership, while Russia and China only speak in general terms about supporting their aims to play a greater role in the UN; 2) climate control, on which Russia joins European states, while the others deny that the degradation of nature was their responsibility; 3) nuclear arms, on which India and China oppose proposes for reducing the number of nuclear weapons, and Russia refuses one-sided curtailment of its nuclear potential, seeing it as a means of containment; and 4) some economic matters that would also help to form a zone of cooperation geopolitically where these countries would minimize US influence.

Thus, the article’s focus is a grouping to exclude the United States and the West, and it expresses certainty that such a zone is possible and would attract many other countries on the global periphery. They would join to maintain their sovereignty and realize their national interests, while gaining access to natural resources of the partners on beneficial terms and raising their international status. This would not mean confrontation or even opposition to the United States and its allies, but it would lead to political dialogue based on equality. In the Asia-Pacific region, the US pivot since 2011 is aimed at dominating, and this needs to be countered even if many states view the US role as a mechanism for balancing against China. Vietnam is cited as a country that is better off orienting itself to China and also Russia. A split in the region into two groups is anticipated between countries choosing the USA and those preferring to broaden economic ties with China, which will gradually draw ever closer to China. The Asia-Pacific region is where bipolarity is taking shape, the authors argue, and the SCO is part of the zone apart from America. Taking pains to argue that this zone will not be a bloc or formal but will have strategic salience, the article downplays economic integration and tosses in the term “multipolarity” at the end as if that mere mention qualifies earlier concentration on Russia joining China.

As for countries viewed by many as in play, the article treats Vietnam as ready to be with China and Russia, India as a core member of the non-American group, Iran as a member, and South Korea and Singapore as tied to the United States. No mention is made of Japan, assuming its overtures to Russia have no significance for reordering. By casting a wide net, Russia’s dependency on China is obscured. The assumption is that these two countries are acting as one in pursuit of the same global polarization.