Country Report: Russia (January 2018)

The late fall and early winter was a quiet period for Russian diplomacy in Asia and analysis after the busier period from September to mid-November. Optimism about Sino-Russian relations was less pronounced than in recent years, but it is still present, while pessimism failed to gain much momentum. The 2016 interest in Japan faded without warnings about poorer relations or much reflection. Triangular analysis inclusive of Trump is unavoidable, while South Korea is drawing closer attention. Idealism about the Greater Eurasian region is falling, and concerns about Russo-Indian relations in the context of the triangle with China have been intensifying. There are signs of attention to growing problems but no clarity about new policies that address them, such as the difficulty in attracting investment into the Russian Far East.

Timofei Bordachev in Izvestiya on November 1 wrote about Sino-Russian relations, asking if Russia should be afraid of the new China. After the 19th Party Congress and declarations of military build-ups—modernization by 2035 and emergence as advanced in the world by 2050—Russians had to decide how to respond. In 2008 Putin had declared in response to NATO that what matters is not intentions but potential. China is no longer able to conceal its rising power, unlike what Deng had advised. The article notes that sometimes China applies economic pressure, but, on the whole, it is restrained in foreign policy, as seen in the enviable restraint and resort to dialogue with the United States. China intends to keep the peace with the United States until it becomes so strong that no fight is necessary, the article observes, even in the face of repeated, unwelcome moves by the United States. For some American “thinkers,” the ideal outcome would be the disappearance of a united China.

The article proceeds to observe that countries no longer believe China’s claims to be peace-loving, even if there is no comparison between its near-forty-year record of peace versus the US and NATO record of war. Yet, even its “peaceful giant” reputation is not enough to remove fear among its neighbors as it keeps strengthening. It is no accident that Putin was the only leader of a great power who took part in the BRI forum in May, as leaders of India, Indonesia, Japan, and South Korea joined those of European states and the United States in staying away. Russia has the most confidence in its ties to China. Many propagandists in the West and some in Russia try to stir up a complex discord in Russia toward China, and, unfortunately, there is fertile soil for that, but not on the political level. The continuous exchange of information at the top serves to raise mutual trust. Despite charges in the West that Sino-Russian interests in Central Asia are opposed, Chinese investments there relieve Russian concerns about instability and insecurity. Russia is more interested in a stronger Chinese presence in that region, argues Bordachev. Most important, the objectives of development of Russia and China are not in contradiction. Thus, there is not a single objective reason for competition. Russia’s military power always will be a reliable guarantee that she will not become a natural resource supplier to one of its partners. Not only is there no reason to fear a stronger China, there is no cause to look at China with concern. As China strengthens, it can facilitate the peaceful transition of the international order to a more just one. In this article, we see resistance to warnings about China’s rising power and lingering optimism.

Il’ia Kramnik in Izvestiya on January 10 remarked that since Russian industry was not too successful in filling arms orders Russia would have to seek help from another country, namely China. He asked how China could help. The Russian navy, he alleges, has sought help before, buying ships and importing technology in 1860-1910; importing technology in the 1930s-40s as well ships through lend-lease; and again, mainly technology in the 2000s. When Germany, following the events of 2014, refused to supply diesel motors, Russia was driven to China, although plans ran into problems, including stoppage of Ukrainian production and big price hikes. Meanwhile, China is building corvettes and frigates at a rapid clip and at reasonable price. Thus, China could fill the deficit that Russia faces. Russian weapons and radio-electronics would still be used. Russia could get by with this deficit, but not without larger, military vessels, including aircraft carriers, where China has drawn on Russian experience. Izvestiya again savors ties with China.

In the January Mezhdunarodnaya Zhizn’ Sergei Trush assessed Trump’s China policy after one year. In his campaign Trump harshly criticized China, catering to many Americans who blame China for all manner of evils. After a period in which the United States practically monopolized the process of globalization—over capital, information, and the international division of labor—Trump is dealing a serious blow to ideas about US leadership, leading to mobilization of the opposition. Trump’s decision to leave TPP is favorable to China’s interests, but his early signs of trade wars and support of Taiwan led the Chinese to consider curtailing financial flows to the United States and to stop cooperation on international issues, especially regarding Korea. Quickly, Trump made clear that he was backtracking on Taiwan and appealing for help on North Korea, which Xi Jinping was ready to offer, albeit not in full measure. His main problem, as that of Vladimir Putin, was with the missile defenses being expanded by the United States and its Asian allies, but he targeted South Korea, not the United States in his retaliation. Meanwhile, in his first year Trump delayed action against China in the economic sphere. There was no “anti-Chinese revolution.” Instead of destroying bilateral mechanisms, Trump has supplemented them with cybersecurity and humanitarian issues. Yet, the absence of progress on North Korea showed the limits of Trump’s “business approach.” Seen as the number one priority for the United States, this issue leads to treating all other foreign issues, notably those with China. It is a nuclear threat and a threat to the military-political prestige of America. China seeks to avoid conflict with the Trump administration, showing restraint from the outset, alert to its own transition in model of development and to China’s unpreparedness to become an alternative nucleus of globalization. Meanwhile, China’s anti-corruption struggle is disruptive, leading to a cult of personality not favorable to strengthening the CCP’s authority, adds Trush. Russia, given its problems, is not seen as fully reliable by China in opposing the United States. Its resources are limited. Thus, China’s leadership puts off a full confrontation with the United States, which coincides with the current US inclination to delay conflict with China as Trump deals with internal opposition.

On November 24, Vladimir Skosyrev wrote in Nezavisimaya Gzaeta on Sino-ROK relations. China seeks to break up a “mini-NATO” and express its opposition to THAAD, using economic retaliation and cultural pressure, which Seoul is eager to restore, leading to the recent promises. It was Seoul that made the concessions, the “three no’s.” With foreign ministers in agreement, Xi will meet Moon in Vietnam and host him in December the article anticipated. Yet, it reports on Wang Yi’s warnings that China would be watchful of actions, and continue to treat THAAD deployment and ties to Japan as forging a “mini-NATO” in Northeast Asia. People are asking if Beijing or Moscow can believe that the US missile defense systems in South Korea will not harm them since they are part of a wider missile defense system in the region. The article disagrees, quoting an expert who says that THAAD only has an effective radius of 200 km and it is clearly directed at North Korea. This is not alarmist nor is it rose-colored in treating China’s foreign policy.

On January 12 in Nezavisimaya Gazeta Vladimir Skosyrev wrote about countries on the Silk Road refusing joint projects with China, including Pakistan’s refusal to accept a $14 billion plan for a dam to be placed under China’s control. Repeated cases of this sort in BRI are noted, which would allow the donor to threaten the security of the recipient. Despite all that China is doing for Pakistan, Pakistan is refusing this offer. Countries are in great need of infrastructure and welcome China’s BRI initiative, but Washington, Tokyo, Delhi, and even Moscow insist that it must not form a political structure centered on Beijing, reducing their own influence. Yet, the article adds, of late Beijing has faced growing opposition, as in a $2.5 billion contract with Nepal that was canceled. BRI means using Chinese specialists for construction, Chinese technology, Chinese steel and aluminum, and Chinese workers and industrial orders. In these circumstances, Thailand put off work on a high-speed railway. In Pakistan China plans $60 billion in projects, forming a corridor to the Indian Ocean. In place of Deng’s legacy, Xi hopes to become a world leader and use the BRI for that ambition, which raises suspicions in the West and the East. Formally, Russia is not a part of the Silk Road initiative, but it cooperates with China through the framework of the EEU and SREB. As a result, the Chinese investments in Russia are on a much smaller scale. Russia has nothing to reject since the flow of capital as part of the Silk Road project is practically zero. Capital has flowed to bilateral projects as Yamal natural gas and Artik-2. This poses no problem for Russia. The Chinese investors do not enter strategic sectors, but in Kazakhstan there are voices of concern, as there are in Western Europe over divisive moves in Eastern Europe that could harm the EU.

On November 28 Kommersant focused on North Korea’s patience, given that South Korea is ready to renew dialogue if the North refrains from missile and nuclear tests, arguing that the North’s restraint for 2 ½ months should now be met by US talks, which Washington had said it is prepared to conduct. Yet, Igor’ Morgulov charged that what is standing in the way now is not the North’s tests but the US-ROK military exercises. Only one side is showing restraint, he complained. The article reports that a South Korean official thinks that Tillerson and Joseph Yoon are optimistic that it is time for talks, but Trump’s attitude is unknown. The Russia Foreign Ministry view is that Pyongyang is exercising due restraint, and that the provocations are coming from the US-ROK side. Notice was taken of the US position conveyed at the Trump-Xi meeting in November that Washington is fully serious about the military variant to resolve the issue if Beijing does not force Pyongyang to stop testing and that Beijing takes this threat seriously and is greatly intensifying pressure on Pyongyang with the aim of forestalling US interference. The article reports on many new Chinese measures curtailing trade. Also Mikhail Korostikov ascribes to a South Korean the idea that Pyongyang is now stopping tests due to the pressure and that it is close to reaching its goals through these tests. In this commentary, the standard Russian position that pressure and sanctions do not work is contradicted, but blame is still placed on the US side and its allies for refusing talks with the implicit message that once they begin the path forward will be clear, obliging the allies to yield on regional security.

On December 27 Kommersant covered Sergey Lavrov’s meeting with his Chinese and Indian counterparts in Delhi, marking the 15th such encounter. Given the sharp disagreements between India and China, Russia could not always succeed in the role of middleman. There was strategic avoidance of all sensitive issues. These occasions allow for bilateral talks too, despite Lavrov’s insistence that the threesome is a major part of forming a polycentric architecture and that they agree on values such as multilateralism, equality, and the superiority of international law. Naturally, he left such popular terms in Russia undefined and avoided other values of a more divisive nature. Asked about the existing differences, the Indian official noted that China refuses regular meetings of defense ministers from the three parties. He said also that India wants to give the battle against terrorism key attention, as it stated in BRICS, and it wants support for freedom of navigation in the South China Sea, which is opposed by China. India is dissatisfied too with the development of Sino-Pakistan relations, including China’s decision to invest in a project in Pakistan-controlled Kashmir, leading India to boycott the BRI summit. The article notes also the near-war over the summer over China’s road construction opposed by Bhutan. Also mentioned are Indian pretensions against Russia over Pakistan with experts in recent months speaking of the formation of a Moscow-Beijing-Islamabad triangle aimed against the intended triangle of Washington, Delhi, and Islamabad, citing Russian arm sales to Pakistan. Yet, the article claims that this is geopolitical talk from the past, not from the polycentric world we have entered, and Russia’s deepening ties to Pakistan are not against India’s interests nor is the special linkage with China against anyone’s interests. Moreover, Lavrov assured the Indians that the strategic partnership with India has not been dropped from Russia’s strategic priorities, notably a unique level of trust in military-technical cooperation with pride in joint production of the world’s best supersonic, winged rocket, BrahMos. In turn, a Chinese official asked Russia to play a more constructive role as a middleman with India. The article ends by bemoaning that this triangular format had sounded wonderful, but now it is an atavism, existing due to inertia. Gabuev is cited as concluding that in this format no significant decision is taken, but even if it has little use, the author insists that it does no harm.

In Kommersant on January 10, an article examined the world in 2018, assessing positively the results in 2017 for Russia in its traditionally strong sectors—power politics, military strategy, and diplomacy—but warning that the world is quickly becoming more complicated, requiring new competencies and global vision. Blind spots and sudden threats can arise. Summarizing a news report on international threats in 2018, the article notes three challenges: a correct grasp of the ongoing transformation; utilization of new possibilities for growth; and protecting the world from war. One warning is that a mix of mutual mistakes in perception could undercut Russia’s efforts at harmonization of relations with neighbors and slow the advance of Eurasian integration. This requires new attention to the processes inside neighboring countries and reformulation of the fundamental narrative on shared history and joint future as well as on how it is translated. Also, despite US preoccupation with the possibility of impeachment, US policy in Eurasia remains unchanged. Russia cannot change the bases of US strategy, but it can disrupt its realization by forming a legal lobby there to influence US policies. Time has come too to propose to some of the EU states’ simultaneous integration into Russian-led integration.

The article proceeds to discuss the continuing economic rise of the Asia-Pacific region, warning that it will be hard for Russia to find benefit in it. Russia needs to transfer more funds to invest in Eastern Siberia and the Russian Far East to take advantage of the regional situation, rejecting a fortress psychology in favor of liberalization of the investment climate and business laws, of a special migration regime, and of planned pockets of growth. In digital space the world is dividing into techno-economic blocs headed by the United States and China with minimal Russian participation. Russia needs a favorable tax regime to boost this sphere and innovative business, greatly simplifying immigration and naturalization procedures for specialists and forging technological clusters in energy rich areas, including the Far East. In North Korea, Russia is able to stop Washington from attacking through measures of strategic restraint, but that would require a lot of resources. Solidarity with China and South Korea is preferable. Dialogue with Japan, which is still supporting Washington, could be productive. The author, Andrei Sushentsov, added that multipolarity can turn into chaos without experienced, confident leadership, which avoids self-satisfaction. Russia cannot be a superpower, but it must embrace its historical fate as one of the global players, setting an example for global leadership.

Vladimir Vidmorovich wrote for on December 22 on the struggle between Russia and China to be the main non-European state in the Balkans. He asserts that the big difference between the two is that China plans with far-sighted vision and Russia has no economic strategy. Reference is made to the 16 + 1 summit in Budapest, where China discussed cooperation with Eastern Europe and aroused a lot of fear in the EU. China’s successes in the rich, corrupt, and unstable Baltics grew more apparent. So far, readers are told, direct competition between Beijing and Moscow is absent, but even if economic problems between the two are few, Russia is losing its niche as the main alternative to the West. The BRI project shows that China plans to embed itself for the long run in the region. There is uncertainty what China’s military ambitions are in the area, but certainty that China is ready to provide much easier money to local needs with minimal demands, as in Serbia in energy and transportation. In contrast, Russia in recent years has practically stopped investing in the Balkans and, unlike China, links economic cooperation with political conditions and insists on making a geopolitical choice and slowing integration into Euro-Atlantic structures. The article adds that Russian investments pose a geopolitical risk due to the negative image of Russian companies in Europe, as in the case of Gazpromneft, which was seen as using its purchase of a Serbian company as a geopolitical weapon, raising prices and making it hard for Serbia to diversify its oil supplies. Talk of brotherhood, religion, and history, which only invoke shame, are quietly losing force, even if distrust in the West remains, giving China its opening. China presents long-term plans, not Russia. Yet, few understand what BRI is, and Chinese products still have a seamy reputation, while the more China is involved, the more likely it will be tempted to intervene in internal affairs. Competition between China and Russia as the main non-European will grow, readers are warned.

In Vedemosti on December 7 an article by Dmitrii Magonia asked why South Korea is activating its economic ties with Russia, noting Moon Jae-in’s economic initiative at the EEF, “9 bridges of development,” through which over three years $2 billion will be invested in projects jointly with Russia after the late November assertion by his ambassador of the intention to boost trade to $30 billion in 2020. In 2012 the two states announced large-scale joint economic projects before the geopolitical circumstances shifted. Although Seoul did not directly join the sanctions on Russia, the projects were frozen. The change now is because North Korea needs to be pacified, in the thinking of South Koreans. To do so, projects such as the Trans-Korean Railroad and an energy bridge across North Korea from Russia are envisioned. For them, the article adds, there is a question of security, linked to the presence of US military bases. Also, the need to export is evident, given a satiated domestic market in South Korea. After several years when the Russian direction has been frozen, such a big market able to pay its bills must not be overlooked. Another factor is the love for maritime products by Koreans, which are present in Russian territorial waters. Previously, smuggling was widespread, but now the market is more civilized, and Koreans are prepared to pay for the right to fish in Russian waters, investing in fish processing in the Russian Far East, as seen in an April statement that Koreans were ready for one project for Pollock.

The nine bridges include: gas industry, railway communications, port infrastructure, electricity, the Northern sea route, shipbuilding, agriculture, fish farming, and creation of new workplaces. Russia has something to offer for each of these, meeting the Korean need to diversify its supplies of gas beyond the unstable Middle East Russia can join the United States in supplying LNG. Gazprom supplies 7 percent of the Korean market and could raise that by 2-5 times. Samsung factories could transit Russian railways to Europe and to Kaluga where the main Korean companies are located inside Russia. Special notice is given to the sea route and port infrastructure, which is very undeveloped in the Russian Far East. The Northern sea route cuts the distance from Vladivostok to St. Petersburg from 23,000 km using the Suez Canal to 14,000 km, and South Korea has two of the three biggest shipbuilding firms in the world. Some Russian companies need to expand their tanker fleets, while many ports need to be developed.
Seoul is interested also in building a grain terminal in Zarubino. Relying on Russia and China, which support the idea of peaceful resolution of the North Korean problem, South Korea can balance US forceful methods (from sanctions to military operations). Paradoxically, readers are told, Russo-Korean relations do not coordinate political and economic issues, and Russia has received nothing where it could have gained. Korean investors have a lot of options in the competitive Asia-Pacific region. Russia has done a lot to turn the Russian Far East into a “territory of special investment rules,” with its own model of control, but Koreans still point to bureaucracy, corruption, undeveloped infrastructure, and lack of respect for the law. To date less than 5 percent of investment in the Russian Far East has come from South Korea.

In Vedemosti on December 21, discussion by Vladimir Shtanov centered on transit from China through the EEU countries, including joint financing of projects. Of 11 infrastructure projects involving Russia, which are also targeted as BRI goals, to smooth movement between China and the EEU and EU, Russia recognizes their need to keep bilateral trade growing. Chinese are interested in deepening the Arkhangel’sk port and building a railway to the White Sea through the Urals and Komi (Belkomur). Another project is through Murmansk, modernizing the BAM and Trans-Siberian railways. Chinese are interested in participating in high-speed railroad construction in Russia. The first project could be the Moscow-Kazan’ line, but lacking money, Russia has decided to proceed in stages, beginning with Moscow-Vladimir by 2023, using Silk Road funds in part. The main aim is to speed the movement of goods and passengers between China and Europe, with Berlin 9500 km from Beijing. Deutsche Bank is seen as a partner for the Moscow-Berlin leg if not more. The main benefit for the EEU states is inclusion in a global logistics market with improved transport serving to raise economic efficiency. Goods from China will move faster at a higher cost, but there are ways to limit costs.

On December 19 RIA Novosti focused on a Chinese investor planning to establish in Primorskii krai a metallurgical cluster. Debang Guangdong intends to invest $5 billion. Such a cluster is desired; the resources exist in the Russian Far East, where there are ports that do not freeze. In the first stage of the project, investment will be to be up to $500 million with production up to 1 million tons, rising to 5 million and then 10 million tons in the third stage. The investor asserted that there is agreement with various companies about participating in the project and that 30-50,000 workplaces would be created. This would be at the intersection of BRI and other plans. Now the search for a location is under way, perhaps Zarubino will be it. No concerns are raised about the difficulties ahead in proceeding beyond this early exploratory process to a full-fledged project on this very substantial scale.

Artem Lukin in the December Kontrapunkt asked if Russia would be a peacemaker or stand on the side of conflict in a possible Korean war. Unlike the past, he asserts, Russia today does not strive to dominate the peninsula and use it as a platform for expansion, but it still has important interests in Korea. Hidden or open sabotage of international sanctions against North Korea is the most obvious of the possible means of interference with US policies on the North Korean question, but Moscow could go much further. One cannot fully exclude its military interference in the peninsula, although it seems unlikely now. American analysts always talk of possible Chinese interference in North Korea in the event of a crisis on the peninsula and make almost no mention of Russia in similar scenarios. Yet, after Putin’s successful operation in Syria one should not fully exclude the Kremlin’s readiness to flex its muscles on the Korean Peninsula. If Putin and Xi Jinping agreed to act together not only diplomatically but also on the military front, that would put Washington and Seoul in an extremely unpleasant position. This alliance, however, would be complicated by the fact that Russian and China only seem to agree on the future geopolitical structure of Northeast Asia There is one cardinal difference: China’s aim is to replace the strategic domination of the United States in East Asia with its own, whereas for Russia Chinese domination would unwelcome as America’s and the aim is a “concert of powers,” a balance of forces so that security questions have to be collectively resolved, giving Russia a voice in a multipolar framework. Indirectly, this piece appears to warn Russians to avoid ratifying China’s interventions plans given the clashing objectives of the two.

On January 10 Konstantin Asmolov wrote in RIA Novosti on the possibility of a meeting between Moon Jae-in and Kim Jong-un, but he pointed to various difficulties. Moon said he would meet only under certain conditions, but in 2000 and 2007, summits took place, showing that they can occur. In this case, the United States insists on de facto capitulation through disarmament prior to agreeing to talks. This mischaracterization of the US position shows Asmolov’s leanings. He adds that the reason the two prior summits occurred in North Korea is because the South Korean law names the North not as a state but as an anti-state organization. In theory, any representative of the North should be arrested. Conservatives are blocking a summit, but a summit could occur in Russia or China. The article makes no mention of the North Korean reasons for not holding a summit in South Korea, rejecting recognition of the South more than the other way around. If Moon’s political position is strengthened beyond the high level of trust he now enjoys, then the summit themes could be expanded, readers are told, but his domestic reforms face sabotage and his foreign policy is opposed.

On January 16 Andrei Lankov wrote in on how Russia is reacting to the new sanctions against North Korea, insisting an international conflict under any circumstances would not correspond to Russia’s interests and it should use its status in the Security Council to stop rising sanctions against the North, which could end badly. China, Dankov asserts, suddenly has made a 180-degree shift on sanctions over the past several months and is now extremely tough on the North, posing problems for Russia. He blames Russian diplomats for actions that can worsen the situation. Sanctions had low effectiveness from 2006, as seen in the growth of the North Korean economy reaching 4-5 percent a year. They were semi-symbolic, covering goods peripheral to the North’s foreign trade, and they were sabotaged by China at all stages, putting loopholes in the documents and closing its eyes to local violations. After all, its interests are best served by preserving the status quo on the peninsula, not instability in the North. However, in August-September, China’s position radically changed. Earlier, Chinese officials had faulted their Russian colleagues for being too hard on North Korea; of late, they accuse Russia of too much tolerance of the North. No longer does China drag its feet on Security Council resolutions, to the point it even goes beyond the US side. Trump has made the difference due to his seriousness about going to war in Korea, taking no risk even if he is just bluffing. Yet, sanctions, however much they cause an economic crisis in North Korea, cannot get the desired results. In saying this, Dankov contradicts countless Russian sources over many years that insisted that sanctions had been tried and had not worked, failing to note their limited nature and that they could shake the economy if they were intensified and enforced vigorously. Indeed, he fears that a wounded North Korean leadership could provoke a conflict with the outside world, taking down others with them. As for Russia’s position, he faults diplomats for backing radical sanctions, unlike the modest sanctions earlier that did little harm. China, at least, uses its support for sanctions to buy time with Trump. Dankov proposes threats of vetoes to lighten the sanction regime, as China did for a decade.