Two approaches to building influence

For The Diplomat, I explored differences between Russia and China’s respective approaches to building influence abroad:

There is a fundamental difference in the goals that push Russia and China to pursue grandiose projects. Moscow frames its project in terms of an exclusionary sphere of influence, which would confirm Russia’s status as a global great power. It is less interested in genuine economic integration than in the acknowledgement of its privileged status in the post-Soviet space by what it perceives as its peers – the West and China. As long as Moscow can gain prestige and keep up the appearance of great-power posturing, the nuances of the implementation process do not matter much. China’s aims related to the New Silk Road are at the opposite end of the logical spectrum. Beijing is first and foremost interested in continuing its economic expansion abroad. The ideas of renewing the Silk Road were framed in a non-exclusionary way. The concept remains open for all possible participants, from Asia through Africa to Europe. China makes no pretenses towards having a sphere of influence – Chinese scholars have even been reminded by officials not to compare the New Silk Road to the Marshall Plan, as the latter allegedly demonstrates “hegemonic features.”

Russia focuses on the form of its influence – Moscow insisted on the establishment of a legal foundation for the integration process and its institutionalization. China cares much more about the substance. The New Silk Road is therefore better understood as an umbrella for what remains bilateral economic engagement. These differences help explain why Russia and China can be expected to reconcile their respective interests in Central Asia.

Read the whole article at The Diplomat

China and Russia: Two Approaches to Integration

Russia’s long-lasting turn to China

The bolstering of Russian-Chinese ties stands out as one of the key international consequences of the Ukrainian crisis. Attempting to push back against Western sanctions, Russia turned to the East and embraced China as a very close partner. Over the course of the past few months, both sides finalised decade-long negotiations leading to the signing of a 30-year gas deal. They also concluded numerous agreements on economic co-operation, including one envisioning Chinese companies constructing a high-speed railway linking the Russian cities of Moscow and Kazan. Russia’s turn to China did not, however, start with the Ukrainian crisis. Its roots go even deeper than Putin’s third presidential term with its increasingly anti-Western and conservative agenda. The focus on China is embedded in the 2008-2009 global economic crisis.

Ten years ago, in the mid-2000s, such a turn to China seemed implausible. Russian-Chinese relations were said to have run out of the post-Cold War steam they had been running on. Despite important positive bilateral developments, such as the signing of the border agreement, the creation of the Shanghai Co-operation Organization (SCO) and the provision of military equipment necessary for the modernisation of the Chinese armed forces, the Russian-Chinese rapprochement was facing a growing number of obstacles. No energy partnership materialised. Russia was at pains to avoid dependence on China in its plans for oil and gas exports to Asia and was repeatedly reaching out to Japan, South Korea and other potential customers. Moscow delayed decision on the construction of Asian pipelines, attempting to stir up competition for its natural resources. The arms sales to China stalled, with Russia unwilling to provide the most advanced weapons and unable to come to terms with China’s illegal copying. As China’s influence in Central Asia grew incrementally, the region was expected to turn into the field of competition and rivalry in the immediate future. Globally, despite shared criticisms of American international primacy, both states pursued different policies. Russia challenged US predominance while China searched for a modus vivendi. Taken together, these developments were, it seemed, not conducive to a more amicable relationship between Moscow and Beijing. China moved up the international power ladder and increased the distance separating it from Russia. The global economic crisis of 2008-2009 only reinforced these trends: China’s rise accelerated, while Russia’s resurgence hit the doldrums.

Surprisingly, Russia and China did not drift apart. On the contrary, Moscow turned towards Beijing. Following the economic crisis, energy co-operation recommenced. Russia constructed the first oil pipeline to China, and this was followed by the signing of a series of contracts on oil deliveries. These made Chinese companies Russia’s most important customer in the Asian market. Chinese banks turned into the main source of financing for Russian energy behemoths, such as Rosneft and Transneft. Security co-operation encompassed not only regular military exercises on land (the Peace Mission) but also joint naval drills. Trade in arms revived and both sides expect to conclude new contracts on such weapons as the Su-35 fighters in the coming months. In Central Asia, Moscow and Beijing found ways to divide their influences, with China dominating the energy realm and Russia the security realm. Moreover, both sides seem able to reconcile their respective initiatives directed towards the region – the Russian-led Eurasian Economic Union and the Chinese ‘Silk Road Economic Belt’. Globally, China began to replace Russia as the West’s key interlocutor and emerged as the major coordinator of non-Western states in multilateral forums, such as the G-20 or BRICS. Even the Russian-American ‘reset’ initiated in 2009 did not weaken ties between Moscow and Beijing. Moreover, in the early-2010s Russian and Chinese policies towards the US converged. Both states put pressure on the US (in Eastern Europe and East Asia respectively) and opposed global American initiatives (e.g. blocking intervention in the Syrian civil war).

The 2014 Ukrainian crisis had the potential to scupper this booming Russia-China co-operation. Having inspired a referendum in Crimea and annexed the peninsula, Moscow put Beijing in a highly uncomfortable position. Russia infringed upon the principles of non-interference and territorial integrity, cherished by China for reasons related to its own fears of separatism, particularly in Tibet and Xinjiang. Despite these serious doubts, Beijing decided to support Moscow. China explained its neutral position with regard to the annexation of Crimea with reference to specific historic circumstances and stopped short of criticising Russia for its ‘silent intervention’ in Eastern Ukraine. During subsequent bilateral and multilateral summits, Chinese leaders offered Vladimir Putin political and economic support rather than criticism.

The Ukrainian crisis did not open a new chapter in Russian-Chinese relations; it validated changes which had been underway since the global economic crisis: Russia’s increasing acceptance of China’s superior position and Beijing’s policy of self-restraint towards Moscow. For a more nuanced account of the developments leading to this outcome, see my forthcoming book.

Chinese engagement, Russian withdrawal?

The past week saw a Chinese destroyer accompanied by a missile frigate and a supply ship all set off for the Hawaii archipelago. Although it may be tempting to make allusions to the Japanese navy approaching Pearl Harbour during the Second World War, this was part of a multi-national naval drill, the Rim of the Pacific (RIMPAC).

China has for some time now been regarded as key to the future of the international order. It is thus not surprising that every Chinese move, especially involving its military, is closely watched. The Sino-Vietnamese brinkmanship over the maritime borders in the South China Sea several weeks ago appeared to confirm China’s image of an increasingly assertive great power, attempting to push through its ideas for the East Asian neighbourhood. However, recent steps taken by Beijing did not fit this pattern. In addition to participation in US-organised multilateral naval exercises, China deployed 850 troops to boost the UN peace-keeping mission in South Sudan. These are, of course, very different types of political-military engagement but the similarity in their interpretation is remarkable. They are treated by observers and commentators as strong political signals from Beijing.

RIMPAC is indeed a significant event as it is the world's largest international maritime warfare exercise hosted and administered by the United States. It makes claims that it is crucial for sustaining cooperative relationships critical to ensuring the safety of sea lanes and security on the world's oceans. This was the first time that China decided to take part in RIMPAC. This move is interpreted as signalling Beijing’s benign intentions, especially given recent Sino-American tensions. It also suggests China’s growing readiness to become engaged internationally and reinforces the image of China as a responsible global actor. Peacekeeping in Africa is seen through similar lens, in terms of improving China’s credentials as a stakeholder in the international order. Beijing makes use of this to demonstrate its benign face to the outside world. Moreover, South Sudan is not the only instance of Chinese military engagement in UN peacekeeping operations. In 2013, the UN mission in Mali was aided by 500 Chinese troops.

The question is whether China’s participation in multilateral efforts to manage international security goes beyond the symbolic, whether China can make a tangible and meaningful contribution to peace and cooperation in the Pacific or to the solution of the Sudanese crisis. China has certainly been forced to leave its ‘splendid isolation’ from global high politics and to start sharing the problems of arranging the international order. It has to take care of its interests far away from the centre. The ubiquitous presence of Chinese workers worldwide makes it necessary for China to be prepared for contingencies. This was a lesson China took in the case of the 2011 revolution in Libya, when it had to evacuate its 30,000 citizens. The growing appetite for energy resources, oil in particular, is another thread which may explain China’s readiness to make more vigorous foreign forays. Beijing’s involvement in South Sudan was frequently interpreted as directly related to China’s overarching goal of securing greater access to natural resources. Regardless of its incentives, China’s engagement reinforces the Western ideas of how the international order should be arranged. Its acceptance of troops being sent to South Sudan followed on from a change to The United Nations Mission in the Republic of South Sudan (UNMISS) mandate, which now covers the protection of civilians and human rights monitoring as well as support for the delivery of humanitarian aid.

Against the backdrop of China’s embrace of multilateral co-operation, Russia has neither taken part in RIMPAC 2014 nor contributed to the peacekeeping mission in South Sudan; or, for that matter, last year, in Mali. Does this abstention testify to Russia’s diminishing interest in global issues and the ‘change of places’, with China gradually taking on more responsibilities globally? The reversal of Moscow and Beijing’s roles has been more and more visible in the aftermath of the global economic crisis. Russia’s economic interests around the globe are negligible when compared to China’s. Russia does not export its workforce, nor does it import resources. Moreover, Western expectations towards both states vary. When Russia took part in the 2012 edition of RIMPAC, this was interpreted as hedging against China, not as a potential contribution to the safety and stability of global sea lanes... 

Russia, China, and the future of the liberal international order

In recent weeks, China’s assertive moves in the South China Sea have dovetailed with Russia’s annexation of Crimea and its covert aggression in the eastern parts of Ukraine. Last year Moscow and Beijing successfully prevented the intervention against the Syrian regime. The return of power politics, with Russia and China singled out as the major culprits, has become the order of the day among the scholarly community. It has been said about both states that they are striving for hegemony in their respective spheres of interest or neighbourhoods and that they oppose liberal internationalism globally.

What are the outcomes of these policies for the international order? John G. Ikenberry optimistically argues that the liberal order will persist as the emerging powers do not wish to overturn it: ‘it is a misreading of China and Russia, which are not full-scale revisionist powers but part-time spoilers at best, as suspicious of each other as they are of the outside world’. For Walter Russell Mead, Russia and China (supported by Iran) are revisionist great powers who challenge the international order created by the US. Charles Kupchan, in turn, takes a more centrist position, arguing that the liberal order dominated by the West will be replaced by a ‘diversified world’, which will be anything but one dominated by a single actor.

President Putin’s visit to Beijing was preceded by ambitious declarations of elevating the two states’ relationship to a ‘new stage’ and it is worth pondering the question of what the Russo-Chinese relationship actually means for the future of the liberal international order.

Russia and China have aspirations to dominate and reorder their adjacent regions. Their respective actions towards Ukraine and the South China Sea coincided but they can hardly be said to represent a coordinated action against liberal order. Although Moscow and Beijing continue to oppose liberal internationalism, with its practices of intervention and normative content focused on human rights and democracy, they are both on the defensive. Russia’s engagement with R2P is very uneven, while China finds it increasingly difficult to reconcile global interests with keeping a low profile outside its immediate neighbourhood. Russia and China may have converged in terms of political systems, but they still represent two distinct types of non-democratic regimes.

The parallel nature of both states’ actions can be very misleading and makes analysts place them in the same category, under the banner of the common challenge they supposedly pose to the West. But beneath the surface, Russia and China are in the midst of their own, bilateral ‘power transition’.

Beijing is gaining the upper hand in the Russo-Chinese relationship and is beginning to dictate its terms. Russia’s sophisticated plans for the diversification of energy export to Asia have been replaced with an increasing dependence on China, so far limited to oil but soon to be extend to the gas sector. The naval drills, organised regularly since 2012, have reflected first and foremost Beijing’s strategic needs and the concerns it holds dear with regard to its neighbourhood. Russia has acquiesced to China’s presence in Central Asia, while not being able to position itself as an independent player in East Asia. Even the success of Russian diplomacy in preventing US action against the Syrian regime cannot overshadow China’s imprint on global multilateralism, from the G-20 to BRICS.

Hence, the relationship between the non-liberal great powers – Russia and China – and the West cannot be reduced to a simple ‘them versus us’ dichotomy or to a return of power politics. Moscow and Beijing are undergoing a complex process of re-arranging their respective places in the international hierarchy. The effect of this is still far from being determined, but it will certainly have an impact on the future international order.

The myth of the 10-year long gas negotiations

President Putin’s upcoming visit to Beijing (20-22 May 2014) has once again raised expectations that a gas contract will finally be signed after a decade of negotiations. We have witnessed a similar ‘fever’ prior to every Russian-Chinese summit for the last couple of years. Let us have a glance at how Russia and China have repeatedly failed to agree or... how they have been faking their negotiations.

The very first agreement, which envisioned the construction of a pipeline and the deliveries of Russian gas to China, was reached during President Putin’s visit to Beijing in October 2004. Two years later, another agreement followed and the major contours of a future contract were made public. Russia’s proposal entailed the construction of two gas pipelines, along the western and eastern routes, to Xinjiang and coastal China. The total volume would amount to 68 billion cubic meters (bcm) per annum, 38 bcm for the western route and 30 bcm for the eastern one (Russian gas exports to Europe hovered between 120 and 130 bcm).

Already then it was the price which seemed to be the major obstacle. The price offered by China was at the level of US$ 100, while Gazprom’s price for gas on the European market stood at US$ 250. In practice, however, neither side was determined to strike a deal.

For Russia, the talks with China were a way Moscow could put pressure on European states. The plan was for the western pipeline (named the Altai pipeline) to be supplied from the Western Siberian gas fields, i.e. the very source of deliveries to Europe. Demonstrating the possibility to ‘switch sides’, Gazprom attempted to convince the European companies to renew long-term gas contracts and to prevent the anti-monopolist regulation of the EU gas market. At that time, China’s demand for gas remained limited, especially given that in 2006 Beijing signed a contract on a gas pipeline from Turkmenistan.

Following the 2008-2009 global economic crisis, Gazprom, faced with waning European demand and the disadvantageous EU law, seemed much more interested in striking a deal with China. The Russian government kept insisting on the priority of constructing the Altai pipeline first. For Moscow the pipeline to China continued to be primarily an element of its policy towards the European Union, providing convenient leverage and increasing its bargaining power. The western gas pipeline was also supposed to discourage China from finalising a gas agreement with Turkmenistan. In this case Moscow clearly underestimated Chinese resolution in acquiring access to gas supplies from Central Asia. The eastern route was regarded by Gazprom as a future development.

The series of agreements which followed between 2009 and 2011 seemed to conform to Russia’s vision of gas co-operation with China. According to declarations from both sides, new details were agreed almost every three months. A comprehensive agreement on the western gas pipeline was allegedly reached in September 2010. This document foresaw gas deliveries to begin in 2015, with a volume of 30 bcm per year. In mid-2011 Gazprom went as far as declaring it would be concentrating on the Altai pipeline and abandoning the eastern route.

On the surface, the price remained the only hurdle. But there were more factors which spoke against the feasibility and profitability of the Altai gas pipeline. Even though China’s demand for natural gas skyrocketed, Beijing’s bargaining position vis-à-vis Russia strengthened. Having secured access to alternative gas sources – constructing pipelines from Turkmenistan and Myanmar and LNG terminals – China felt no pressure to close talks with Russia without obtaining serious concessions. China’s primary needs for gas were concentrated on the eastern coast. The western route, promoted by Gazprom, would require additional investment in Chinese domestic pipeline infrastructure. Moreover, even Gazprom’s own plans, the so-called “Eastern Gas Programme”, assumed that the deliveries to China along the eastern route are necessary for the project to be profitable.

The Altai pipeline made no economic sense either to China or to Gazprom. Why did Russia promote this route so stubbornly? The only logical conclusion is that as late as the end of 2011 at least one of the sides was conducting negotiations on the western gas pipeline in bad faith. The Russian-Chinese talks were just a facade, which was supposed to help Gazprom gain concessions in the European market. Real negotiations started in early 2012, when Gazprom and CNPC dismissed the Altai project and re-focused on the eastern gas pipeline.

From Georgia to Crimea – China’s problems with Russia’s foreign policy

Neither Russia’s intervention in Georgia in 2008, nor that in Ukraine in 2014, have infringed upon vital Chinese interests. The former was below the radar of Beijing’s foreign policy and China reacted soberly to the latter. Ukraine has, though, certainly been more noticeable, not least because the country provided the Chinese military with technologies (including the first aircraft carrier) and was to supply it with grain. Beijing demonstrated self-restraint with regard to ties with Kiev, taking Russia’s interests into account.

Nevertheless, both cases of the use of military force by Russia have left Beijing feeling uneasy and have complicated foreign policy-making. China has carefully avoided a for-or-against choice on Russia and has preferred to keep a low profile.

The main problem China recognises is that Russia’s behaviour may fuel separatism, which Beijing considers its most serious challenge. Long gone are the times when both states supported each other against separatism (the triad of Taiwan, Tibet and Chechnya). The Kremlin does not seem to be wary of separatist forces and the relatively cost-free detachment of Abkhazia and South Ossetia from Georgia has made it even more self-confident. China, meanwhile, has grown even more wary of separatist forces. The 2010 Russian-Chinese bilateral declaration included Moscow’s support for China’s policy not only with regard to Taiwan and Tibet, but also Xinjiang. Moreover, the form of Russia’s support for Crimean separatism – a declaration by its inhabitants expressed in a referendum – creates a precedent which may be detrimental to China’s core interests. It may reinforce those sections of Taiwanese society which would like to have freedom to decide about the status of the island. It thus seems implausible that China will accept either Crimea’s independence or its annexation by Russia. It should also be expected that China will support other post-Soviet states in opposing any formal recognition of a Russia-imposed status quo, just as Beijing enabled the Central Asian members of the SCO to resist Russian pressure to recognise South Ossetia and Abkhazia in 2008.

The Ukrainian crisis is, however, far from clear-cut from Beijing’s perspective. The revolution in the Maidan is regarded as a Western-led conspiracy which overthrew the legal government (in a similar way to the Colour revolutions). Beijing perceived the protests in Tibet in 2008 and in Xinjiang in 2009 as having been inspired from abroad. The success of a democratic and popular protest does not bode well for China’s ruling party. Seen in this light, Russia’s intervention in Crimea is considered to be a ‘proper response’ to Western subversion, and China could implicitly support such methods.

Finally, the Western reaction, and in particular that of the USA, to the Russian intervention, offers Beijing a unique ‘laboratory’. Asserting its territorial claims in the East and South China Seas in an increasingly aggressive manner, China can be expected to draw lessons from the Western response to the use of military force, equally as it now observes the West’s reaction to the implicit Russian threat of full-scale invasion.

Given the complexity of Chinese interests, it should not come as a surprise that Beijing is avoiding taking a clear stance. The question is whether such a reaction can lead to any changes in China’s relations with Russia. Will the absence of unambiguous support make Russia revise its approach to China? The Georgian War did not harm the ever closer relations between Russia and China. Moscow seems to have reconciled itself to the absence of support from China for the independent status of Abkhazia and South Ossetia as it has got used to Beijing’s increased leverage within the SCO. The Crimean issue could lead to similar results. While not supporting Russia, Beijing has no reasons to condemn its actions.

On the other hand, however, China could be tempted to pressure Russia, which faces the perspective of semi-isolation from the West. Beijing could make additional adjustments in their bilateral relations and tilt it even more to its advantage. According to the Japanese media, China asked for Moscow’s support in the dispute with Japan, concerning the Diaoyu (Senkaku) Islands (offering in return support for Russia’s stance with regard to the Kuril Islands). So far, Russia has seemed uninterested. The need to gain support in the dispute with the West over Crimea could force Moscow to revise its approach and give in to Beijing’s demands.

What are the consequences for the contemporary international order? The 100^th anniversary of the outbreak of the WWI makes comparisons tempting (see the thought-provoking piece by Margaret Macmillan in International Affairs). The road from a minor crisis to war between great powers is indeed a short one.

The Russo-Chinese relationship is often depicted in the West in terms of a quasi-alliance hostile to the US and Europe. Conversely, Russia and China present their relations as the ‘stabilising factor of international politics’. As the Crimean case demonstrates, neither depiction is precise. But, paradoxically, the limitations of ties between Russia and China revealed by the Crimean crisis strengthen international stability. Both Moscow and Beijing tend to avoid mutual obligations which would make them hostage to each other’s territorial claims. Consequently, Russia and China are forced to pursue their assertive policies with much more caution. The situation, analogous to the one described by Margaret Macmillan in the heyday of the WWI seems a very distant prospect:

‘Germany found itself backing its weaker partner of Austria–Hungary because it did not want to risk losing its one sure ally; that meant it was drawn into Austria–Hungary’s rivalry with Russia in the Balkans. Not for the last time Germany was to discover that the stronger power cannot always control its weaker partner. Yet Germany could not easily abandon the alliance for fear of losing prestige.’

Russia’s oil export to China: diversification or dependence?

The strategic goal of Russia’s energy policy has invariably been to diversify oil and gas export and to reduce its dependence on the European market. This goal was outlined for the first time in the 2003 Energy Strategy and later repeated in other landmark documents. The initial forecasts were very ambitious: by 2020 almost one third of exported oil and one quarter of gas should be going to the Asian market. In the 2009 Energy Strategy, the Russian government corrected these assumptions: the share of export to Asia should amount to 25% of oil and 20% of gas by 2030. The most recent draft of the Energy Strategy foresees that 23% of oil and oil products and 31% of natural gas will be exported to Asian customers by 2035.

Russia’s concept of export diversification assumes that potential customers for Russian oil and gas – China, Japan, South Korea, the ASEAN states, Australia and even clients from the West coast of the USA – should compete for Siberian resources. Moscow has been at pains to avoid dependence on a single customer who would be able to dictate the terms of co-operation.

Observers have for years now expressed scepticism towards the Kremlin’s grand designs. Bobo Lo in his recent paper described Russia as ‘a niche supplier’ for the Asian market. The prospects of Russia becoming a key supplier for China have been met with similar scepticism. Linda Jakobson and her colleagues in the paper on Russian-Chinese energy and security co-operation commented aptly: ‘Even if Russia fulfils its obligation to annually provide 15 million tonnes of oil through the ESPO pipeline, it will remain a minor oil supplier because of China’s soaring demand for imported oil and intense efforts to diversify supply.’ In his seminal 2012 study on Russian-Chinese oil and gas co-operation Keun-Wook Paik did not envision a bright future for the increase in Russia’s oil export to China, pointing to technical difficulties and the demand from other Asian clients. Paik forecast Russia’s export of crude oil to China as reaching a maximum of 24 million tonnes by 2015. As he succinctly put it, ‘China did not get the massive and secure quantities of oil which it wanted’. Even in the most optimistic scenario, Paik assumed that 35 million tonnes of oil would be exported by Russia to China in 2020 and 45 million tonnes in 2030.

But in 2013 the picture changed drastically. Russia’s Rosneft has been signing one agreement after another with Chinese companies. As a result, by 2020 Russia should be exporting 56 million tonnes of oil per annum to China. China will thus obtain more than 20% of Russia’s total oil export (assessed to remain at the level of between 240 and 250 million tonnes for the next two decades). Even in the best-case scenario, not much oil will be left for the rest of Asia...

Rosneft’s oil agreements with China

	amount of oil (t)	starting date	period	estimated value
Rosneft-CNPC* (oil delivered via the ESPO** pipeline)	15 million	2011	20 years	US$ 100 billion
Rosneft-CNPC (oil for the Tianjin refinery)	9 million	following the refinery’s construction	unknown	unknown
Rosneft-CNPC (oil delivered via Kazakhstan)	7 million	2014	unknown	unknown
Rosneft-CNPC (oil to be delivered via a new spur of the ESPO?)	15 million	by 2018	25 years	US$ 270 billion
Rosneft-Sinopec (oil delivered from the ESPO)	10 million	2014 (contract under negotiation)	10 years	US$ 80 billion
Total	56 million

* CNPC – Chinese National Petroleum Corporation

** ESPO – East Siberia-Pacific Ocean oil pipeline