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6 April 2017

Russia in East Asia: Ambitions Fall Short of Reality

Russia’s declared Pivot to Asia means mostly more co-operation with China, but limited engagement with other regional players

Ever since the end of the Cold War, the idea of a dramatic turn to Asia has been a recurrent aim of Russia’s foreign policy. Russian politicians and commentators have emphasized the need to balance Russia’s external relations by taking a more active posture towards the East since the mid-1990s. Asia re-emerged once again as a priority along with Vladimir Putin’s return to presidency in the early 2012, which was symbolically confirmed by the APEC summit in Vladivostok later that year. The ‘Russian pivot’ was given an added impetus in the aftermath of the crisis over Ukraine and the West’s sanctions.

There have been two fundamental goals: to make Russia a fully-fledged participant of the East Asian politics — a sui generis third party for the smaller states squeezed between the US and China — and to avoid Russia’s dependence on China in the region. This required substantial adaptation. In terms of political cooperation, it meant the diversification of political ties — i.e. the development of infrastructure for political and security dialogue with states other than China. Economically, it required diversifying trade flows, developing commercial ties with East Asian countries while attracting investment from them for projects in Russia. In the energy sphere, the turn to the East meant finding new customers for Russia’s oil and gas, rather than just increasing its levels of export to China. The Kremlin’s assumption behind the ‘pivot’ was that Russia would be able to become a relevant actor in the Asia-Pacific region. The Kremlin assumed it had sufficient tools to make this possible.

The shadow of ‘Sinocentrism’

Russia has not managed to translate ambitious goals into a new political reality. Its policy towards Asia remains ‘Sinocentric’ — i.e. centred on China. China has been Russia’s key political partner in the region. Similar views on international politics and similar interests form the basis for Sino-Russian political cooperation. These include first and foremost the opposition towards the US political and military domination of the Asia-Pacific region as well as a willingness to rearrange the security architecture of the region. China remains Russia’s only partner in the sphere of security and defence cooperation. Since 2012, both states have been conducting regular naval exercises, mostly in East Asian seas. Russia and China share their opposition to the American deployments of missile defence systems, both in South Korea and Japan.

China has been Russia’s most important trade partner among East Asian states. In 2016 Russian-Chinese trade reached US$ 69 billion, three times as much as Russia’s trade with Japan (US$ 20 billion) and four times as with South Korea (US$ 16 billion). Chinese investment in Russia grew at a relatively slow pace over the last five years, reaching up to 8,9 US$ billion in 2015.

Russia’s focus on China has been even more conspicuous in the energy realm. The existing infrastructure is mostly bound for China and China increased its position as number one customer for Russian crude oil. The oil pipeline, East Siberia – Pacific Ocean (ESPO), has two sections, one to Daqing in China, another to Nakhodka/Kozmino on the Pacific coast. Russia and China started the construction of a second branch from Skovorodino to Daqing, parallel to the already existing one which would double the capacity of the section to China, from 15 to 30 million tons of oil. China purchases increasing amount of Russian crude oil, using not only the pipeline to Daqing but also the Pacific terminal which Russia assumed would serve as a tool of diversification, providing the resources for other customers than China. In 2015, China imported 41 million tons of oil from Russia, Japan – 14 million, South Korea – 4 million (to compare, in 2015 Russia exported 154 million tons to the EU). In 2016 China bought 70% of oil from Kozmino port, up from 51% in 2015.

The two states began also to build the gas pipeline, the Power of Siberia, which would link Russia and China directly and would not supply any other state. Its completion may be expected around 2019-2020, although it reaches its full capacity around 2023-2025. Moreover, Gazprom withdrew from previous plans to build an LNG facility in Vladivostok which would balance future Russian gas sales to China by offering natural gas to other Asian customers. China is a major contributor to the flagship private project, Novatek’s Yamal-LNG. Chinese company, CNPC, holds a 20% stake in the project (France’s Total is another foreign stakeholder) and contracted the purchase of 3 million ton LNG per annum. The Chinese banks promised a US$12 billion loan for the project’s development. In this context, Japan offered US$ 400 million investment in the project. The only major exception to this Sinocentric pattern is the Sakhalin-2 LNG facility. Japanese firms hold stakes in the project and Japan is the biggest buyer of gas, with South Korea and China being two other major customers.

Failed overtures

Against this backdrop, Russia’s ties with other East Asian states are significantly weaker. Russia and Japan have been attempting to tighten their ties for the last three years. They established a rare format of strategic consultations — the ‘two plus two’, between foreign and defence ministers. Vladimir Putin and Shinzo Abe have met more than dozen times. The Russian president hosted the Japanese prime minister as his special guest at the opening of the Sochi Olympic Games in February, 2014. The absence of Japan’s strategic autonomy – due to its bilateral alliance with the US – remains, however, the major obstacle to the development of closer relations between Moscow and Tokyo. Japan joined the G-7 sanctions after Russia’s annexation of Crimea and had to scale down its ambitions. Although Japan’s room for manoeuvre increased in the aftermath of Donald Trump’s election for the president, the strategic alliance between Japan and the US remains in place. Moreover, Russia does not seem capable of addressing one of the most pressing Japanese concerns — i.e. the nuclear and missile programme pursued by North Korea. Japan’s response in the form of deploying another layer of missile defence may only deepen Russia’s negative attitudes. Secondly, Russia would find it difficult to redirect energy streams from China to Japan. Even if the latter would be able to absorb the increase in oil and gas deliveries, Russia lacks both infrastructure and free resources, given how much is already contracted on the long-term basis by China. Thirdly, it would be difficult for Japan to increase substantially security and defence cooperation with Russia, be it in the form of arms acquisition or joint military exercises.

Another setback for Russia came amid growing tensions in the South China Sea. Over the years, Russia managed to stay neutral on the territorial disputes in the South China Sea. Moscow’s position, though, has evolved over the last two years. In terms of rhetoric, Russia declared at several occasions that outside powers should not interfere with the disputes, thus repeating and reaffirming the China’s position. In terms of behaviour, the 2016 naval drills, ‘Joint Sea-2016’ took place in the South China Sea, albeit not in the contested parts. While the change has been very incremental, Russia has been supporting, even if unintentionally, China.

Close cooperation with China has seriously limited Moscow’s ability to act as an independent player in the wider region — preventing Russia from implementing a fully-fledged turn to the East rather than just reinforcing cooperation with China. Instead of playing its intended as  a third party — a balancer in the region dominated by China and the US — Russia has been increasingly supporting Beijing. In the longer term, such a policy on the part of Moscow may weaken its relations with traditional partners, Vietnam in particular.

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