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Two-headed Russian eagle mulls moves at crossroads

by Andrey Borodaevskiy

The bicontinental nature of Russia, mirrored in its national symbol — a double-headed eagle looking in two opposite directions — tends to express itself now and again in substantial turns in the country’s central government policies.

Thus, after centuries of domination by the Tatar-Mongolian hordes over the territory representing modern Russia, including its western parts with the center in Moscow, the emerging and integrating Russian state has taken a predominantly European orientation.

Paradoxically, while expanding its territory and statehood in the East Asian direction, Russia got accustomed to “looking West” for new ideas, inspiration and partners in cooperation. Actually this happened even before Russian Czar Peter the Great proclaimed “cutting a window to Europe” as the aim of his foreign policy. This, in many ways a natural European orientation, has become a trait of Russia’s state policies in the current post-socialist period.

Actually President Vladimir Putin inherited it from his predecessor and nominator Boris Yeltsin. In the first decade of the 21st century, a parallel trend toward Eurasian integration schemes in the area of the former Soviet Union, also with the participation of China (in the form of the Shanghai Cooperation Organization), has become evident and gained momentum.

The modern-world situation leaves no hope for Russia to ever become a full-fledged member of the European Union, while its neighbors — both from among the former Soviet republics and political satellites (like Poland or the Czech Republic) — either have already joined the European Union or have been invited, and have recently signed economic cooperation treaties with EU of their own (Georgia, Moldova and Ukraine).

It is exactly this global political situation, first of all, that explains Putin’s special infatuation with the Eurasian project and his prejudiced attention to what has been happening between both Georgia and Ukraine, on one side, and the EU, the U.S. and the NATO, on the other side.

In this author’s view, economic interests rather than military considerations that have made him take the rough course in both these cases and use a wide arsenal of strong weapons — from those of purely economic nature (like playing with the conditions and prices of oil and gas supply) to direct paramilitary and military actions.

It looks like the real start to this policy was been on New Year’s Eve 2006 when Russia — first time ever and in a manner unprecedented in modern history — temporarily cut gas supplies to Ukraine, and via it to other European consumers.

The next big event of this nature was the high-speed military skirmish with Georgia over Abkhazia and South Ossetia in August 2008. And this spring, in the background of the aggravating gas conflict intensified by the defeat of the former Ukraine’s president in his confrontation with the tough Maidan defenders (in the center of which was the issue of signing an association treaty with the European Union), Moscow brilliantly masterminded and smoothly executed the return of Crimea, at one time in the past given to then Ukrainian Soviet Republic as a “gift.”

From that moment on, Russia has widely been perceived as a political nuisance. There hardly is anything positive for it to catch in the Western direction, at least in the short term. Also, the personal standing of Russia’s president in the family of democratic leaders has suffered tremendously.

So, with the ardent separatist movement in the eastern regions of Ukraine, ignited, partly equipped and strengthened by paramilitary volunteers from Russia, still in full swing, there was for Putin not much left than to turn his pragmatic attention toward the Far East. He clearly demonstrated this new stance during his May state visit to Beijing.

Before, for 10 years on end, Sino-Russian negotiations of a long-term mega-deal concerning gas supplies to China could not be successfully concluded because of “unbridgeable diversions” with regard to prices.

Now, in the wake of the visit, the $400 billion contract has been signed with urgency. It provides for 38 billion cubic meters of gas deliveries to China annually for 30 years beginning in 2018.

The basis on which this historic compromise was made with astonishing speed is not clear. Experts’ opinions differ tremendously as to what really is behind the estimated price of $350 per 1,000 cubic meters and how fair it actually is, both for the Chinese and for the Russian side.

Both variants of gas supplies from Siberia to China (the “Eastern route” figuring in the contract and the “Western route” additionally negotiated right now) are capital-intensive mega-projects. It is Russia’s willingness to arrange and finance their realization that explains, at least in part, why the Chinese agreed to pay a price that, nominally, is more than twice as high as prices in China’s gas trade with Turkmenistan and Uzbekistan, Qatar or Australia.

On the other side, it is difficult to predict if this price will look good for Russia in, say, 10 to 15 years. Actually, in one stroke, China secured for itself a fixed-priced supply of gas of an annual size comparable with what Russia trades with Germany — until lately its biggest economic partner.

In the background of substantial shifts in the sphere of gas supplies in Europe, this desperate mega-deal with China looks like something bordering on the wholesale concession of Siberian resources to the dynamic and economically much stronger neighbor.

In arranging production at the two sites in question and building a pipeline 4,000 km long, Gazprom will have to rely on its own or borrowed money. It is also possible that the export of oil and gas technologies to Russia from Europe and North America may come under politically inspired sanctions.

As for the Chinese, they will simply have to wait — first for the new gas system with its vast and expensive infrastructure to be built and then, as some observers and bloggers allege, perhaps for an opportunity to seize this whole area as a move in the overall scheme of “regaining primordial Chinese lands” in Siberia and in the Russian Far East (in which the Crimea case may serve as a historic precedent).

In the footsteps of the recent tour of bilateral negotiations in Beijing, the Chinese put forward a plan to transform neighboring areas along the state border between Russia and China into a single economic zone. The idea is for China to supply skilled hands at expanding agricultural and other production on the Russian side of the border.

Meanwhile, independent experts have repeatedly aired the opinion that in joint endeavors, especially those concerning agriculture, it would be better for Russia to cooperate with Japanese partners — because they possess know-how more suitable for local conditions.

Besides, in contrast to China, Japan would not strive to massively and permanently populate the now almost empty Russia’s Far-Eastern plains.

Putin himself should clearly see that arranging his Eastern policy by putting all the eggs into one Chinese basket is a dangerous thing to do.

With the European direction of political and economic engagement at least temporarily closed and with a rather real threat of “Sinification” of Siberia and the Russian Far East, Putin is desperately striving to enhance the number of international partners. It may explain the extraordinary enthusiasm with which his recent Latin American tour and its pinnacle — the summit of the BRICS group in Brazil — was received by Russia’s mass media.

Sheer logic suggests that we are on the eve of some important moves by Russia directed at establishing more normal and favorable operating conditions for eventual long-term multilateral cooperation schemes, first of all — in its eastern regions.

However, changes in the political climate should be substantial enough to enable collaboration not only with China but also with Japan, South Korea, the rest of the BRICS countries (Brazil, Russia, India, China and South Africa), and, perhaps, the NAFTA group (U.S., Canada and Mexico).

All things considered, the Russian eagle has gotten itself into a rather precarious situation and has to look around for as many new partners and openings for business as possible.

Andrey Borodaevskiy (annabo36@mail.ru), an expert on world economy and international economic relations, was a professor at Seinan Gakuin University, Fukuoka, from 1994 to 2007.

  • giltedged

    The professor couldn’t find a job in Europe??? I would be surprised to learn that there is any country wishing to have itself roasted three times over. Perhaps only a Ukrainian blogger can explain it.