The Sino-Russian romance

March 21, 2006
by Rian Jensen and Erich Marquardt
Asia Times

This Tuesday, Russian President Vladimir Putin is to make an official state visit to China. Putin will arrive in time to witness China's Year of Russia ceremony, kicking off a year-long festival with the aim of encouraging improved cultural relations between the two countries.

Putin's visit to China is further evidence of the intensifying ties between Moscow and Beijing, with Liu Guchang, China's ambassador to Russia, describing the bilateral relationship in recent days as reaching an "unprecedented high level".

Both countries find it in their strategic interests to improve relations. This enhanced relationship is manifest in their participation in the Shanghai Cooperation Organization (SCO), the strengthening of their military relationship, improved economic ties, and substantial energy commitments.

Strategic partners

The Russia-China relationship improved significantly last July 1, when a meeting between Putin and his Chinese counterpart Hu Jintao led to a joint statement that rejected attempts by any country to gain a "monopoly in world affairs" and to "impose models of social development" on other countries.

This statement was clearly directed at the United States and came after Moscow and Beijing reached agreement that they did not desire increased US influence in Central Asia. The "colored revolutions" that were sweeping through Eurasia - in Georgia, Ukraine and Kyrgyzstan - caused concern in both Moscow and Beijing, as each perceived US motives in the region as potentially threatening their spheres of influence.

Moscow's and Beijing's efforts to increase control over the countries that make up the SCO reflect this policy. For instance, shortly after the SCO meetings in Kazakhstan last July 5, member-state Uzbekistan announced that the US military could not use its base at Karshi-Khanabad for any purpose other than its support operations in Afghanistan. Tashkent's statement was a prelude to its July 29 announcement that the United States would have to shut down its operations at Karshi-Khanabad altogether.

Outside the SCO, Russia and China have closely aligned diplomatic stances. Russia supports China's policy toward Taiwan, voicing criticisms in recent weeks regarding Taiwanese President Chen Shui-bian's move to "cease" the activities of the National Unification Council. Beijing, for its part, remains quiet about Russia's activities in Chechnya. Moreover, both countries have been reluctant to take concrete action against Iran and its controversial nuclear-research program.

Last August, the Russia-China relationship reached a symbolic point when both countries engaged in their first-ever bilateral war games. The exercises, called Peace Mission 2005, took place from August 18-25 and consisted of sea, land and air maneuvers. Peace Mission 2005 provided Beijing the opportunity to demonstrate to Taiwan and other Asian states that its improved relations with Moscow augment Chinese power in the region. Additionally, the war games allowed Russia to show the United States and the European Union that Moscow was nurturing a relationship with the up-and-coming Asian superpower. On a more immediate level, the joint war games provided Moscow the opportunity to sell more Russian military hardware to the Chinese.

For instance, as a result of Peace Mission 2005, Beijing discussed with Moscow the purchase of Russian-made Il-76 air transport planes and Il-78 air-refueling tankers. China continues to buy much of its military equipment from Russia, including Su-27 and Su-30 fighter jets and a few Sovremenny-class destroyers. Speaking to reporters on January 13, Russian Defense Minister Sergei Ivanov said, "Russian-Chinese military and technical cooperation has been, is and will be developing. I can assure you of that."

Indeed, the chairman of the State Duma Committee for International Affairs, Konstantin Kosachev, recently said China and Russia are "strategic partners". Nevertheless, Moscow has refrained from selling Beijing some of its most technologically advanced weapons systems, although this could change.

Peace Mission 2005 also served Russia's and China's interests in Central Asia, with Sino-Russian military cohesion sending a strong signal to the states of the SCO. The signal was that Russia and China see it in their strategic interests to control developments in Central Asia and in the former Soviet republics. This signal acts as a warning to those states - or factions within those states - that changes in foreign policy toward the West and away from the East could result in repercussions from China and Russia.

With Peace Mission 2005 behind them, Russia and China are planning for new military exercises, this time to take place in southern Russia. Russian Interior Minister Rashid Nurgaliyev stated on March 2 that Russia and China have "made plans to conduct exercises in spring 2007 in [Russia's] Southern Federal District". According to Nurgaliyev, the joint exercises will include special forces from China's Public Security Ministry, in addition to special forces and regular troops from Russia's Interior Ministry. The exercises, described by Nurgaliyev as large-scale, will "develop skills for cooperation in accomplishing objectives to counter the threat of terrorism".

Economic and energy needs

In addition to the political and geostrategic motives, there are economic imperatives behind this strengthening partnership. Bilateral trade volume in 2005 reached nearly US$30 billion, a 37% increase from 2004, and leaders of both countries have pledged to at least double that level by 2010.

When speaking to the media on March 13, Russia's trade commissioner to China, Sergei Tsyplakov, projected that Russia-China trade may reach $36 billion this year. The two countries are also expected to agree on the establishment of special economic zones, which was noted by a Chinese diplomat on Saturday as "one of the most important documents to be signed [during Putin's visit] at an inter-governmental level".

Energy is also a critical area for Sino-Russian cooperation. Bilateral initiatives are driven by Beijing's aggressive effort to secure reliable access to energy supplies to fuel its booming economy, which recently surpassed France and the United Kingdom as the world's fourth-fastest-growing, at an annual rate of roughly 10%. As the world's second-largest importer of oil (nearly 130 million barrels in 2005), with demand projected to grow roughly 7% in 2006, China naturally looks to the Russian Far East as a source for imports.

Russia currently provides 8% of China's energy needs, and is expected to ship nearly 15 million tons of oil to China this year - nearly double last year's level. Already the amount shipped this January via the Trans-Siberian Mainline Railway was up 42% from the same period in 2005. Yet Russia's ability to meet the 2006 target remains unclear as, among other reasons, the imperiled Yukos will have difficulty even meeting previous years' export levels.

The two countries have been engaged in discussions for expanding energy cooperation on a number of fronts, and Putin's visit to Beijing is widely expected to finalize - if not add substantive momentum to - talks about oil and gas pipeline projects. For instance, Russian state energy firm Gazprom announced on March 13 that it will sign a memorandum with China National Petroleum Corp (CNPC) agreeing to build gas pipelines to China's Xinjiang region. The budget and prospective date of completion are unknown.

The signing will occur during Putin's visit, and will build on negotiations that were initiated last December between the two energy companies. Beijing has been seeking ways to raise the level of gas as a percentage of total energy consumption to 8-10% by 2010, doubling current figures. Gazprom chief executive officer Alexander Medvedev said the signing of an agreement in Beijing this month will "stipulate the price formula" for gas shipments.

Putin's visit may also provide a push to negotiations about a cross-border oil pipeline from Siberia to northeastern China. Such a pipeline would be an offshoot of the East Siberia-Pacific Ocean (ESPO) pipeline, which received final approval from Russian authorities at the end of February, overcoming vociferous criticism from environmental groups concerned about the pipeline's proximity to Lake Baikal and the possibility of oil seepage into the UNESCO (United Nations Educational, Scientific and Cultural Organization) World Heritage Site.

On March 11, Russian Deputy Prime Minister Alexander Zhukov, who is also co-chairman of the Russian-Chinese commission for cooperation in education, culture, health care and sports, announced that the Russian state oil giant Transneft would construct the ESPO line through Siberia to the Pacific coast, with a possible spur to China. The first stage of the $11 billion, two-stage pipeline will run 2,400 kilometers from Taishet in Ikurtsk region to Skovorodino in Amur region and is due for completion in 2008; the second stage consists of a pipeline from Skovorodino to Perevoznaya Bay for export to Japan and other Asia-Pacific economies.

The agenda for Putin's visit is expected to include discussions about an ESPO offshoot from Skovorodino that will link up with China's energy grid in Daqing. China has lobbied intensively for this separate pipeline, fearing that Siberian oil supplies will be directed instead to Japan. A possible Daqing spur is expected to deliver a total capacity of 30 million tons of crude to China, with the remaining 50 million proceeding to the terminal at Perevoznaya.

A lasting partnership

During the past year, Russia and China have taken measures to improve their bilateral relationship, and Putin's visit is sure to strengthen ties. Moscow and Beijing recognize their mutual interests in Central Asia, both in terms of limiting US encroachment and weakening revolutionary forces in the region. Although debates persist about sales of advanced weaponry, China's security calculus still requires a reliance on imported Russian arms that, in turn, sustains Moscow's defense economy.

The most contentious aspect of the bilateral relationship is in the energy arena: Russia has historically been reluctant to allow Chinese investment in this strategic sector, and unwilling to commit firmly to the construction of cross-border oil pipelines. Yet recent developments may portend changes in this area. Russia's readiness to establish a direct energy corridor to China ensures that relations will continue to intensify in the near term, although it remains unclear whether continued cooperation - in political, military, and economic areas - will lead to a truly durable partnership.

Rian Jensen is the associate editor of China Brief, a journal published by the Jamestown Foundation. Erich Marquardt is the publications coordinator at the Jamestown Foundation. The views expressed in this article are their own, and do not represent the Jamestown Foundation.

Russia says 'nyet' to military in the Caspian

March 20, 2006
by Sergei Blagov
Asia Times

MOSCOW - Russia, which has significant economic interests in the oil-and-gas-rich Caspian region, is warning against any military buildup in the area, particularly by the United States.

Foreign Minister Sergei Lavrov made that clear during a two-day meeting last week of his counterparts from the other four countries that border the Caspian Sea - Iran, Azerbaijan, Kazakhstan and Turkmenistan.

He was upset by what he called "efforts by some nations from outside the region to infiltrate the Caspian politically and militarily with ill-defined goals ... It is easy to invite foreign troops, but it can be difficult to make them withdraw," he said.

Lavrov is believed to have been targeting the US, which is thought to be trying to establish a base in Azerbaijan while assisting the country with anoverhaul of its navy. But Azerbaijani Deputy Foreign Minister Khalaf Khalafov told a news conference in Moscow that a foreign military presence in the Caspian region "cannot be considered in isolation from other problems". However, he insisted that the sovereign rights of the coastal countries be respected.

Lavrov said Russia was not calling for withdrawal of all military forces from the region. "Demilitarization of the Caspian does not correspond to the realities of today," he said, adding that such a goal could entail "disarmament of the Caspian states, which now face new threats". Still, he warned against "any pretexts for conflicts in the region".

Lavrov said he hoped drafting a convention on the legal status of the Caspian Sea could be completed "in the very near future". The foreign ministers agreed to hold the next round of talks in Turkmen capital Ashgabat, but provided no date.

"Problems of the sea-bed delimitation in the southern sector, rules of military activities and transit as well as conditions for sub-sea pipelines still remain unresolved," Lavrov said.

In wake of the failed Caspian Sea summit in April 2002, Moscow pushed for a series of bilateral deals, instead of an overall agreement among all five littoral states. Moscow believes that in the absence of an overall pact, bilateral agreements on the Caspian are needed. Kazakhstan agreed and clinched a separate deal with Russia in 2002, while Azerbaijan eventually followed suit by signing a similar agreement in 2003.

The second Caspian summit has been subject to endless delays. In April 2004, Lavrov announced that it could have been convened in the second half of 2004 in Tehran. Iran said then that the summit had to be postponed to an undisclosed date after its presidential elections, but no new date was scheduled.

Nonetheless, Tehran reiterated readiness to host the summit, despite growing tensions around its nuclear ambitions. "Iran is ready to host the second summit of Caspian states," Mochtaba Damirchilu, of the Iranian Foreign Ministry, said at a briefing in Moscow. The Iranian delegation had held a number of consultations with Caspian states to define the date of the summit, he said.

Meantime, Moscow has renewed attempts to forge a multinational force in the Caspian Sea. Russian Defense Minister Sergei Ivanov suggested in a visit to Azerbaijan this year that his country, Kazakhstan, Turkmenistan, Azerbaijan and Iran should make concerted efforts to deal with security threats in the region.

That could include defense, border control and intelligence services, he said. His Azerbaijani counterpart Safar Abiyev said his country was ready to cooperate with Russia to launch joint Caspian forces.

Still, Azerbaijan has made little secret of its uneasiness over Russia's strict rules regulating maritime and naval transit between the Caspian and the Black seas through Russian riverine routes.

"There were some problems in connection with the passage of vessels belonging to the Caspian states to the Black Sea," Khalafov said last month. "The Caspian littoral countries are now trying to resolve the problem."

Russian President Vladimir Putin last July attended an international conference on Caspian security, held on board Russia's Caspian Flotilla flagship naval vessel, Tatarstan. The conference supported an idea of creating a joint naval force of the littoral states, similar to the Black Sea Force and presumably under the Russian aegis.

The Russian Caspian Flotilla still remains the strongest naval force in the sea. After the division of the Soviet Caspian Flotilla in 1992 between Moscow and Baku, Russia kept three-quarters of the naval vessels and personnel. In the past five years, Russia nearly doubled its Caspian naval force, which now includes two frigates, 12 major patrol vessels and about 50 smaller vessels based in Astrakhan, as well as some 20,000 personnel.

Moscow has also moved to boost its economic clout in the northern Caspian.

Putin and Kazakh counterpart Nursultan Nazarbayev in July witnessed the signing of a 55-year production-sharing agreement for the Kurmangazy oilfield in the Caspian Sea. Russian and Kazakh investment in the Kurmangazy oil deposit could hit US$22 billion to $23 billion. Russia and Kazakhstan also finalized a deal to develop jointly the Khvalynskoye oil and gas field in the northern Caspian.

Russia's state-controlled gas giant Gazprom now plans to build a major petrochemical complex in Russia's main Caspian port of Astrakhan, and crude-oil production is expected to start in the Russian section of the Caspian shelf by next year.

Moscow's opposition to outside meddling in the Caspian region grows proportionately to its increasingly significant economic interests.

Sergei Blagov covers Russia and post-Soviet states, with special attention to Asia-related issues. He has contributed to Asia Times Online since 1996. Between 1983 and 1997, he was based in Southeast Asia. In 2001 and 2002, Nova Science Publishers, New York, published two of his books on Vietnamese history.