A friendship out of necessity
A cartoon at the Chinese newspaper Global Times shows it all: a smiling Putin kneels, handing a bouquet of oil barrels to a panda. Far in the background, a Western businessman is grinding his teeth. Says it all, eh?
Or what about this one:
That was basically the mood after Putin's long-planned meeting with his Chinese counterpart Xi Jinping, which resulted in a massive gas deal worth $ 400 billion. The moment was garnered with a solemn joint press statement by both heads of state last month, which abounded of phrases like "a more just and rational world order", "countering the interference in other countries' internal affairs", "a new stage in bilateral relations and an all-encompassing partnership and strategic cooperation".
But despite the loud words, supported with many billions, for now this doesn't mean that there's a new alliance in the making in the East, one that would somehow shake the world order. Despite the 40 bilateral agreements that were signed during Putin's visit in China and everything written and uttered about Moscow's turn to Asia (wait, another "Asian Pivot"?), there won't be so many changes in the orientation of the two countries, at least not overnight. Russia will keep being as economically intertwined with the West as before, its budget heavily dependable on the energy deliveries to Europe. And China's trade with the EU and US will be many times bigger than its exchange with its big neighbor.
Still, it's clear that Russia and China are getting somewhat closer. The consistent blocking of many resolutions at the UN Security Council, particularly on Syria, shows just how effective such a friendship can be. The events in Ukraine were just the factor that accelerated the warming up of these relations. The process used to be going rather slowly in recent times, with lots of creaking and mostly driven by inertia. Now it's been abruptly catalyzed by external circumstances. But their partnership is as logical as it's difficult. And it'd still be too premature to ring the alarm that the two big Eastern powers are uniting against the West.
The rose in this metaphorical bouquet of deals is the 30-year agreement for Russian gas deliveries to China. Beijing will pay $ 25 billion in advance, and agrees to pay the full volume of the agreed deliveries of 36 billion m3 of gas through annual installments between 2018 and 2048, even if they don't end up using the gas. Besides, a new gas pipeline will be built with Chinese money - it should be ready by 2020.
At a first glance this looks like a triumph for comrade Putin, especially given the conflict in Ukraine and the Western sanctions against Moscow. Obviously, Russia is diversifying its exports of energy resources, which accounts for more than 50% of the entire federal budget (yeah, Russia is that dependent on its resources - and if that's not a cause for concern, then some people from across this renewed Iron Curtain must really be dwelling in a state of intellectual limbo), while simultaneously getting a chance to develop its underpopulated Far East regions with Chinese money. By decreasing their dependence on the Western markets, the Russians are potentially curbing the threat on their economic security in case Europe somehow manages to diversify its supply channels and stop buying from them. But a closer look at the details reveals that the gas deal might not have been so beneficial for Russia.
Firstly, the agreement was being prepared for 10 years. Last month Gazprom announced that 98% of the agreement was ready. The remaining 2% was the question about the price. The problem was, Beijing had a lot of room for bargaining until the last moment, because they have alternative gas sources, like the pipelines from Turkmenistan and Myanmar. Russia was also not in a hurry. But the Ukrainian crisis has accelerated things a lot.
Still, the deal wasn't signed in urgent circumstances. Putin's visit to China had been planned for months, long before the Ukrainian crisis. There wasn't a feeling of urgency and there was no pressure to make concessions that would hurt either side's interests. But the fact that 10-year negotiations are seeing a breakthrough just now, and the signing occurred at 4 a.m., shows that Putin was firmly determined to leave Shanghai with a signed agreement. The problem is, China is holding all the strong cards in its relations with Russia, because it's economically much stronger, and it has alternatives for gas supply from other countries. And Russia has no plan B.
Of course there'll be benefits for both countries. For energy-hungry China, the Russian gas is a chance to scaled down on their coal use, and do something meaningful about the dreadful air pollution across the country. The Russian gas will go directly to North China, which is now literally suffocating with coal dust. Really, anything that could substitute coal would be very welcome. The environmental problem is a very serious problem in China (curiously, there've been claims that their "war on pollution" may end up accelerating global warming).
For Putin, the agreement is an opportunity to demonstrate to the West that if they don't flip the bird to him, he could still turn to his friends in the east. But even with this deal, the amounts of gas that Russia will be selling to China by the end of the decade will hardly cover even 1/4 of what they're selling to Europe. Although the agreed price wasn't officially revealed, estimates put it around 350 $ per 1000 m3, i.e. less than the average price Europe is paying. Besides, the expenses for delivery to China will be much higher. Meanwhile, the gas for China will be coming from a newly developed basin. This means that if Europe quits Russian gas, Moscow has no alternative options for its existing gas basins, nowhere to sell all that gas. So Russia is not really winning much from this agreement, while China can actually do without the Russian gas just as well.
But the Beijing-Moscow axis is not just about energy, is it...
We could hardly talk about this deal just in economic terms. These are all political-economic decisions. The two sides of the coin always go together, whenever relations with China are the issue. There's been an intensified dialogue between the two since the 2001 Sino-Russian Treaty of Friendship. So all these dozens of agreements are no surprise.
The thing is, they largely coincided with the crisis in Ukraine. Of course, Russia's interest is to give them maximum publicity. Part of these agreements were being prepared for a long time, and they concern strategic areas like space research and joint development of commercial long-range aircraft, a project that'll challenge Airbus and Boeing. These agreements were partly signed because Russia didn't find partners elsewhere for them. Moscow was looking for cooperation with European and American companies on the plane issue, but failed. Which is why now it'll be building those aircraft together with other countries in the east, from huge passenger planes to fifth-generation fighter jets (a joint project with India).
Meanwhile, the geopolitical partnership between Russia and China dates way back, before the Ukrainian events. It's evident from the Syrian crisis, where both countries have jointly opposed the West at every corner, citing their fave concept of "non-intervention in other countries' internal matters from a single country". China and Russia are sharing a disconcent of America's domination at the world stage, and disdain for the US criticism to some of their actions and policies (including domestic policies, something the US wouldn't appreciate someone else schooling them on, btw). So it's a logical alliance between the two.
Russia's isolation by the West is another reason for getting closer to China. For Russia the threats from the Ukrainian crisis are mostly economical. The more capital leaks out of Russia and the bigger the risk of sanctions, the more Putin will be compelled to look at his weakening hand of cards with concern. And his turn to the East is coming at a time when China's relations with the US are not in a good shape (to put it mildly), as is evident from the recent cyber espionage scandal. Besides, China has problems of its own in the South China Sea, where it is becoming ever more assertive of its territorial claims. China is concerned about the US attempts to pack up a bloc of countries that are opposed to the emerging Eastern giant: Japan, South Korea, the Philippines, even Vietnam recently.
Still, the analyses claiming that there'll be a shift in the configuration of powers in the "strategic triangle" of global diplomacy between America, Russia and China, are a bit premature. China and Russia do need the US as a trade partner and a balancing factor in the world, and they cannot completely divorce from America.
Right now, the US is China's primarty trade partner, and the exchange between the two is 5 times bigger than China's exchange with Russia. Besides, 60% of the $ 4 trillion Chinese currency reserves are deposited in US bonds and dollar assets. China is not prepared to substantially sharpen the tone of its relations with the US, despite the desperate US efforts to contain the growing Chinese influence. The negotiations with Japan and the return of a US military contingency in the Philippines are more like deterring measures, rather than preparation for a political and economic assault on China.
Meanwhile, the Sino-Russian partnership is far from cloudless and devoid of tensions. The two countries are fiercely independent. Neither of them wants to entangle itself with the other too strongly. What's more, the Chinese have always been a difficult partner, and negotiations are usually very complicated with them. Because they adhere too strictly to their own interests, and they're inflexible and hard to influence. But in a sense, in the case of Russia and China the relations are at least a tad easier than those between Russia and the West, granted. The reason is that the two are mostly pragmatic regimes, they don't put so much emphasis on such issues like civic rights, the freedom of speech, democracy and other such pesky stuff. While for the US and Europe, such things supposedly do matter (at least nominally), and they often tend to cause problems, as far as cooperation with countries that do not share them is concerned.
However, the mutual distrust and suspiciousness of Moscow and Beijing will remain. And even if the theories claiming that the two are forever destined to be eternal rivals turn out to be true, there's little chance that they could become eternal friends, either.
Or what about this one:
That was basically the mood after Putin's long-planned meeting with his Chinese counterpart Xi Jinping, which resulted in a massive gas deal worth $ 400 billion. The moment was garnered with a solemn joint press statement by both heads of state last month, which abounded of phrases like "a more just and rational world order", "countering the interference in other countries' internal affairs", "a new stage in bilateral relations and an all-encompassing partnership and strategic cooperation".
But despite the loud words, supported with many billions, for now this doesn't mean that there's a new alliance in the making in the East, one that would somehow shake the world order. Despite the 40 bilateral agreements that were signed during Putin's visit in China and everything written and uttered about Moscow's turn to Asia (wait, another "Asian Pivot"?), there won't be so many changes in the orientation of the two countries, at least not overnight. Russia will keep being as economically intertwined with the West as before, its budget heavily dependable on the energy deliveries to Europe. And China's trade with the EU and US will be many times bigger than its exchange with its big neighbor.
Still, it's clear that Russia and China are getting somewhat closer. The consistent blocking of many resolutions at the UN Security Council, particularly on Syria, shows just how effective such a friendship can be. The events in Ukraine were just the factor that accelerated the warming up of these relations. The process used to be going rather slowly in recent times, with lots of creaking and mostly driven by inertia. Now it's been abruptly catalyzed by external circumstances. But their partnership is as logical as it's difficult. And it'd still be too premature to ring the alarm that the two big Eastern powers are uniting against the West.
The rose in this metaphorical bouquet of deals is the 30-year agreement for Russian gas deliveries to China. Beijing will pay $ 25 billion in advance, and agrees to pay the full volume of the agreed deliveries of 36 billion m3 of gas through annual installments between 2018 and 2048, even if they don't end up using the gas. Besides, a new gas pipeline will be built with Chinese money - it should be ready by 2020.
At a first glance this looks like a triumph for comrade Putin, especially given the conflict in Ukraine and the Western sanctions against Moscow. Obviously, Russia is diversifying its exports of energy resources, which accounts for more than 50% of the entire federal budget (yeah, Russia is that dependent on its resources - and if that's not a cause for concern, then some people from across this renewed Iron Curtain must really be dwelling in a state of intellectual limbo), while simultaneously getting a chance to develop its underpopulated Far East regions with Chinese money. By decreasing their dependence on the Western markets, the Russians are potentially curbing the threat on their economic security in case Europe somehow manages to diversify its supply channels and stop buying from them. But a closer look at the details reveals that the gas deal might not have been so beneficial for Russia.
Firstly, the agreement was being prepared for 10 years. Last month Gazprom announced that 98% of the agreement was ready. The remaining 2% was the question about the price. The problem was, Beijing had a lot of room for bargaining until the last moment, because they have alternative gas sources, like the pipelines from Turkmenistan and Myanmar. Russia was also not in a hurry. But the Ukrainian crisis has accelerated things a lot.
Still, the deal wasn't signed in urgent circumstances. Putin's visit to China had been planned for months, long before the Ukrainian crisis. There wasn't a feeling of urgency and there was no pressure to make concessions that would hurt either side's interests. But the fact that 10-year negotiations are seeing a breakthrough just now, and the signing occurred at 4 a.m., shows that Putin was firmly determined to leave Shanghai with a signed agreement. The problem is, China is holding all the strong cards in its relations with Russia, because it's economically much stronger, and it has alternatives for gas supply from other countries. And Russia has no plan B.
Of course there'll be benefits for both countries. For energy-hungry China, the Russian gas is a chance to scaled down on their coal use, and do something meaningful about the dreadful air pollution across the country. The Russian gas will go directly to North China, which is now literally suffocating with coal dust. Really, anything that could substitute coal would be very welcome. The environmental problem is a very serious problem in China (curiously, there've been claims that their "war on pollution" may end up accelerating global warming).
For Putin, the agreement is an opportunity to demonstrate to the West that if they don't flip the bird to him, he could still turn to his friends in the east. But even with this deal, the amounts of gas that Russia will be selling to China by the end of the decade will hardly cover even 1/4 of what they're selling to Europe. Although the agreed price wasn't officially revealed, estimates put it around 350 $ per 1000 m3, i.e. less than the average price Europe is paying. Besides, the expenses for delivery to China will be much higher. Meanwhile, the gas for China will be coming from a newly developed basin. This means that if Europe quits Russian gas, Moscow has no alternative options for its existing gas basins, nowhere to sell all that gas. So Russia is not really winning much from this agreement, while China can actually do without the Russian gas just as well.
But the Beijing-Moscow axis is not just about energy, is it...
We could hardly talk about this deal just in economic terms. These are all political-economic decisions. The two sides of the coin always go together, whenever relations with China are the issue. There's been an intensified dialogue between the two since the 2001 Sino-Russian Treaty of Friendship. So all these dozens of agreements are no surprise.
The thing is, they largely coincided with the crisis in Ukraine. Of course, Russia's interest is to give them maximum publicity. Part of these agreements were being prepared for a long time, and they concern strategic areas like space research and joint development of commercial long-range aircraft, a project that'll challenge Airbus and Boeing. These agreements were partly signed because Russia didn't find partners elsewhere for them. Moscow was looking for cooperation with European and American companies on the plane issue, but failed. Which is why now it'll be building those aircraft together with other countries in the east, from huge passenger planes to fifth-generation fighter jets (a joint project with India).
Meanwhile, the geopolitical partnership between Russia and China dates way back, before the Ukrainian events. It's evident from the Syrian crisis, where both countries have jointly opposed the West at every corner, citing their fave concept of "non-intervention in other countries' internal matters from a single country". China and Russia are sharing a disconcent of America's domination at the world stage, and disdain for the US criticism to some of their actions and policies (including domestic policies, something the US wouldn't appreciate someone else schooling them on, btw). So it's a logical alliance between the two.
Russia's isolation by the West is another reason for getting closer to China. For Russia the threats from the Ukrainian crisis are mostly economical. The more capital leaks out of Russia and the bigger the risk of sanctions, the more Putin will be compelled to look at his weakening hand of cards with concern. And his turn to the East is coming at a time when China's relations with the US are not in a good shape (to put it mildly), as is evident from the recent cyber espionage scandal. Besides, China has problems of its own in the South China Sea, where it is becoming ever more assertive of its territorial claims. China is concerned about the US attempts to pack up a bloc of countries that are opposed to the emerging Eastern giant: Japan, South Korea, the Philippines, even Vietnam recently.
Still, the analyses claiming that there'll be a shift in the configuration of powers in the "strategic triangle" of global diplomacy between America, Russia and China, are a bit premature. China and Russia do need the US as a trade partner and a balancing factor in the world, and they cannot completely divorce from America.
Right now, the US is China's primarty trade partner, and the exchange between the two is 5 times bigger than China's exchange with Russia. Besides, 60% of the $ 4 trillion Chinese currency reserves are deposited in US bonds and dollar assets. China is not prepared to substantially sharpen the tone of its relations with the US, despite the desperate US efforts to contain the growing Chinese influence. The negotiations with Japan and the return of a US military contingency in the Philippines are more like deterring measures, rather than preparation for a political and economic assault on China.
Meanwhile, the Sino-Russian partnership is far from cloudless and devoid of tensions. The two countries are fiercely independent. Neither of them wants to entangle itself with the other too strongly. What's more, the Chinese have always been a difficult partner, and negotiations are usually very complicated with them. Because they adhere too strictly to their own interests, and they're inflexible and hard to influence. But in a sense, in the case of Russia and China the relations are at least a tad easier than those between Russia and the West, granted. The reason is that the two are mostly pragmatic regimes, they don't put so much emphasis on such issues like civic rights, the freedom of speech, democracy and other such pesky stuff. While for the US and Europe, such things supposedly do matter (at least nominally), and they often tend to cause problems, as far as cooperation with countries that do not share them is concerned.
However, the mutual distrust and suspiciousness of Moscow and Beijing will remain. And even if the theories claiming that the two are forever destined to be eternal rivals turn out to be true, there's little chance that they could become eternal friends, either.