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Author Topic: Russia-Asia (Japan, China, etc)  (Read 8272 times)
Power User
Posts: 41998

« on: October 01, 2010, 11:28:01 AM »

In the wake of Japanese weakness to Chinese pressure comes this , , ,

Russia's Focus Shifts to the East

While on a visit to the far eastern Siberian peninsula of Kamchatka, Russian President Dmitri Medvedev said on Wednesday that the Pacific Kuril Islands chain is a “very important” part of Russia. Medvedev pledged to visit the Kuril Islands, which are controlled by Russia but claimed by Japan, in the “nearest future.” Medvedev was scheduled to visit the islands during his trip, but the stop was canceled, allegedly due to bad weather.

STRATFOR has closely followed how Moscow has paid and continues to pay substantial attention to the geopolitical events to its west — i.e., Europe and the United States. But over the past few years, Russia has finally achieved a degree of security that allows it to turn its attention to its neighbors to the east. It is true that these eastern neighbors are thousands of desolate Siberian miles from the Russian core of Moscow and St. Petersburg. But they are important to Russia nonetheless, as Medvedev’s comments about the Kurils indicate. This eastern front, which not only includes the heavyweights of China and Japan but also dynamic players like Vietnam and Indonesia, has of late seen a notable increase in attention from Russia. These interactions raise interesting questions, not only about what is going on now, but also what this could bring — in terms of opportunities, risks and challenges — in the future.

Russia is a country that spans nearly the entire Eastern Hemisphere. As such, while its core and core interests are in the West, it has natural interests in the East as well. And these interests in the Asia Pacific region have paralleled what has in recent decades been a remarkable shift in global economic power from West to East. China and Japan continue to jockey over the position of the world’s second largest economy, and South Korea is nearly in the top 10. While European countries struggle to determine what exactly the eurozone should and should not be, Asian economies, generally in better financial shape after having suffered their own crisis in 1997-98, concentrated on public investment to maintain growth and expanding regional trade relationships to make up for lower demand from Europe and the United States. While they are still heavily dependent on exports, they are not shackled by debt like the Western developed countries and continue to grow at relatively fast rates.

“Russia has finally achieved a degree of security that allows it to turn its attention to its neighbors to the east.”
For Russia, Asia’s increased economic power has made it a growing market to tap. As a country that is capital poor with an economy that is driven by the export of natural resources, Russia inevitably looks to East Asia in its efforts to build new relationships. Russia is increasingly looking at the energy-hungry countries of Northeast Asia especially as an opportunity to increase its oil and natural gas exporting portfolio, signing major deals over the past few years with the likes of China and Japan. Russia sends liquefied natural gas exports to Korea and Japan, and 200,000 barrels of oil flow daily to China. But there are opportunities with other countries as well. Southeast Asian countries like Vietnam and Indonesia are hungry for military, energy, nuclear and space technology — something that Russia also happens to have copious amounts of and is increasingly sending their way.

Even better for Russia, the East Asia region is one where Moscow does not need to attempt to exert hegemony the way it does in Europe. Since the Mongol invasions, there have been no strategic challengers that pose an existential threat to Russia as Hitler or Napoleon did — although Japan has repeatedly threatened Russia’s Pacific presence and China could one day threaten Russia’s dominance in Central Asia. But even if a more substantial challenger were to emerge, Russia has the strategic depth of the sheer space of Siberia, as opposed to the short and smooth invasion route presented by the North European Plain.

Of course there are challenges and potential perils for Russia when looking east as well. Russia has had a historically ambivalent relationship with China, and a disastrous defeat in the Russo-Japanese war was one of the primary reasons for the fall of Tsardom that led to the Russian Revolution. In geopolitics there is no such thing as permanent allies — only alliances of necessity or convenience — and while a dynamic East Asia could present some convenient relationships now, this convenience can quickly change, whether through economic stagnation, political realignment or other means. In particular, Medvedev’s promise of a trip to the Kuril Islands is especially (and deliberately) aggravating for Japan, which is in the midst of a lengthy dispute with China over another group of disputed islands and is therefore attempting to strengthen its defense posture and shore up its security alliance with the United States.

In terms of energy cooperation, Moscow is pursuing opportunities in the Asia Pacific region that show promise, though they also bring enormous geographical and financial difficulties. The success of these projects depends on future Asian economic growth, which faces risks related to global circumstances and, in particular, China’s structural flaws and deepening imbalances. Moreover, Russia’s thorny territorial disputes and deep-seated antagonism with Japan, and the persistent differences with China that prevent a long-term strategic alignment, ensure that a growing Russian focus on the region brings political and security challenges. Asian countries also have much to gain from Russia, but are simultaneously wary of Russia’s tendency to use energy as a political tool, its military might, its arms trade with their regional opponents, and its plans to revitalize its naval presence in the Pacific. At the same time, the United States is strengthening its Pacific alliance structure and attempting to re-engage with Southeast Asia. In other words, Russia is becoming more involved in the region at a time when the region’s economic and security conditions are changing rapidly, and changing in ways that suggest heightening competition.

So after decades of being engrossed in the Western theater throughout the Cold War, and the subsequent 20 years of rebuilding the influence it had lost after the collapse of the Soviet Union, there has emerged in the East an area worth looking at for Russia. And now, even if only remarking on the importance of a small and far-flung island chain, it certainly appears that Moscow finally has a mounting interest to do so.
Power User
Posts: 41998

« Reply #1 on: December 12, 2010, 08:53:57 PM »

Power User
Posts: 9336

« Reply #2 on: March 24, 2014, 11:25:57 AM »

There are a number of stories out there now abut the tightening of relations between Russia and China.  This chart n Gazprom explains quite a bit of it:
Power User
Posts: 41998

« Reply #3 on: May 21, 2014, 10:21:40 PM »

Landmark China-Russia Agreements Go Far Beyond Energy
Geopolitical Diary
Wednesday, May 21, 2014 - 17:08 Text Size Print

On Wednesday, Russian President Vladimir Putin concluded a successful trip to China that was marked by a range of major bilateral agreements. The most important was a long-awaited natural gas deal between Russian state-owned energy firm Gazprom and China National Petroleum Corp. But the significance of Putin's trip goes far beyond energy. The deal, along with the others reached, highlights a major shift in Sino-Russian relations that has widespread geopolitical implications.

With Russia set to export some $400 billion worth of natural gas to China over the next 30 years, or approximately 38 billion cubic meter annually at $350 per thousand cubic meters, the deal is a good fit for both sides. China's energy demands are rapidly escalating, while Russia is looking to further diversify its energy exports away from Europe. Moscow has been particularly eager to complete the deal with Beijing, since it will give it considerable leverage in its bitter, protracted energy talks with Europe and Ukraine. To sweeten the deal, Moscow proposed several changes to its energy tax and export structures and offered China a large stake in Gazprom's liquefied natural gas project at Vladivostok. (China had already been awarded a stake in the Yamal LNG project run by Novatek, which is partly owned by Gazprom.)

What is a Geopolitical Diary? George Friedman Explains.

The other agreements struck during Putin's two-day visit are unique in that they involve Chinese investments, infrastructure and businesses inside Russia. Moscow has long shied away from allowing heavy Chinese investment in its strategic projects; it feared that it would not have sufficient leverage over Chinese activities in Russia, as Moscow has had with the Europeans. For example, most Asian investors were not given a chance to bid on the Kremlin's modernization and privatization programs between 2008 and 2010.

The new deals include a $10 billion aviation agreement, a $2.6 billion power grid agreement, plans to build auto manufacturing plants and housing, and increased rail connectivity. Each of these would take place in Russia. Moreover, the largest proposal on the table would give China National Petroleum Corp. a 19 percent stake in Russian oil behemoth Rosneft, giving China a seat on the board of Moscow's most prized company.

Over the past decade, Russia and China have worked well together, especially on minor economic deals. Beijing and Moscow have found common political ground, aligning constantly against Western (particularly U.S.) interests by, for example, voting in tandem at the U.N. Security Council on issues involving Iran and Syria. But the current deepening of Sino-Russian economic relations is unprecedented.

This does not portend a return to the Sino-Soviet axis against the West of the 1950s. China is far too intertwined with the U.S. and European economies to attempt a grand realignment, and regional frictions, particularly in Central Asia and the Pacific, would further complicate such an alliance. Nonetheless, tighter bilateral relations would give Russia and China a stake in each other's futures. With significant investments in Russia, Beijing would have no desire to see an unstable Russia, and vice versa.

China now has sufficient interest in cooperating with Russia to avoid conflicts -- whether direct or in their overlapping spheres -- that could detract from Beijing's ability to manage attempts at containment by the United States and its allies. Russia is one of the few powers capable of significantly resisting or interfering with major U.S. foreign policy initiatives. Beijing's willingness to enhance its strategic relationship with Moscow reflects its belief that the United States poses a far greater threat to Chinese interests than does Russia. Similarly, giving another power a stake in Russian stability will help Moscow deter U.S. attempts to isolate or destabilize the country, particularly as tensions with the West continue to escalate.

Read more: Landmark China-Russia Agreements Go Far Beyond Energy | Stratfor

Power User
Posts: 41998

« Reply #4 on: October 14, 2014, 10:34:19 AM »


Editor's Note: Russian President Vladimir Putin will meet with Chinese Premier Li Keqiang on Oct. 14, during three days of significant business negotiations and deal signing between the countries. Russia has been looking for an investment boost as a remedy for its economy, which is in sharp decline because of slowing internal growth, sanctions from the West and a sour investment climate overall. Already, Moscow's focus on expanded economic ties has shifted east, prompted by Russia's tense relations with the West in recent years. Moscow has traditionally been reserved in its relations with Asia -- and China in particular -- but this trend appears to be changing.

Russia reached out with the expansion of the East Siberia Oil Pipeline, completed in 2012, a move that increased eastbound oil exports from 4 percent to approximately 20 percent. Russia hopes to duplicate this success with natural gas exports through the Power of Siberia pipeline, which began construction this summer. The oil and natural gas deals with China are worth some $270 billion and $400 billion, respectively, over the next three decades.
Russia-China Deals Since 2012
Click to Enlarge

Beyond energy, Moscow now views China as a much larger investor in Russia as well as an alternative market for credit. Both areas are reflected in the type and quantity of deals struck between the two countries over the past three days, 38 agreements in all, worth approximately $25 billion. Among the first notable deals is an agreement with China's Exim Bank that could provide $2 billion of long-term loans to Russia's Vnesheconombank, or VEB, which is currently suffering under sanctions imposed by the West. Additionally, Beijing said it would invest $10 billion in a high-speed rail project connecting Moscow and Kazan, Tatarstan, a $25 billion project that was put on hold when Western investors shied away because of sanctions.

Moscow also offered Beijing the chance to purchase a stake in Russia's oil giant, Rosneft. This is alongside a proposed stake in planned liquefied natural gas facilities on Russia's eastern coast and a possible expansion of the Power of Siberia pipeline -- one that would add a large spur supplying China's western regions. Though indicators appear to show a revival of the Sino-Soviet alliance, both countries are carefully calculating their commitments: Beijing and Moscow are naturally wary of being beholden to one another. For the time being, however, there is a shared willingness to come to terms, which offers a distinct advantage for a Russia badly in need of new markets and investors, and a China that fits both those bills.
Russia and China Strengthen Their Energy Relationship

    June 18, 2011: Russia is one of the world's largest energy producers and China is one of the biggest consumers, but these bordering countries have done very little energy trade. Instead, Russia relies mostly on the West as a consumer — it supplies one quarter of Europe's energy — while China largely relies on energy supplies from the Middle East and Africa imported via sea routes. The reason for this disconnect is that Russia's current oil and natural gas production occurs mostly in the west of the country, while most of China's population is in its east, leaving thousands of kilometers between the source and the consumers. The distance — and therefore investment — involved in connecting Russia's energy to China's population is massive.

    Considering the difficulties involved in any oil and natural gas projects linking Russia and China, the endeavors appear to make no economic sense. However, this is not only about economics. Beijing and Moscow have many political, security and other issues in their overlapping and respective regions. It could be that energy cooperation, even at a high price, is considered mutually strategically necessary, or it could be a tradeoff for concessions in other areas. It is not clear what the tradeoff could be, but it is clear that a serious discussion is going on between the two Asian giants on finding common ground and shaping a stronger relationship in the future.

Russia Diversifies Oil Export Routes and Markets

    March 9, 2012: Russia is diversifying its customer base so that if demand in Europe declines -- or if Russia and its European customers find themselves in a politically untenable situation -- Russia will still have a large market to its east. In the past decade, Russia has increased its oil exports to Asia from 3 percent to 15 percent of total exports, with more increases expected. When the Eastern Siberia-Pacific Ocean oil pipeline (ESPO) is expanded, Russia theoretically could supply one-fifth of China's imports, or one-third of Japan's imports. However, Russia is not singling out one customer in East Asia yet; it is supplying many customers. Conversely, no East Asian country wants to become too reliant on Russia after seeing Moscow cut off supplies to its customers in the West.

Russia Looks East for New Energy Consumers

    Jan. 23, 2013: With its oil and natural gas exports to Europe declining, Russia is expanding its energy export networks to Asia. Russia has long relied on Europe as its primary customer, but over the past two years Moscow has worked to build out its energy infrastructure to the east as a way of diversifying its customer base. Today, it has enough capacity to divert about half of its oil exports to eastern markets. Because oil and natural gas are the chief sources of revenue for the Russian government, the Kremlin wants to ensure it has the flexibility to shift routes and destinations as demand in different regions rises or falls, somewhat insulating the country from volatility in energy markets.

Russia Tries to Crack China's Natural Gas Market

    Sept. 11, 2013: The past two weeks have been particularly busy for Russia and China as they discuss energy deals. Last week, Russian Deputy Prime Minister Igor Sechin traveled to China and struck a series of deals on behalf of Russian oil giant Rosneft, of which he is a board member. In June, the two sides agreed to a $270 billion oil deal under which Russia, starting in 2015, will export 300,000 barrels per day to China for 25 years, on top of the 400,000 barrels per day it already delivers noncontractually. In addition to this deal, Sechin and Rosneft agreed with China National Petroleum Corp. to construct a new oil refinery in the Chinese city of Tianjin and launch a joint venture to open gas stations across China that would be fed by Russian oil -- Moscow's first venture into China's gasoline market.

Russia's Competition for Natural Gas Deals with China

    Sept. 12, 2014: As China diversifies its options for natural gas suppliers, it is leveraging its position to get the best deals it can out of new contracts with Russia. Because Russia is counting on the Chinese natural gas market to help it move away from exporting energy to Europe, Moscow is offering concessions to Beijing, particularly in light of the growing competition it faces. Beijing's wariness of a natural gas contract with Russia and its concern about the end price of Russian natural gas has put Gazprom in a difficult position. The company was supposed to begin constructing the Power of Siberia pipeline in September, but without a final deal with China in place, it is postponing construction of the $32 billion pipeline until early 2014 to ensure that there will be a market for the natural gas the line will carry. Gazprom is courting other customers, such as South Korea and Japan, to sign contracts for natural gas exports via the pipeline, but the volume these countries would import is not nearly as great as the amount China has proposed.

Russia, China Agree to Natural Gas Deal

    May 21, 2014: Russia and China struck a long-awaited deal on natural gas May 21, according to Alexei Miller, the CEO of Russian natural gas giant Gazprom. According to the provisions of the deal, which is worth $400 billion, Russia will supply 38 billion cubic meters of natural gas per year to China for the next 30 years, with the option to raise supplies to 60 billion cubic meters per year in the future. The agreement will enable Russia to launch plans for building the $42 billion Power of Siberia pipeline, a 4,000 kilometer-long (approximately 2,500 miles) pipeline that will tap two new source fields and run from Siberia to China. The energy deal does not mean that Beijing and Moscow are aligned politically, as they were periodically during the Cold War. But each country now has a use for the other, and their partnership could help ensure domestic stability and enhance their respective positions in the world.

Read more: A Chronology of Russia's Rekindled Alliance with China | Stratfor
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