Putin’s Grand Plan for Asia

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Putin’s Grand Plan for Asia

Worried Russia will be marginalized by China, expect Vladimir Putin to push his Eurasian Union vision – and perhaps spring a surprise over Pakistan.

Vladimir Putin, Russia’s current prime minister and future president, has shown a strong interest in Asian affairs. In his second term, Putin would undoubtedly like to maintain good ties with China, consolidate Moscow’s first-among-equals status in Central Asia, manage the regional repercussions of the U.S. military withdrawal from Afghanistan, prevent a war or major crisis in the Koreas, and deepen Russia’s integration into East Asia’s more dynamic and prosperous economic  networks. At the same time, Putin is eager to strengthen Russia’s position in Europe.

It’s a big to-do list, but Russia has already succeeded in raising its profile in Asia over the last few years. Its partnerships with China and India are solid, while relations with Iran and North Korea are stable despite all the complications surrounding both countries. Last year, Russia joined the East Asian Summit, which could emerge as the most important multinational security institution in East Asia. Russian government representatives regularly participate in the Association of Southeast Asian Nations Defense Ministers’ Meeting and Dialogue Partners, the Asia Cooperation Dialogue, and other important regional meetings where they were once absent. But Russia is still too often treated as an afterthought in Asian-centered initiatives. Even eastern Russia is poorly integrated into East Asia’s dynamic economies, while Moscow’s diplomatic flexibility is constrained by its conflict with Tokyo, the mutual Russian-U.S. failure to extend their reset to Asia, and Russia’s inability to either align with a rising China or develop a means to manage its consequences.

It’s true that Putin chose China as the destination of his first foreign trip after his announcement in late September that he’d run again for president. But to read this as a signal that he would align Russia closer toward Beijing in the coming years would be a mistake. Putin’s October trip had been scheduled long before his announcement, and the fact is that he didn’t pursue particularly Beijing-leaning policies during his earlier terms as president (2000 to 2008).

Still, Putin did publish a series of major substantive articles during the recent election campaign. In his survey on foreign policy, Putin professed to welcome the rise of China. He wrote: “First of all, I am convinced that China's economic growth is by no means a threat, but a challenge that carries colossal potential for business cooperation – a chance to catch the Chinese wind in the sails of our economy,” such as by using Chinese investments and trade to revitalize the depressed Russian Far East.

“Second, China's conduct on the world stage gives no grounds to talk about its aspirations to dominance.” Furthermore, Putin wrote, “we have settled all the major political issues in our relations with China, including the critical border issue.” Finally, Moscow and Beijing “have created a solid mechanism of bilateral ties, reinforced by legally binding documents. There’s an unprecedentedly high level of trust between the leaders of our two countries.” In short, “Russia needs a prosperous and stable China, and I’m convinced that China needs a strong and successful Russia.”

But whatever Putin professes before taking office, it’s unlikely that he’ll break with the cooperation-conflict pattern that has characterized Russia-China ties during the past two decades. The two countries pursue similar policies towards a range of subjects, including regional security and world order issues. They share an aversion to certain Western practices such as NATO’s military humanitarian interventions in Libya, Serbia, and elsewhere. But Putin has made clear that he values Russia’s national independence, sovereignty, and freedom of action above all else – as does Beijing. Notwithstanding their improved post-Cold War relationship, Moscow and Beijing haven’t formed a mutual defensive alliance. They still tend to pursue distinct, if largely parallel, policies regarding many issues, including those cited above.

The reality is that despite the generous comments in his article, Putin and other Russians fear becoming China’s junior partner in world affairs. They can see that global economic, demographic and military trends are all moving in Beijing’s favor. China has become Russia’s largest trading partner, but in 2010, Russia ranked only as China’s 10th-largest trading partner, and China no longer needs most Russian high-technology or industrial exports. Russia’s population is stagnating while the Chinese people are becoming more numerous, wealthy, and influential. Bluntly put, Russians fear becoming a mere raw materials appendage to the Chinese colossus. They are bargaining hard to make the Chinese pay top dollar for Russian oil and especially gas deliveries to China, but they insist that China also buy Russian industrial goods as well as raw materials and better protect Russian property rights and trademarks.

Putin’s push for a Eurasian Union would, if realized, allow Moscow to again lead a multinational bloc of tightly bound, former Soviet republics. Having a ruble currency zone would boost Moscow’s claims to great power status despite its lagging economic potential compared with China. The plan would also serve to limit China’s influence in the former Soviet republics that joined. The Shanghai Cooperation Organization (SCO), now chaired by China, has been seeking to expand its economic, security, and other activities in the same functional areas as the proposed Eurasian Union. Russia has led the opposition to Beijing’s proposals to establish a free-trade zone and other economic integration within the SCO framework, which would enhance Chinese economic expansion in Eurasia.

Perhaps the one change Putin might undertake is to relent and agree to sell China some of Russia’s top-of-the-line weapons, which would help reduce the quantitative and qualitative trade imbalances between the two countries. Until now, Russian leaders had hesitated to permit such transfers for fear that China could steal their expensive sophisticated military technologies to build cheaper systems that would undercut Russian sales on third party arms markets in developing countries. But recent press reports indicate that Russia might be readying to sell China 48 Su-35 warplanes for $4 billion if the conditions included enhanced property right protection for Sukhoi.

Putin also mysteriously told some defense intellectuals last month that Russia and China “plan to expand this [military sales] cooperation and go beyond trade relations to include joint research activities.” Although Putin probably had in mind simply jointly developing weapons systems for selling to third markets, Moscow and Beijing could cooperate more directly against at least certain shared U.S. threats. Thus far, while Russia and China have frequently complained about U.S. missile defenses and other military activities, they have declined to join forces except rhetorically, refraining from pooling resources and developing joint military countermeasures.

Another reason Putin is promoting his Eurasian Union idea is because Moscow wants to constrain the U.S. military presence in Central Asia after NATO leaves Afghanistan, ending the main, perhaps only, reason the Kremlin has welcomed U.S. troops in its strategic backyard.

Putin joins other Russians in complaining about NATO’s failure to prevent the smuggling of Afghan narcotics into Russia and Central Asia, and he wants the Moscow-dominated Collective Security Treaty Organization, as well as the Shanghai Cooperation Organization, to have the leading role in managing that problem as well as other regional security challenges in Central Asia. Meanwhile, Putin has continued to cultivate good ties with Afghan President Hamid Karzai and other Afghan leaders, promising them Russian military and economic assistance and exploiting their strained ties with NATO. Putin will likely step up these efforts as the U.S. military leaves Afghanistan, an unwelcome development for Moscow since it decreases Western reliance on Russian territory and logistics to support their contingents in Afghanistan. Above all, Russians fear that NATO will simply walk away from the conflict, and dump another Afghan Civil War on Moscow’s lap at a time when Central Asian governments look more vulnerable to Islamist terrorism and Arab Spring-like upheavals.

Another Putin surprise might entail upgrading ties with Pakistan. Moscow’s ties with Islamabad have been strained for decades due to Pakistan’s support for Islamist terrorism, support for U.S. and Chinese measures against Russia, and confrontational policies towards India, a Russian ally. But Putin has now agreed to make a formal visit to Islamabad in September. Strengthening ties with Pakistan would give Moscow greater influence in post-NATO Afghanistan, including a means of communication with the Taliban, as well as enhance Russia’s leverage with India.

In the meantime, relations between Moscow and New Delhi remain strong, with Russia continuing to hold a dominant position in India’s arms and nuclear energy markets. But both these positions are under threat from foreign competition. Russia’s military-industrial complex is still miffed at losing India’s recent tender for its main future multi-role fighter plane to a European competitor. Over time, India will likely follow China and develop a more balanced trade and investment relationship with other Asian as well as Western countries. Having some influence in Islamabad would position Moscow better to mediate between New Delhi and Islamabad and underscore the value for India of maintaining good ties with Russia.

One of the most interesting things about Putin’s key foreign policy article was how much space he devoted to North Korea, while hardly mentioning Iran. Putin wrote that, “We have consistently advocated the denuclearization of the Korean Peninsula – exclusively through political and diplomatic means – and the early resumption of Six-Party Talks.” In coming years, Putin added, “We will continue conducting an active dialogue with the leaders of North Korea and developing good-neighborly relations with it, while at the same time trying to encourage Pyongyang to settle the nuclear issue.”

Russians are undoubtedly eager to reduce tensions on the Korean Peninsula. Russia’s economic and security interests would be bolstered by a lengthy period of harmony and stability in the Koreas. Russian entrepreneurs envisage converting North Korea into a transit country for Russian energy and economic exports to South Korea and other Asia-Pacific countries. Such a development would further Russia’s integration into East Asia as well as revitalize Moscow’s ties with North Korea. Russians have discussed linking a trans-Korean railroad with Russia’s rail system, which would allow Russia to become a transit country for South Korean trade with Europe, which now involves mostly long-distance shipping. Furthermore, Russian planners want to construct energy pipelines through North Korean territory. Unfortunately, these plans can’t be realized without an end to North Korea’s estrangement from its neighbors, which Moscow alone can do little to change.

So what about Iran? Putin’s return to the presidency is unlikely to see any major change in Moscow’s policy toward Tehran. Russia started voting for sanctions against Tehran in 2006, when Putin was president. Putin, like most Russians, distrusts Iran’s government, doesn’t want Tehran to have nuclear weapons, and resents the way Iran declines to reward Moscow for resisting further sanctions. Still, Moscow could move closer to Tehran if Russia-West relations suffer for other reasons. And Russia has no reason to support additional U.N. sanctions on Tehran in any case since the existing measures have already driven most Western companies out of Iran, allowing Russia and Chinese firms to dominate Iran’s foreign economic ties. Putin and other leaders seem content with the status quo, with Iran alienated from its natural Western economic partners and Iranian-related tensions propping up world oil prices.

Yet at the same time, Putin and other Russian diplomats are making a vigorous effort to affirm Russia’s role as a major Asian player in other sectors besides oil and arms. Having a niche in Iran’s troubled economy is no substitute for integrating Russia further into the Asia’s more dynamic markets. Securing additional South Korean, Chinese, and Japanese investment and trade would help revitalize the Russian economy, especially the lagging but strategically significant region of the Russian Far East. Russia’s trade relations with Japan, South Korea, and China fall far behind these three countries’ economic interactions with each other. Russian leaders are also seeking to establish a more favorable environment for Asian investors that thus far have flocked predominately to China as well as to India, South Korea and other Asian markets.

Ultimately, the success of Putin’s Asian pivot should become clearer by September 2012, when Russia will host its first APEC Summit in Vladivostok. But any enduring achievements will require Moscow to adopt a more attractive legal and regulatory environment for foreign companies, as well as end its dispute with Japan. Ultimately, although the dispute is a bilateral one, it impedes Russia’s diplomatic flexibility in the region and, by having the same effect on Tokyo, has allowed Beijing and Washington to dominate the restructuring of Asia’s 21st century economic and security architecture.