Vladimir Putin’s visit to China this week was supposed to reaffirm the budding strategic ties between Moscow and Beijing. And in many ways it did precisely this. After years of complex negotiations, Putin will return home with a massive energy deal between Gazprom and China National Petroleum Corp under his belt. But while the deal to supply China with gas over the next decades is a significant landmark in Sino-Russian relations, it’s still premature to speak of a burgeoning Moscow-Beijing axis vis-à-vis the West.
Although details of the deal are not yet public, it is safe to assume China was able to push Russia to get a very good price. Sensing Russian strategic weakness at the moment, the energy deal underscores China’s growing confidence vis-à-vis Russia – a sentiment that has only been reinforced by recent events in Ukraine. This is bad news for Russia but good news for China – and perhaps also for the West if it can play its cards right.
Indeed, several factors underscore why Beijing’s view of Russia is correct. First, China knows about Russia’s struggling economy (the IMF already considers the country to be in a technical recession) and its strong dependence on energy exports to Europe, which makes it extremely vulnerable to demand shifts. With 60 percent of its revenue coming from European markets, Gazprom has plenty of reasons to be worried by the renewed calls for European energy security and independence from Russia. In June 2008, Gazprom was valued at $360 billion; now the market value of Russia’s gas export monopoly is just $97.7 billion. Add to this the sanctions that have been imposed in the wake of the crisis in Ukraine, which are now also beginning to take a toll on the Russian economy: already some $45-50 billion has been moved out of Russia since January 2014, and more should be expected unless the crisis is resolved.
Finding a new energy export market is therefore of critical importance to Russia. Sixty percent of Russia’s state income is derived from oil, gas and coal sales. China’s voracious demand for energy makes it an ideal customer from a Russian point of view, although China currently only gets 9 percent of its oil imports and 1 percent of its gas from Russia. Of course, China likewise is open to new economic cooperation and Russian energy. Although it must be uncomfortable with Putin’s current behavior in Ukraine, China also sees the benefits of a closer strategic partnership with Russia, as illustrated by the two countries’ multiple “double-vetoes” in the Security Council in recent years, including the one this week on Syria.
But with Russia progressively isolated and looking for new energy consumers, China is confronted with a wider strategic reality. It can help fuel its burgeoning economy with Russian gas, depending less on the unstable Middle East and Africa, and utilizing Russia’s weaker bargaining position to negotiate favorable terms. This is exactly what happened during Putin’s visit to Beijing. Moreover, having Russia as a declining power rather than a potential aggressive rival strengthens China’s role as major power in Central and East Asia – areas where China and Russia don’t always see eye to eye.
Meanwhile, China sees the three other major players on the grand chessboard – the United States and Europe on the one side, and Russia on the other – now drifting further apart, and with that the entire post-Cold War order in which Russia and the West maintained important bridges. Finally, the Ukraine crisis has also succeeded in strengthening the transatlantic alliance. This is illustrated by the use of Western sanctions against Moscow, renewed NATO commitments to Central and Eastern European countries, and the growing discussion of potential U.S. energy exports to Europe.
These perceptions help account for China’s carefully calibrated position on Russian behavior in Crimea. China has sent signals of support to Russia on Ukraine, albeit quietly given its own separatist movements in Tibet and Xinjiang. This approach has cleverly allowed China to appear hostile to neither the West nor Russia. The recent visit of President Xi Jinping to Europe during the time of the Crimean referendum shows China’s desire to pursue good relations with the EU and Russia simultaneously.
China, in other words, appears to be the biggest winner of the Ukrainian crisis while Russia might be its biggest loser, in part because of the economic burden from Eastern Ukraine and Crimea, but also as a consequence of Russian international isolation instigated by Western powers.
But where does that leave the West?
Clearly, the West must capitalize on the growing asymmetry in Sino-Russian relations. The reason Russia is reorienting itself from Europe to Asia is because it seeks a closer strategic partnership with China to confront the Western-led international system. The West must make sure this confrontation does not materialize. This requires continuing to pressure Russia’s economy and its regime with sanctions and beefing up NATO’s presence in Europe. But it also requires improving transatlantic cohesion. This can be done, for instance, by completing an ambitious Trans-Atlantic Trade and Investment Partnership agreement. In trying to find a common policy to address the Ukrainian crisis, Europe and America must also avoid the kind of collateral damage they suffered over the Iraq crisis in 2003.
The West must also defend Ukraine territorial integrity by bringing China and its own territorial integrity concerns into the equation. Here, the potential common ground between the West and China when it comes to Ukrainian sovereignty should be exploited further. In other words, asking Beijing to put pressure on Russia is a good step to encircle Russia while recognizing the Chinese role in international security. The West must also open the door to closer cooperation between NATO, the EU and China, sending a message to Moscow that NATO and the EU are not in decline and will remain significant players in Central Asia after the Afghanistan withdrawal. Neither China nor the U.S. and Europe are interested in chaos in Afghanistan-Pakistan after 2014. Ultimately, encouraging China to be a responsible stakeholder and a core part of the global system would also help set an important precedent for Russia to follow at a time when its relations with the West are spiraling off course.
Clearly, Russia is the West’s biggest immediate concern right now. In the long run, though, a rising China is a more serious strategic challenge than is a declining Russia. Utilizing the pragmatic emerging power China to put pressure on the revisionist power Russia, while also taking steps to ensure a good working relationship with Beijing and reassuring America;s Pacific allies, is clearly a win-win strategy for the West going forward.
Erik Brattberg is a Resident Fellow at the Brent Scowcroft Center on International Security at the Atlantic Council in Washington, DC and an associated Researcher at the Swedish Institute of International Affairs in Stockholm. Bernardo Pires de Lima is a Non-Resident Fellow at SAIS Center for Transatlantic Relations at the Johns Hopkins University in Washington, DC, and a Researcher at the Portuguese Institute of International Relations in Lisbon.