Russia and Asia, or Russia within Asia?

24 september 2011

Prospects for Russian Policy in the Asia-Pacific Region

Pavel Salin is Director of the Center for Political Studies at the Financial University under the Russian Government. He holds a Doctorate in Law.

Resume: The world crisis has spurred the already high rate of processes taking place in the Asia-Pacific region, forcing its transformation into a major center of world politics.

The world crisis has spurred the already high rate of processes taking place in the Asia-Pacific region, forcing its transformation into a major center of world politics. It can now match, at the very least, the Euro-Atlantic space, with a formidable potential to beat it by a number of indicators in the next 10 to 15 years. At present, this part of the world is leading other regions by development rates (the crisis has noticeably strengthened the lead) and is second by the level of industrial development.

This rapid economic upturn of the Asia-Pacific region is due to its competitive advantages, the three most important of them being: 1) the low cost of labor; 2) a high level of savings; and 3) rapid industrialization of almost all the countries, magnified by investments in the human resource and export-oriented production. During the crisis, the latter asset became a disadvantage, but the inherent risks may be offset as the standard of living rises and producers reorient production towards domestic markets – a policy China is vigorously pursuing now.

In strategic terms, Russia’s presence in the Asia-Pacific region is negligible at present, which is both its strength and weakness. On the one hand, its absence (in the systemic terms) from a most promising region weakens Moscow’s global positions. One the other hand, it gives it freedom of maneuver in building any unions from scratch, without fearing a conflict of interests.

Russia has as good as lost its erstwhile positions in the region, such as the once powerful influence upon North Korea. The membership in the “sextet” is nominal: Moscow’s niche has been taken by Beijing, and it was to China that Kim Jong Il traveled to show his successor. The withdrawal from the Cam Ranh base in Vietnam lost Moscow its military presence in the region. The situation is exacerbated by the continuing degradation of Russia’s Pacific Fleet, which, unlike the Russian Northern Fleet, is highly underfunded.

Formally, Russia participates in integration processes in the region: it has joined the Asia-Pacific Economic Cooperation forum, and has the status of “dialogue partner” in ASEAN. However, the initiative to join these integration projects dates back to the 1990s and came not as a result of pragmatic consideration but residual ambitions of the once-great power to be present everywhere. The Kremlin’s incoherent policy in Asia-Pacific is still more obvious against the background of its attempts to “wave the Russian tricolor” in the region – the visits by top Russian officials to the Kuril Islands have left more questions than answers.

The purpose of the article is to analyze the current situation in terms of Russia’s interests and, most importantly, its opportunities in the Asia-Pacific region, in order to draw basic principles for its policy there, which would help it obtain maximum results with the least effort.

METHODOLOGICAL RULES AND ATTEMPTS TO IMPOSE THEM

The main risk inherent in planning a foreign policy strategy (not just Russia’s and not necessarily in the Asia-Pacific region) is when it is built to counter alien interests. In other words, if Russia proceeds from anti-Chinese or pro-Chinese positions (or anti-Western or pro-Western ones) in its policy-making, it will be vulnerable from the very start, regardless of how intricately this policy is designed. Even the most insightful tactic may be frustrated by an erroneous strategy built depending on alien interests.

True, the possibility of such an error is diminishing now. Russia’s foreign policy of the first post-Soviet decade was haunted by the ghost of great-powerness and anti-Americanism. Any moves by the U.S. or Russia in any region of the world were perceived as a zero sum game: what was advantageous to Washington was disadvantageous to Moscow, and visa versa. The last five to seven years have been marked by a pragmatic approach to policy-making: formulations of policy pursuits in terms of national security are giving way to geo-economics which functions under other laws than foreign-policy doctrines of the bipolar world.

The leading world players are aware of the changes that have taken place in the recent years. In their attempts to manipulate Russian elites, including with regard to Asia-Pacific issues, they mostly appeal to their interests. In professional and creative handling of these issues, however, genuine interests are substituted by putative ones. At present, there is a conflict between two points of view in the Russian mass media, the government circles and the expert community. This conflict can be termed a “battle for Russia.”

More active is the “anti-Chinese party.” The scope of this article precludes a thorough analysis of its arguments; we would only mention that the advocates of this approach appeal to the existing trends and risks, while exaggerating them considerably.

As an alternative to “the Chinese threat” – largely imaginary – Russia is offered to integrate in the Euro-Atlantic security community (in a consultative, non-voting capacity, of course), with a further projection of this “union” onto the Asia-Pacific region. In other words, the West wants Moscow to become a front-line area in the emerging conflict with China, and not to have a say in the decision-making that directly concerns Russia (if indeed it joins the “anti-Chinese front”).

The advocates of this concept believe that “Russia would not be able to cope with China on its own.” Being basically valid, this proposition has two doubtful points on which it is based: first, a military conflict between Moscow and Beijing is inevitable sooner or later; and second, the two countries will be fighting in a vacuum as other players in the Asia-Pacific region and elsewhere will remain uninvolved.

For its part, China, which hitherto abstained from brainwashing Russian elites, is now actively doing it. While successfully copying Western technologies, it does not overlook the West’s achievements in the humanitarian sphere; for example, it consistently applies methods of ideological programming in Russia, with the help of formally independent expert centers and mass media.

However, in their “battle for Russia,” both China and the West deliberately oversimplify things. The Asia-Pacific region is not just China – even though it is the most influential player there – but numerous other countries and emerging blocs which may become valuable partners of Russia, if it pursues a prudent policy towards them. Therefore, neither China nor (the more so) the West can be “a window to the Asia-Pacific region” for Russia. Owing to its geographic position, Russia can project its interests and stand by them in the region without intermediaries.

As the situation with regard to Russia’s interests in that region has several options, the question arises about the civilizational choice of the young Russian elite. It should be borne in mind that the elites in all countries – Russia in particular – shape their foreign policy proceeding from their own interests, and then impose it on the rest of the population through mass media manipulations. So, Russia’s policy in the Asia-Pacific region largely depends on the position and world outlook of the Russian elites, especially those to come, and to a much lesser extent, on the other groups of society.

Since Russia lacks experience in stable and lasting political development which would guarantee succession and long-term planning to the elites, they are increasingly inclined to opt for a “withdrawal strategy.” That is, they associate their own prospects and the future of their children not so much with Russia, as with the centers of attraction abroad, as they view them as much more stable. This tendency leads to “inner emigration.” Members of the elite continue to live in Russia, but they link their prospects with other geographic and geopolitical reality. This kind of alienation has assumed a mass scale in the past two decades and is not even concealed. The “inner emigration” has a considerable influence on Russia’s foreign-policy strategy in which the interests of the country and the population at large are sidelined. For example, canceling the visa regime with the European Union would be a very welcome move for less than 1 percent of the Russians and would marginally affect another 5 percent, whereas 80 percent of the population do not have foreign travel passports at all. Yet the mass media present this issue as the key problem in Russian-EU relations, and the Russian authorities are ready to make major concessions for its resolution.

For the past 300 to 350 years, Europe has been at the peak of its status and cultural influence and has attracted Russia and the rest of the world as the center of civilizational attraction. But the present redistribution of economic influence in favor of the Asia-Pacific region will inevitably lose the EU its symbolic capital – the key instrument which so far has enabled it to maintain the high status after losing the economic and military leverage. Strictly speaking, the process has already begun, but quantitative changes have not yet evolved into qualitative ones.

The Russian elites are interested in not so much an average standard of living or consumption in the region which they have chosen for implementing the “withdrawal strategy,” as parameters of status (luxury) consumption. The recent economic changes have caused the centers of status consumption to shift from Europe to the Asia-Pacific region. Whereas California, Monaco and the French Riviera were the main habitat for homo millionerus some two decades ago, the last decade has been marked by a gradual migration of the rich from the West to the East. A 2005 study, conducted by the Merrill Lynch investment bank and the Capgemini consulting company, offers an indirect proof of it. It says that, whereas earlier millionaires tended to settle in respectable places not far from London, today 30 percent of them buy real estate in other countries. In 2006, Shanghai hosted the first exhibition for millionaires in Asia, which has been promoting anchor investment in Asian real estate since.

This tendency came as a result of the economic changes catalyzed by the crisis. As a consequence, in 2011, the number of millionaires in Asia has for the first time exceeded those in Europe. Manufacturers of de-luxe products have had to respond: Mo?t Hennessy has stated its intention to launch the production of champagne in China using local brands of grapes. The Glazer family, which owns Manchester United, an English professional football club, has held preliminary negotiations with several investment banks over floating the club’s shares on the Hong Kong stock exchange, as this business can fetch much higher profits in Hong Kong than in London.

Therefore, Russian consumers of de luxe products will follow in the footsteps of their producers and relocate to the Asia-Pacific region (at least mentally), which will affect their geopolitical and cultural preferences. But there is a serious factor that keeps tying the Russian elites to Europe – the latter’s proximity to Russia. A flight from Moscow to London is several times shorter than to Shanghai or Hong Kong. However, the development of superfast transportation technologies (supersonic aircraft and suborbital routes, which the rich will certainly be able to afford) will take the edge off the problem within a span of several decades, if not eliminate it altogether.

 

DEVELOPING THE REGIONAL COLLECTIVE SECURITY SYSTEM

The Asia-Pacific region offers a “tabula rasa” advantage, that is, it actually lacks a set of stable interests and mutual obligations of the world’s leading states, which would shape the political landscape in this part of the world. Also, Asia-Pacific, unlike the Trans-Atlantic region, is just forming the system of economic division of labor and a collective security system. Therefore, Russia should focus on gaining access to the key infrastructure of decision-making. If successful, this effort may secure the Russian Federation benefits (even if it finds its positions weakened), the way it has been drawing dividends from its membership in the UN Security Council since the breakup of the Soviet Union, despite the dramatic weakening of its positions and the general erosion of this international institution.

Russia has to build its long-term strategy of presence in the Asia-Pacific region proceeding from its own interests. This does not mean, however, that at this point Moscow’s and other players’ interests conflict with each other. For example, Russian and U.S. tactical interests coincide, as both assume that China should be involved in the systems of traditional international relations, so that it pursue its policy in the international legal environment, where Russia would have a “share package” of its own. But first, Russia needs to integrate in the emerging Asian institutions, in order to be able to later contribute to China’s joining them.

Efforts to set up such institutions are already being made, although they have been rather disordered so far. Russia is involved in several projects. For example, Hanoi hosted a meeting late last year of the defense ministers of ASEAN countries, the U.S., China, Japan, and Russia. It discussed territorial disputes in the region and ways of their settlement. In addition, in the spring of 2011, after a U.S.-Chinese summit, the two countries agreed on a bilateral format to discuss regional security problems. It may turn into a full-fledged international security institution in the future. The need to establish full-fledged collective security bodies is ripe in the region, preparations are underway, and if Moscow ignores these processes, it may incur considerable costs in the future.

The problem may be exacerbated by the weak Russian military presence in the region. To resolve it, Russia not only needs more troops, but also major changes in its military doctrine. Whereas ground and air forces are sufficient for realizing Russia’s ambitions in Central Asia and the South Caucasus, protection of its interests in Asia-Pacific, which has an entirely different geography, requires a powerful naval force. Assigning two Mistral helicopter carriers to the Pacific Fleet is obviously not enough, while the intention to build the first full-fledged aircraft carrier by the early 2020s, recently announced by Russian generals, sounds rather like a promise “perhaps sometime in the future” given the increasingly inefficient strategic planning and its poor implementation.

Cooperation in security issues in the region should lean on the existing political institutions, possibly with their simultaneous transformation. Russia’s participation in the East Asian Community (based on the East Asia Summit) looks quite promising. It still has equal chances with the United States in this organization (both countries began to participate in its work in 2011).

Alternative integration projects (for example, the U.S., seeking to set up an alternative to ASEAN, initiated the signing of the Trans-Pacific Strategic Economic Partnership Agreement between Singapore, Brunei, Chile and New Zealand in 2005) do not have serious prospects for success yet. Also, ASEAN countries have de-facto ignored Russian President Medvedev’s proposal for cooperation between ASEAN and the Shanghai Cooperation Organization.

ASEAN has noticeably balanced its geopolitical priorities recently. Earlier, under Washington’s influence, it was rather anti-Chinese. Now ASEAN, supported by China, is considering giving Myanmar chairmanship in 2014 (earlier the U.S. opposed such a move, saying the Myanmarese government is still authoritarian). This indicates Beijing’s increased influence on the organization and the simultaneous weakening of Washington’s influence.

 

GEO-ECONOMIC PRIORITIES

An analysis of Russia’s competitive advantages and disadvantages suggests that the vast expanse of land it possesses is the only asset that gives it an edge over other countries in the region. Russia should focus on the capitalization of its territory and use it for purposes other than mining or transportation of natural resources. Capitalization implies a qualitative change in the territory’s properties, enabling the owner to use it for diverse purposes.

According to some estimates, Russia can meet a considerable increase in demand for food in the region which has shortages of farmland. But it should foresee a possible outcome of the WTO admission talks with the members of the Cairns Group (a coalition of agricultural exporting countries), which includes some agricultural exporters in the Asia-Pacific region.

Another line of the capitalization of Russia’s territory is a proposed project to build a West-East transport corridor (from Shanghai to London). Several influential Russian groups are lobbying for the project, which eases the task of its implementation. The Russian Railways company supports creating a transmodal transport corridor on the basis of the Trans-Siberian railway. A slightly less influential group of shipowners is lobbying for the use of the Northern Sea Route as another bridge between the East and the West.

It should be born in mind, though, that capitalization of Russian territory through transit is fraught with strategic risks. Asia-Pacific countries now primarily stimulate domestic demand. If, within a span of five to ten years, they succeed in making the region the center of not just industrial production but also consumption, transportation flows from Europe and back will plunge, and Russia’s investments in the transport infrastructure may fail to pay back. Also, China and some other Asian players are lobbying for the restoration of the Silk Road, using advanced technology and bypassing Russia.

Lastly, China, aware of the potential danger of alternative transportation routes, is trying to tie Russia and neighboring countries to its territory. The Russian authorities have announced that an 8,500-kilometer-long Russia-Kazakhstan-China highway would be built by 2018. It will be part of the “Europe-Western China” transport corridor. It follows from the name of the project that China alone will serve as “the gate to the Asia-Pacific region” for Russia, which would be an unwelcome development for it.

The same concerns routes along which Russia is planning to export fuels to the East. There are two rival options at present. The first, sponsored by Beijing, envisions the construction of pipelines exclusively to meet China’s demand. Under the second option, all transit routes would have access to the ocean, giving Russia the opportunity to supply fuels to all countries in the region and establish mutually advantageous cooperation with them.

To strengthen its positions in the region, Moscow should stick to the same strategy as in relations with Europe, i.e. cooperate along two tracks. Priority should be given to the supra-national one (unlike the European vector, where relations with nation-states prevail), as the Asia-Pacific region has no full-fledged system of regional political associations yet. So Russia has a chance to get a “parcel of shares” in new blocs, taking part in their creation.

As stated above, it would be best to establish relations with ASEAN, the only association in the region unrivaled in terms of scope and strict membership requirements. Despite ASEAN’s unwillingness to expand (this unwillingness is the bloc’s competitive advantage, compared with APEC) and its strict 10+ format, the bloc has options for further transformation. One of them is the ASEAN Regional Forum, with two fields for interaction: governmental and non-governmental (involving NGOs and the expert community). APEC, actively promoted by the Russian mass media as a cooperation partner, is institutionally a far less coherent body due to the greater difference between the economic and political potentials of its participants.

The other line of cooperation envisions dialogue with individual countries of the region (military cooperation with India, military and energy cooperation with Vietnam, etc.).

It is also necessary to overcome stereotypes in interaction with Asia-Pacific partners, which would enable Moscow to give “asymmetric” responses to current challenges and derive maximum benefit from its limited potential in the region.

Russia should also take into account the current geopolitical reality (for example, Vietnam may welcome the restoration of the Cam Ranh base, possibly on a reduced scale, under Russia’s aegis and in partnership with it, but it will not allow military presence of China or the U.S. in its territory for fear of becoming a protectorate of one of the superpowers).

Finally, Russia has to take into account the low degree of consolidation in the region and the trend towards expansion (along the lines of trans-Atlantic consolidation). Latin American countries may become significant players in the Asia-Pacific region (not the “Bolivarian hooligans” but the “heavyweights” such as Brazil and Argentina, with which China is successfully establishing strategic dialogue). Lastly, when building a strategy, Russia should not ignore the growing Islamic factor, including Indonesia’s ambitions as the most populous Islamic state.

 

NOT TO YIELD TO CHINA’S CHARM

Amid the current upsurge of Sinophilia one can often hear people say that the 21st century is the century of China. Taking it as an axiom in building a foreign-policy strategy towards the Asia-Pacific region would be as harmful as building it proceeding from alien interests. From a formal economic point of view, China is following the same path that the “tiger economies” did, from Japan to Singapore and Malaysia. However, the “value of the matter” is now certainly much higher, because China’s population is dozens or even hundreds of times larger than that of its “predecessors.” Hence China’s geopolitical ambitions, on the one hand, and the ensuing concern of Western countries, on the other.

If we extrapolate the existing trends, “the century of China” (including in the Asia-Pacific region) from the economic and demographic points of view may last for about two decades, or three at the most. Judging by the official results of two censuses, China’s urban population has increased from 36 to 50 percent over the past decade, whereas the overall population has grown only by 0.5 percent. The cost of Chinese exports keeps increasing, while European companies (as well as the most far-sighted Chinese ones) prefer to place production not in China but in neighboring Asia-Pacific countries, for example in Vietnam, where labor costs are lower than in coastal “special economic zones” of China.

Yet, considering that China repeatedly dominated the region during its millennia-old history and the ambitions of its elite, including the intellectuals, it is quite possible that Beijing will attempt to convert its economic potential into political influence. The prerequisites for that are already ripening. For example, there is an increasing amount of articles in the world media saying that the Chinese economic model proved more efficient during the crisis than the Western one. True, there have been no claims about the effectiveness of the Chinese political model so far, but it looks it is not long before it would be voiced. Chinese intellectuals are actively working on a doctrine providing that the Confucian development model, based on harmony, is more promising than the Western one, based on technical progress. The concept is intensively promoted by the Confucius Institutes, opened around the world in the past decade (in Russia alone there are more than 15 Confucius Institutes).

The United States has responded by building up its military presence in the Pacific. In particular, it is increasing the potential of its military base in Guam. In its dialogue with Asia-Pacific countries, many of which have territorial disputes with Beijing, the U.S. is consistently promoting the idea that they have no other security guarantees except strong ties with America. Yet the main emphasis in restraining China’s influence in the world is made on the economy, even if with some elements of military force. For example, the instability in Libya and Sudan (now officially divided into two states) primarily hurts China’s interests.

What is Moscow’s role in the American-Chinese confrontation that has already begun? Russia has a unique position as a potential supplier of raw materials for China. It is the only country that can supply fuels by land (the U.S. Navy may easily block seaways in case of a Sino-American conflict) and, unlike Central Asian countries, it can bypass problem areas in northwestern China, where ethnic instability is possible.

As was said above, there are Chinese and Atlantic lobbies locked in a “battle for Russia.” The question is how far the U.S. is prepared to go to distance Russia from China as a fuel supplier. Will it be an attempt of a new “color revolution,” to replace the present Russian elite with a pro-American one? Or – which is more likely – will the U.S. incite separatist sentiments in Russia’s Far East?

The upcoming economic weakening of China (which is inevitable, the only question is when), regardless of whether it occurs due to Washington’s policies or objective factors, will not automatically sideline the Asia-Pacific region or lead to a renaissance of Europe. Asia-Pacific, no less and possibly more culturally diverse than other regions of the globe, has a considerable potential for demographic and civilizational development, which will facilitate the emergence of new locomotives of regional and world development. For example, unlike China, India does not pay so much attention to demographic “overheating,” and its population is estimated to exceed China’s in 20 years, although India’s territory is incomparably smaller. Indonesia, another potential regional leader, is the most populous Muslim state in the world and can play the leading role in the Islamic project, which will be promoted with no less vigor than the Western one.

So, if Russia wants to remain a global policy player, it needs a long-term strategy of presence in the Asia-Pacific region. This strategy, as well as the infrastructure to be built on its basis, should be at least as long-term as Russia’s European policy was in the past three centuries.

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