In spite of all the passions being generated by the upcoming parliamentary and presidential elections, due in 2007 and 2008, respectively, Russian foreign policy will continue to be marked by the systematic and long-term revamping of Eastern policies, which began a partial resurgence in the 2004-2006 period.

The methodologies being implemented by President Vladimir Putin will continue to determine foreign policy beyond 2008 regardless of who will be the presidential successor in the Kremlin. The key issue will remain the same, namely, what resources and levers can help Russia return to the Greater Orient in practical terms, and whether it needs this return at all. If it is decided that it does need such a return, in what capacity should it be? As a renovated liberal empire, or an energy superpower, which has already taken on an early form? Indeed, the latter concept underscores the proposed establishment of an Energy Club of the Shanghai Cooperation Organization (SCO), which will form a new Eurasian energy space embracing Russia, China, Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan. If the project engages SCO observer countries – Iran, India, Pakistan and Mongolia – it will serve as a counterbalance to OPEC, as well as other Western institutions and concepts (like the Energy Charter). It will also provide Russia with a podium for its new Orient-directed capabilities.

AGENDA FOR THE MIDDLE EAST

Middle Eastern developments, which include a new surge in the Arab-Israeli conflict due to preparations for a larger war between Iran, Syria and Hizbollah, on the one hand, and Israel and the U.S., on the other – make Russia partially hostage of the ongoing events. In 2005 and 2006, Moscow established very close contacts with Palestinian and Shiite movements in the region. While the physical construction of bridges in war-torn Lebanon is a noble idea, the construction of a Russian political bridge between the Palestinians (Hamas) and Syria, on the one hand, and their opponents, Israel and its allied powers on the other, is apparently dragging its feet. Clearly, Moscow’s energy-sector diplomacy in that region is not particularly fruitful while supplies of defense products to Syria and Iran irritate Israel and the U.S. Hence, it seems Russia will have to work hard for a place amongst the Quartet of international peace mediators, and for designing a new version of the Road Map peace plan.

However, the Middle East crisis proves that President Putin has obtained new opportunities to influence separate Arab countries. He has strengthened bilateral formats with several countries, including Morocco, Jordan, Egypt and Saudi Arabia. The Russian leader’s visits to Saudi Arabia, Qatar and Jordan in February 2007 caused extensive response in the world. In regard to its relations with Algeria, Russia cancelled debts totaling $7 billion. Russia’s energy diplomacy is having an influence that frequently materializes into concrete political results. This is naturally lucrative for Russia in many ways.

WHAT TO DO WITH IRAN?

Certain elements of the Russian-Iranian relationship are rather controversial and prone to generating conflicts. However, a number of factors, including the proximity of the two states, the mutual benefits of nuclear projects and cooperation in defense-related technologies serve to mitigate these local controversies to some degree.

In 2007 and 2008, Russia will continue to honor its relations with Teheran despite mounting criticism over Iran’s nuclear programs, not to mention the possibility of UN-imposed economic sanctions against Iran. It is clear that in the event of the latter, Moscow – as well as Beijing – will have to readjust its positions and support the sanctions at the UN Security Council. This, however, will essentially be a more tactical rather than strategic step. Besides sharing regional interests in dividing the Eurasian markets of energy resource supplies, together with nuclear projects in Iran, the two countries are also bonded by the agenda of forming a multipolar world, which might be interpreted as covertly anti-American. For Moscow, the realization of closer ties with Teheran poses bigger risks, as it has much more to lose, such as the Russian-U.S. partnership, however formal it may be at the moment, relations with the EU, and its reputation in the International Atomic Energy Agency, the UN Security Council and other organizations. Meanwhile, the Iranians long ago showed their hand as they threw down an overt challenge to the U.S. and Israel. Thus, Russian-Iranian cooperation is strictly meted out in doses, especially on the Russian side. The Bushehr nuclear project, which has been halted by financial questions, provides a graphic example. More importantly, Moscow is attempting to publicly exert influence on Iran so that the latter softens its anti-American stance. Understandably, this will not persuade Teheran to voluntarily dismantle a number of its nuclear facilities. It is more likely that the Iranians will schedule the transition of dual-purpose installations to purely defense projects for the medium-term, as the chances are high that they still do not have the technological resources to accomplish the job in the short term (2007 or 2008).

WHY RUSSIA NEEDS TURKEY

Presently, the natural gas trade makes up the core element of Russian-Turkish economic and, to a degree, political relations. Turkey is a promising part of Russia’s energy strategy; Russia meets 65 percent of Turkish demand for natural gas. These supplies travel via the Trans-Balkan pipeline and the Blue Stream pipeline, which stretches across the Black Sea bed (and survived some dramatic moments while under construction). Considering the new opportunities for gas re-export to adjacent regions, Russia now feels much more secure in this sphere. In all probability, the Turks will try to reduce their dependence on Russian gas and establish alternative channels of energy resources from other countries. Assuming that political relations will continue to improve – or at least keep at their current levels – the most promising areas of Russian-Turkish business in 2007 and 2008 will be in the supply of electric power and equipment for a number of power plants, existing contracts on gas, and the development of telecommunications.

INDIA AND THE PAKISTANI RESOURCE

Objective factors in Russia and India’s mutual complementability include their willingness to set up a network of new energy and transport corridors, and this fits into the SCO’s new Eurasian energy strategy. On the other hand, the lifting of restrictions imposed on India by the Nuclear Suppliers Group generates competition from the U.S. and other countries. Russia is unlikely to have the same advantages on India’s civilian nuclear power market that it has in Iran and some other countries. Our economic objectives in India are localized rather narrowly. First, Russian companies must maintain their grip on individual segments of the promising nuclear market. Second, we must fortify trade, including in the realm of defense technologies. Third, cooperation must embrace the maximum number of high-tech industries, and the Indians must be encouraged to invest heavily inside Russia.

Provided all of this takes place, Russia’s motivation as regards Pakistan may assume the following pattern. First, new opportunities can be tapped as Russia positions itself as a mediator in Indian-Pakistani relations. Second, we can make good use of the Pakistani resource in combating terrorists and Islamic extremists, among them Chechen and other militants based in Russia’s North Caucasus. Third, there are good prospects for cooperation in the energy sector, which envisions the growing activity of Russian companies, like Gazprom, for example, on the Pakistani market. Russian Prime Minister Mikhail Fradkov’s visit in Palestina in April 2007 became a landmark in relations between the two countries.

ABANDONING THE POST-SOVIET AREA? FOR GOOD MONEY, OF COURSE

Central Asia and the South Caucasus have a key role for Russia in terms of security and potential threats. An analysis of the sequence of regional events exposes the following features: First, Islamic extremism and drug trafficking in Central Asia are growing, while radical movements (Hizb-ut-Tahreer and others) are changing their tactics and shifting their activity to the legal social field, working with young people or the elderly, for example. This makes them even more dangerous for the authorities. Second, Russia’s activity in the region is growing both at the level of bilateral relations and collective projects, including in the Collective Security Treaty Organization, the Eurasian Economic Community, the Common Economic Area, as well as in the realm of politics, defense, trade and diplomacy. Third, the Russian-Georgian crisis has reached a critical point. Russia is cautiously proposing Kosovo’s precedent for interpretations in the possible self-determination of the breakaway Georgian provinces of South Ossetia and Abkhazia. Next, uncertainty is growing over a peace settlement in Nagorno-Karabakh, as the settlement concept of the Minsk group of mediators, which Russia is a member of, set up by the Organization for Security and Cooperation in Europe, has reached a deadlock. Finally, the energy factor has become more variegated since the Baku-Tbilisi-Ceyhan oil pipeline opened as an alternative to Russian pipeline routes. Meanwhile, new anti-Russian political projects (like the overhauled GUAM organization) are starting to take shape. Add to this GUAM’s attempts to set up peacekeeping forces that would replace Russian peacekeepers in the Abkhazian and South-Ossetian zones of conflict.

To sum up these tendencies, Russia will continue to build up its political and economic presence in Central Asia (the energy sector, most importantly) in the near future, while mitigating instability in the South Caucasus (Georgia). This tendency presupposes the possibility of Moscow recognizing de jure independence of South Ossetia and Abkhazia, together with the signing of bilateral agreements on mutual assistance with these regions. However, Russia’s leadership seems to be keeping such a move up its sleeve as a last resort. On the whole, with the exception of Armenia, the South Caucasus has become a lost region for Russia, although Moscow will continue tough bargaining over it with the U.S.

INDISPENSABLE CHINA

Russia’s East-Asian strategy incorporates a search for the best possible paradigm of relations with large and small countries of the Asia-Pacific region. This includes the simultaneous creation and development of “bilateral partnership nodes” with countries of Northeast Asia – China, the Koreas, Japan and Mongolia. Some of these nodes, like the Russian-Chinese partnership, for example, have solidified, while others, like the Russian-Japanese and Russian-North Korean partnerships, are experiencing rather complicated phases of development. But plans to divert 30 percent of Russia’s hydrocarbons exports from the West to the East following the completion of oil and gas pipelines presently under construction will give new incentives for healthy partnerships.

Already today, one can look at these projects as part of a greater Eurasian Energy Club project of the SCO. If the plans materialize as expected, the Europeans will feel the real value of Siberian energy resources, and the European Energy Charter will reduce to the status of a piece of paper that makes declarations, but fails to relieve the EU from its dilemmas. Simultaneously, it appears that President Vladimir Putin holds all the keys to the Europe-Russia-East Asia energy balance in the years 2010 through to 2012. Incidentally, although Putin regularly makes open hints, Old Europe is reluctant to comprehend the far-reaching essence of Russia’s steps, while New (Eastern) Europe is unable to grasp the situation due to its overwhelming Russophobic sentiments. Moscow may eventually tire of its attempts to appease capricious and wealthy Madam Europe and do what it finds appropriate for itself.

Meanwhile, in its efforts to build relations with China, Russia tries, on the one hand, to minimize the growing risks (ecological calamities in the form of oil spills, the depletion of border rivers, migration, China’s growing economic might) and, on the other hand, to make relations as profitable as possible. A Russian-Chinese partnership will not transform into an absolute benefit or absolute evil in the nearest future. The most probable forecast suggests parallel combinations of encouraging tendencies and risks, which will grow and diversify within the structure of partnership.

WHY JAPAN CONTINUES TO BE ELUSIVE

Any sort of romance in Russian-Japanese relations continues to be elusive, although as early as Boris Yeltsin’s presidency it seemed that mutual affection was just around the corner, especially after the success of the casual summit near Krasnoyarsk. The Japanese seemed to be under the illusion that Yeltsin had some sort of covert strategy to revert the “northern territories” to their country by 2000, but Vladimir Putin, who appeared on the scene like a strict teacher in front of a class of undisciplined schoolchildren, immediately put everything in place. Illusions about open or secret plans for territorial concessions vanished. Fuel was added to the fire by a scandal involving the Sakhalin-2 offshore hydrocarbon project, although the real motives of that incident require separate scrutiny. In theory, the Soviet-Japanese model arranged in 1956 – the year of the signing of a peace treaty followed by the division of the Southern Kurile Islands along the 2:2 scheme – could offer an optimal compromise solution for Russia. Yet, in a best-case scenario, its practical enactment remains very problematic until 2010 or 2012. Russian-Japanese relations in 2007 and 2008 will remain in the format of the existing paradigm: reserved dialog against the background of internal tensions.

NORTH KOREAN BLAST CHANGES NOTHING

North Korea’s underground nuclear tests place objective restrictions on political relations between Russia and the Democratic People’s Republic of Korea. The situation in the region deteriorated markedly after October 14, 2006, when the UN Security Council passed the dramatic Resolution 1718; Russia and China voted for the Resolution, thus launching sanctions against Pyongyang. However, Pyongyang’s declared intention to return to the nearly ruined six-partite negotiations at the end of 2006, and the success made there, testifies to continued bargaining between Washington and Pyongyang – with a certain role played by Beijing – over the future of North Korea and its nuclear program (possibly centered on an amount of $15 billion to $17 billion). A collapse of the North Korean regime would be dangerous and unrewarding for Russia and other neighboring countries. At the same time, such a scenario would give a chance to some neighbors in the region – Japan, South Korea and Taiwan – to become full-fledged nuclear powers.

RUSSIA’S SITUATION ON THE “EASTERN FRONT”

First, Russia is bound for an intense rivalry for a place under the sun, since its closest allies (China, Central Asian countries, and India) and more distant partners (Turkey, Iran, Pakistan, Azerbaijan, etc.) all have their own notions about dividing the spheres of influence and interests. These notions occasionally conflict with those of Russia.

Second, Russia’s Eastern policies will remain to a large degree discreet and impulsive in 2007 and 2008 in terms of reacting to newly appearing challenges and events. Thus, Russia will continue to implement its policy along the principle of energy resources, which will be projected on to both regional and global policies.

Third, the odds are high that the situation in the Islamic zone (the Middle East, Iran, and Afghanistan) will worsen and the region will turn into a minefield for Russia. The reorientation of Russian policies toward the Islamic world would be dangerous as both the Christian Occident and the Islamic Orient may breed contempt for Russia if given the right circumstances.

At the same time, Russia’s renewed and more dynamic position in the Islamic world may theoretically provide an extra resource for strengthening itself, while providing an opportunity for regaining old niches and carving out new ones in the Arab East and Moslem areas of South and Southeast Asia.