Country Report: Russia (March 2019)

Editorial Staff (with the assistance of Olga Puzanova)

Three themes centered on East Asia drew considerable attention in Russia in the latter half of the winter of 2019: China, North Korea, and Eurasia. On China, Russia’s ambassador continued to tout the best relations ever, offering no hint of challenges, while others assessed whether, in light of troubled Sino-US relations, China now needs Russia enough to forge a relationship of equals instead of a hierarchical one favoring China. Yet, a case was reported of raw pressure by an apparently arrogant Chinese embassy official on a Russian newspaper, which dared to take a negative outlook on China’s economy. Another article carried a warning against falling into the Chinese “debt trap,” as others had done, if Russia were to agree to megaprojects. We follow this with an article on how China uses visas to shape not only its labor market but its relations with other states with mention of a visa war with Kazakhstan and tough restrictions hurting Kirghizia. Such hesitant pieces on China and bilateral relations due to unwelcome, Chinese assertive practices were countered by at least one publication critiquing China for passivity in leaving Russia to defend Venezuela against the US.

Coverage here of North Korea is brief, as Russian coverage of the failure of the Hanoi summit is planned separately in another publication. Yet, we do carry one piece on that theme, asserting that the ball is now in Trump’s court, as well as an earlier article by Russia’s ambassador to Pyongyang finding reason to trust Kim Jong-un. The final articles reviewed are on Eurasia: on Indo-Chinese relations and Russia’s desire for them to agree to unify the Eurasian heartland; on Russia’s role in forging the Eurasian troika, more explicitly bringing Russia into the center of the reorganization; and on the difficulty of developing a Eurasian national identity in Russia.

China

Ambassador Andrei Denisov in Mezhdunarodnaya Zhizn’ explained why Sino-Russian relations are now the best they have been in history. They are stable and a model for international relations, he adds, indicating enormous scope to grow even closer, given overlapping national interests. But there will be no alliance since there is a shared principle of the tandem. множества существующих в мире формальных союзов и организаций. The path for cooperation on the Korean Peninsula was set on July 4, 2017, including the need for a step-by-step resolution of the problem beginning with the double freeze and declarations of no use of force as all sides advance a formula for a peace and security mechanism in Northeast Asia. This path is now being followed, but the process must become irreversible, not in small measure due to the role Russia and China have played, and the two are essential for forming a mechanism for the region. Denisov greatly respects the constructive role China is playing in regulating the Korean situation, and he is confident China has a similar reaction to Russia’s role. As Russia pursues better ties with Japan, so does China over the past two years; he thinks China views Russo-Japanese talks much as Russia views Sino-Japanese efforts.

When asked about the docking of EEU and SREB and plans to reach $200 billion in annual trade, the ambassador praised the success in reaching $107 billion in 2018—a 27 percent rise with Russia having a positive trade balance of $11 billion due primarily to oil exports climbing 20 percent but also to a jump in agricultural exports by 55 percent to more than $3 billion. To boost trade more investment projects and financial integration are needed, involving more use of the national currencies. There is a long list of key projects totaling $120 billion, including 32 worth $4.2 billion of Chinese capital linked to the free port of Vladivostok. Plans are proceeding on a joint wide-bodied passenger airplane. Soon trade will be boosted by exploitation of the “Eastern” gas pipeline and later through the export of Arctic LNG. Denisov concludes $200 billion is within reach, but it will take infrastructure and favorable conditions for trade such as bank services. As for BRI and EEU, as well as the Northern sea route, Putin has called for the creation of a new transport configuration of the Eurasian continent. Denisov praises the agreement in May 2018 in Astana on the cooperation of the two entities but calls for more work on the EEU. On arms, work proceeds on big contracts with Russia supplying air defenses and plane engines. The supply of SU-35s is done. Asked about Chinese purchases of Baikal water, he said that there is nothing in that to oppose. Bottles are already being sold in China, taking advantage of geographical proximity and the high quality of the water taken from the depths of the lake. Talk of a water pipeline are still a fantasy, given the cost of water. In recent years Chinese tourists have looked to exotic places in Russia, as the Arctic to ride on dog-driven sleighs or view polar bears. Now 159 universities in China teach Russian language and literature, more than 20,000 Chinese in higher education are taking Russian as a second foreign language, which Denisov sees as a positive shift. In lots of spheres there is a growing demand for bilingual Chinese and Russians, he adds, mentioning the Russian-Chinese university established at Moscow State University and the Beijing Politechnical Institute in Shenzhen. Denisov offers many proofs of growing Chinese interest in Russia, including the boom in tourism and the increase of academic centers covering Russia.

Oleg Remyga in EastRussia asked if China and Russia could be equal partners instead of elder and younger brothers, arguing that China needs Russia due to the trade conflict with the US, which the US provoked in the summer of 2018. China needs new markets, trade routes, and sources of raw materials, if talks fail and in the face of US pressure on BRI, which is described as an alternative economic reality uniting Asia and Europe with promising results in lifting trade figures despite some variation in responses to debt and use of Chinese workers. While the US treats BRI as a geopolitical game and is trying to contain it, BRI is just an effort to ensure stable economic growth inside China as its growth slows.

Trade between Russia and China rose 24.5 percent in 2018 to $108 billion. In the five years since Russia began its “turn to the East” its economy has proven it can weather sanctions and return to growth, and now it is more attractive to China, as the trade war with the US takes force. Chinese investment in Russia is undercounted in statistics, in part due to the role of Cyprus, the Virgin Islands, and other off-shore sites. Energy and agriculture predominate, the latter to reduce dependence on US imports. A new deal in e-trade with the Alibaba Group and Mail.ru Group is promising. The article asserts that in the past year Russia has become much more necessary to China, making it possible for Russia to obtain investments on more favorable terms, as Russia no longer is just a source of resources. With both states at odds with the West, conditions are fortuitous for closer economic and political relations.

On March 4, Nezavisimaya Gazeta reported that it had been the subject of unprecedented pressure from the embassy of the PRC. While it noted that many in Russia consider today’s cooperation with China a continuation of the golden age of Soviet-Chinese friendship in the 1950s, it asserted that not all Chinese officials respect Russian law and treat Russians as partners with full rights. Some even threaten Russians and openly demonstrate disrespect for Russian laws. While this newspaper, as others, considered such accusations fabrications, it has now found out differently. Embassy personnel demanded that the paper withdraw published material taken from open statistical data, including state statistics. Chinese further warned of the potential of Russia to threaten the workers at the paper. Such interference constitutes a criminal offense in Russia, but Chinese officials act as if they are not subject to Russian laws. They even used the impolite “ty” form rather than “vy” in their communications. Further, we were warned that we would never be allowed into China. All of this was for citing data on the slowing of the Chinese economy, with the charge that China had a growth rate of 6 percent last year, and the query as to what was Russia’s rate. Just Guangdong province alone has a much bigger economy than all of Russia, it added. The paper concludes that this text testifies to the real relationship of Russia and China more than all of the toasts of politicians.

Ivan Zuenko on March 6 for the Moscow Carnegie Center discussed the engine of the Chinese economy. The aim he said is not to build a bridge but to spend money, as officials, middlemen, and others look to red envelopes and foreign bank deposits. The more they build, the better, with little regard for the economic value of the projects. In this month’s National People’s Congress, as in the last year, construction of infrastructure was again identified as a big part of economic growth. In 2018, 4100 km of high-speed railways were built, the longest bridge in the world was built with 55 km linking Hong Kong, Zhuhai, and Macao. Local residents say it was not needed and ask why $18 billion was spent on it. A rational explanation for such projects is it makes use of productive capacity and raises employment, while creating new conditions for the development of the local economy. Yet, another actor are kickbacks, which over 40 years have been a big part of China’s economic miracle. In the 1980s there were officials-entrepreneurs, who formed companies and protected them from those of other provinces. From the 1994 fiscal reforms, taxes went more to the center, and big companies gained the upper hand, as working with state construction corporations enriched local officials, especially from 2008 as China went on a building spree against the background of the world financial crisis. If a project cost $4.5 billion, middlemen received $200 million. Xi’s anti-corruption campaign prolongs the length of projects, but kickbacks continue, and the big new bridge is no exception. It cost 4.5 times the price of Russia’s Crimean bridge. In Hong Kong ferries were widely use, and there was no problem of transport, and Macao and Hong Kong trade little with one another. Traffic has been heavily Chinese tourist groups on buses with package tours to see the bridge and the three cities. The bridge goes to the city periphery, leaving a slow trip to the center. However, money was spent, kickbacks were paid. Chinese propose the same approach to foreigners. Officials of Jilin and Heilongjiang proposed a high-speed railway to Vladivostok with a long bridge across the Amur costing $6 billion. As other BRI countries, Russia would be saddled with debt. Some countries have caught on; Sri Lanka was too late, Zuenko notes. Tajikistan and Kirghizia may also be. Thus, Russia should not rush to be excited by Chinese megaprojects.

Oiuna Baldakova and Ivan Zuenko wrote for Carnegie about how China uses visas, attracting talent from around the world and sending vast numbers of tourists, including to Russia. While Russia could attract more, those coming are a new source of income for Russian business and the state. A debate is under way on removing the need for short-term visas between Russia and China, which would again show the world how close bilateral relations are, but opponents want to reaffirm that Russia is an independent, sovereign country attentive to risks. Such a move needs to be reciprocal, readers are told, and China uses visas as a way to pressure its partners as well as to attract talent to spur innovation as the economic growth rate is falling. In 2017 China simplified work visas for highly-qualified personnel and toughened them for those with low qualifications, dividing categories into three levels. Compared to category A, those in B have to wait longer for documents and receive shorter stays, and those in C face greater uncertainty. In the post-Soviet space competition with China is limited due to not wanting to damage ties to China or lack of funds to match Chinese offers, whereas in the West warnings have grown over aggressive methods to acquire intellectual property, leading to Chinese obfuscation.

Now in China 90-110,000 Americans are working, compared to under 40,000 from all of the post-Soviet space, who from 2016-17 faced tougher conditions for visas, being seen as having low qualifications. Much stricter now is enforcement of visa categories. A visa war ensued between Kazakhstan and China, affecting students, businessmen, and tourists, as well as relatives of accredited diplomats. This provoked an outburst from the Chinese ambassador and even tougher Chinese visa measures with demands beyond those required of Russians. To date, this situation has not improved. For Kirgizstan problems began in 2016, as individual visas were completely halted, including for truck drivers going to Xinjiang. Miss Kirghizia 2017 did not receive a visa to the competition in Sanya. Businesses suffered. Only in December 2018 were individual visas restored. BRI and SCO partners were hit even amid talk of joining the EEU and SREB.

Vasilii Kashin in Profil’ on January 29 compared Russian and Chinese policies toward Venezuela. If there should be a civil war, regime change, or chaos, China will be the main loser, he argues. Venezuela has been a key element in the economic empire China has been building since the end of the 1990s and the basis of its presence in Latin America, which psychologically is not ready to defend it, despite $62 billion in investments and credits if realized. There is a large Chinese diaspora there, more than 400,000 before the crisis, which could become a headache if chaos ensues. Russia is second to China, with $9 billion in arms delivered and a debt to Russia of $3.15 billion and to Rosneft of $3.1 billion. Despite this balance, the usual division of labor in the international arena is observed: Putin offers Maduro support, and Russia leads in opposition to the US, while China hides in the shadows even as it supports Maduro and Russia’s position at the UN. China has leverage in Latin America and a large navy but does little. China minimizes risks and often loses everything, as in Libya, while losing authority in the eyes of its partners and opponents, displaying weakness and passivity, which largely accounts for the US trade war strategy.

North Korea

Aleksandr Matsegora, ambassador in Pyongyang, in Interfaks on February 8 said that we have no reason to doubt Kim Jong-un’s adherence to denuclearization. He expects a meeting of Putin and Kim in 2019, but no organizational preparations have begun. An inter-governmental commission was to meet in early March. In response to US accusations of Russian violations of the UN sanctions with oil supplies to the DPRK, he responded that Russia strictly adheres to the sanctions regime, supplying monthly oil from a few hundred to 1.5 thousand tons, in accord with the quotas. Matsegora is convinced that the oil quota should be raised, e.g. in agriculture, since the North has been thrown back to the 19th century and for ambulances and fire engines. How are existing sanctions consistent with Western claims of humanism and human rights? This issue is mainly for China since it supplies the only electric station. As for North Korean workers in Russia, there are more than 10,000 on work visas, and in the past year only 202 visas were issued, as Russia scrupulously follows the UN restrictions. Serious problems for both the Korean and the Russian sides have resulted. Some construction projects in Siberia and the Russian Far East have been stopped, reducing the numbers studying Russian and spending on Russian goods they are still allowed to take back. Due to the sanctions, trilateral projects with South Korea are not possible, but they will materialize and will “cement” the system supporting peace in Northeast Asia. China’s participation would be welcome along with its investments. Contrary to US charges that North Korea is backpedaling on denuclearization, but these refer to missiles, for which there is no DPRK-US agreement. Unless the US meets Kim part way, it knows nothing will be achieved. When asked about the Russian terminal in Rajin, Matsegora answered that it is stalled due to Russian coal companies fearing one-sided US sanctions, despite the fact that transit through a North Korean port is not prevented by the Security Council sanctions.

On March 6 in RSMD Konstantin Asmolov asked why the Trump-Kim summit failed. He observes that Trump praised Xi Jinping, when earlier he had charged that China is pulling North Korea backwards. He also argues that the Otto Warmbier family has been used to demonize the DPRK or as a symbol of caution, not arousing Kim Jong-un, who, after all, could hardly be directly responsible. Asmolov sees Trump as nervous, confirming the failure of the meeting, but concludes that this was a temporary difficulty, not a rupture, when the two leaders maintain good relations and will, sooner or later, meet again. Trump showed that he is in control of the situation, expecting more than Kim offered, indicating that the US knows more about the nuclear program than the North had thought, and making clear that he is not inclined to rush things. Further sanctions would be tantamount to a blockade, provoking countermeasures from Trump. Asmolov explains the failure, disregarding the idea it was due to insufficient preparations. He says that some oral agreements were not put on paper or made public, e.g. that the US would not impose new, unilateral sanctions or oppose Russo-Chinese proposals at the UN to soften UN sanctions, which a majority of experts, including the author, favor, satisfying the North but not viewed as a direct US concession or exceeding what Congress would permit.

Explanations of failure from both sides are noted. On one side the view is that the current sanctions regime is aimed at causing an economic crisis; the harsher, the better, and most US experts and politicians believe that Kim is unwillingly negotiating due to sanctions pressure; so they cannot be relaxed. On the other side, the view is that a deal was within reach but the US suddenly demanded new conditions due to the interference of John Bolton, who demanded data on all WMD, and that internal politics in the US scuttled the deal, including the Democratic opposition against anything Trump does and classic conservatives unwilling to talk with a regime of “absolute evil.” Messianic thinking widespread in the US establishment is the villain here, demanding ultimatums not negotiations, as is the opposition that led to Michael Cohen testifying on the first day of the summit. Media warnings that Trump would go too far at the summit, making Kim the victor, played a role in the failure too. Further, failure could be twisted by Trump into claims of success, i.e., sanctions are working, rockets are not flying, and he is standing tough for US interests. Now, what happens next depends more on Trump than on Kim. As soon as emotions quiet in the US, Trump can proceed to another summit, readers are told. Kim may make a gesture of goodwill, although his visit to Seoul is in doubt.

Eurasia

On February 6 in RSMD Andrei Kortunov asked if unification of the heartland is a geopolitical chimera or an historical chance. The geographical center of Eurasia is the heartland, including China and India. Kortunov discusses preconditions for consolidation, assuming that on most international questions Chinese and Indian interests overlap as alternatives to Atlantic civilization and points in the “non-Western” world, which are demonstrating the end of the Western stage in the development of the system of international relations. Both are at the stage of long-tern economic and cultural-civilizational rise, becoming drivers of Eurasian and global growth, while harboring resentments over the trauma in national identity of loss of status in world politics. They are revisionist players, ready to rewrite the rules of the game, which primarily reflect the interests of the West. Both suffer from ecological problems and deficits in natural resources, social inequality, and massive corruption. Each is obsessive about national sovereignty, reacting sharply to any attempt to interfere in internal affairs. Given the positive historical ties between the two, consolidation of the heartland could be a renewal of Eurasia that was torn apart. The benefits are so compelling that they should be obvious to both sides of the Himalayas, but neither is in a hurry to realize them. Why? That is the question driving much of the analysis. Different types of governments, ethnic homogeneity versus diversity (on an enormous scale dwarfing all of Europe, leading to a parallel between China facing India and Russia facing the EU), and the British legacy versus the Soviet legacy are cited. What better meets the needs of development in other Asian countries—Chinese socialism or Indian democracy—remains an open question. Both turn to the West for investment and technology for modernization. China is stronger economically and militarily, meaning that consolidation of the heartland would bring a very unequal system compared to Franco-German consolidation of Europe. China seeks a closed system, but India demands an open one to forestall Chinese dominance.

Kortunov considers the interests of external players. The US opposes the consolidation of Eurasia, pressing for the maximum contradictions between China and India. It treats India as Kissinger treated China and China as the equivalent of the Soviet Union. FOIP is similar to NATO in its divisive intent, but India demands strategic autonomy and will not forsake its partners Moscow and Tehran. The EU would see consolidation as an economic challenge, not a geopolitical one, but it would widen its markets there even if BRI standards were applied. In Russia there is lively discussion about variations of consolidation. Some see Moscow gaining as the pivot in the triangle and no shift southward in the Eurasian center, marginalizing it. Yet, both Beijing and Delhi react with suspicion to play on their contradictions, and the situation may arise when Moscow is forced to take sides, causing big losses. Moreover, consolidation would come at the expense of the US and would reduce the risk of military conflict—both good for Russia. The plusses of consolidation outweigh the minuses, but Russia does not have a decisive role nor does any other outside power. It is up to China, the stronger country, to allay suspicions. On December 1 at the G20 the Russo-Indian-Chinese (RIK) triangle was reactivated after a 12-year hiatus. Putin prioritized security and anti-protectionism. This is geographically more compact than the BRICS including these three and in doubt with the new president of Brazil. Russia seeks to refocus on the triangle, the article suggests. The three can meet at the G20, BRICS, the SCO, etc., but that does not bring consolidation. Problems must be addressed. Russia could propose talks on the Arctic to show that it does not favor one over the other. Only if the future world order can this new heartland become an “axis of history.” What started as a call for China and India to consolidate ended as an appeal for a three-way axis for the future.

In Kommersant Ogonek on March 4 Dmitrii Kosyrev wrote on writings about the shift of the world center of power and Russia’s special role. As the term Eurasia comes into wider usage, as the crux of discussions about a new world order, the fact that Russia is its birthplace is noticed. If China and India are recognized as the epicenter of modernization after five centuries when the West temporarily had that role, it is Eurasia that is rising to be the center of the world. Russia is added as the third country in the mix for its influence on Eurasia and its central place in the BRI, which connects Eurasia. Kosyrev concludes that Russia’s key task in Eurasia is to achieve maximum closeness between India and China, since it has no strategic competition with either of these two giants. We are back to the troika framework.

On February 5 in RSMD Sof’ia Paderina analyzed Russia’s turn to the East in terms of national identity. She asked if Russians are Eurasians, noting that not only is the trend to turn to the East, but to resolve ideological questions arising since the collapse of the Soviet Union with a positive image of national identity as Eurasians and a Eurasian power. It is appealing to think that through its extensive development across Eurasian space and interactions therein Russia forged an independent civilization, although some doubt the synthesis reached this level and produced national consciousness of this. Disappointment over Russia’s status provoked claims that it had achieved a synthesis of civilizations, especially since the 1990s when the challenge of forging a new national identity (or reviving an old one) proved difficult. Eurasianism served this need of consolidating society around a national idea and became a basis of state policy. Putin sees it as rooted deep in Russia’s past and a tradition of political thought, while gaining new force in integrating the post-Soviet space and buttressing the political and economic turn to the East. The 18th century was a time of Europeanization of Russia, although leaving the masses out. In the 1990s, there was another orientation to the West, sharply at odds with civilizational traditions and leaving Russia as the young partner to the West, undermining the international authority of the country. Turning to Eurasianism, Russia could assume a role in shaping a new world order. Putin in 2005 made this switch clear and developed the idea of Eurasianism in many subsequent speeches leading to plans for a Eurasian union, a civilizational project as well as an economic and geopolitical one. Yet, Russia does not know the East well, noted Karaganov, and cannot specify what some call Russia’s Asian half. Some call for clarity on this part of the country’s identity to persuade Russians that they really have a presence in Asia. People have trouble understanding the turn to the East or Greater Eurasia without feeling a part of what is called Eurasia, as some see it as a “Kremlin concoction.” Bordachev finds this identity still missing, awaiting political and economic integration, and based on opposition to the West rather than substance of its own. People still associate themselves with Europe and regard it as the civilizational source for Russia, including Christianity and language. What unites Uzbeks and Belarussians apart from joint memories of the Soviet past, often not seen as positive? Tradition, religion, and culture are not at all similar. The essence of Eurasianism is that Russia is an axis of history around which a wider space can congeal in some sort of megaproject. Yet, the focus is on economic ties as if they lead to political ties, which in turn can promote civilizational ones in a vain attempt artificially to bolster the turn to the East, implies the author, similar to Soviet ideology forcing artificially a civilizational whole. It cannot be realized from above.

#BRI #Eurasianism #free and open Indo-Pacific #Hanoi summit #SREB #turn to the East