Russia’s China Challenge in a Changing Asia: An American Perspective

Russia’s relations with China have steadily improved for about twenty years after a brief, strong, pro-Western tilt in Russian foreign policy right after the collapse of the Soviet Union in 1992.¹ The weakening political position of the Gaidar government by late 1992 and the defeat of pro-Western liberal parties Russia’s Choice and Yabloko in the 1993 parliamentary elections were correlated with the emergence of a more balanced Russian foreign policy between the West and China. Both countries’ elites view the alliance period of the 1950s and the split in relations in the 1960s-1970s as historical anomalies that do not meet each other’s interests in the contemporary period. On the one hand, while both contested aspects of what they negatively viewed as US aspirations of unipolarity in the first two decades after the Soviet collapse, there was never serious interest in either country in a full-blown security alliance. On the other hand, they also view a breakdown in relations, as occurred with the Sino-Soviet split, as something to be avoided that would only redound to the benefit of the United States.

Rather than being characterized by the term, “axis of convenience,” popularized by Bobo Lo,² the relationship, I think, is best described as an “axis of necessity.” Both countries place primary importance in the relationship on maintaining a stable and uncontested border, one of the longest in the world. Vladimir Putin has stated on a number of occasions that he considers the final resolution of the Sino-Russian border in 2004 as one of his most significant foreign policy achievements. Both view their primary and secondary security challenges as elsewhere, thus making the peaceful maintenance of their mutual strategic rear very important. For China, its eastern littoral and the western province of Xinjiang are of primary importance, while Russia continues to view NATO and the domestic security of its Islamic republics in the Northern Caucasus as its most pressing security concerns. From an economic standpoint, there is strong complementarity with China’s status as the most rapidly growing consumer of energy and natural resources and Russia’s comparative advantage as an exporter of energy and other natural resources. Bilateral trade eclipsed US$80 billion in 2012, and each side has set the goal of US$100 billion in 2015 and US$200 billion by 2020. While reaching these goals will be partially dependent on natural resource prices, the task appears feasible.

Although dramatic progress in the bilateral relationship marked by substantially deepened economic, political, and security ties over more than two decades is impressive, there remains a strong residue of distrust in relations stemming from nearly four centuries of strained ties coupled with more contemporary disappointments and concerns. Forty years may seem like an epoch in the psychology of Americans, but the 1969 border conflict that came dangerously close to major war remains quite prominent in the minds of Russian and Chinese elites. Chinese intellectuals and foreign policy specialists can hardly disguise their disdain for the perceived series of catastrophic mistakes that reduced Russia from superpower status to its current state. Growing Russian xenophobia and nationalism arouse deep concern in their Chinese partners. In dozens of personal discussions over the past decade with Chinese experts on Russia who have spent extended periods of time and experienced first-hand discrimination and worse, this is virtually always one of the first questions they raise. Russian counterparts watch Chinese debates over foreign and security policy carefully and view the rise of more assertive Chinese nationalist thinkers very warily.³

The most striking feature of the bilateral relationship is structural. By that I mean the dramatically shifting balance of economic power that has taken place over the last several decades. I began referring to this phenomenon in 1999 as the starkest juxtaposition between rising and falling great powers during peacetime in modern world history.⁴ While difficult to calculate at the time, the World Bank estimated that the Soviet GDP was approximately four times that of China in 1980. Granted that the Russian Federation is not the Soviet Union, but that economic power balance has reversed and looks to continue to move in China’s favor to 2030 and probably beyond. The demographic imbalance is closer to ten times, and in the Eastern Siberian and Russian Far East regions bordering on China that imbalance is even greater. Putin regards Russia’s return to sovereignty as one of his greatest achievements, and the watershed events in this regard took place in the middle of the last decade when Russia paid off its IMF and Paris Club debts. However, he remains deeply concerned about the sovereignty of the North Caucasus because of a widening Islamic insurgency coupled and partially fueled by poor governance. He has similar concerns about sovereignty, for different reasons, in the Russian Far East. While that region’s falling population captures the popular imagination, it is the weak economic development that is the greater concern. Shortly after coming to power more than a decade ago, Putin quipped that if the eastern portions of Russia were not more effectively developed, soon the dominant language would be Chinese.

Like virtually all countries on China’s periphery, even mighty Russia has concerns about being overwhelmed by Chinese economic power and the political influence that comes with this. While most of Russian rhetoric about foreign policy threats and concerns is focused on the United States, and since the electoral cycle of 2011-2012 Putin has actively played identity politics with the US threat to galvanize his shrinking domestic constituency, the global financial crisis of 2008-20 marked a kind of turning point in Russian perceptions of themselves, the United States, and China.⁵ Until then Putin had been emphasizing for a couple of years that the economic balance in the world was shifting from the West to the East, and he was especially enamored of Russia’s place as one of the original BRIC’s powers, a term coined by Goldman Sachs analyst Jim O’Neill in 2001. The main message of Putin’s infamous 2007 Munich speech was that the economic balance of power was shifting in this way, and that if there was a unipolar moment, it had ended forever with the emergence of a multipolar world, and the United States needed to take heed of this and drastically adjust its overweening foreign policy.⁶ Until the crisis, Russia had experienced what I call a “golden decade” of unexpected economic growth that saw its nominal dollar GDP grow by a factor of nearly eight.

The dramatic impact of the crisis, which hurt the Russian growth rate more than any other G-20 country, was, indeed, a rude awakening for Moscow. As the leadership looked around the world, while they could, maybe, take heart in the deep impact of the crisis in the United States (the source or catalyst of the crisis) and Europe, the obvious relative winner was China whose growth rate continued to gallop ahead of most of the world while it was awash in cash that could be used to scoop up underpriced assets around the globe, notably in Russia’s self-anointed “zone of privileged interests,” or the post-Soviet states. Russian vulnerabilities were exposed, and at a minimum the Russian leadership had to look at its rapidly growing eastern neighbor with greater concern about its own interests. I remain convinced, although this has been virtually impossible to prove, that concerns about China’s dramatic rise were a factor motivating Moscow to engage with the new Obama administration in its overtures to improve relations under the rubric of the reset.

China is likely to remain Russia’s largest bilateral trading partner for the foreseeable future. The challenge for Russia will be to engage a number of other Asian partners in the development of Eastern Siberia and the Russian Far East so that Chinese investment and trade does not dominate this area completely. In the relatively recent past, the Russian government has tended to overestimate its own hand and/or allow commercial battles between Russian companies as well as between Russian and foreign companies to result in very suboptimal outcomes for Russian interests.⁷ An excellent example of this was the negotiations a decade ago between Russia Petroleum, a subsidiary of TNK-BP, with Korean and Chinese firms for the development of the giant Kovykhta gas field near Lake Baikal. When these negotiations were nearly concluded, including the now elusive agreement with China over gas prices, the intervention of Gazprom scuttled the project. The ramifications of this failed deal were very negative for Russia since China made a strategic decision to look to Turkmenistan for a major deal to deliver piped gas as well as to other suppliers for long-term LNG contracts because of its view of Russia as an unreliable gas partner.

China, Energy, and Russia’s “Pivot to Asia”

For a variety of economic and geostrategic reasons Russia is now again attempting to develop the economy of its eastern territories and integrate them more deeply into the rapidly developing Asian regional economies.⁸ As the Obama administration announced its “Asia Pivot” in 2011, Russia’s own “Asia Pivot” was marked by its hosting of the APEC Summit in Vladivostok in September 2012.⁹ Historically, Russia had been primarily a European focused power until the Cold War confrontation with the United States. Engaging in Asian affairs does not come naturally to Russia’s elite, but Putin is keenly aware of the shifting global economic balance of power to Asia, and he understands that Russia’s integration there is essential for its successful long-term development. It is true that during the latter Soviet period Moscow was more focused on Asia because of the emergence of China as a perceived strategic threat, but this engagement with the region was almost entirely on military-strategic terms. Now, however, the currency of power has shifted to some degree from military to economic prowess. Just as energy, mainly oil and gas, has been Russia’s principal economic comparative advantage to its west, its economic integration into Asia leads with its energy resources.

Moscow’s contemporary energy strategy highlights the importance of speeding up development of the hitherto dormant oil and natural gas resources in the eastern regions to tap the rapidly expanding energy markets in the Asia-Pacific region, mainly led by China, which Russia sees as a historical and ever-growing geopolitical rival, and simultaneously as a critical economic and strategic partner. Although there has been important progress in 2013, the China factor has remained the biggest dilemma as well as one of the bottlenecks for implementation of the Energy Strategy of Russia for the period to 2030, which laid out ambitious targets for drastically increasing oil and natural gas exports to Asia. The dilemma is that these exports are intended to enhance Russia’s influence in the Asia-Pacific region and raise its self-esteem as a Eurasian power, but, to the extent they are dominated by China, the result could be a sense of dependency.

Oil Politics

In the first decade of the 21st century, Russia made a striking debut as a new hydrocarbon exporter in Northeast Asia. In 2009 LNG exports from the Sakhalin-2 project came online; and Russians also began loading crude oil from the Pacific coast of the Russian Far East upon the completion of the first phase of the ESPO pipeline system. With the addition of shipments from the Sakhalin projects, Russia’s crude exports to Northeast Asia sharply increased; however, the past and current state of external relations surrounding the ESPO pipeline and the impasse in building a gas pipeline to China testify to the dominance of a realist interpretation of energy issues among the Russian power elite. China and Russia have a high degree of mutual complementarity, but, notwithstanding Russia’s anxiousness to increase hydrocarbon exports to the Asia-Pacific region in which China takes the lion’s share, Sino-Russian negotiations over energy trade have led to considerable mutual frustration.

It took about fifteen years before the start of construction of a crude pipeline to China, while the bilateral talks more than once oscillated due to Moscow’s realist tactics to use Beijing as a “negotiation card” to maximize investment from Tokyo. Russia initially expected Japan to commit to financing the construction of the pipeline, but this was not to be. In retrospect, Moscow at least anticipated the completion of the ESPO pipeline before building a spur pipeline to China from the trunk pipeline. Its equivocal attitude on the timing of starting construction persisted while Beijing repeatedly requested it to decide. The Russian leadership only verbally endorsed the bilateral agreement more than once, and refused to put it on paper until the last minute. Russia finally agreed on the construction of the spur pipeline from the middle of the ESPO pipeline only in autumn 2008 when it was in urgent need of refinancing the energy sector against the backdrop of the global financial crisis. In April 2009 it inked an inter-governmental agreement to export 15 million tons of crude per annum for twenty years.

This increase of crude exports to China is not positively appreciated by the Russian power elite, who are alarmed at the prospect that Russia could become the “resource appendage” of its historical and geopolitical rival, China. Concern about its geopolitical loss stems from the widening gap in demography and economic development. Even after the complete legal resolution of the Sino-Russian border in 2004, suspicions about the conceivable expansion of Chinese influence over the underdeveloped and depopulated eastern regions still linger prominently in the minds of Russian policymakers. In short, neither the realization of the bilateral oil pipeline nor the increase of oil trade volumes led to a positive-sum understanding of the Sino-Russian energy partnership.

The second phase of the ESPO pipeline system, which extends the route by 2,000km to the Pacific Ocean from the connection point of the spur pipeline to China and the terminus of the first phase, was completed in the winter of 2012. With the new line having a designed capacity of 50 million tons annual delivery (which equates to about one million barrels a day), Russia intends to increase crude exports to the Pacific coast from the current 15 million tons to 30 million tons in the near future. Meanwhile, Beijing’s request for Russia to increase the amount of crude exports through the spur pipeline, which has spare capacity for shipping another 15 million tons per annum, was promptly rejected by Moscow without showing any interest in continuing the negotiations. For maximum use of the ESPO pipeline system, considerable amounts of crude oil must be developed in Eastern Siberia, which requires a vast scale of investment, given geological difficulties across a vast area covered by permafrost, harsh climatic conditions, lack of sufficient economic infrastructure, etc. Even with tax exemptions for extracting minerals and reduced export duties, investments by Russian domestic oil companies in East Siberian oil fields have been seriously insufficient. The increment of proven reserves calculated in advance of increasing commercial production has lagged behind the governmental plan. Despite the urgency of developing oil fields to increase crude production for the ESPO pipeline, the role of foreign capital in the surrounding areas has been limited in scale. Overall, Russia is prepared to work closer with Japan in the field of oil development, however few and small the existing joint projects may be to date. Capital investment from China, which will presumably become the biggest beneficiary of increasing oil supplies from Russia’s eastern flank, had obviously remained unwelcome until just recently.¹⁰ In October 2013 Rosneft and CNPC reached an historic agreement to establish a joint venture to develop fields in Eastern Siberia. Development of the Srednebotuobinsk field, a world-class field with oil and gas reserves of over 134 million tons and over 155 bcm of gas, will serve as the initial foundation for this joint venture in which Rosneft will hold 51 percent and CNPC 49 percent. Rosneft chairman Igor Sechin was quoted at the signing as saying, “The memorandum is another step in developing the strategic partnership between Rosneft and CNPC in various areas of cooperation. Our balanced strategic position will enable us to jointly develop and produce hydrocarbons, execute long-term supplies, jointly construct refining capacity, and manage various assets. The development of the East Siberia resource base will create additional opportunities for supplies to current and future refineries of Rosneft, including the Komsomolsk refinery, the Far East Petrochemical Company, and the Tianjin refinery, which will help meet growing demand for petroleum products in Eastern Siberia and the Far East, as well as increase exports to China and the Asia-Pacific region.¹¹

Natural Gas Politics

The evolution of negotiations to build a natural gas pipeline from Eastern Siberia to Northeast Asian consumers also proves that Russia has predominantly maintained a nationalist or realist approach, favoring a balance of power, while gradually noticing the importance of security of demand due to the conceivable impact of the shale gas revolution upon Asia. Construction of a pipeline from the Kovykta gas field near the city of Irkutsk, was an important symbol of Sino-Russian partnership from the mid-1990s. No blueprint for actual construction of this pipeline, however, has materialized to date, and there seems little possibility that the construction will start anytime soon. The reason why China and Russia have disagreed on building any gas pipeline has been officially attributed to a gap between the purchase price proposed by the two sides, of reportedly more than US$100 /1000 cubic meters. Russia long insisted that the price of its gas to China should be equivalent to that of its exports to the EU, and now more recently has demanded that the price be equivalent to the Henry Hub price. However, the record of the past fifteen years demonstrates that the bottom line of Russia’s gas pipeline strategy toward China addresses not merely pricing, but also geopolitical calculations

The design of gas pipeline routes in Northeast Asia underscores Moscow’s geopolitical maneuvering. Russia intended to delay the building of a bilateral gas pipeline to China despite diplomatic rhetoric in recent years. Exxon Mobil, the operator of the Sakhalin-1 project, and CNPC basically agreed on gas supplies to China by pipeline in October 2006, but they have been opposed by Gazprom, given that Russian law prohibits gas exports by pipeline in the absence of a domestic entity, giving Gazprom a virtual monopoly. The negotiations between Exxon Mobil and Gazprom with regard to exporting natural gas from Sakahlin-1 have been deadlocked.

In the meantime, Russia has hurried up construction of a new LNG plant in Vladivostok for the purpose of increasing not merely Russia’s share in the global LNG market, but also endorsing nationalist emphasis on its overall presence in the Asia-Pacific region. Furthermore, it is driven by calculations to secure export destinations other than China, before the emergence of the bilateral pipeline. The so-called “SKV” pipeline, which stretches 1800km from Sakhalin Island to Vladivostok, was completed in September 2011 in time for Russia to host the 2012 APEC summit without having successfully clarified the source of sufficient gas supplies for it. As prime minister at that time, Putin publicly declared that Russia would construct a gas pipeline from the Chayanda gas field, second to the Kovykta field in gas reserves in Russia’s Eastern regions, to be connected with the SKV pipeline regardless of cost.

Against the stalled Sino-Russian gas cooperation, Russia has advanced negotiations with Japan, especially for realizing a new LNG plant at the endpoint of the SKV pipeline in Vladivostok. A consortium of Japanese companies and Gazprom are currently in the process of a preliminary feasibility study with strong backing from both governments. When and from where the SKV pipeline will procure a reasonable amount of natural gas at an economically competitive price are the key to this planned LNG plant. Gazprom and Japanese companies are also in the process of negotiations over two more projects: expansion of the Sakhalin-2 project’s liquefaction capacity and development of the Sakalin-3 project.

A variety of new proposals are currently under discussion with China, Japan and the Republic of Korea, although the impact of the US shale gas revolution on the global gas market is striking a blow to Moscow’s gas strategy. Whichever project may be selected, any decision on large-scale investment must take into account the availability of multiple natural gas supply routes from the United States, Canada, Australia, etc., toward the late 2010s. Complicating these negotiations with the Chinese and others has been the intensifying competition between Gazprom and Rosneft, state companies that wield tremendous domestic political clout. Rosneft is actively expanding its activities into the gas business, as the recent deal noted above with CNPC indicates, and both Rosneft and Novatek, an up-and-coming independent Russian gas company, seek to break Gazprom’s export monopoly.

Rumors abounded that China and Russia would conclude a major gas deal when Xi Jinping went to Moscow in March 2013, but once again the issue was kicked down the road as Putin and Xi agreed to reach an agreement by the end of this year. However, it appears that this goal is unlikely to be achieved as the two sides seem to be moving further apart rather than closer in price discussion. The conventional wisdom is that with new LNG sources slated to come on line in Asia in the next 4-5 years and having just reached agreement with Turkmenistan for increased supplies of piped gas, the Chinese have the stronger negotiating position and can simply wait for the Russians to drop their price. It is also possible that the Chinese could pay a higher price for Russian gas in return for greater equity stakes in upstream Russian oil and gas fields. The non-transparency of the negotiations makes predictions very perilous, but to mix metaphors, it would appear that the Chinese have the Russians over the barrel in these gas negotiations.

Russia’s Asia Pivot: The Diversification Efforts

It is impossible to analyze Russia’s Asian energy strategy as well as the triangular dynamics between China, Russia, and the United States outside of its broader foreign policy towards Asia. Despite continuous official pronunciations of the historically unprecedented harmony in Sino-Russia relations (which may be true to the extent that for centuries this has been a highly conflictual relationship), Putin’s greatest foreign policy challenge in the years ahead will likely be managing relations with his rapidly rising neighbor to the East. Just as Russia is wary of Chinese encroachment on its most valuable sovereign domain, hydrocarbon supplies, Russia is acutely concerned about becoming overleveraged to China more broadly in regional relations if not global ones. Consequently, we are seeing increasing signs of efforts by Moscow to diversify its portfolio of Asian partners, especially with Japan, South Korea, and most recently Vietnam.

In June 2012, Foreign Minister Sergey Lavrov stated that Russian-Chinese relations had reached unprecedented high levels.¹² This was shortly after SCO joint military exercises in Tajikistan.¹³ Russia and China have formed a close political partnership in recent years that reflects shared understandings vis-à-vis the United States and the West (opposition to perceived Western “domination” in local affairs) and alignments on contentious issues such as Iran sanctions, Syria, and NATO expansion. As noted above, bilateral trade has also grown rapidly. Nevertheless, Russia’s concerns about Chinese encroaching domination are not simply paranoia. Over the last five years, China has had an increasing footprint in Russia’s historic sphere of influence, Central Asia. In 2009, the presidents of China, Kazakhstan, Uzbekistan and Turkmenistan celebrated the inauguration of the Central Asian-China pipeline, which runs approximately 2000km. through the four countries and has a planned total capacity of 40 billion cubic meters.”¹⁴ This marks the first major diversion (Turkmenistan began exporting gas to Iran in 1998) of former Soviet republic gas resources outside of the Soviet legacy Gazprom pipeline network. In Sept. 2013, Xi Jinping made a highly publicized tour through Central Asia signing over US$50 billion in bilateral deals. China is now far and away the biggest trade and investment partner for Central Asia.¹⁵

In relations with Japan, the territorial dispute is still the cause of a rift; however, Russia has studiously not taken sides on the Sino-Japanese territorial despite public pressure from China to take its side. In July 2012, Putin called for an increase in trade between Japan and Russia,¹⁶ and Japan was one of the three locations that his top aide, Nikolay Patrushev, visited in his Asia-Pacific tour in late October 2012 (China was absent from the itinerary as the other two stops were South Korea and Vietnam). Abe Shinzo’s visit to Moscow in April 2013 and the 2+2 meetings in November have given some momentum to relations with Japan. As noted in Shinji Hyodo’s contribution to this set of papers, recent Chinese naval incursions into the Sea of Okhotsk, formerly the strategic Soviet bastion for their SLBM capabilities in Asia, have raised mutual concerns in Tokyo and Moscow.

With regard to South Korea, there has been bilateral cooperation, especially in space technology. In November 2012, South Korea sent an SOS to Russia to send rocket parts as soon as possible for its already-delayed satellite launch. Most South Koreans still look at Japan as a foe, but when it comes to Russia, they are more relaxed but cautious.¹⁷ Seoul positively regards Russia’s position in the Six-Party Talks.¹⁸ Putin’s November 2013 visit to Seoul offered an opportunity to explore an upgrading in relations, although the headlines centered on triangular arrangements with North Korea and divergence over Japan rather than on multilateral projects inclusive of Japan.

Russia has also been exploring its other options in Southeast Asia to hedge China. Most notable is the increasingly friendly relationship with Vietnam. In April 2012, China advised Russia to abandon its energy and other ties with Vietnam.¹⁹ Russia did not respond initially and has remained silent on this issue. This undoubtedly antagonized Beijing. In fact, since then, Russia has increased its support of Vietnam in regards to energy exploration in the South China Sea as well as in arms sales and defense cooperation.²⁰ Vietnam’s defense budget for 2012 was US$3.1 billion, a rise of 35 percent over the previous year.²¹ Additionally, Russia is contributing to Vietnam’s first of eight nuclear reactors and in the last three years, Vietnam has sent 200 people to Russia, and about 200-300 others to various countries to attend short- and long-term nuclear training courses.²² In July, Russia’s navy announced that it seeks maintenance and supply facilities at Cam Ranh Bay, the Seychelles Islands, and Cuba.²³ Moscow intends to broaden arms sales cooperation with BRICS members, including China, as well as with Vietnam. The arms sales, such as the Kilo-class submarines, may demonstrate Russia’s resolve to prevent China from dominating the South China Sea and Southeast Asia. Chinese domination of the South China Sea would marginalize Russian influence in the region.²⁴ The Russian-Vietnamese bilateral partnership is clearly Russia’s strongest in the Asia-Pacific region.

In addition to Vietnam, Russia has been forging several other potential strategic partnerships in the Southeast Asia region. Vladimir Romanov, acting trade representative of the Russian Federation in Thailand, said this country was Russia’s biggest trading partner among ASEAN countries (Vietnam was second). The value of trade between Thailand and Russia jumped by 42 percent to US$5.7 billion in 2011, and exports to Russia surged by 49 percent. Russia’s exports to Thailand rose another 40 percent for the first nine months of this year, exceeding $4.22 billion.²⁵ Earlier this year, Russian companies made a trip there to participate in the largest weapons expo in the Pacific. A source in the Federal Service for Military-Technical Cooperation says that Instrument Design Bureau (KBP) has shown in Thailand its anti-tank missile systems: the Kornet-E and the Metis-M1.²⁶ China shows no understanding toward Russian efforts to deepen ties with Vietnam.²⁷

Just this month Putin made trips to Vietnam and South Korea. In Hanoi he advanced discussions to conclude a FTA with the Customs Union (including Belarus, Kazakhstan, and Russia), which in the coming new year will change its name to the Eurasian Economic Union with ambitious plans for deeper integration among its members. It was also reported that Rosatom reached agreement to build a nuclear reactor in Vietnam, and that arms sales including submarines and ships to be based at Cam Ranh Bay are proceeding apace. In South Korea Putin and Park advanced discussions about linking the Trans-Siberian railroad to a trans-Korean system, a project Putin referred to as the “Iron Silk Road” and a vision Park described at a major business conference in late October as the “Silk Road Express.” Putin and his Russian delegation reiterated their interest in building a gas pipeline from Russia through North Korea to South Korea. In his interview with Korean media before the trip, Putin stated, “We definitely support the aspirations of Koreans for national unification.” It is unlikely that Chinese leaders feel the same way about the possibility of Korean unification.

In sum, while many criticize Russia’s efforts to become a more significant presence in Asia, the record for Moscow over the past two years suggests considerable progress on a number of fronts. Relations with China continue to deepen despite certain reservations in both Beijing and Moscow. Simultaneously, Russia has reactivated and strengthened ties with Japan, South Korea, and Vietnam in ways that have raised some concerns with its Chinese partners. Given that Japan and South Korea have longstanding alliance relations with the United States and that Vietnam is the last country with which China has fought a land war (1979), Moscow’s deepening economic ties and, especially, military security cooperation lend substance to Moscow’s genuine desire for a broader, diversified set of partners in Asia to complement its strengthened ties with Beijing.

Conclusion: Where is the United States in This Picture?

The curious missing piece in this Asian puzzle, at least for now, is Russian-American relations. Perhaps this can be explained because Moscow is so heavily invested in its relations with China, the Russians have judged, for now at least, that moving closer to Washington in Asia may be too provocative, and the current hedging strategy with improved ties with Seoul, Tokyo, Hanoi, and others is adequate for the present. But this paradox needs to be explored further. For example, it was similarly curious that when US-Russia relations, as well as Russia’s ties with Europe, were seemingly rapidly improving during the heyday of the reset in 2009/10, Russian ties with Japan went through their most difficult period since the collapse of the Soviet Union.

During the summer of 2013 US-Russia relations appeared to be spiraling downward over the Snowden affair, intensifying tension over Syria, and the failure of bilateral talks over another round of offensive strategic nuclear cuts and strategic stability more broadly. The low point came when the Obama administration cancelled the planned summit in Moscow after the G-20 gathering in St. Petersburg in September. As I argued at the time, the Obama team was making a concerted effort to reset the reset, if you will, after eighteen months of steadily deteriorating relations, and if they did not receive a positive response from Moscow, it was likely that it would put a lower priority on engaging Russia for the final three years in office since potential returns looked unlikely. I think the decision to cancel the summit shocked the Kremlin, and perhaps the outlook of three more years of deeply strained ties with Washington was not viewed with great enthusiasm.²⁸ Coming just after Obama had graciously hosted Xi Jinping at Sunnylands for extended and intimate strategic discussions must have raised concerns in Moscow that the G-2 world was at hand rather than a multipolar or triangular format that would provide more of a role for Russia.²⁹ Russian elites abhor the notion of a G-2 world since it deprives Russia of adequate voice as a great power in international affairs. It might seem that a better strategy for Moscow to pursue would be that of a kind of “swing state” as the PRC did effectively just over forty years ago in the context of the bilateral Cold War confrontation between the United States and China. Although the Cold War was a bilateral structural confrontation in which Chinese economic and military power was orders of magnitude less than that of the Soviet Union and the United States, policymakers in Washington and Moscow both saw tremendous value in the “China card.” The value of this card was enhanced, even inflated, because the U.S.-Soviet confrontation was understood by the protagonists to be very much of a zero-sum nature.

The potential for contemporary Russia to enhance the perception of its value as a swing state in the minds of policymakers in Beijing and Washington can only emerge if US-China ties significantly deteriorate. But here is where the potentially emerging G-2 world today differs so dramatically from the US-Soviet conflict. During the Cold War the only factor that mitigated the conflict was the threat of mutually assured destruction resulting from a nuclear war. No economic interdependence existed between Moscow and Washington. US-China relations could not be more different in that regard as even in the 1990s Secretary of the Treasury, Larry Summers, described the economically symbiotic ties between Beijing and Washington in terms of mutually assured destruction. This is not to suggest that security relations between China and the United States will not grow tenser as China develops greater military capacity in the years and decades to come. I think it is likely they will, at least to some extent. But the capacity for Russia to be viewed as a valuable partner over which to compete for favor will depend at least as much on Russia’s economic power and attraction as it will on Russia’s military modernization in addition to its strategic geographic and natural resource endowments. The outlook in Moscow does not look particularly positive as t recently the Russian Ministry of Economic Development and Trade released a prediction of stagnant average economic growth at no more than 2.5 percent to 2030. If this scenario were to materialize, one would be fully justified to take the “R” out of BRICS, and nobody would be talking about a China-Russia-US triangle for a long time to come.