Bear Hug
Putin is one of those people you always take seriously, even if he’s joking. So when he makes a stopover in Beijing, you’d best pay attention.
During the visit, Moscow and Beijing approved a “framework” agreement on Russian supplies of natural gas to China, an issue that continues to be held up by details of cost and logistics. Downplaying the two countries’ continued failure to finalize a natural gas deal, Putin said that such details should be worked out at the enterprise level. Talk of a natural gas pipeline between Russia and China has been under way for years, but the cost of constructing a pipeline from Kovytka through the mountains to China has remained a sticking point, as has the contracted price for the gas itself. Moscow has in the past shown little interest in paying for the infrastructure necessary to deliver the gas, and China has been unwilling to foot the bill since it can look to less costly (economically and politically) alternatives, such as Central Asia and Myanmar.
Things have changed, otherwise this wouldn’t be happening. As it is so often, the basic economics have not yielded, but the political winds have shifted. The international stage has thrust roles on these giant actors, and they seem ready to play it full.
For long Russia has tried to gain leverage by playing China and Japan off each other over the oil pipeline; each is fearful of losing the regional high ground if the line passes through the other’s territory first. Moscow has shrewdly sought to maximise economic benefit where it is probable to be found, but also to win power play concessions.
Russia does not necessarily have Japan to use as leverage in the natural gas pipeline game (Tokyo is already involved in the Sakhalin project, and South Korea, which also hopes to tap Russian gas, is too small a player to balance Chinese interests). Instead, Russia has held out the prospect of natural gas shipments to China as a demonstration of cooperative relations between Moscow and Beijing. The only bait that works on the Dragon.
Putin’s visit isn’t so much about signing a few billion-dollar deals. As a matter of fact, it’s chump change compared to what world order they have in mind. ather, Moscow is looking to gauge Beijing’s stance on the intensifying standoff between Russia and the United States. As Moscow takes a more confrontational posture on issues like Poland, Ukraine, Iran and Georgia, it wants to be sure that China is on its side, or at least is not going to turn against Russia.
The last time things began to take a turn for the worse, Mao had Nixon over for tea. With Obama’s charisma still bright in the Asia-Pacific, Moscow is keen to avoid a repeat of that scenario. China’s response, however, remains guarded at best.
Beijing sees the US as weakened. Washington is tied down in Iraq and Afghanistan, facing off against Iran (and not making a strong showing) and still mired in the global economic downturn. Obama is under siege in Congress, with the least likely of allies and most damaging of enemies. Pentagon is grumbling and rumbling in dissent. The Treasury is bleeding itself white, while Cabinet and White House Staff look ready to draw swords on each other.
In the meantime, China has stepped out into the international arena, offering to help alleviate the global financial situation, taking a rhetorical lead on addressing global warming and offering its good services to resolve the N. Korean nuclear issue. Beijing does not see the US as down and out — just down. They are wise in that way. The Chinese leadership sees a limited window of opportunity to ensconce China if not as an equal to the US, at least into a stronger position in the global political order and economic architecture that emerges over the coming years.
Certainly Beijing wants to take advantage of the perceived US weakness to limit the resurgence of US power, at least in Asia-Pacific, but it is reluctant to directly challenge Washington. Talk of new currencies and diversified reserves aside, China remains economically tied to the United States, and is still far from developing a robust domestic market or finding alternatives to the US consumer.
For Beijing to sign on with Moscow and risk its economic relations with Washington at this point, China needs some significant guarantees that the cost will be worth the potential payout. And this is in part where the gas deal comes into play. Beijing holds the cards now, Moscow will be expected to shoulder the infrastructure costs as a clear sign of commitment.
China is unlikely to be swayed so quickly, however, as Russia for years made promises and then backtracked on the oil pipeline agreements. Beijing is also waiting to hear Washington’s counteroffer in November, when Obama visits. The Bear is stretching its back after a two-decade hibernation, it doesn’t want the newly awoken Dragon bringing winter to the Eagle’s eyrie again so soon.
Piaroh-Cze:
To balance anything, even power, you need a fulcrum first.
