12.03.10

Russia in the Asia-Pacific region: opportunities and prospects of integration

Russia being the Eurasian state shows long-term political, economic and military interest in the Asia-Pacific region (APR). This means that it has specific interests at stake. Certainly Russia would like to be considered as a major player in Asia Pacific affairs. Russia is geographically part of the region. In some sense geography is simultaneously an obstacle and opportunity for a successful Asian policy. On the one hand, historically Russian (Soviet) «central brain» in Moscow was over-west-oriented, on the other, 75% of Russian territory is located in Asia and presents huge opportunities for development.

The APR is of very direct relevance to the territorial security and economic development of Siberia and the Russian Far East, and to the general well-being of the people living in those regions. The APR presents rich human and nature resource opportunities for the future development. In the beginning of the 21 century the obvious necessity of full value incorporation of Russia in the intra-regional economic flows stimulates the elaboration of pragmatic and weighted Eastern foreign policy. Today Russia is a power that is experiencing a major transformation in its strategic culture: from an inland focus towards the global maritime domain. In the context of today’s conference that is Changing Global Landscape and regional Architecture, understanding new Russia’s regional strategic policy becomes a matter of growing importance.

Russia’s objectives are not after all too different from those of other major powers. In security: prevention of nuclear proliferation, countering international terrorism, stabilizing the Korean peninsular, and bringing stability to the Middle East. The main idea is not only to ensure against security threats, but also to improve geo-economic position and competitiveness in the region. For this purpose it is important to integrate into the global economy, to strengthen Russia’s presence and raise its profile in the Far East and to become embedded both politically and economically in a region that is undergoing rapid economic expansion.

In pursuing its interests in the Asia Pacific, Russia’s main focus has been on Northeast Asia. The bilateral mechanisms are more popular than multilateral.

The relationship with China is perhaps the most positive. A Sino-Russian alignment is sometimes posited as a mean for the two powers to overcome any perceived disadvantage they might suffer in the international environment. However such an alignment would have costs for both powers in terms of their relationships with other powers. Sometimes the ‘rising China’ is also interpreted as a threat to Russia’s own position in the Asia Pacific. The rise of China which shares a long border with Russia is something that clearly has implications for Russia both in the region and globally. From Moscow’s perspective, it will be easier for Russia to handle the rise of China if the Russian Far East turn into a center of vibrant economic activity. But the only way to achieve it is by attracting increased investment into the region, principally from Japan, China and South Korea, building pipelines to supply Russian energy both domestically and internationally. Hot debates about whether China or Japan should be given priority in pipeline building, evidently show Russian willingness to use natural resources as a foreign policy tool. The relationship with Japan is difficult because of the territorial dispute, although this has not prevented cooperation on some economic matters. The idea of a triangular Eurasian alliance of Russia, China and India (as a bulwark against American hegemony in Asia) is still alive, but recently India has been very much focused on its relationship with the US. Russia can also positively contribute to the North Korean issue by being an active member in the six party talks on the North Korean nuclear issue. Although its influence on North Korea appears to have been limited and the US and China have taken the lead in the six party process, Russia’s role has generally been a positive one.

Although the Russian Far East is at the geographic nexus of APEC and Russia has been involved in APEC since 1998, it has not been a big player here. In trading terms, Russia is a major arms supplier to a number of countries in the region, but in terms of non-military goods, it remains a minor actor. The issue of trade liberalization is rather acute especially for the Russian Far East. Recent economic research at the World Bank shows that Far East would likely gain the most from trade liberalization. This is due largely to the potentially greater Foreign Direct Investments in services (e.g., all modes of transport, telecom etc.). The size of the potential gain is the raise of total consumption and GDP per capita by about 10% and international exports by 11% a few years after the WTO accession. And the fact that the APEC summit will be held in Vladivostok in 2012 shows that Asian neighborhood is key to Russia’s potential.

Consideration should also be made of the Shanghai Cooperation Organization, where Russia’s priorities are especially important. Russia is developing a common economic space incorporating Kazakhstan, Kyrgyzstan, Tajikistan, Armenia and Uzbekistan. Iran, Mongolia, India and Pakistan participate as observers. This region is rich in energy resources and, as part of Russia’s periphery, it is important from a security perspective. The SCO is a guarantor of stability and security in the vast ’Eurasian Economic Zone’. The political dividends will stem from the formation of a powerful security framework under the auspices of the Shanghai Cooperation Organization (SCO).

Naturally economic interests prevail over security. But the loss of Soviet military influence in the region is difficult to compensate by economic involvement at least in the nearest future. We should admit that it’s quite difficult for Russia to fit into Asian economic integration process. On the other way it’s vital for Russia to succeed in these attempts.

Currently, Russian primary strategic concerns include the absence of an articulated regional security framework involving all major players, ongoing instability surrounding North Korea; the US plans to deploy ABM elements in the Pacific; proliferation of WMD; the nuclear and missile arms race in South Asia; and the security of exclusive economic zones and key maritime communications. Longer-term concerns include China’s geo-political game and the status of the US as superpower. The reconstruction of Russian military power in the Pacific pursues the goal of supporting the country’s economic ambitions, defending its national interests, and shifting the strategic balance in Russia’s favor. From a security perspective, Siberia and the Far East have seen little geo-political change since the Soviet period. It’s basic military stature as a ‘secondary front’ has remained relatively unchanged and even declined.

Military power in Russia’s East, which was for a long time the basis of the Soviet claim to regional influence, declined drastically after 1991. The reduction in the perception of threat in the region was followed by the withdrawal of Russian contingent from Mongolia. By 1999, the regional grouping of forces had been reduced by 200,000 personnel; nearly 600 tactical missiles had been destroyed; the Russian Pacific Fleet submarine force had fallen by over 75%; and the overall number of surface combatants had fallen by 47%.

After 2000, slow but steady progress has been made to upgrade Russian military capabilities deployed in the area, in both quantitative and qualitative terms. Recently Russia announced its decision to invest 9 billion rubles in the infrastructure upgrade of the Rybachiy strategic submarine base (Kamchatka Peninsula); and is developing a new-generation of weapons the first of which will be in the field by 2010. However, the most ambitious program announced in 2007 aims at restoring Russia’s future Pacific naval power which will involve the formation of the largest and most potent naval grouping in the Russian Navy, housing three nuclear-powered aircraft carriers in its order of battle. In 2007 Russia’s strategic missile-carrying and bomber force recommenced long-range combat patrols over the Arctic, Atlantic and Pacific oceans. Russia’s deployment of strategic air arm pursues a certain geo-political objective to support Russia’s declared national interests in the area.

On the other hand, the Asia-Pacific region has witnessed Russia’s participation in the defense technology market, that proves Russia’s belief in military-technological cooperation as an important element in regional strategic and defence policy. Currently, Russia’s principal partners in the arms export business come from China, India, Indonesia, Malaysia, Myanmar, the Philippines, South Korea and Vietnam. These measures demonstrate growing concerns in Russia about the fragile regional geo-strategic landscape and fears of a major regional confrontation that may harm Russia’s security interests. And although it is declared that economic interests should prevail over security in Russia it still often happens in the opposite way.

Economic progress over the last two centuries depended on big cities, mobile people and businesses (reducing distance to economic activity), and connected countries (improving access to world markets). These factors are now driving growth in China, India and Southeast Asia. Workers are migrating to centers of economic opportunity, and borders are melting as economies integrate through international trade.

The Russian Far East’s size, mineral riches and economic potential are enormous. The proven gas reserves in the neighboring Irkutsk region are one of the largest in the world — with 2 trillion cubic meters. And there are also additional, large oil reserves in Chukotka, Kamchatka and Sakhalin. Yet the living standards of the Far East’s relatively small population (6.5 million) have not yet reflected this huge, potential wealth. This gap between resource wealth and social outcomes is epitomized by poor market access. The issue is not just about movement of people but of commodities and services. There is enormous potential to increase production of metals, gas and coal and other resources, as well as enhance trade in services provided there is better availability of reliable transportation to the largest market centers.

And if you look at the transport and logistics map of the Far East, it is surprisingly sparse in terms of connectivity of even existing resource centers with urban, market agglomerations, with extremely limited connections with the rapidly expanding Chinese markets. For example, the coal from Yakutsk is still transported by expensive and inadequate road routes because there is no complete rail service to the main sources of demand in China. Also, a gas pipeline that could move gas from Eastern Siberia to Chinese markets still remains to be built.

The government is planning several infrastructural projects (cost $ 15.5 billion in the region from 2010 to 2015) alone to improve transportation and communication networks such as air traffic, roads, and railways for resource transportation, to develop Vladivostok as a regional hub. There is to be a new airport linking the Kuriles with the mainland, a new port, new roads, and an increase in the number of fishing and precious metals industries. For Russia development of the Far East and Siberia is one of the key strategic and geopolitical priorities of the 21st century. So geography is opportunity. The Russian Far East can exploit opportunities and significantly accelerate its growth and integration in the region.

The Asia-Pacific is no longer viewed by Moscow as a rear door, but rather as a future ‘front porch’ that could bring about strong economic and political benefits for Russia. Russia will position itself as a strong economic partner by exploring the untapped resources of eastern Siberia and the Far East, including the continental shelf; by building a powerful pipeline network linked to a modernised marine infrastructure, thereby enabling the nation to reach clients in Southeast and South Asia. Russian territory can be a strategic transit point linking the Asia-Pacific with Europe and visa versa. These plans may also rectify the demographic crisis, may improve the living conditions and the economic appeal of the Russian Far East.

Russia remains increasingly prominent as a leading supplier of energy resources, especially considering mounting instability in the Middle East. In the longer term, Russia may become a key player in the Pacific’s efforts to restore stability on the Korean peninsula and possibly in containing China, which many in Russia consider to be a long-term security challenge. The long-term economic agenda and the clear interest to cooperate, rather than to confront, will drive this comeback. Russia’s intention to build credible military capability in the Pacific is driven by a pragmatic need to protect its national economic and political interests.

We see the Russian Far East as a gateway to the wider Pacific region, not only as the border of Russia and Asia. In the past, borders were like barriers — points of separation. Today they represent meeting points of cultures and commerce. In 2012, as Russia welcomes neighbors from nineteen nations, it could demonstrate in spirit how geography is indeed an opportunity.