Friday, July 8, 2011

Russia between Western and Eastern: Economic areas to take advantage

Russia has enormous potential to become a super power, it is a big population, rich in natural resources and a big land. But, additionally, has a privileged location, which add more potential opportunities with two western and eastern countries. Despite in the last decade Russia have gotten high rates of economic growth, the international crisis, which hit severely the country, allowed to realize its weakness.

Russian economic depend deeply of the exploitation of its natural resources, without a industrial base, except by military industry. Thus, according to some calculation, 40 percent of its GDP is generated by raw material exports. Therefore, its production is no diversified and worse, practically has an underdeveloped commercial relationship with other power, such as China and United State (US), since its foreign policy has as priority the political sphere, diminishing potential economic opportunities.

One interesting explanation of why several times the relation between Russia and Western had turn negative rely on the low economic interdependent theory. Thus, then cost for Russia against US would be low, given the strong isolating of Russia. However, as it is affirmed by analyst, it is not a sustainable long-range situation. Even, it is not desirable how to isolate a country adjoining Europe, Asia and the Middle East.

Below, briefly, we try to analyze some historical aspects of the relation Russia with both Western and Eastern in the last years. Then, we will try to give some recommendations about as the Russian foreign policy could help to improve economic growth and development as well as the better relationship in the Globe. This scheme is accord with some scholars, who share the idea of Russia as a good partnership, instead of a isolated one, would be the situation most wanted.

Russian and Western

Making a comparison between Western and Easter, Russia’s worse relationship has been with Western, particularly with US. As we had mentioned, one root of the incidents would be the priority foreign policy on geopolitical sphere, feed by mutual distrust and feelings of thread, perceived all Russia and Western countries. Assimilating the rapidly rising emerging powers—including Russia—will be easier if Russia is a constructive partner rather than an obstructionist outsider or, worse, a revanchist bully.

The worst time would have been the era Bush-Putin, when the relation US-Russian had been deteriorated considerably. For Åslund & others (2009) it is due to the wrong Bush’s foreign policy toward Russia of “minimalist-realist” agenda. This not only did not fit in the international relation, furthermore, caused undesirable response by Russia leaders. It is a shame, given the last two presidents -Putin and Medvedev- were “pro-West” Yu (2009).

Being one the Putin’s goals elevating Russia’s international position, he started giving good gestures toward the US, closing Russian military facilities in Cuba and in Vietnam, among other things. But, because Bush administration assumed that Russia was a diminishing power of little significance, besides viewed these concessions as signs of weakness. Of course, it did not go over well with Putin.

Then the relation US-Russia worsened year by year, thus, at the end of 2002, Russia protested US plans for a war in Iraq. While, in 2003, Russia began renationalizing its oil and gas assets, originating US$ billions of losses of American companies.
In March 2004, Russia prompted sharp protests due to that Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia became NATO members, especially was more upset against the admission of the three Baltic countries. For Russia leaders it meant US intrusion in its sphere of influence.

Then, after being criticized by a united West protested, specially by European countries, because Putin’s interventions in the Ukrainian presidential elections, in January 2006 the giant Russian state company Gazprom disrupted gas deliveries to Europe for two days. However, also it was negative for Russia, since raising concerns about its reliability as a supplier.

In February 2007 Putin dramatically increase its protests after the US revealed plans to establish antimissile bases in Poland and the Czech Republic. Russia’s perception is that US want to encircle it through NATO enlargement and missile defense installations in two countries mentioned.

Them in 2008 Georgia and Ukraine applied for membership action plans to NATO. In August 2008, Russian troops invaded parts of Georgia in order to support two secessionist Georgian territories. The war ended after just five days, without US intervention, and thanks to European mediation.

On November 2008, immediately after the election of president Obama, Russian President Medvedev, ignoring Obama, announced the deployment of “Iskander” tactical ballistic missiles, targeting Poland and the Czech Republic. Later, toured Cuba and Venezuela accompanied with Russian bombers and naval ships.

After all sequences of incidences, the situation is turning to positive one. Medvedev apologize to US administration for announces. Also, Obama declined the plan of missile defense installation in Poland and the Czech Republic. The beginning of these new administrations (Obama and Medvedev) is getting better and has good perspective.

As we can see until now, geopolitics, military and the arms control is the area where the US and Russia have concentrated their cooperation. However, it is reasonable to affirm that there is a big space to included other bilateral issues, such as economic investment and trade.

It is true that there is a values gap between US and Russia. For US Russia is abandoning the democratic trajectory, while for Russia there is an interest to strengthen a different model, evolving a strong bureaucracy, and focusing in the shaping of a new a Multipolar World Order.

However, apart from difference there much more coincidences such as development, economic growth, trade, investment and so on. It is clear that the economic relationship in under develop. Russia has many necessities, which could be supported by Western countries, such as development of alternative sector beyond oil and gas. While, an stable and richer Russia would be better ally for the global security.

Russia should stop its “game of geopolitics”, for example in the following map, we can see the Western cities of Moscow, Saint Petersburg and Yekaterinburg where Russia use to meet with China and other Asian countries, while in the eastern city of Khabarovsk with European countries. Apparently, wish to show the Russian potentiality. Instead Russia could and must build a serious, trusty, long term relation.

Figure 1: Map of Russia and its main cities.


Source: www.igooglemaps.com/asia/russia /

Russia and Eastern

As it had been mentioned, Russia has a raw material-base economy, which was evident during the international crisis Yu (2010). In that sense, it is right the “Strategic Collaboration Partnership” between China and Russia, since rising partnership as China, specifically in terms of its financial power, is complementary with Russia economy. Russia has interests in attracting China to the Siberian and Far Eastern regions of Russia.

In the east, China and Russia are considered each other as old friends. Now, both counties are elevating their energy diversification as both buyers and sellers. But, there are many integration plans approved, for example, a regional cooperation plan (covering the regions of the Northeast China and the Russian Far East Area and Eastern Siberia, 2009-2018). This plan was approved by the presidents of China and Russia in 2009, specifying issues in transportation, communication, raw materials processing, etc.

Perhaps the most significant achievement in bilateral relations in the quarter was the finalization of the Russian-Chinese energy deal on April 21, 2009. A $25 billion intergovernmental “treaty” on oil cooperation was signed for an annual delivery of 15 million tons of Russian crude to China for 20 years.

There are diplomatic efforts to improve relationship. For instance, in October 2009, there was the visit of the Russian Prime Minister Putin (one of most powerful man in China) to China resulted in a dozen of commercial deals, and agreements covering economic and technological issues such as constructing a high-speed rail system in Russia with Chinese technological and financial inputs, China’s, Russia’s exporting of natural gas to China, and so on Yu (2010).

Russia with China are the leaders of the Shanghai Cooperation Organization (SCO), created for securities affairs due to the concerns to the “three evil forces” (terrorism, separatism, and extremism). It has a military threat or economic challenge to the US, and its vision of global political order. Besides, it has working ties with more countries, such as the 10-member ASEAN.

Membership of the Shanghai Cooperation Organization (SCO)



Although the beginning of the SCO was of securities affairs, the influence of China has improved economic areas such as multilateral economic cooperation, financial cooperation, cooperation in transportation, agricultural cooperation, science and technology cooperation, enhancing customs cooperation, approving SCO’s Progress Report for multilateral trade and economic cooperation, etc.

Besides their own bilateral relation Russia-China and the SCO, there are other issues also promoted actively by Russia. One more is the BRIC (Brazil, Russia, India and China) and the “Strategic Triangle” (Russia, China and India), which should help to create a multi-polar world, even remarked by Medvedev.

However, in the eastern the Russian relations are not so good, since there are some suspicious about a kind of ambiguous Russian Diplomacy, by Chinese intellectual and Media. It is said that Russia and China have is just a product of Western pressure against Russia.

Also there is an underdeveloped economic relationship between Russia and China. While China is more motivated by and for “geoeconomic outcomes”, Russia seems more concerned with the geostrategic gains. Russia has also in the eastern a lot of space to develop more the economic sphere.

Bibliography

Welt, Cory (2006), “A New Eurasia?: The Future of the Shanghai Cooperation Organization”, The Center for Strategic and International Studies (CSIS).
Bin, Yu (2008), “China-Russia Relations: Medvedev’s Ostpolitik and Sino-Russian Relations”, Comparative Connections A Quarterly E-Journal on East Asian Bilateral Relations.
Bin, Yu (2010), “Mr. Putin Goes to China: Ten Years After”, Comparative Connections A Quarterly E-Journal on East Asian Bilateral Relations.
Bin, Yu (2009), “Summitry: Between Symbolism and Substance”, Comparative Connections A Quarterly E-Journal on East Asian Bilateral Relations.
Ferguson, Joseph (2009), “ U.S.-Russia Relations: Economic Crisis brings Relative Calm to Relations”, Comparative Connections A Quarterly E-Journal on East Asian Bilateral Relations.
Smith, Keith C. (2008), “Russian Energy Policy and its Challenge to Western Policy Makers”, Center of Strategy and International Studies, Washington D.C.
Åslund, Anders and Andrew Kuchins (2009), “Pressing the ‘Reset Button’ on US-Russia Relations”, Peterson Institute for International Economics, Center for strategic and international studies.

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