RUSSIA TO BUILD COMPREHENSIVE STRATEGIC PARTNERSHIP WITH ASIA PACIFIC
The Vietnamese Party General Secretary Nguyen Phu Trong and Russian President Vladimir Putin
The post-Cold War era has witnessed the dramatic rise of Asia Pacific as the world’s new economic hub and power center. Along with it, increased competition among regional powers and the emergence of unconventional security challenges have led to signs of a new arms race for regional domination. While China, after 30 years of reforms, has become the second world economy and poised to take the leading role and control of Asia Pacific, the US’ “Pivot to Asia” has effectively shifted its foreign policy focus from Europe - Atlantic region to Asia Pacific for strategic calculations that include the need to contain China’s growing influence. Japan, India and Australia have also been keen on expanding influence in the region. Asia Pacific is consequently undergoing an unprecedented hectic competition for power.
Russia’s similar strategy of “pivot to Asia” has emerged against such a backdrop. Questions arise as to what kind of challenges and undertakings for Russia to succeed in building comprehensive strategic partnership with the Pacific Asia region.
Moscow has been under increasing sanctions and diplomatic isolation from US and EU over the Ukrainian crisis. Both the recent G-8 and G-20 conferences have shown the extent to which the US and the EU are allied against Russia. Sanctions have been imposed on all fields, from economic, financial, energy to military and diplomacy. Arms and military industrial exports from Russia are curbed, while officials and businessmen prevented from obtaining visa to the US and Europe. The Russian economy has inevitably been inflicted with damages estimated at EUR 23 billion (or 1.5% of GDP) in 2014 and EUR 75 billion (or 4.4% of GDP) in 2015. Loss from this year’s foreign investment withdrawal is estimated at USD 130 billion.
The Vietnamese delegation holding talks with Prime Minister Medvedev
Consumer price index has sky-rocketed as a result of the ban on Europe’s export of food and produce to Russia. The local currency is under devaluation risks while inflation hits 9%. Moscow’s huge foreign reserve of an equivalence to USD 500 billion might curb the negative impacts of sanctions but only in the short run. From a long-term perspective, Russian economy will likely slow down and risk recession, and the overall plight is unprecedentedly difficult. The security exchange market is shaking, investment outflow sees no end and the forecast growth rate for 2014 is at 0%. Russia’s economic mainstay has been export of energy and raw materials, but world oil price has lowered to USD 75/barrel, and the EU members as the biggest importers of Russian gas are seeking to move away from this partnership to lessen their dependence on Russian gas supply. Russian economic plight is supposed to come along with a plunge in its military power.
The situation has driven Moscow to adjust both internal and foreign policies. The national economic is being restructured from the old model of relying primarily on exports of crude oil characterized by low added value, to a new model of balanced growth between industrial and agricultural production, focusing on consumer goods, bio-technology, IT, development of new materials to achieve sustainable economic growth in tandem with social development and environmental conservation.
Adjustments in foreign policies include a change in priorities. Asia Pacific should by no means remain at number 4 but be elevated to a new position that corresponds to Russia’s “pivot” to Asia. The Russian bear is expected to demonstrate its assertiveness as a strong, reliable and comprehensive strategic partner with Asia Pacific in economic, military and security terms. To succeed with this new strategic pivot, Russia is also expected to highly regard the connecting role of ASEAN at the core of a wider Pacific region, that of no less importance than the role played by China and India. Vietnam, with its role in ASEAN and the comprehensive strategic partnership with Russia, is in the best position to connect Russia with Southeast Asia and help navigate Russia’s return to East Asia and the Pacific.
Since 2011 China has become the biggest trading partner with Russia. Bilateral trade, recorded at USD 88 billion in 2013, is expected to rise to USD 100 billion this year and to reach USD 200 billion by the year 2020. The US and EU-led sanctions have only added strength to this partnership. 47 agreements were signed last May during the official visit to China by Russian President V. Putin, including the USD 400 billion-worth deal to supply China with 38 million cubic meters of Russian gas over a span of 30 years starting in 2018. Russia’s Gazprom is expecting to get USD 25 billion from China as deposit for the “Power of Siberia” pipeline construction project. Similarly, Russia has effectively boosted ties with other regional powers India, Japan and South Korea.
In Southeast Asia, Russia has a long traditional relationship that has expanded and deepened since the onset of the 21st century. Russia has pursued a foreign policy of developing and enhancing all-sided bilateral relations with each Southeast Asia nations while participating actively in a wide range of regional multilateral forums. Moscow advocates to maximize the benefits of cooperation with Southeast Asia for the protection of respective national security and the security of Siberia and Russia’s Far East. Russia is keen on developing balanced relations with all regional countries, but in the meantime regards Southeast Asia as the driving force for Pacific Asian integration. The inaugural Russia-Southeast Asia summit that met in Malaysian capital Kuala Lumpur on 13 November, 2005 marked this trend. The summit reached agreements on a joint declaration for cooperation and a blueprint for actions in 10 years (2005-2015). These important documents shape the targets, principles, mechanism and areas of cooperation in medium and long terms. The joint declaration emphasize mutual commitment to consolidate and further develop partnership and dialogues regarding sustainable economic growth and prosperity on the principle of equality, shared responsibility, mutual benefit and working to promote peace, cooperation, stability, security and prosperity in Asia Pacific. Hence, Russia- Southeast Asia cooperation has been growing in width and depth on all fields: political, security, strategy, military, weapons deals, trade, investment, tourism, oil & gas, education, culture, environment, science and technology… Repercussions from the Ukraine crisis have pushed Russia even harder towards Asia Pacific. Increased presence and comprehensive engagement with Southeast Asia and the wider region of Asia Pacific is the timely choice for Russia now.
Two-way trade between Russia and ASEAN was at USD 17.5 billion in 2013 and forecast at USD 25 billion in 2015. Modest as it is in figures, the partnership has great prospects and is opening up rooms for growth in trade, investment, military industry, energy, tourism, education and science. ASEAN countries have high demands for all major Russian exports namely weapons and ammunition, oil & gas, nuclear energy, steel and machinery. A strong partnership in these areas will be highly beneficial to both.
Vietnam is both a member of ASEAN and a strategic partner and traditional friend of Russia. The relationship has stood the test of time and historical upheavals in both countries and in the world. Inheriting the legacy of close cooperation during the Soviet Union era, Russia and Vietnam have preserved their brotherly and loyal relationship and strategic confidence. The relation of “comprehensive strategic partnership” with Moscow is the highest echelon of Hanoi’s diplomacy. For Moscow, as affirmed by President V. Putin at the reception with the new Vietnamese Ambassador on 19 November 2014, “Russia should expand relations with Vietnam as the tradition of friendliness and long lasting cooperation have bonded Vietnamese and Russian people together. Both nations are working hard to promote in-depth cooperation in energy including oil & gas and peaceful development of nuclear energy, and towards concluding the FTA between Vietnam and the Customs Union”.
“Russia plays a subtle game with China” was an article by Ilya Usov on Pravda.ru dated 17 Nov 2014 that highlighted the strong areas of Vietnam’s economic growth in 2014, while stressed the need for Russia to increase ties with Vietnam as the “new dragon” of Asia Pacific instead of solely focusing on its giant neighbor. The author suggested Russia’s pivot to the East should not lean on China but rather be multilateral and multi-dimensional. At the recent East Asian summit, Russian premier D. Medvedev stated that the FTA agreement between Vietnam and the Customs Union of Russia, Belarus and Kazakhstan, if successfully concluded, will serve as model for other potential partners from Southeast Asia. Russia’s multi-dimensional foreign policies in Asia Pacific will enlarge the country’s sphere of actions and serve important economic interests that CU-Vietnam FTA agreement can serve as a connecting bridge between Russia and ASEAN Economic Community is just one of many examples. Russia’s foreign policy will benefit from partnership with both major regional powers as well as smaller countries that are emerging as new dragons like Vietnam and others in Southeast Asia.