Facing crushing sanctions from the West over Russia’s invasion of Ukraine, Moscow is scrambling for fallback options in the East. After all, the past two decades have seen Russia’s bilateral trade value with Asia almost matching its historically robust economic relations with Europe.
Largely shut off from the stock markets, tech sector and financial institutions of the West, Russia is pinning its hopes on revitalized ties with Asian partners. With close to half of Moscow’s financial assets frozen, Russian Finance Minister Anton Siluanov has hoped that “our partnership with China will still allow us to maintain the cooperation … where Western markets are closing.”
Weeks earlier, Sergey Karaganov, a Kremlin adviser, had admitted that “China is our strategic cushion.”
“We know that in any difficult situation, we can lean on (China) for military, political and economic support,” Karaganov said.
By all indications, however, Russia will struggle to find sufficient cushion in the East. Asia’s most advanced economies have imposed sweeping sanctions on Moscow, while the vast majority of Association of Southeast Asian Nations (ASEAN) members have condemned Russia’s invasion of Ukraine.
Crucially, China is neither willing to nor capable of compensating for Russia’s economic estrangement from the West. Prominent Chinese policy experts have openly argued that China needs to sever its ties with Russian President Vladimir Putin because, as influential Beijing-based expert Wang Huiyao writes in The New York Times, “China will not want to shoulder Russia’s economic burden alone.”
Eager to avoid a full-blown showdown with the West, China has refused to categorically support Russia’s latest aggression, repeatedly abstaining rather than vetoing U.N. resolutions against Moscow.
If anything, China has emphasized the need for respecting the territorial integrity of Ukraine, while offering to help de-escalate tensions as a potential mediator. Overall, China has prioritized its self-interest and chosen to focus on projecting an image of a responsible power that isn’t bound by the mishaps of an unruly ally.
Mocow’s pivot to Asia
To be fair, Russia has made huge strides in reorienting its foreign policy toward Asia over the past decade. Beginning with its 2012 Asia Pacific Economic Cooperation summit, which carried a whopping $21 billion price tag, Russia actively pursued warmer trade and strategic ties across Asia. No less than Putin himself emphasized the importance of diversifying the country’s strategic orientation, which has been historically tied to the West, during the 2013 St. Petersburg International Economic Forum.
Within a year, Russia and China had signed a $400 billion, 30-year energy deal that served as a launching pad for a proactive energy diplomacy across Asia. In fact, Russia sought to pursue similar deals with other major Asian economies, including Japan and South Korea. The imperative behind Moscow’s “March East” strategy was accentuated by a new round of Western sanctions in the wake of Russia’s annexation of the Crimean Peninsula in 2014.
Aside from its burgeoning trade and defense ties with China, Russia found considerable success in its pivot to Southeast Asia, where a whole host of authoritarian leaders desperately sought an alternative strategic patron amid the Sino-America cold war in the region. From Philippines President Rodrigo Duterte to Indonesian President Prabowo Subianto, prominent populist leaders openly welcomed warmer personal and strategic ties with Moscow.
Leveraging its world-class defense industry, Russia has emerged as the leading arms supplier in the region. Over the past two decades, the country has exported up to $10.7 billion in military hardware to Southeast Asia. Despite its supposed alliance with Beijing, Moscow heavily armed Chinese rivals such as Vietnam, which has purchased modern Russian submarines and fighter jets worth $7.4 billion since the end of the Cold War.
A third force in Asia
Until last year, Russia seemed like a promising “third force” in the region, potentially serving as an alternative to either the West or China. Russian energy companies began expanding their footprint across the region, aiding efforts by Southeast Asian states to develop their vast energy resources in the hotly contested South China Sea, especially in Vietnam’s exclusive economic zone and the North Natuna Sea, off the coast of Indonesia.
Less than a year into the COVID-19 pandemic, which devastated several Asian economies, Russia offered the region its first-ever COVID-19 vaccine, Sputnik V, which Putin described as “reliable as a Kalashnikov assault rifle.” Soon after, Moscow launched its own “vaccine diplomacy” in Southeast Asia, offering co-production deals with Indonesia and Vietnam.
Soon after, Moscow also began to project itself as a potential peacemaker, especially with respect to post-coup Myanmar, which has been engulfed by civil unrest. In particular, Russia, a top defense supplier, enjoys significant influence with Myanmar’s junta, including de facto leader Senior Gen. Min Aung Hlaing, who has repeatedly visited Russia in recent years.
Recognizing Moscow’s influence over the regime, ASEAN foreign ministers held a special summit with Russian Foreign Minister Sergey Lavrov last year to discuss shared strategic interests as well as the crisis in Myanmar. Hobbled by Western sanctions, however, Russia struggled to expand its economic footprint across the region prior to its invasion of Ukraine. In 2019, the Eurasian country’s bilateral trade with ASEAN stood at only $18.2 billion compared to Washington’s $292.4 billion and China’s $644 billion.
Alliance of inconvenience
Russia’s brazen invasion of a sovereign neighbor has sent shock waves across the region, prompting Japan, South Korea, Taiwan and even the perennially “neutral” Singapore to impose unprecedented sanctions on Russia, jeopardizing Moscow’s free trade deals.
With Russia emerging as the world’s most sanctioned nation, prompting boycotts by global financial and logistics giants, even friendly regional states such as Vietnam are struggling to conduct trade and finance joint projects. U.S. strategic partners such as Indonesia and Malaysia, and allies such as the Philippines will likely shun major defense deals with Russia for the foreseeable future.
By all indications, even China seems to be reassessing its economic relations with Russia. In recent weeks, Chinese companies have refused to provide Russia with aircraft components, while the Beijing-backed Asia Infrastructure Investment Bank has suspended loans to the Eurasian country as well as its ally in Belarus.
With the bulk of Sino-Russian trade conducted in euros, Moscow might soon struggle to finance its bilateral trade with the Asian power. As leading trade expert Ho-fung Hung noted, any switch to renminbi-based currency swap deals would mean “little more than China giving out supplies to Russia for free as a disaster relief.”
Not to mention, Washington has directly threatened China with sweeping sanctions should it help Moscow bypass new restrictions. This is particularly crucial because, as Huiyao argues in his New York Times commentary, “China’s economic interests with Russia are dwarfed by those it shares with the West.”
Prominent political scientist Hu Wei, another top adviser to the Chinese government, has called on Beijing to prioritize “its own best interests” by “unloading the burden of Russia.”
At best, what Russia can expect is heavily discounted raw material exports to China on extremely favorable terms. Beijing will likely also demand major strategic concessions, including access to Russia’s most prized military technology. India is also following suit, seeking to expand discounted energy imports from its Eurasian partner.
Heavily isolated in the West, Russia confronts either opportunistic partners that are bent on extracting maximum concessions from an enfeebled Moscow, or lukewarm welcome across much of Asia, which has been horrified by the invasion of Ukraine. Russia might want some succor among some Eastern partners, but a full-blown bailout seems out of question.
Richard Javad Heydarian is a professorial chairholder in geopolitics at the Polytechnic University of the Philippines and author of, among others, “The Indo-Pacific: Trump, China and the New Struggle for Global Mastery.”