East Asia and Pacific // Comments

04 november 2013

Russia's Pacific Destiny

Vladislav Inozemtsev

Scientific Director of the Center for Post-Industrial Studies

“By virtue of our unique geography”, former Secretary of State Hillary Clinton wrote in a 2011 Foreign Policy article, “the United States is both an Atlantic and a Pacific power.” Russia, meanwhile, has seen itself as a Euro-Asian country, as Vladimir Putin has argued from the start of his first term in the Kremlin. The American attitude, which in Secretary Clinton’s locution is about as uncontroversial a statement as an American Secretary of State can make, reflects the country’s historic “maritime” vocation. The Russian one reflects the longstanding fascination with the country’s continental scale and reflects its traditional terrestrial focus. It is really no surprise, when you think about it, that during the “space race” Americans fetched their returning astronauts at sea, while Russians did so over land.

Despite these different conceptions of the Pacific, which is now the most dynamic region in the world, both the United States and the Russian Federation have made similar mistakes. The most striking of these has been the equation of the Pacific Rim with Asia and Asians. American and Russian policymakers and experts have commonly spoken of the Asia-Pacific or Asian-Pacific region, respectively. Both groups presuppose that the Pacific Rim cannot even be imagined without the primacy of Asian nations, tacitly agreeing that among them China appears to be a natural leader. The recent and ongoing shift of global wealth toward the Pacific is therefore widely interpreted as a harbinger of the “Asian century.”

This interpretation, however, does not square with the fact that the Pacific Rim is not Asia-centric in any metric aside from population numbers. If one counts the economic might of all 31 Pacific coastal states using the purchasing-parity method, it turns out that in 2011 $20.7 trillion of GDP, or 46.1 percent of the gross regional product, was generated by non-Asian countries: the United States, Canada, Mexico, the Latin American nations, New Zealand and Australia. That percentage comes to more than half when Russia’s 5.3 percent is added. The Asian share stood at $21.8 trillion, or 48.6 percent, according to the IMF’s World Economic Outlook report.

If one looks at military geography, here too the Pacific Ocean remains a zone of American dominance. Indeed, the U.S. preponderance is enormous: 11 aircraft carriers, 83 cruisers and destroyers, and 57 nuclear-powered submarines. China has no aircraft carriers, 13 cruisers and destroyers, and 5 nuclear submarines. Total U.S. military spending of $740 billion compares favorably to less than $160 billion spent in 2012 by the PRC.1 More than 80,000 U.S. servicemen are stationed in six Pacific Rim countries (with new deployments to come in Australia and the Philippines), and the United States has agreements with Australia, New Zealand, Japan, South Korea, the Philippines, Singapore and Thailand that have for decades defined the balance of power and ensured stability in the region. Neither China nor any other Asian state stations troops abroad, and China has no military allies.

Thus, even a first look at the situation in the Pacific shows that Asian powers are not yet dominant in the region, although many trends indicate their growing significance. Of course, it’s likely that within twenty years or so China may become the largest economy in the world, surpassing the United States in absolute terms (although not in per capita terms). Geopolitical rivalry in the Pacific may grow, too, as military balances shift in such a way as to diminish U.S. preponderance.

That rivalry may grow does not of itself predispose its outcome. The United States will retain many advantages in any such rivalry. But it abides one strategic blind spot: In American conceptions, Russia doesn’t fit into the context of its Pacific policies.

This is not hard to understand. Although Russia’s overall economic and military capabilities render it a potential “balancer” between the Asian and American shores of the Pacific Ocean, it is practically absent from the region. Its exports are directed mostly to Europe, while Siberia and the Far East remain economically underdeveloped. Indeed, the gross regional product of the whole section of Russia east of the Urals is less than the GDP of every Asia-Pacific nation except Papua New Guinea, Brunei, North Korea and Cambodia. Though Russia’s nuclear potential is comparable only to that of the United States and could critically alter the balance of power should Russia join a Pacific-centric anti-American camp, no one in Moscow formulates Russia’s interests in the region crisply enough for any such decision to be forthcoming. Russian foreign policy initiatives toward the Pacific are so sparse and abstract that it is even hard to remember what they have been about.

So Russia is an Asian anomaly. Even though the bigger part of the country is geographically located in Asia, and even though Russia has the longest Pacific coastline of all nations it is nevertheless not perceived as an Asian power by Americans or by anyone else. Russia is a loner on the Pacific Rim, a massive country, but one with no clear strategies to pursue, no allies to collaborate with, no high-profile goals to accomplish. Russia is on the Pacific, but not of it.

Little wonder, then, that Americans rarely think of Russia as a Pacific nation, but it would be useful for both countries were it to begin doing so. The reason is simple: Just as the United States tightened its relations with China in the early 1970s to gain leverage over Russia (then in the form of the Soviet Union), so American interests today require using Russian power to maintain some control over a rapidly rising China.

American decision-makers and experts in both major parties have already applied this logic to other countries. In recent years, as many neighboring countries began to tremble before China’s growing influence, they sought closer relations with the United States. That includes formal allies like Japan, South Korea, Australia, and New Zealand, important countries like India, and Singapore, the Philippines, Vietnam, Malaysia, Thailand and Indonesia. Economic ties are fostered through new initiatives such as the Trans-Pacific Partnership. Informal alliances have already formed, some connected directly to the United States, and some lateral, as with Japan’s closer ties to India. Such lateral arrangements are enabled and encouraged by the United States.2

The Chinese, for their part, have tried to build alliances with Burma and Laos, but Burma has pulled away and Laos is even less significant than Cambodia. China largely controls the situation in North Korea, but the costs of doing so are mounting in both economic and strategic terms. North Korean brinkmanship brings significant U.S. forces into the Pacific—exactly the opposite of what China would want from the conduct of a genuine ally. China ever more effectively penetrates post-Soviet Central Asia, but the result has been to make many Central Asian elites nostalgic for Russia and Russians. China’s “soft power” doesn’t amount to much, it seems, in that part of the world. China has also developed a strategic relationship with Pakistan, but that relationship could easily become as problematic to China as the one it tries now to manage with North Korea.

In a sense, China’s most successful foreign policy over the past two decades has been to transform Russia into its junior partner. Chinese leaders do not treat their Russian counterparts as equals, and economic facts alone suggest why. From 2000 to 2012, China’s exports to the Russian Federation increased 54.5 times, from $950 million to $51.8 billion. Back in 2000 Russia had a $4.3 billion trade surplus with China, replaced by 2012 with a $16.1 billion deficit.3 In 2000, the share of industrial goods in all Russian supplies to China amounted to 19 percent, and in 2012, less than 2 percent. Increased trade thus does not bring Russia significant or enduring economic benefits. For example, Chinese direct investment in Siberia and in the Far East of Russia totals about $650 million, and in Russia as a whole only $2.6 billion. The unequal relationship is also evident in the fact that while negotiations over supplying China with Russian natural gas have stalled, Russia still sells its oil to Chinese state-run companies well below market prices. Meanwhile, China, once a major importer of Russian weapons and military ammunition, has become the biggest competitor of Russian arms-makers, exporting its own products based on Soviet and Russian technology to more than thirty countries.

Beyond economics there is politics. While talking of friendship and alliance with China, Russia entered into the Shanghai Cooperation Organization, which functions mainly to legitimize Chinese influence in Central Asia. Russia has even made territorial concessions to China. In 2008, Russia ceded to China half of Big Ussuri Island as well as Tarabarov Island, both located in the lower reaches of the Amur River. At the same time, Chinese migration into Russian territory is worrying Russian citizens, and the conflict between Russian and Chinese interests in Central Asia is becoming more acute.

Under such circumstances, the American interest lies not in ignoring Russia’s role in the Pacific, but in engaging it to mutual benefit. America and Russia bring complementary assets to bear with regard to developing Siberia and the Russian Far East. U.S. interests are not served by a Russia that is beholden to China in the Pacific; they would be served much better by a stronger Russia in the Pacific Rim, and by a Russia that would need to deal with the consolidating democracies of the region.

It is no secret that loose economic ties between Russia and the United States, and the insurmountable mistrust that drags on from the collapse of the Soviet Union, do not form a propitious backdrop for a cooperative U.S.-Russian relationship. America is once again a foil for the Russian leadership’s discontents. But the problem runs even deeper than that. These days in Moscow some statesmen and politicians, and many experts, are talking about “turning to Asia.” This verbal formula is much more often used than turning toward “the East” or toward “the Pacific Ocean”; even when liberal scholars talk about the “Great Ocean”, they always express their admiration for the “Asian model.”

“Asian” flavor is attractive for several reasons. A China-oriented drive in foreign policy means associating with a clear winner; a focus on Central Asia could further the Russian aim of post-Soviet integration; Russia wants to keep its special relationship with the Islamic world; and above all it wants to emphasize the supposed “Euro-Asian” character of Russian national identity.

Obsession with “Asianness” has an important domestic political undertone flowing from this last point. Asia has supposedly found a successful path to economic growth without copying the Western liberal-democratic formula. This vindicates Russia’s claim to an interpretation of human rights and liberties, as well of the government’s role in society, that deviates from any Washington or Western consensus. All this is of a piece with a longstanding semi-mystical impulse in Russian culture, or, more precisely, Russian counterculture, to downplay Russia’s Europeanness, partly in reaction to the fact that so many Europeans have long rudely seen Russia as not quite up to their level of civilization.

For all its superficial attractiveness, this impulse can bring Russia neither economic prosperity nor political or social progress. Economically, a China-oriented policy will guarantee Russia’s subordinate status, for by itself Russia cannot out-compete China in the industrial sector under foreseeable circumstances. Any modernization of Siberia and the Far East must proceed in cooperation with Japan, South Korea and the United States, which possess the most advanced industrial technologies and investment resources.

Finally, dreams of turning Russia into a “transit corridor” linking Asia to Europe have no chance of being realized in the Asianist conception. The kind of infrastructure investment and technologies required for that to happen can only come from the private sector in the West and in the East, not from the Chinese government, which has a stake in a competing land project that pierces Central Asian countries.

In political terms, too, the Asianist impulse will bring Russia nothing but disappointment. Some Russians may admire China’s technocratic governance, which has ancient roots in the mandarin system, but the Russian political elite is unwilling to emulate it. While in Beijing the “fifth generation” of CCP leaders came to power recently through an apparently smooth transition, in Moscow President Putin returned to the Kremlin longing for unlimited personal power; with each passing year responsible Chinese management differs ever more from Russia’s almost random personality-based system.

As to the specifics of the Asianist delusion, Russian engagement with Central Asia will not bring any added value to Russia as the leader of the fledging Eurasian Union. There is not much to be gained economically. Despite the vaunted Customs Union, Russia’s trade with Kazakhstan is growing more slowly than its overall trade. This is no surprise since two resource-addicted countries do not have much to offer one another. Small Central Asian countries like Kyrgyzstan will flood their Eurasian Union partners with cheap, re-exported Chinese goods, but this is unlikely to contribute to industrial growth. However, without a much needed Ukraine, the expansion to Central Asia can only seem like success for the Eurasian Union to an inexperienced observer.

Sooner or later, the “Asian” obsession will dissipate, and when it does American leaders should seek to change Russia’s “Asian” direction to a “Pacific” one. That direction promises both economic development and a healthy association with working democracies around the Pacific Rim. Russia’s interest in greater cooperation with the United States, Japan and the other democracies of the Pacific Rim may be economically driven in the main; for the United States, the longer-run political benefits may be just as important.

Not that Americans won’t make a lot of money, too, and generate a lot of jobs if U.S.-Russian cooperation in the Far East becomes a reality. The needs are great and the results of recent efforts are poor.

Today both Moscow and regional authorities are disappointed with results of the massive investment campaign they conducted while preparing the APEC summit in Vladivostok held in September 2012. Having spent more than $20 billion, the federal government managed to only slightly improve the lives of 600,000 inhabitants of one coastal town. Even so, the authorities of neighboring regions demanded financing from the federal budget of numerous new programs totalling $165 billion, but the government doesn’t have that kind of money. Major planned investments to Russia’s Eastern regions over the next decade will fund the construction of roads and other infrastructure, the development of new deposits of raw materials, and the development of the Arctic regions. These are investments with some strategic rationales, but also investments designed to make rich people richer by enabling the natural resource arbitrage that has been at the center of Russia’s economy in recent years. None of this will boost the quality of life for ordinary citizens very much.

Russian Siberia and the Far East desperately need a classical industrialization push similar to those undertaken by South Korea, Malaysia and other Pacific “tigers”—namely, an industrialization aimed at the development of finished products that can compete on international markets. This requires a real “partnership for modernization”, one more practical and bold even than the one proposed by EU leaders to President Dmitri Medvedev in 2009. The reason is that, as things stand now, the Russian Far East is being treated essentially as a colony of European Russia. These provinces are supplying a good deal of the national wealth thanks to the value of their natural resources, but rather little is returning to them in benefits. In 2012 almost 75 percent (more than $400 billion) of Russian exports were goods extracted or primarily processed in Siberia and in the Far East. Only a small part of the country’s total investment returns back to the region.

So we are talking about a huge financial withdrawal, but if that missing money were invested wisely in the region for about ten years running, we might begin to see a big difference in regional living standards. Unfortunately, the financial, administrative and overall management prerequisites for that development are largely missing. So the money and the management assets and probably some of the human capital for significant development will need to come from outside. And here is where the United States and its Pacific Rim allies come in.

The accelerated development of the eastern regions of Russia could dramatically increase business activity in the region, attracting tens of billions of dollars of Japanese, Korean, and American investment, and creating a huge new market for both Russian and foreign companies. To attract American and other investors to the Russian Far East is a true challenge for the Russian government. If it succeeds, the Pacific Ocean might develop a new pole of economic and political gravitation, which can counterbalance the Chinese preponderance in the northern part of the region and cast away doubts about Russia’s ability to manage huge natural resources to the benefit of its own population and global development. On the shores of the Pacific Ocean these days there is no territory with such huge potential resources for development and such acute need for economic growth as Russia’s eastern regions.

It is possible that this potential could be converted in time into an expanded Trans-Pacific strategic economic community designed to help integrate the Russian economy in the wider context of Pacific economic cooperation. Given the commodity sector’s economic dominance in Siberia and of the Far East, which cannot be changed for at least two or three decades, the coordination of export policies between Russia, Australia, Indonesia and the Pacific Latin American nations may provide new opportunities for all parties and soften their competition in the global commodities markets. An economic bloc of northern Pacific nations would have much to offer current ASEAN members, and could extend Pacific cooperation toward the shores of the Indian Ocean.

Politically, too, there are potential benefits to be harvested. Take, for example, Russia’s formally unfinished conflict with Japan since 1945. Areas adjacent to the disputed South Kuril Islands are rich in marine bioresources and probably contain significant energy reserves. But today Russia harvests fish and seafood in the region mainly for export to neighboring countries; deliveries to the Russian domestic market account for only 30 percent of the catch. The oil and gas production facilities in Sakhalin were built by Americans and Japanese, since the Russian Federation still lacks advanced technologies for offshore drilling. Russia might be induced to trade off these disputed islands in exchange for an ambitious program of economic cooperation and safeguarded economic rights to maritime spaces around the contested islands.

One politically comfortable way to achieve this would be for Russia to lease the islands to Japan for, say, 99 years. That would delay the final solution to the problem until sometime next century. Leasing payments could serve as a kind of guarantee to Japanese and other foreign investors who believe doing business in Russia would be too risky. If this could be done, the Kuril Islands could come to symbolize a genuine reconciliation between Japan and Russia.

Then there is Korea. None of Korea’s neighbors, including China, is happy with the status quo. Russia and the United States, and certainly Japan as well, have an interest in eliminating the constant military threat from North Korea. China’s interests and perceptions are more complex, but we may be close to a point where Beijing will see the opening of North Korea’s economy as being in its interest. When that day arrives, Russia should strive to strengthen its economic role on the Korean peninsula in cooperation with the United States, Japan and South Korea. It could lead the economic reconstruction of the ailing country in laying new railways and pipelines toward the Yellow Sea ports. Parts of the country could become a sort of free economic zone, developed by all interested parties, until the time comes when both economic growth and, more speculatively, political reform allow the question of Korean reunification to be put on the table. The main obstacles here are political, to be sure; China at present seems to be allergic to Korean unification under any circumstances, particularly if the outcome would be a democratic state. That is why American or EU participation in developing North Korea is anathema, but Russia as the lead party would likely be less threatening, and of course Russian work in Korea would be a logical and efficient extension of the development of Russia’s own Maritime Provinces.

In due course, it is possible that Russia’s active involvement in the political processes of the Pacific, with U.S. encouragement and support, could help bring about greater regional cooperation in general. That cooperation could include environmental and humanitarian elements, liberalized trade protocols, joint scientific research and more. U.S.-Russian cooperation in the Pacific could be extended to include other democratic countries around the northern hemisphere, perhaps in time forming a Northern Alliance from Vladivostok westward all the way around the globe to San Francisco.

The vital interest of the United States in the Pacific has in a sense not changed in more than a century. It seeks an Open Door, a Pacific zone in which North Americans, South Americans, Asians and Russians can cooperate to mutual benefit. That kind of openness to economic partnerships and more liberal trade would be harmed by a full-scale Sino-Russian strategic alliance, and it would be harmed by Russia’s more or less permanent dependence on China in the Far East. America’s support for a more active Russian role can help introduce a new element of healthy balancing in the Pacific and maybe, one day, support the further consolidation of democracy in Russia and beyond. That would represent a real “reset” in U.S.-Russian relations.

Such a policy is far from being anti-Chinese; nor is it as a vehicle for a Russia-assisted U.S. domination of the region. It should rather be seen as a way to integrate the rise of China into a more stable regional order, and a way to discourage either China or Asian states that fear its rise from doing anything gratuitously disruptive. Bringing Russia more fully into a Pacific vocation, if done wisely, would be an act of general reassurance, with economic and political benefits for all.

Whether from such modest beginnings there could arise one day a grand projet that could become something like a North Pacific Treaty Organization, pursuing both political (and possibly even military) and economic goals, perhaps in close cooperation with NATO, must remain in the realm of hopeful speculation. Together, there is a lot the United States, Russia, Canada, Japan and South Korea could do to ensure regional security and promote economic and technological development. That would include, for starters, making sure the Arctic does not become a source of tension and conflict.

Such a vision, even far short of its realization, would signal to Russia that Americans and others see it as more than just a European offshoot stretching toward the Pacific Ocean. It would signal that, like the United States, it is a continental power that stands on the shores of both the Atlantic and the Pacific Ocean. Sometimes words can mean a lot. Sometimes obstacles to better relationships, such as Russia’s currently shaky democratic credentials, can be overcome by patient indirection. But all of this requires that American leaders and thinkers make a place in their mental maps for Russia as a Pacific power. Is that really too much to ask?

Source: The American Interest

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Vladislav Inozemtsev, “Russia's Pacific Destiny,” Russian International Affairs Council, 04 November 2013, http://russiancouncil.ru/en/inner/?id_4=2637

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