Putin to expand strategic partnership
with China By Sergei Blagov
MOSCOW - President Vladimir Putin, certain of
re-election to a second term, evidently intends to
expand Russia's strategic ties with China in military
sales and economic cooperation between the two Asian
giants. Still, some divisive issues remain, such as the
likely awarding of a major Siberian oil pipeline to
Tokyo, not Beijing. The United States is watching
closely and warily as the former communist allies forge
powerful new ties in Asia and view Washington as a
potential menace.
In Sunday's election, Putin is
expected to sweep to a second four-year term and move
ahead briskly with improving ties between Moscow and
Beijing.
Once China and Russia were closely
allied, but later the Sino-Soviet split opened and the
United States took advantage of the bitter division to
forge new diplomatic relations with China, sidelining
the Soviets. Now the situation is very different, as
both Russia and China espouse capitalism and have
resolved many of their differences in the face of what
they perceive to be a common rival - the US.
Last month, the US Defense Intelligence Agency
(DIA) said the United States might anticipate potential
problems with both China and Russia, although the US
currently has good relations with the two countries. The
US effort to seek bases in Central Asia - strategically
important to both Moscow and Beijing - is one of many
causes of concern, as well as US unilateralism in its
foreign policy.
Testifying before the Senate
Select Committee on Intelligence on February 25, Vice
Admiral Lowell E Jacoby, director of the DIA, said
Beijing "likely fears a long-term US presence on its
borders", while Russia is improving its relations with
some countries, most notably China, in pursuit of a
multipolar world and to enhance its arms sales.
China the top customer for Russian
arms During Putin's first term, China
consolidated its position as the top customer for
Russia's arms industry, purchasing billions of dollars'
worth of jet aircraft, missiles, submarines and other
military hardware.
Russia and China were both
disturbed by the Iraq war - especially the US decision
to attack without broad international support - and
Moscow and Beijing protested what they viewed as a
rejection of the rules of the international game. They
still back the primacy of the United Nations Security
Council in resolving international crises, and they
support the principle of non-interference in the
internal affairs of sovereign states.
Apart from
shared concerns about US dominance in the Middle East,
Asia and elsewhere, the two nations have other common
interests and mutually reinforcing needs. They are weary
of - and alarmed by - militant Islamic groups in their
border regions, and want stability in Central Asia.
Russia and China have said they hope to increase
bilateral trade to US$20 billion a year, from the
current $12 billion.
Last June, Chinese
President Hu Jintao, leader of the world's most populous
nation, visited Russia on his first trip abroad and
signed a strategic energy pact with President Putin.
Hu's speeches in Moscow emphasized the importance of a
multipolar world and the need for the UN to play a
central role in Iraq.
China, Russia now
pledge eternal friendship Last week, Chinese
Foreign Minister Li Zhaoxing announced that presidents
Hu and Putin would meet in Beijing in the second half of
this year. Li also noted that the two nations share a
4,300-kilometer border - once the site of major troop
deployments and occasional skirmishes - and pledge to be
eternal friends. He also announced that chairman Wu
Bangguo of China's National People's Congress as well as
Premier Wen Jiabao would visit Russia this year to
discuss enhancing their strategic partnership based on
common political, economic and military interests.
Russia's ongoing government reshuffle has sent
some positive signals to China. In an apparent
reiteration of their shared belief in the primacy of the
UN in conflict resolution, Putin appointed UN Ambassador
Sergei Lavrov to be Moscow's new foreign minister. Putin
also retained Defense Minister Sergei Ivanov, a close
ally who also has been mentioned as a possible heir to
the Kremlin leader in 2008. Ivanov has considerable
China experience; last year he and his Chinese
counterpart, General Cao Gangchuan, agreed to strengthen
their defense cooperation. That will continue.
When Putin sacked the government of Mikhail
Kasyanov on February 24, the new prime minister, Mikhail
Fradkov, pledged to pledged to develop the oil sector
and boost Russia's crude-oil output to ports in Asia.
However, some bilateral economic issues could
prove divisive. Putin's cabinet reshuffle eclipsed - but
not in Beijing - the announcement this month that Moscow
would probably exclude China and accept a
Japanese-backed plan to build a new oil pipeline to
Nakhodka. A formal decision has not been announced.
China and Japan have been competing for Russian crude -
both trying to reduce their dependence on Middle East
oil - and each has been backing rival pipeline routes.
China National Petroleum Corp is backing a US$2.8
billion link to China's northeastern city of Daqing.
Tokyo has offered to fund a $6 billion pipeline to the
port of Nakhodka on Russia's Pacific coast.
Last
May, Russia and China signed a non-binding contract that
involves the eventual expansion of oil exports to China,
up to 220.6 million barrels (30 million tons) a year.
Russia's major oil corporation Yukos and China's
National Petroleum Corp (CNPC) have signed a $150
billion deal for a pipeline to China to ship up to 700
million tons of oil from 2005 to 2030. Under the
agreement, CNPC would buy up to 5.13 billion barrels of
Russian oil, worth $150 billion, between 2005 and 2030.
The $2.5 billion pipeline will run from Russia's Western
Siberian field in Angarsk to to China's Daqing oilfield
and refinery.
Russia to hike oil exports to
China by rail In late February, Putin supported
plans of the state-owned Russian Railways Co (RZD) to
boost oil exports to China. "Using railway routes for
oil supplies to China is a good idea," Putin said.
The RZD said it would boost oil exports to China
by rail. Shipments to China would rise to 110,000
barrels per day (bpd) in 2005 from 88,000 bpd this year,
according to the company, and by 2006, oil supplies to
China by rail would be running at 200,000 bpd. RZD also
said it was technically feasible to boost rail shipments
to China even sixfold to 600,000 bpd. An increase in
rail deliveries across the border, however, makes up
only a fraction of the planned pipeline deliveries.
Beijing has been viewing the Angarsk-Daqing
pipeline as an important way to reduce its growing
dependence on oil shipped from the Middle East. As China
has been pursuing this and other oil and gas projects in
the former Soviet republics, Russian pledges to boost
rail shipments of crude oil to China could hardly be
viewed as an alternative to Angarsk-Daqing.
Nonetheless, this month China Petroleum &
Chemical Corp, the Sinopec Group, reiterated its
interest in extracting Russian oil and gas. Sinopec is
also willing to consider ventures in hydrocarbon
refining with Russian companies. Sinopec is engaged in
talks to set up joint ventures with Russia's two top oil
producers, LUKoil and Yukos, the Chinese company's vice
president, Wang Jiming, told Russia's Interfax news
agency.
Putin, when visiting Khabarovsk in
Russia's Far East last month, described the
Angarsk-Nakhodka oil pipeline as a strategic project.
Earlier in February, Russia's government said it wanted
to build the 3,900km Angarsk-Nakhodka crude oil
pipeline. The rival proposal to build a pipeline to
Daqing and give China exclusive access to the oil might
be abandoned, then-energy minister Igor Yusufov said.
Japan also wants to explore for oil in
Russia's Far East On the other hand, Japan
Petroleum Exploration Co, a state-owned oil explorer,
said it might join a research project to explore oil
reserves in Russia's Far East and in Eastern Siberia,
which have been estimated at as much as 100 billion
barrels. Japan Petroleum Exploration would be the first
Japanese company to join an oil-reserve survey in this
part of Russia.
Meanwhile, last year Russia
Petroleum agreed with consumers in China and South Korea
to start supplies from 2008, gradually rising to 30
billion cubic meters of natural gas per year. Tyumen Oil
Co-British Petroleum (TNK-BP) also plans to build
Russia's first gas pipeline to Asia, also going to China
and South Korea. Kovykta field in Irkutsk region,
eastern Siberia, is estimated to contain some 2 trillion
cubic meters of gas reserves. The $4 billion project
calls for the installation of a 3,700km pipeline between
Kovykta field, 400km north of Irkutsk near Lake Baikal,
and China's Pacific coast port of Lianyunggang, via Ulan
Bator in Mongolia.
This month TNK-BP oil company
announced plans to invest $650 million to develop the
major Kovykta gas field in eastern Siberia from 2004-09.
TNK-BP controls 63 percent of Russia Petroleum, whose
main asset is the giant Kovykta field. BP owns a 50
percent stake in TNK-BP.
The Russian government
has said it projects crude output growth of up to 441
million barrels (60 million tons) in Eastern Siberia and
up to 147 million barrels (20 million tons) at offshore
oilfields around Sakhalin Island by 2020. According to
the Russian estimates, the development of untapped oil
reserves in Eastern Siberia would require some $55
billion of investments in the next 25 years. Given the
scale of the projected growth, Chinese and Japanese
hydrocarbon interests could be eventually reconciled in
Siberia.
In the meantime, both Russia and China
have been recently subject to US criticism. The State
Department censured Russia and China for their poor
human-rights records in a report on February 25. And the
DIA has said there are reasons to anticipate potential
problems with Russia and China, despite good relations
with both nations at this time.
The US criticism
and shared concerns in Beijing and Moscow about
Washington's dominance could provide further impetus for
Russia and China to overcome differences and unite on a
variety of international issues.
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