Russia joins the China game
By Francesco Sisci

BEIJING - Over the past couple of weeks China has signed multibillion-dollar deals with Russia, bringing it economically and militarily closer to Russia than it has been since the 1960s. And this has happened with the tacit or active participation of the United States.

First came the arms deal. On June 25 the Washington Post reported that China was negotiating to buy eight submarines from Russia worth some US$1.6 billion. It was part of a larger deal worth $4 million that would include the delivery in four to five years of two more Sovremenny-class destroyers (China already has two), a new batch of S300 PMU2 anti-aircraft missiles and 40 Su-30MKK fighter-bombers, among other items. China has already purchased four Kilo-class subs from Russia. The new weapons would significantly increase China's ability to blockade Taiwan and challenge US naval supremacy in the seas near China.

The deal should settle Beijing's qualms over the US pledge in April to provide Taiwan with billions of dollars' worth of weapons, including eight diesel submarines, 30 AH-64D Apache Longbow attack helicopters, 12 P-3C submarine-hunting aircraft, four Kidd-class destroyers, long-range radar systems and Patriot-3 missiles.

Yet, as Post journalist John Pomfret noted, the Beijing-Moscow deal underscored "serious troubles within China's domestic submarine-manufacturing program, especially the multibillion-dollar program to develop the Song-class guided-missile submarine. China tried to develop the Song to replace its Romeo-class, called Ming class in Chinese, attack submarines, introduced in 1962."

The Song submarine was first tried in 1995 but proved a failure. A new design came out in early 2000 but it is incomplete and far behind schedule.

China was well aware of those problems but it rejected the idea of buying more subs from the Russians because it wanted to develop its own military industry and the purchase of foreign subs would inevitably cut resources from the development of its own arms. Furthermore, China had problems in operating and maintaining both the four Kilo-class subs it had already purchased as well as its Su-27 fighters. The plane pilots and the sub crews experienced serious problems running these sophisticated weapons, and complaints about the training received, as well as maintenance, popped up.

To top it all, China cannot use these subs to their full potential. They have no ability to see "over the horizon", that is, the Chinese subs are not hooked up to a system of satellites, planes or ships that would convey information and allow them to see their targets.

The Americans knew all this and thus made no great fuss over the deal, but announced early this month that they were toying with the idea of providing extra missiles to Taiwan.

So why would China give $4 billion to Russia to buy something it can hardly use and that could put it on the spot with the United States? The answer may lie in a second recent development.

On Thursday PetroChina Co signed joint-venture agreements with Royal Dutch/Shell Group, ExxonMobil Corp and Russia's Gazprom for a 3,900-kilometer pipeline linking gas fields in western China with Shanghai in the east. The companies are to cooperate for 45 years, investing a total of $8.5 billion in both the pipeline and in exploration and production. The pipeline alone will account for $5.2 billion of the total investment. It is expected that it will eventually extend into Siberia.

At first glance the rationale for the deal is apparent. China predicts that its oil consumption in 2005 will be 243 million tons, in 2010 it is expected to reach 296 million tons and in 2015 it will reach 360 million tons. This would leave China with a yearly oil deficit of some 200 million tons within 13 years. Other estimates say that by 2020 China will need to import 400 million tons a year.

At present half of its oil imports are from the Middle East, but this can't go on if imports are to grow at the pace being forecast. Therefore Beijing needs to decrease its dependency on foreign oil. In a forthcoming paper, Professor Zhang Xiaodong of the Chinese Academy of Social Science argues: "One of the effective strategies to decrease dependency on the Middle East oil is to diversify suppliers of crude oil. But the question is, where and who will be a potential supplier that can steadily export oil to China at an acceptable price? It is very likely to be in the Caspian Basin."

This picture has been clear for years, and for almost a decade Moscow has been wooing Beijing about its plans to sell it oil and gas, but Beijing resisted the temptation. Plans for a $10 billion oil and gas pipeline from Kazakhstan were announced in 1996 but saw no further development.

Now, however, it is no time for hesitation. Russia last month entered a political agreement with the North Atlantic Treaty Organization (NATO) and thus its political balance came to lean heavily toward the US and Europe (see the Asia Times Online articles Mega-NATO: China out in the cold, May 24, and How China dropped the ball, May 31). China saw itself being contained on the north by Russia and on the east by Japan and Taiwan. Beijing therefore needed some leverage to push Russia more toward China. The recent gas and arms deals could be the first of such actions, with others possibly in the cards, such as purchasing electricity and oil from Siberia, something Moscow has been pushing for years.

These deals do not compromise in any sense Russia's political agreement with NATO, and in fact give Moscow more weight in the political alliance. While these are small bargaining chips for China, which can't use arms deals as leverage against US concerns about Beijing's rearmament, they provide Russia the opportunity to claim to its NATO friends that it holds the keys to China's security and energy sufficiency.

In other words Russia is now stronger vis a vis both NATO and China and is gaining a central role if not as a great power, then as great power broker.

However, there is a factor that does not fit easily into this new formula: Taiwan.

The energy deal, and naturally even more so the arms deal, puts pressure on Taiwan. While militarily these weapons do not constitute a serious threat to the US, certainly they open a new chapter in the rearmament program in the Far East and create great tension between mainland China and Taiwan. In other words Moscow, newly acquired in the US allies' court, has helped deepen the strategic tension around Taiwan, which is also linked to the US.

One can look at this picture in another way: the Russian arms in Chinese hands are not a great threat, but justify the US arms sales to Taiwan. But even if we were to choose this warmongering scenario, the question remains what effect more weapons in the region will have on local tension. In any case, whether or not the arms are pointed at Taiwan, the Taiwan issue is a solid argument for China to pursue its rearmament program, which is ultimately worrisome for the US and the West.

The message China might be sending the US through these deals is that Taiwan is the great divider on its relations with Washington, and if this issue were to be resolved, Beijing need not rearm. In other words, if the Taiwan issue were to be solved, the whole construction of alliances surrounding China including Russia and Japan could take a different shape, and might not even need to exist.

So the Taiwan issue and the general fear of China play in tandem, but bring about a situation where confusing agendas are on the same level: on the one hand Russia is part of the NATO alliance, but helps an arms buildup versus Taiwan, another US ally. Is Russia being a traitor? Hardly so - the punishment would be rejection from its recently acquired status in NATO. Is the US then playing both ends of the table by turning a blind eye to Russia, while selling its own weapons to Taiwan? But this would be a dangerous game for the US that could lead to escalation of tension in a region difficult to control because of the complex balance of power in Asia, where no precise fault lines around China exist, as Henry Kissinger explained in his book Does America need a Foreign Policy (New York 2001, pp 145-149).

The most likely scenario is a lack of coordination in US policy, but with the new arrival of Russia in the China picture, the rub falls on Taiwan. It could be in Washington's best interest to favor a dialogue between Beijing and Taipei that would pre-empt the tension brought about by these arms deals, but here the ball goes back into the Taiwan court. Is the leadership in Taipei willing to stop playing brinkmanship and start talking? And what else can Beijing give to Taipei?

(©2002 Asia Times Online Co, Ltd. All rights reserved. Please contact for information on our sales and syndication policies.)

Jul 9, 2002

Peace brokers answer South Asia's call for arms (Jul 8, '02)

Massive pipeline project under way in China (Jul 6, '02)

North Korea rolls out new tank (Jul 6, '02)

Russia now the world's leading arms exporter (Jul 3, '02)

All eyes on Sino-Russian sub deal(Jul 2, '02)


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