Valdai Club

Russia’s intention is to expand the Greater Eurasian community with its EAEU partners, as well as China, India and Iran, by reaching out to ASEAN countries, and thereby creating a major Euro-Asian political and economic arc, one which spans from Belarus all the way to the border with Australia.

For the second year in a row, May was a breakthrough month for Russia in terms of delivering on its foreign policy strategic priority for the 21st century, a policy that foresees a pivot towards Asia and the Asia-Pacific Region (APR). In May 2015, Moscow and Beijing issued a joint statement, signaling their commitment to coordinate efforts undertaken by their key Eurasian projects – the Eurasian Economic Union (EAEU) and the Silk Road Economic Belt (SREB) initiative. This has brought Russia’s relations with China to a new level, laying the groundwork for the continued expansion of trade and economic relations and the economic development in Central Eurasia, as well as for the gradual emergence of a new political and economic community of Greater Eurasia.

The fact that Russia’s first step in implementing its pivot towards Asia strategy was to establish closer ties with China did not come as a surprise, and the agreement with China to coordinate the EAEU and SREB projects was only part of these efforts. This is attributable to China’s importance and role in the Asian and global economy, its international status as the main strategic opponent of the US and a central non-Western power, as well as the fact that it has become Russia’s top trading and economic partner ahead of any other single country, and a systemic rift in Russia-US relations since 2014. The latter factor is not only due to the fact that few Asian countries, apart from China, have been willing to step up cooperation with Russia since that time due to US pressure or to Moscow’s desire to show the absurdity of the US claims that Russia is being isolated. Even more importantly, it reflects an understanding by both Moscow and Beijing that in the years to come the US containment policy towards the two countries, along with attempts to draw them into a Washington-centered world order, will be gaining momentum, making Russian-Chinese rapprochement a necessity in terms of improving the odds for the non-Western world of winning in the ongoing struggle for defining what the future world order will look like.

However, it would be a mistake to rest on the laurels of an unprecedented rapprochement with China and the emergence of the Greater Eurasia. First, Russia’s turn towards Asia is not the result of its spat with the West, even though it has been an increasingly important factor since 2014. This policy was in fact announced in 2011-2012, several years before the Ukraine crisis, and reflects Russia’s strategic interests, and not just a reaction to the environment it finds itself in. These interests are underpinned by both an understanding that the center of economic and political gravity is shifting to the APR, a region quickly becoming a hotbed of growth as well as Russia’s eagerness to develop its Far Eastern and Siberian regions. Initially, this policy was described as an effort to expand cooperation between Russia and Asia as a whole, not just China.

Second, as the confrontation between Western and non-Western powers for the right to define the future world order enters its decisive stage (the confrontations opposing Russia and the US and China with the US are only part of this struggle), Russia is becoming increasingly interested in stepping up its cooperation with other APR countries. It is clear that Russia is not interested in polarization in the Asia-Pacific, which will only increase, unless Russia strengthens ties with other regional powers, including US allies, while also expanding relations with China. Otherwise, polarization would undermine economic growth, make the development of Siberia and Russia’s Far Eastern regions less likely, in turn preventing Russia from becoming a great power in the APR in its own right, and, at the end of the day, create prerequisites for transforming Russia into China’s junior partner. It has to be noted that Russia’s interest in preventing the APR from becoming polarized fully coincides with the interests of other Asian countries, especially ASEAN members, Korea and even Japan.

Even in terms of countering the US and trying to impose its own vision of the world order, it is in Russia’s interests not to polarize the APR, but to prevent it from splitting into two opposing blocks. In the end of the day, Moscow’s objective is not to make the new confrontation with Washington last as long as possible (and dividing the region into blocks would mean just that), but to establish partnerships within the APR under new rules. From this perspective, it is not in Russia’s interests to isolate itself from other Asian countries, including US allies, and focus exclusively on China. On the contrary, the closer and more intensive Russia’s cooperation with the Asian and European allies of the US becomes, the faster Washington will understand that knocking out Russia, China and non-Western powers in general and forcing them to blend into the US-led world order as junior members is impossible, and that there is no viable alternative other than to work out new rules of the game.

Third, Russia is interested in drawing all Asian and APR countries, not only China, into projects to develop Siberia and Russia’s Far East. In fact, only by balancing projects implemented by China, Japan, Korea and other ASEAN countries can Russia bolster the development of these regions and remove any suspicion that Russia’s sovereignty is under threat. In this case, Russia’s interests also coincide with those of other Asian countries who do not want China to hold a monopoly on all projects to develop Siberia and Russia’s Far East.

Consequently, having stepped up its cooperation with China in 2015, Russia now needs to enhance its ties with other Asian countries and associations. Until recently, they have been falling far behind the vibrant Russian-Chinese relations. Regarding Japan, the fallout from the Ukraine crisis and the sharp deterioration in Russia-US relations have only added to the Kuril Islands dispute. Tokyo was pressured by the US to impose sanctions against Russia (even though Japan chose to make them less far-reaching than those initially introduced by the US and the EU), becoming the only Asian country (and the only US ally in Asia) to take such steps. With ASEAN, Russia has never had a developed relationship, even before the crisis in Ukraine. Getting involved in ASEAN security mechanisms, primarily the East Asia Summit, was not enough. On the economic front, Russia has established close and comprehensive ties with Vietnam, while its relations with other ASEAN countries have remained underdeveloped.

In 2015-2016, many Western and even Asian observers viewed this imbalance as a sign of Russia’s becoming a junior partner of China, expecting Moscow to side with Beijing on most issues related to regional political and economic development while being unable to play an independent role in the APR. Of course, this runs counter to Russia’s policy aims and interests. Apart from the fact that Russia’s relations with Japan, ASEAN and, to some extent South Korea, are underdeveloped, these assumptions were further supported by Russia’s stance on the future of the Asia-Pacific’s economic order. Specifically, Russia vehemently opposed the Trans-Pacific Partnership (TPP), and was even more venomous and raucous in doing so than China, at the same time while Japan and a number of ASEAN countries, including Vietnam, Russia’s main ASEAN partner, are parties to the TPP treaty.

As a result, by early 2016 Russia felt an urgent need to rebalance its policies and concepts for its political and economic presence in the Asia-Pacific. Moreover, both sides became aware of this need. Japan, South Korea and APR countries are not interested in China monopolizing development projects in Siberia and Russia’s Far East, nor in seeing China become an even stronger geopolitical power by making Russia a de facto junior partner, thereby further polarizing the APR. In this regard, their interests fully coincide with those of Russia. Unwilling to make a definitive choice between the US and China, it would be in Korea’s, ASEAN’s and even Japan’s interests for Russia to become a truly independent center of power in Asia as a counterbalance to the Chinese and US influence so as to reduce the extent to which the APR is polarized by Beijing and Washington.

In May 2016, the process of rebalancing Russia’s Asian policy got underway with a sequence of milestone summits: the Russia-Japan Summit on May 6; and the ASEAN-Russia Summit on May 19-20. Taking into account the abovementioned limitations, these two summits could be hardly expected to produce an instant breakthrough or a substantial agenda for political and economic cooperation, although they did yield tangible results, especially in terms of economic cooperation with ASEAN countries. These summits matter because of their strategic significance. Dialogues that until then remained in a somewhat dormant state, intentionally or otherwise, were set in motion, finally rebalancing Russia’s APR policy. Russia’s strategic cooperation with China, the cornerstone of Russia’s APR footprint, were supplemented by closer ties with Japan and ASEAN, who are also very important regional powers both in terms of economics and politics. The fourth pillar is gradually taking shape in the form of an emerging partnership with India, which has been recently eager to forge closer ties with Asia-Pacific and Eurasian integration processes.

It is telling that this rebalancing is taking place against the backdrop of efforts by the US to prevent its Asian allies from stepping up their ties with Russia. This goes for Japan, as well as some ASEAN countries, including the Philippines, Singapore, Thailand and Malaysia. It is a well-known fact that the White House pressured both the Japanese Prime Minister Shinzo Abe and leaders of Southeast Asian countries not to visit Russia or at least to delay their trips. However, this did not produce the desired effect and once again goes to show that Russia’s efforts to rebalance its APR presence are relevant not only for Moscow, but also for APR countries.

There is also reason to believe that the May 19-20 ASEAN-Russia Summit will be followed by concrete steps by ASEAN countries, and that they will not lose interest in cooperating with Russia after a couple of months, as has happened more than once in Russia’s foreign policy. This optimism is attributable to at least two factors.

The first factor is that the region is becoming increasingly promising for Russian goods and services. ASEAN is currently among the fastest-growing markets in the world. The rise in consumer income in Southeast Asia has facilitated the rapid emergence of a middle class, making the region a global leader in terms of consumption growth rates. As ASEAN countries expand their economies, the demand for traditional Russian exports (energy, raw materials and energy infrastructure), as well as agricultural products increases. ASEAN is also a promising market in terms of transportation infrastructure development. Russia has already shown its interest in working in these segments and is already involved in a number of major projects.

The second factor is that for the first time in the history of Russia’s relations with ASEAN the idea of ASEAN and EAEU forming a free trade area was tabled, while initiatives aimed at setting up FTAs between the EAEU and specific ASEAN countries such as Singapore, Cambodia, Thailand and Indonesia are already underway. The fact that summit participants discussed setting up FTAs with the EAEU, not Russia, was totally justified, since EAEU, not its individual member states, are in charge of foreign trade. The EAEU has already signed an FTA with one ASEAN member, Vietnam. An agreement to this effect was signed in May 2015, becoming the first document of its kind between the EAEU and a third country. Its adoption proves that trading relations with EAEU counties, primarily Russia and Vietnam, are gaining traction and have the potential for further rapid development. In addition, having signed one treaty of this kind, the EAEU can go on to sign similar agreements with other ASEAN countries, as was agreed at the May 19-20 summit. If these agreements are signed within the next several years, and this realistically can happen, this development would provide a powerful impetus to the expansion of trade and economic ties with ASEAN, thereby alleviating the risk of dwindling growth rates in Russia-ASEAN relations.

Apart from laying the groundwork for stepping up trade and economic relations with ASEAN countries, an agreement in principle to commence with creating a free-trade area between the EAEU and some ASEAN countries, as well as explore the issue of establishing an FTA between the EAEU and ASEAN in general, is of no less strategic importance. This agreement would be an important step towards reinforcing Eurasian integration and promoting the EAEU globally as a serious and promising integration project.

For the first time, it is a question of the Eurasian Union not simply establishing relations with a third country within the scope of its authority, but rather its building ties with another integration association. In addition, what’s at stake is quite an advanced form of trade and economic relations (the final documents mention a “comprehensive free trade area”) with one of the most developed regional integration projects in the world. By creating an FTA, EAEU and ASEAN would make Eurasian integration a reality not only for the post-Soviet space, but also as an integral part of the global economic architecture, one that would be very hard to reverse. It is clear that a move of this kind could bolster EAEU’s reputation and appeal with respect to other countries and organizations, such as Mercosur and even the European Union.

Creating an EAEU-ASEAN FTA is also extremely important in terms of expanding Russia’s involvement in the economic processes in the APR and strengthening Russia’s positions in the region in general. Lately Moscow has been frequently hit by accusations of its allegedly being insufficiently committed to regional processes related to trade liberalization and enhancing connectivity, both of which are central to the Asia-Pacific agenda. Russia was passive when it came to delivering on strategic objectives articulated within the APEC framework to create a greater Pacific free trade area, and has distanced itself from the emerging mega-regional communities. The resolutions of the ASEAN-Russia Summit and efforts to establish an EAEU-ASEAN FTA lay the groundwork for improving the situation and pave the way to Russia’s becoming an integral part of Asia-Pacific economic processes. Among other things, this would strengthen Russia’s positions within APEC with respect to other Pacific powers, including the US and China.

Moreover, the ASEAN-Russia Summit was the first time Moscow made public its intention to be part of the emerging mega-regional communities within the APR, the cornerstone of the emerging regional economic order. Until now, Russia was vehemently opposed to one of these communities, the US-led TPP, while refraining from taking a stand on TPP’s main competitor, the Regional Comprehensive Economic Partnership (RCEP), which is about to be created by ASEAN countries China, India, Japan, South Korea, Australia and New Zealand. It was never a question of Russia joining any one of these two, since it would have automatically made Russia a marginal player in shaping a new economic order in the APR. Russia has addressed this shortcoming. The ASEAN-Russia Summit declaration mentions the need to explore ways for Russia to join RCEP. By doing so, Moscow has made it clear whose side it will take when it comes to shaping the economic order for the APR, so it can become part of this process.

The biggest breakthrough and strategically important initiative spearheaded by Russia at the ASEAN Summit was the agreement to explore ways to coordinate the two emerging mega-regional communities: the Greater Eurasia that is expected to result from closer cooperation between the EAEU and the SREB project, with the institutional backing of the Shanghai Cooperation Organization; and Asia’s RCEP. Back in 2015 in his address to the Federal Assembly Vladimir Putin advanced the idea of creating an “economic partnership” that would encompass the EAEU, the SCO and ASEAN, focusing on “protecting investments, streamlining procedures for the cross-border movement of goods, joint development of technical standards for next-generation technology goods, and the mutual provision of access to markets for both services and capital.” Moreover, at the news conference following the ASEAN-Russia Summit, the Russian President went even further by adding the missing link and saying that “coordinating the Eurasian Economic Union, the ASEAN community, the Shanghai Cooperation Organization and the Silk Road Economic Belt” had great prospects. He went on to say that EAEU–SCO-ASEAN cooperation is complementary with SREB and would not be viewed by Beijing as an attempt to bypass China. Taking into account that China is an SCO member, this would be virtually impossible. In any case, the project to align four integration structures – the EAEU, SCO, SREB and ASEAN – has become a reality.

First, this initiative shows Russia’s intention to expand the Greater Eurasian community it is about to create with its EAEU partners, as well as China, India and Iran, by reaching out to ASEAN countries, and thereby creating a major Euro-Asian political and economic arc, one which spans from Belarus all the way to the border with Australia. The mega community will no doubt have every chance of becoming the backbone of the world order in the 21st century. Second, implementing this initiative will mean that there will be an important overlap between Greater Eurasia and RCEP. This would mean that not only will they coordinate their initiatives, an immense achievement in its own right, but also the emergence of an even larger mega-regional community which will cover a major part of the Eurasian space and most Asian countries. Not only would it be able to challenge the US-led communities in terms of its role in the global economy, trade and investment, but also could even overshadow them.