World Geostrategic Insights conversation with authors of “Russia Pivot to Asia” on the scope and implications of Russia’s geeconomic shift to Asia.
“Russia Pivot to Asia” is a data-driven news and statistics portal written by academics and experienced regional businessmen from across Eurasia.
Q1 – For three centuries, Russia has been grappling with the question of its political, cultural and strategic identity: whether it is a European power destined above all to have close relations with European countries, as Westernists argue, or a specific and distinct civilization, which should limit international ties, as Slavophiles advocate; or whether it is a country with a Eurasian destiny, which inevitably leads it to have strong ties with Asian countries. Now the question seems to have been settled: hit by the severe sanctions imposed by European states, Russia had no choice but to head toward Asia. However, Russia’s orientation toward Asia had begun even before the Europe-Russia tensions resulting from the Ukrainian crisis that began in 2014, which only accelerated and consolidated the eastward shift. In fact, Russia’s pivot to Asia is currently well established and multifaceted, as described in the publication “Russia’s Pivot to Asia 2024.” What is the extent of this phenomenon and its implications? Is Russia’s tilt toward Asia a deliberate choice or rather a matter of necessity? Has Asia become Russia’s vital geopolitical perspective, its present and its future, while relations with European countries, almost all of which are now included in Russia’s list of unfriendly countries, are a past that is unlikely to return?
A1 – The question of whether Russia is oriented toward the West, toward itself or toward Asia has been asked for centuries, especially outside Russia. Except for the long period of the 20th century, when pragmatism took a back seat to experimental Party ideology, Russia was open to trade, exchange of ideas, and relations with both the East and the West. The easiest and most readily accessible regions of contact were indeed the West, since the Russian Far East was much less developed and was not an area of political or financial decision-making. This was evident throughout the 1980s until 2014, when the West began to implement an increasingly strong “curtain of sanctions” that blocked Russia from normal trade, financial and diplomatic relations.
From its domestic point of view, Russia regards the double standard of behaviour as an unacceptable condition. Therefore, either an equal and common basis for coexistence is found, for example in the UN Charter, without evangelising anyone, and a rebalancing based on a more equal representation among the nations that make up the majority of the world is carried out, or the rift between the groups of nations will become deeper and more fractured. It is no wonder that the global East and South have flexible frameworks to protect the sovereign national interests of all, including Russia.
Russia has long dreamed of a Eurasian trade space, with Russian Ministers during Tsarist times dreaming of this stretching from Vladivostok to Lisbon. The concept isn’t new, however the execution of it, which has required numerous changes to the Russian economy without upsetting it, is recent. The writing has been on the wall for a number of years as well, President Putin has long been frustrated with the ‘laziness’ of Russian businesses, many of which have been content to simply import Western products without bothering to manufacture them. That has now changed; arguably the most important aspect of Russia’s Pivot to Asia has been the insistence on Russian self-reliance in its manufacturing sector. That is now a State decree.
It will take time for Russian capital and investors to cover all the bases, but the fact that it has begun so well is a very positive start. Western sanctions were the final dynamic that has enabled Russia to undertake this shift. It is very much an economic and strategic necessity – one of Russia’s fundamental weaknesses was an over-reliance on the West. That has now been dealt with in a quite spectacular manner.
Over time, the West will relax its political position towards Russia albeit possibly not for 20 years. Doors and ports will reopen. But by then Europe will have to compete with newly dominant Russia domestic and Asian competitors in the Russian market. With a higher manufacturing cost base, it will be hard for European businesses to compete.
Q2 – According to the Russia Pivot to Asia 2024 Guide, Asia encompasses all of the Caucasus and the eastern part of the Caspian Sea, including the Middle East, and then Central Asia, Southeast Asia, India, all of ASEAN, all the way to the Far East and China. In this framework, undoubtedly the Central Asian countries occupy a special place, considering also the strong historical, cultural and linguistic ties with Russia. In fact, in Russia’s foreign policy concept for 2023, much attention is paid to the formation of a Greater Eurasia Partnership, combining the potential of all Eurasian states and Eurasia’s most important regional structures, such as the Eurasian Economic Union (EEU), the Shanghai Cooperation Organization (SCO), and ASEAN, interfaced with the EEU’s development plans and China’s Belt & Road Initiative. What are the prospects and challenges for the development of an integrated Greater Eurasia area?
A2 – It will not be easy to develop and integrate a ‘Greater Eurasia’. But plans are in place to do exactly this. Just last week, Bakytzhan Sagintayev, the Chairman of the Eurasian Economic Commission spoke about cooperation between the Eurasian Economic Union and the Shanghai Cooperation Organisation. This implies the introduction in time of trade agreements between members of both. Russia’s new Foreign Policy is also quite specific, it wants to develop economic and trade ties with South Asia’s ASEAN trade bloc, Latin America’s Mercosur, the African blocs and members of the Belt & Road Initiative. Then there is the BRICS.
So there is plenty to discuss and plenty of opportunities. I think it inevitable that some type of flexible trade agreements will emerge involving participants in all of these trade groups. However, this will be a new type of agreement, not the rigid trade deals that have to be set in stone and upheld by the WTO as a watchdog. That is all Western-thinking.
Future agreements will be rather more flexible, with tariffs adjusted on an ‘as-need’ basis. That differs from the Western concept of FTA in that structuring agreements with more flexibility is easier to negotiate, but harder to manage. Yet these types of deals will become more prevalent. The agreements between the members of the CIS for example are a type of blueprint. They are bilateral, within a multilateral framework. That will be the way ahead. Discussions on structuring this are already under process.
Regarding the prospects, is a rapidly developing work in progress, and we believe that within this decade the practical results, despite the disparate political systems of the many nations pragmatically joining together and accounting for well over 50 percent of global GDP, will be a stellar example of what free trade and equal and unarmed economic interactions can accomplish. That is, if the diplomacy of forced regime change from the outside does not return, but who knows, hegemony and control are dishes that once tasted are hard to relinquish.
Q3 – Russia is engaged in an “unlimited partnership” with China. The bilateral Russian-Chinese partnership has become a structuring factor not only for Russia’s Asian diplomacy, but also for its global foreign policy. Strategically, within the United Nations, China and Russia are on similar lines, as well as in other multilateral organisations. In the economic sphere, relations have grown steadily in many areas. Even in the military sphere, Russia has developed a structuring relationship with China. However, some analysts note that this strategic relationship will inevitably be dominated by China, with an economy (and population) about ten times larger than Russia’s, as well as significantly higher economic growth rates and technological potential. Moreover, Russia’s current impossibility to build partnerships even with the West will increase the imbalance in favour of China. What is your opinion?
A3 – Presidents Putin and Xi are well aligned and appear to get along well on a personal as well as a professional level. There are also no ideological issues, as there were previously between Mao and Stalin. Both will also continue to be politically influential in this relationship for at least the next 20 years. So, there is stability there. There is also practical reality. Everyone talks about Russian energy as the main driver, and it will remain so with China. Beijing has been smart to diversify its energy supplies, but losing Russia as a supplier would be immensely disruptive. Also, Russia possesses some of the world’s largest volumes of reserves across a huge scope of products – everything from diamonds and rare earths to water and metals. China can both assist with extracting some of these resources while at the same time needing them.
This shows the need for pragmatism. Both are nuclear powers, while China has pressures that are different to Russia’s as well. Beijing needs to keep 1.4 billion people happy. Russia is a major key to that – and Beijing knows it. There are enough differences between them and enough symbiotic materials to maintain a course that benefits both.
Yes, there is a clear imbalance as you mention, however, the relationship that has built up is not an all-or-nothing exercise. Russia enables the China dynamic through energy and essential resources. China, through interaction at the trade and production levels, has had a huge impact on improving the performance of Russian industries across the board. When many focus on the developed production infrastructure of China, few bother to examine the tremendous changes and efficiencies that have been and are continuing to be built within the Russian Federation, they have modernised and positively changed the face of manufacturing in Russia.
Q4 – Moving to a more strictly economic and commercial level, as described in the guide “Russia’s Pivot to Asia 2024,” China has benefited greatly from Russia’s move to Asia and current geopolitical turmoil. The market exit of many Western companies from Russia has created a significant gap, which Chinese investors have so far successfully filled. As an example, China’s share of Russia’s domestic automobile market, which was 5 percent in 2021, was 45 percent at the end of 2023. So, undoubtedly the ongoing geopolitical changes favour closer trade and investment ties between Russia and China, but could they also persist under different scenarios of more “relaxed” relations between the West and Russia, although not likely at the moment? In general, how do you see the prospects for Russian-Chinese economic cooperation and opportunities for Russian businesses?
A4 – There will be increasing cooperation between both sides for their mutual advantage. Some might not be so obvious. You mention automotive. In 2014, just before the Crimea issue, public buses in Russia were mostly European brands like Scania and Volvo. As European manufacturers began to withdraw from Russia, they were replaced by Chinese brands such as King Long and Ankai. Now these too are being replaced, but by Russian domestic brands like Volgabus. So there is a type of technology transfer going on. But what is in a Volgabus? Sure, some of the parts will be Russian, and some Chinese. It’s important to refer again to Russia’s need to localise critical components. So increasingly parts in all products, not just buses, will be Russian. But others will be Chinese, or in future years Indian or Indonesian or Turkish, even South American, or African.
The Russian bosses of its manufacturing industries together with Russian government guidance will work both towards Russia’s need for self-reliance and a commercial need to remain market competitive when it is easier or cheaper to import. That is a mix of a domestic Russian development strategy and market competition and will develop into a healthy norm.
It will be the same in China. Domestic brands may be Chinese but increasingly as Russian businesses work out what China needs and can adapt to that market, component parts in Chinese products will include Russian made parts. This will eventually result in Russia becoming an entrenched part of Asian supply chains. Certainly, we will see this develop over the coming two decades. The process has already begun.
Short and sweet, there is still a lot of room to expand, especially when one considers the broader benefits of cross-pollinating with the many nations comprising the warp and weft of the interlinked and interdependent regions known as the Global South. This is a world-scale game-changing shift, largely happening under the noses of the G7, and their allied interests, yet strangely are almost ignored in English language media and diplomacy.
The Russia’s Pivot To Asia website can be viewed at www.russiaspivottoasia.com. The site contains a 2024, 250 page, full colour guide on the subject that can be downloaded for free.
(The views expressed by the authors of “Russia’s Pivot to Asia” belong only to them and do not necessarily reflect the views of World Geostrategic Insights)
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