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Foreign Policy

Putin and Xi Signal to the US: The Enemy of My Enemy is My Friend

Jun 21, 2019

[CropImg]Xi Jinping Putin.jpg

As President Donald Trump headed to Normandy to celebrate the 75th anniversary of D-Day,  President Vladimir Putin welcomed his Chinese counterpart Xi Jinping in Moscow where they declared a new era of Sino-Russian friendship and cooperation on shared national interests. Within the Beijing-Moscow axis, China is Washington’s greatest economic competitor while Russia wields significant political influence against US interests in Europe, the Middle East, and more recently alongside China, in Venezuela. In a news conference during his three-day visit to Russia, President Xi commented on the US-China trade war stating that, “protectionism and unilateral approaches are on the rise, and a policy of force and hegemonism is increasingly taking hold." It seems that previous Western sanctions targeting Russia and Trump-era tariffs directed at China bring the once conflicting neighbors closer together. President Xi even labeled President Putin his best friend, an action which some analysts labeled an intentional ‘middle finger’ directed at Washington. While a China-Russia strategic alliance, or flexible marriage of convenience, plays an important economic role, it also illustrates a degree of unity among the illiberal Eastern powers while the US bickers with Mexico on its southern border and its allies in Europe about trade and security. In sum, political consensus in the West noticeably diverges as national interests in the East converge on positions involving the future of Eurasia.

Traditionally, China and Russia have utilized veto power within the United Nations Security Council to offset US political hegemony. However, as suggested by President Putin at the St. Petersburg Economic Forum, as new political and economic power centers emerge, the US dollar loses its ability to impose pressure because of the increasing role of regional currencies. Washington’s past habits of ‘weaponizing the US dollar’ against other economies are less active and will force international financial organizations to reconsider the dollar’s overall function. China and Russia further stepped away from the US dollar last week by agreeing to expand the use of both the yuan and ruble in new bilateral trade agreements.

China’s continual economic expansion in Europe and Asia through the Belt and Road Initiative (BRI), and Russia’s increased role as an opponent to US foreign policy, both further a case for a more integrated Eurasia. Europe, the Middle East, and North Africa all need massive investment to develop their agricultural industries, energy sources, infrastructure, irrigation systems, and health facilities. A more active, but responsible, China and Russia might fulfill such financial needs. However, a more integrated Eurasia also requires increased accountability and prudence. China should engage with European markets to foster responsible and long-term investment without intentionally creating debt traps, dumping excess capital, or demanding political allegiance from debtors. The United States should also immediately halt any further political destabilization of the Middle East, to avoid new waves of migration into Europe, which increase the proliferation of populist political parties. An integrated Eurasia would likely encourage the West to lift sanctions against Russia, subsequently boosting sales between Moscow and the EU. However, Russia must also develop a positive role in Europe alongside China to rebrand itself as an economic and political ally instead of remaining a political destabilizer for Washington to blame. An integrated Eurasian future will require significant compromise, but on a practical level, what else does Xi Jingling’s visit to Russia indicate?

Well first, trade with China remains Russia’s economic lifeline as sanctions remain a burden. The Kremlin announced that trade between China and Russia increased 25 percent last year to reach $108 billion. Increases in oil prices pushed trade beyond the $100 billion milestone. Also, Xi attended the St. Petersburg International Economic Forum with a 1,000-strong delegation to explore investment opportunities. The US is officially boycotting the event over the recent detention of Michael Calvey, an American banker, in Moscow.

Russia’s sharp turn to China began in 2014 when Western sanctions hoped to punish Russia for its annexation of Crimea and military involvement in Ukraine. Since 2014, 70 percent of Russian exports to China are energy related, and China exports machinery vital to oil production to replace West-denied equipment. Additionally, China and Russia both share an interest in developing the Arctic, which, due to global warming, both powers identify as a critical location for oil and gas improvements and sea route developments. As the Arctic melts, the area will evolve into a vital path for goods in and out of Asia through Russia with China as the primary market.

Major agreements between the two countries also included a $1.7 billion deal between Rosatom and China National Nuclear Power (CNNP) to build additional units at the Xudapu nuclear plant in northeastern China, and agreements between the Russian Direct Investment Fund (RDIF), Alibaba, and Russia’s Mail.Ru Group to invest $383 million in joint e-commerce ventures.

China’s activity in the Russian economy grew by 19 percent in exports last year, while Russia’s share of China’s exports stagnated at approximately 2 to 3 percent. While Russia is the apparent junior partner in the relationship due to its needs for new markets, financing, and technology, improved China-Russia relations will likely result in a more coherent future for Eurasia as a whole. Russia is also a key source of energy and natural resource necessary for the Chinese economy. Xi’s visit to Russia led to the signing of a $400 billion natural gas deal for a 2,000-mile pipeline to stretch from eastern Siberia to northeast China and a second pipeline from western Siberia to Xinjiang province. The United States should accept these pragmatic relationships and identify its potential opportunities to develop Eurasia further.  

Greater economic cooperation between China and Russia follows years of agreement on foreign policy issues. For example, China and Russia hold roughly the same views on the Venezuela crisis, North Korea’s nuclear program, Kosovo’s international status, the legitimacy of President Bashar al-Assad’s regime in Syria, and the Iran nuclear deal. Russia sells its S-400 antiaircraft missile systems and SU-35 jet fighters to China for deployment to the disputed South China Sea. Both countries also oppose the US decision to withdraw from the Intermediate Range Nuclear Forces (INF) Treaty. Now, Russia experiences Western sanctions as China combats Washington’s tariffs. Alexander Gabuev, a fellow at the Carnegie Moscow Center, told NPR’s Lucian Kim that through sanctions “it is the West and the US that drive Russia into China’s arms.”

President Xi’s trip ended Friday after the two countries signed a total of 30 government and commercial agreements, with plans to link the BRI and the Moscow-led Eurasian Economic Union (EAEU), which includes Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. Russia’s largest mobile operator, MTS, also agreed to allow Huawei to develop Russia’s 5G network. China and Russia are also entertaining ideas for new methods of inter-bank transfers and joint credit agencies supplemented by shared financial and economic infrastructure to function independently of Western-dominated financial institutions. Talks of future alternatives to both the World Bank and International Monetary Fund, including the New Development Bank which aims to finance projects in the BRICS (Brazil, Russia, India, China, and South Africa) countries. It seems that while the US disagrees with its partners in the West, the Eastern powers have never been closer. 

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