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The second "Asian turn" of Russia

The second "Asian turn" of Russia

Chris Miller

A graduate student at Yale University, a researcher at the Institute for Foreign Policy Studies

Chris Miller is a Yale graduate student at the Institute for Foreign Policy Studies. He is currently completing work on the book "Collapse: The Struggle to Save the Soviet Economy":

“Many analysts predicted that, due to Western sanctions imposed by the Ukrainian crisis, Russia was reorienting its economy from the West, with which it profitably traded its energy resources in exchange for investment and consumer goods, to the East, primarily towards China.

Economic ties between Russia and China are expanding, and there is evidence of this. Direct Chinese investment in Russia more than doubled in 2014, reaching $ 2 billion, according to data from the PRC Ministry of Commerce. Leading Russian banks, including VTB and VEB, have received loans from Chinese financial institutions, according to Gordon Orr of the American consulting firm McKinsey & Company. 8 also brought a number of significant Chinese investments in Russian industrial and infrastructure projects.

However, there is reason to doubt that the two countries are starting a new era of closer economic relations. As Sergei Tsyplakov recently noted (representative of Sberbank of Russia in the PRC - Approx. Per.), trade relations between the two countries "stand on the same foot" - oil and gas. This explains why, despite the notable deals mentioned above, the dollar value in Russian-Chinese trade has plummeted in recent months. Since oil and gas make up the bulk of Russian exports to China, trade volumes are highly sensitive to energy prices. And since oil prices have dropped by 2014% compared to 50, the dollar (and yuan) value of Russian exports to China has also decreased.

So how do analysts see Russia's economic relationship with China? This is not the first “pivot to Asia” for Moscow. In the 1980s, Soviet leader Mikhail Gorbachev sought to improve political and economic ties with Asian countries, including China, South Korea, and Japan. For several years in the late 1980s, the U-turn seemed to be making great strides, but Gorbachev's policies failed and led to the country's economic collapse in the 1990s and 1991s. Understanding the Kremlin's "Asian Pivot" in the 1980s sheds light on the scope of today's politics and on the serious challenges they face.

In the 1980s, many Soviet analysts believed that the West was in decline and Asia was on the rise. The United States was struggling to recover from 1970s "stagflation," and the manufacturing industries that boosted growth were under competitive pressure from more efficient Asian firms.

Meanwhile, Asian countries have shown impressive economic performance throughout the 1980s. Japan, which has become the second largest economy in the world, has proven that it is not only a center of cheap manufacturing, but also mastered advanced technologies. The famous book by Ezra Vogel "Japan as number one”Notes the attributes that made Japan successful in the author's opinion. Vogel's findings have been studied not only in the United States but also in the Soviet Union. Looking increasingly towards the Asian economies during the 1980s, analysts noticed that Japan is not alone. The Asian Tigers - South Korea, Taiwan, Singapore and Hong Kong - have also shown impressive growth rates, starting with the textile industry and slowly moving upward in value towards more sophisticated, higher value added products. At the same time, after the death of Mao Zedong, Chinese leader Deng Xiaoping built a capitalist economy closely linked to world markets.

After coming to power in 1985, Mikhail Gorbachev was impressed by the surge in economic activity in Asia and made revitalizing economic ties with Asian countries a priority. Many influential Soviet institutions paid more and more attention to Asia in the late 1980s. The Institute for World Economy and International Relations, one of the most influential Soviet research institutes, established the "Department for the Study of the Pacific Region" in 1985 to study it more fully. The institute also became the base for the USSR National Committee for Asia-Pacific Cooperation, headed by Yevgeny Primakov, which promoted commercial ties between the USSR and the growing Asian economies. The USSR Foreign Ministry followed its own institutional changes - the creation of a department covering the countries of the Pacific Ocean and Southeast Asia, which united Japan with the rapidly growing countries of Southeast Asia.

Realizing that many others, both in the Soviet Union and abroad, did not see the USSR as a real Asian player, Gorbachev consistently asserted Moscow's role in East Asia. In 1986, in the early days of perestroika, he gave a speech in Vladivostok - territory that Russia acquired from the Ch'ing Empire as a result of a combination of diplomacy and coercion - to reaffirm the Soviet Union's position in Asia and to outline a policy that would help to quickly connect the USSR to the growing Asian economies.

Gorbachev began his speech in Vladivostok by emphasizing the priority of the economic development of Siberia and the Far East and calling for an increase in exports - the economic engine that “started” development in other countries of East Asia. But the expansion of trade was only possible if the Soviet Union played an active role in the Asia-Pacific region. Gorbachev argued that Soviet citizens needed to take Asia more seriously. The reasons for this were geography and economics. "Many large states of the world, including the USA, India, China, Japan, Vietnam, Mexico and Indonesia"Are in the Pacific Ocean. "Here are the states that can be considered average, but rather large by European standards - Canada, the Philippines, Australia and New Zealand". The scale alone meant that the Soviet Union had to focus on Asia, and Gorbachev insisted: “This colossal human and socio-political array requires close attention, study and respect».

Moreover, Gorbachev argued that Asia was undergoing a new wave of dynamism, perhaps even replacing the Atlantic as a center of economic and political activity. Asia "woke to a new life in the XX century”And is now catching up with Europe. Gorbachev referred to “A whirlwind of changes - social, scientific and technological ... Renaissance of world history". As a result, the USSR needed closer economic ties. "Laws of growing interdependence", - explained Gorbachev, -"And the need for economic integration lead to the search for ways leading to agreement and the creation of open ties between states».

Much of this rhetoric reflects the challenges of modern Russia in establishing closer ties with China. The logical grounds are also similar: then, as now, closer ties with the Chinese economy were not only seen as economic opportunities, but were also perceived as a way to strengthen the Kremlin's geopolitical positions.

Nevertheless, the "Asian U-turn" of the Soviet Union failed, which is perfectly illustrated by the last book by Sergei Radchenko. The Kremlin has succeeded in improving relations with South Korea and China, but relations with other Asian countries, notably Japan, have remained strained over a dispute over the Kuril Islands. The collapse of the Soviet economy meant that few Asian companies were interested in investing in the country. At the same time, the Russian elite remained firmly oriented towards Europe, with only a few of the country's leaders studying Asian languages ​​or studying in Asian countries.

Russia’s current Asian reversal faces many of the same obstacles. If the volume of the Russian economy shrinks by about 5% next year, as many analysts believe, it is likely to be less attractive to Asian investors and exporters. Similarly, while diplomatic relations with China are increasing, Russia's positions in Asia remain suspended due to the ongoing territorial dispute with Japan, Asia’s second largest economy and countries with growing geopolitical ambitions. Perhaps the most surprising thing is that the interest in Asia declared by the Russian authorities was not accompanied by a serious attempt to build relationships, maintaining, for example, a deeper acquaintance with the culture of Asian countries. Until the Russian elite begins to show bоmore interest in Asian states, analysts will be right in their skepticism, arguing whether the current turn of Moscow to Asia will be more successful than the previous one.

Translation: Ilya Sinenko, graduate student of the Department of International Relations, School of Regional and International Studies, FEFU

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