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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, a graduate student at Yale University, an employee of the Institute for the Study of Foreign Policy. Currently completing the work on the book "Collapse: the struggle to save the Soviet economy" ("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 confirmation. Direct Chinese investment in Russia in 2014 increased by more than 2 times, reaching 8 billion dollars, according to the Ministry of Commerce of China. Leading Russian banks, including VTB and VEB, according to Gordon Orr of the American consulting firm McKinsey & Company, received loans from Chinese financial institutions. 2014 also brought a number of significant Chinese investments in Russian industrial and infrastructure projects.

Nevertheless, there is reason to doubt that the two countries are starting a new era of closer economic relations. As recently noted by Sergei Tsyplakov (representative of the Savings Bank of Russia in the PRC - Approx. Per.), Trade relations between the two countries "stand on one leg" - oil and gas. This explains why, despite the notable transactions 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 very sensitive to energy prices. And since oil prices have fallen by 2014% compared to 50, the dollar (and yuan) value of Russian exports to China has also declined.

So, what kind of analysts see Russia's economic relations with China? This is not the first "turn to Asia" for Moscow. In the 1980-s, Soviet leader Mikhail Gorbachev sought to improve political and economic ties with Asian countries, including China, South Korea and Japan. For several years at the end of the 1980, it seemed that the "turn" was making great strides, but Gorbachev's policy failed and led to the economic collapse of the country in 1990-1991. Understanding of the "Asian turn" of the Kremlin in the 1980-X sheds light on the possibilities of today's politics and on the serious problems that it faces.

In 1980, many Soviet analysts believed that the West was in decline, and Asia was on the rise. The United States tried to recover from 1970's “stagflation”, and manufacturing enterprises that spur economic growth were subject to the competitive pressure of more efficient Asian firms.

Meanwhile, Asian countries demonstrated impressive economic results during the 1980-ies. Japan, which became the second largest economy in the world, proved that it is not only a center of cheap production, but also mastered advanced technologies. The famous book by Ezra Vogel "Japan as number one»Notes the attributes that made, according to the author, Japan successful. Vogel's findings were studied not only in the United States, but also in the Soviet Union. Looking more and more toward the Asian economies during the 1980s, analysts have noticed that Japan is not alone. Asian tigers — South Korea, Taiwan, Singapore, and Hong Kong — also showed impressive growth rates, starting with the textile industry and slowly moving upward in value towards producing more complex products with higher added value. At the same time, after the death of Mao Zedong, the Chinese leader Deng Xiaoping built a capitalist economy, which is closely connected with world markets.

After coming to power in 1985, Mikhail Gorbachev was impressed by the surge in economic activity in Asia and made economic ties with Asian countries a priority. Many influential Soviet institutions paid more attention to Asia at the end of the 1980-ies. The Institute of World Economy and International Relations, one of the most influential Soviet research institutes, established the "Department of the Pacific Studies" in 1985 to more fully explore it. The Institute also became the basis for the USSR National Committee for Asia-Pacific Cooperation, headed by Yevgeny Primakov, who promoted commercial links between the USSR and the growing Asian economies. The USSR Ministry of Foreign Affairs followed its institutional changes-the creation of a department covering the countries of the Pacific and South-East 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 real Asian player in the USSR, Gorbachev consistently asserted Moscow's role in East Asia. In 1986, the first days of perestroika, he delivered a speech in Vladivostok - the territory that Russia acquired from the Qing Empire as a result of a combination of diplomacy and coercion - to confirm the position of the Soviet Union in Asia and to state a policy that would help to quickly connect the USSR with the fast Growing Asian economies.

Gorbachev began his Vladivostok speech, emphasizing the priority of the economic development of Siberia and the Far East and calling for an increase in exports - an economic engine that "started" development in other East Asian countries. But the expansion of trade was possible only if the Soviet Union plays an active role in the Asia-Pacific region. Gorbachev argued that Soviet citizens need 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 on 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". 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 experiencing a new wave of dynamism, perhaps even replacing the Atlantic as the center of economic and political activity. Asia "woke to a new life in the XX century"And now is catching up with Europe. Gorbachev referred to the "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", Gorbachev explained,"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 turn" of the Soviet Union failed, which is perfectly illustrated by the last book of Sergei Radchenko. The Kremlin succeeded in improving relations with South Korea and China, but relations with other Asian countries, in particular Japan, remained tense because of the dispute over the ownership of 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 focused on Europe, and only a few of the country's leaders studied Asian languages ​​or studied 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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