Moscow in between

PUBLISHED : Wednesday, 06 October, 2010, 12:00am
UPDATED : Wednesday, 06 October, 2010, 12:00am

The long and convoluted story of a pipeline linking eastern Siberia with northern China finally ended last week with the completion of the 1,000-kilometre-long project, which will carry crude oil from Russia, the world's largest producer, to China, the world's second-largest consumer behind the United States.

The economic and political ramifications of the pipeline and other planned projects are huge. Russia is now offering to meet all China's natural gas needs, possibly beginning in 2015.

Marking the completion of the project, China and Russia signed a joint statement in which they agreed to 'comprehensively deepen their strategic partnership of co-ordination'. The pipeline is a win-win for both countries. For China, it provides a channel for oil to flow into the country without traversing sea lanes controlled by the US while Russia is able to diversify its markets for energy.

All this is taking place against the background of months of uncertainty as Russia made clear that it was looking to the US and Europe - not China - to help it get away from a dependence on exports of energy and other raw materials.

In the wake of the Barack Obama administration's widely publicised 'reset' of relations with Russia, Moscow also quietly decided on a new orientation of its foreign policy by focusing on the West. President Dmitry Medvedev spoke of it last July when he addressed the country's diplomatic representatives assembled in Moscow. Who, he asked rhetorically, are Russia's main international partners as the country forges 'special modernisation alliances'? The answer: 'First of all, it is countries such as Germany, France, Italy, the European Union in general, and the United States.'

Russia, it was clear, was looking to the West for capital, markets and technology. China was being relegated to a lesser position.

Not surprisingly, in an interview with the People's Daily to mark his visit to China for the completion of the pipeline, Medvedev was asked about his speech. 'Some analysts,' a reporter said, 'drew conclusions regarding a shift in Russia's foreign policy focus. Do you agree with this, and what exactly will occasion changes in your country's foreign policy?'

Medvedev answered diplomatically that 'it is particularly important for us to use effectively foreign sources of new technologies and promote Russian hi-tech products in foreign markets. This requires close collaboration with our partners in both the West and the East.'

China is eager to take part in Russia's modernisation plan and does not want to be edged aside by the US and the European Union.

In Beijing, President Hu Jintao told Medvedev that Chinese experts and organisations were willing to take part in the creation of Skolkovo, a hi-tech research hub outside Moscow that has been dubbed Russia's Silicon Valley. The research centre will focus on energy, information technology, communication, biomedical research and nuclear technology.

The Russian leader said he welcomed such Chinese involvement and added that investments in hi-tech industries, including aircraft production, would also be welcome.

Clearly, while Medvedev's original intention was to cultivate political and economic relations with the West, Russia will take capital and technology from China if they are not forthcoming from Europe and the US.

While Russia straddles Europe and Asia, its political leadership has traditionally had a Eurocentric view. However, China may well see an opening. Years ago, Medvedev's predecessor Vladimir Putin complained to Hu that China was importing primarily raw materials rather than machinery from Russia. At the time, Hu indicated that Russian products must first be competitive.

This time, however, in his talks with Medvedev, Hu called not only for deepened energy co-operation but also urged expanded investment co-operation, including improving trade mix.

So while China knows that Russia is looking westward, it is giving Moscow reason to look more closely to its east.

Frank Ching is a Hong Kong-based writer and commentator