I’ve been predicting that Russia would not send its army into eastern Ukraine, but stand back and let the country dissolve into chaos. The crisis erupted because the country is dead flat broke, after nearly $200 billion in aid over the past twenty years, most of it stolen. All the huffing and puffing about a new Hitler seizing a new Sudetenland in preparation for a Drang nach Westen is beside the point. The center ring of this bathetic circus has shifted to Beijing, where Vladimir Putin is negotiating the terms of a new Sino-Russian deal. This isn’t a fusion of the two countries by any means, but rather a cautious, self-interested alignment of interests. The Indian journalist M.K. Bhadrakumar, a former ambassador to Turkey and several Central Asian Republics, has a useful assessment on his blog today. Bhadrakumar is a sympathetic and canny observer of Russian policy.
The highlight of the two-day state visit by Russian President Vladimir Putin to China on Tuesday is probably going to be the signing of the long-awaited 30-year mega gas deal. The Russian media have been speculating such a strong possibility. The Chinese official remarks, however, remain cautiously optimistic and flag that the “main difference”, namely, over the price of gas, “still lingers.” To be sure, it is a political call now for the Kremlin.
Russia took a tough stance in the recent years insisting that the price of gas should be linked to the price of oil, which is the formula it maintains in dealings with Europe. With the passage of time, China’s negotiating stance (which rejected such a linkage), has strengthened.
Time worked in China’s favor. Beijing has been in no tearing hurry to conclude the deal while it kept lining up LNG supplies from other sources — Qatar and Australia — and kept up the momentum of overseas upstream investments, including in Canada, as well as boosting further supplies from Turkmenistan and other Central Asian countries.
China is also estimated to have the world’s largest source of shale gas. On the contrary, Russia’s negotiating hand has weakened. A ‘Look East’ strategy for energy exports is increasingly a matter of compulsion rather than of choice, as the United States pushes for Europe’s diversification of energy imports to reduce high dependence on Russia.