Selling arms and oil and unnerving the West will be on the agenda for Putin's China visit.
Russian President Vladimir
Putin will be on his way to China on Friday, the Kremlin has announced, in what has become an almost
routine visit in recent years.
The two have enjoyed a close relationship since Chinese President
Xi Jinping made Putin the first foreign leader he visited after becoming president in 2013 and since then regular
annual meetings between the two have usually also come with announcements of
significant new economic and political joint deals. As Putin is due to meet his
Chinese counterpart this week, here are the most likely talking points and
possible announcements.
Putin Is Looking to Sell Arms
Although Russia has long
occupied the second spot globally , behind the U.S. for
the most military equipment sold, a boom in France’s arms dealing has sought to
displace Russian supplies in Asia. Meanwhile, China has attempted to cut down
on imports in a bid to produce its own equipment, though Putin will likely try
to convince Chinese officials they ought to be buying more Russian goods.
“Since Western sanctions and a
drop in oil prices of 2014, arms sales are increasingly important for the
Russian budget,” Agnia Grigas, Senior Fellow at the Atlantic Council says.
“Following on the arms deals between the two countries of 2015, it is likely
that more will follow during this visit.”
On Monday Russia’s Deputy
Prime Minister Dmitry Rogozin announced that an apparent agreement between Moscow and
Beijing for the supply of Russian rocket RD-180 rocket engines would be
awaiting the Russian President’s signature once he lands in China.
Lauren Goodrich, Russia
analyst for private security firm Stratfor believes the sale could see Russia
find a buyer for a product it may soon have a surplus of, while also convince
China to buy more.
“It will be an important
development because that particular rocket engine is something that Russia
sells to the U.S. and within the sanctions, the U.S. has to end that contract
within two years,” Goodrich says. “It also opens the door for Russia to sell
arms to China and that door has been closing recently. China used to be a big
market for Russia but it has been producing its own equipment. Moscow will want
some of that business back.”
Russia and China Can Make
Japan Nervous
Japan’s Prime Minister Shinzo
Abe has been among the world leaders meeting with Putin most frequently, as his
country sees trade with Russia as lucrative and also has an ongoing territorial dispute with Moscow , which it would like to
resolve. Although a U.S. ally, Japan has enjoyed a more amicable relationship
with Russia in recent years and they follow meetings with China closely and
suspiciously.
“Japan particularly does not
want to be left out of business with Russia,” Goodrich says. “Putin knows he
can play the east Asian powers against one another. There’s always been a big
concern in Japan that when Russia and China meet, they make joint plans about
the east China Sea, disputed by Japan.”
Earlier this month both
Chinese and Russian navies sailed vessels into the disputed waters and in
Japan, this apparent coincidence seemed too much like coordinated action.
“The fact that the two
happened to be in the same place at the same time, seemed to confirm the
suspicions of some in Tokyo that Russia and China were teaming up to signal
that both are there and they both talk to each other. The chances of a formal
alliance between the two is small. However it always useful for each country to
make their presence known and to make Japan unsure about whether or not they
are planning something,” she added.
Putin Is Out For Investment in
Energy
Russia and China have one
natural gas pipeline under construction, known as the Power of Siberia pipeline
and another prospective pipeline known as the Altai pipeline. Though Russia’s
oil giant Gazprom and China’s state-owned oil company CNPC have hit a snag that
Putin and Xi will likely need to resolve.
“They will discuss Russian gas
export plans and the high level visit by Putin will probably be used to make a
breakthrough on the two stalling pipeline projects,” Grigas says. “Russia has
long prioritized the 1,700 mile-long Altai pipeline, from its already-developed
Western Siberian gas fields because of the shorter relative length of the
pipeline and cheaper construction costs. ”
The West Siberia pipeline was
postponed by two years in 2015 and Altai appears to have stalled indefinitely
due to price wrangling. And that’s not even the most urgent oil deal Putin
needs to make.
“There is also the
privatization of Russian oil-giant Rosneft,” Goodrich says. “Russia is offering
19.7 percent, which would give someone two seats on the company’s board. This
deal needs to get done by the end of the year for Russia, which is a very tight
deadline. If this deal is not done Russia will not be on budget.”
Goodrich adds: “China is
reluctant because it already has many investments in Russia, it has many eggs
in the Russia basket, so to speak and it does not have all the money it used to
for investing. Because of that Rosneft has been talking about finding other
partners such as India. Over the weekend Italy was also mentioned and it
remains to be seen if Italy can afford it, but it can probably at least afford
part of it.
“It might be that Russia needs
to sell the shares piecemeal, but it will be Putin’s job to convince China to
invest as much as possible,” Goodrich says.
China Wants Transport Link
With the West Via Russia
Russia’s Transport Ministry
announced an ambitious
plan to build a hyperloop train between its eastern
Zarubino port and China last week. The project is valued at nearly $460 million
and Russia needs Chinese investment. But China has railway plans of its own in
Russia.
“The hyperloop train plan is
highly advanced and speculative at this point. Hyperloop technology is highly
modern and it will take time for this project to materialize,” Goodrich says.
“However, China has been interested for a while in building a railway line
between the Russian city of Kazan and the capital, Moscow, which China views as
a necessity for eventually linking themselves with the West.”
Traffic on Trans-Siberian
routes has been rising of late and this is due in no
small part to China. Both countries could benefit from a modernized, westward
route, so it is likely Putin will be discussing the Kazan-Moscow train line in
China.
Putin Needs to Show He Has
Friends
Since the Ukraine crisis the
Russian government has tried to unnerve Western states, by claiming it could
replace trade with Europe and the U.S. by tapping into South America and East
Asia. While the success of these endeavors has been debatable, Russian officials
frequently like to point to Russia’s continued relevance on the international
stage as evidence that the policy of isolation has failed.
One of the most significant
partners Russia can boast throughout the last two years, however, is China and
any visit Putin makes to China will likely prompt fears in the West that Moscow
and Beijing are mulling over deeper cooperation.
“Russia would like to present
Sino-Russian relations as balancing or a bulwark against the West but this
notion is more posturing than reality,” Agnia Grigas, senior fellow at the
Atlantic Council says. “It is Russia that needs this relationship more, both
for pragmatic and political reasons.”
Goodrich agrees noting that
there is a difference between what China conveys and what Russia will try to
convey with such meetings.
“Anyone who watches China does
not believe a Sino-Russia alliance deal is on the cards. There is simply too
much mistrust there and they have different interests internationally. The U.S.
sees that,” she says.
“What Putin tries to convey,
especially in the face of sanctions, is that he is not alone. This is a big
signal to Europe that Russia is looking for eastern partners and if it appears
that Russia is moving close to China, it adds to the already shaky resolve on sanctions in Europe,” Goodrich adds.
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