September 12, 2018
by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)
The Eastern Economic Forum in Vladivostok has become a crucial part of strategic integration between China, Russia and other countries in northeast Asia, a graduation assimilation set to transform the current world system
Xi Jinping and Vladimir Putin were involved in a joint cooking venture. Pancakes with caviar (blin, in Russian), chased down with a shot of vodka. It just happened at the Eastern Economic Forum in Vladivostok. Talk about a graphic (and edible) metaphor sealing the ever-evolving ‘Russia-China comprehensive strategic partnership’.
For a few years now the Vladivostok forum has been offering an unequaled roadmap tracking progress on Eurasia integration.
Last year, on the sidelines of the forum, Moscow and Seoul delivered a bombshell: a trilateral trade platform, crucially integrating Pyongyang, revolving around a connectivity corridor between the whole Korean peninsula and the Russian Far East.
Roundtable topics this year included integration of the Russian Far East into Eurasian logistic chains; once again the Russian link-up with the Koreas – aiming to build a Trans-Korean railway connected to the Trans-Siberian and a “Pipelineistan” branch-out into South Korea via China. Other topics were the Russia-Japan partnership in terms of Eurasian transit, centering on the link-up of the Trans-Siberian and Baikal-Amur Mainline (BAM) upgrades to a projected railway to the island of Sakhalin, and then all the way to the island of Hokkaido.
The future: Tokyo to London, seamlessly, by train.
Then there was integration between Russia and ASEAN – beyond current infrastructure, agricultural, and shipbuilding projects to energy, agro-industry sector and forestry, as outlined by Ivan Polyakov, chairman of the Russia-ASEAN Business Council.
Essentially this is all about the simultaneous build-up of a growing East-West and also North-South axis. Russia, China, Japan, the Koreas and Vietnam, slowly but surely, are on their way to solid geoeconomic integration.
Arguably the most fascinating discussion in Vladivostok was Crossroads on the Silk Road, featuring, among others, Sergey Gorkov, Russian deputy minister of economic development; Wang Yilin, chairman of China’s oil giant CNPC, and Zhou Xiaochun, vice-chairman of the board of directors of the essential Boao Forum.
Moscow’s drive is to link the New Silk Roads or Belt and Road Initiative (BRI) with the Eurasian Economic Union (EAEU). Yet the ultimate geoeconomic target is even more ambitious; a “Greater Eurasian partnership”, where BRI converges with the EAEU, the Shanghai Cooperation Organization (SCO) and ASEAN. At its core lies the Russia-China strategic partnership.
The roadmap ahead, of course, involves striking the right chords in a complex balance of political interests and management practices amid multiple East-West projects. Cultural symbiosis has to be part of the picture. The Russia-China partnership is increasingly inclined to reason in go (weiqi, the game) terms, a shared vision based on universal strategic principles.
Another key discussion in Vladivostok featured Fyodor Lukyanov, research director at the always essential Valdai Discussion Club, and Lanxin Xiang, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange. That centered on the geopolitics of Asian interaction, involving key BRICS members Russia, China and India, and how Russia might be able to capitalize on it while navigating the harrowing sanctions and trade war swamp.
All power from Siberia
It all comes back to the basics and the evolving Russia-China strategic partnership. Xi and Putin are implicated to the core. Xi defines the partnership as the best mechanism to “jointly neutralize the external risks and challenges”. For Putin, “our relations are crucial, not only for our countries, but for the world as well.” It’s the first time ever that a Chinese leader has joined the Vladivostok discussions.
China is progressively interconnecting with the Russian Far East. International transport corridors – Primorye 1 and Primorye 2 – will boost cargo transit between Vladivostok and northeast China. Gazprom is about to complete the Russian stretch of the massive Power of Siberia gas pipeline to China, in agreement with CNPC. Over 2,000 kilometers of pipes have been welded and laid from Yakutia to the Russian-Chinese border. Power of Siberia starts operating in December 2019.
According to the Russian Direct Investment Fund (RDIF), the partnership is evaluating 73 investment projects worth more than $100 billion. The overseer is the Russian-Chinese Business Advisory Committee, including more than 150 executives from leading Russian and Chinese companies. The CEO of RDIF, Kirill Dmitriev, is convinced “particularly promising transactions will be found in bilateral deals that capitalize on the Russia-China relationship.”
In Vladivostok, Putin and Xi once again agreed to keep increasing bilateral trade on yuan and rubles, bypassing the US dollar – building upon a mutual decision in June to increase the number of yuan-ruble contracts. In parallel, Economic Development Minister Maksim Oreshkin advised Russians to sell US dollars and buy rubles.
Moscow expects the ruble to appreciate to around 64 per US dollar next year. It’s currently trading at around 70 rubles against the dollar, dragged down by US sanctions and the dollar weaponization wreaking havoc in BRICS members Brazil, India and South Africa, as well as potential BRICS Plus states such as Turkey and Indonesia.
Putin and Xi once again reaffirmed they will continue to work in tandem on their inter-Korean roadmap based on “dual freeze” – North Korea suspends nuclear tests and ballistic missile launches while the US suspends military drills with Seoul.
But what really seems to be capturing the imagination of the Koreas is the Trans-Korean railway. Kim Chang-sik, head of railway development in Pyongyang said: “We will further develop this project on the basis of negotiations between Russia, North Korea and South Korea, so that the owners of this project will be the countries of the Korean peninsula.”
That connects to what South Korean President Moon Jae-in said only three months ago: “Once the Trans-Korean main line is built, it may be connected to the Trans-Siberian Railway. In this case, it would be possible to deliver goods from South Korea to Europe, which would be economically beneficial not only to South and North Korea, but to Russia as well.”
Understanding the matryoshka
Contrary to misinformed or manipulated Western hysteria, the current Vostok war games in the Russian Far East’s Trans-Baikal, including 3,000 Chinese troops, are just a section of the much deeper, complex Russia-China strategic partnership. This is all about a matryoshka: the war game is a doll inside the geoeconomic game.
In ‘China and Russia: The New Rapprochement’, Alexander Lukin, from the National Research University Higher School of Economics in Moscow, lays down the roadmap in detail; the evolving, Eurasia-wide economic partnership is part of a much larger, comprehensive concept of “Greater Eurasia”. This is the core of the Russia-China entente, leading to what political scientist Sergey Karaganov has dubbed, “a common space for economic, logistic and information cooperation, peace and security from Shanghai to Lisbon and from New Delhi to Murmansk.”
Without understanding the Big Picture enveloping debates such as the annual gathering in Vladivostok, it’s impossible to understand how the progressive integration of BRI, EAEU, SCO, ASEAN, BRICS and BRICS Plus is bound to irreversibly change the current world-system.
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