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#18 - JRL 7206
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June 2, 2003
The Great Game in the Far East

The more important summit in Russia this week was arguably not between Putin and Bush, but between Putin and Chinas new president.

With the worlds only superpower in town, perhaps it was inevitable that the headlines from the mass gathering of heads of state for St. Petersburgs party were dominated by U.S.-Russia relations. But arguably the Bush-Putin meeting was less important than it might have seemed after the Iraq fallout.

The war over the war in Iraq has now been reduced mainly to sniping about reconstruction. North Korea is of course a potential sore point, but Pyongyang has said it considers its nuclear program to be a matter for it and the United States alone, dashing Russias attempts at diplomacy. And as for Iran, some clashes may be expected, but it is plausible to argue, as Nikolai Zlobin of the Washington-based Center for Defense Information does, that now the task for Russia is to save face.

The discussions between George W. Bush and Vladimir Putin may have been less important, in fact, than Putins summit with Chinas new president, Hu Jintao. Both declared themselves supporters of a multipolar world--in the wake of the Iraq war, the euphemism of choice for a world not dominated by the United States. And both sides proved it with actions: Hu chose Moscow, rather than Washington, as his first foreign port of call after assuming the leadership of China, while Putin gave the go-ahead for a huge new oil pipeline to China rather than choosing an alternative pipeline to Japan. We were therefore treated to the spectacle of two great games in play at the same time: one for a multipolar world, the other for Far Eastern oil.

Thanks to the volatility of the Muslim world, oil is now a stronger geopolitical playing card for Russia than ever. Japan, which imports all its oil, has embarked on an active search for new sources outside the Middle East and in 2002 imported some Russian oil for the first time since 1978. Diversification is also a new mantra for China, which became a net importer of oil in 1993 and has since become the worlds third-largest importer. Japanese companies now partner some of the Western giants in Siberia, while China has been making a big bid for a stake in the development of Central Asian oil, with the possibility of a pipeline from Kazakhstan.

The attractions of Russia as an alternative source have only been enhanced by the discovery in recent years of an oil field near Angarsk, west of Siberias Lake Baikal, that reportedly has reserves equal to those of Kuwait. For Russia, the choice of a pipeline from Angarsk either to Daiqing, China, or to Nakhodka, a port on the coast of the Sea of Japan, is the choice between serving one huge market (China), or supplying up to a quarter of Japans oil needs and a variety of rich markets along Asias Pacific coast. And, despite the phenomenal size of the Angarsk oil field, it really is being presented as a choice: Russian Prime Minister Mikhail Kasyanov argues that there will be insufficient oil in the foreseeable future to justify both pipelines.

From the outside, the choice between Japan and China would seem to have been no competition. Japans relations with Russia still founder in a historical time warp because of the dispute about the status of the Kuril Islands that Russia seized during World War II. In contrast, Sino-Russian relations are racing ahead and picking up speed. In 2001, Jiang Zemin, Hus predecessor, signed a friendship treaty with Russia, symbolically opening a new page in a relationship that, during the Soviet era, was by turns friendly, hostile, and cool.

Trade between the two countries has doubled in less than a decade, and China in 2002 accounted for more than half of Russias arms exports, according to the Moscow-based Center for Analysis of Strategies and Technologies. Now, China has for the first time assumed leadership of the Shanghai Cooperation Organization, a six-member group that currently focuses on issues such as terrorism, separatism, and extremism in Central Asia.

An easy political choice, then, for Russia, but also a canny one in the broader context of relations with the United States. In 1997, U.S. President Bill Clinton began calling China a strategic partner, going on to become the first U.S. president to visit China since the Tiananmen Square massacre in 1989. Since 2000, Bush has changed the wording to strategic competitor. In choosing the Chinese route, Putin has taken an important step toward a multipolar world by forming what is a long-term strategic partnership with China and effectively promising to fuel the next stage of Chinas economic development.

The hand of supporters of a multipolar world has therefore been strengthened, while the stakes have risen for the United States and its allies in the other great game, in the Caspian and Central Asia. With much of the oil from eastern Siberia going to China, they should be even more concerned to ensure that oil from Kazakhstan flows westward, not eastward--and that Russia will have less say in control of Caspian oil.

Conceivably, the West might ultimately get the better of Russia in the Caspian and Central Asia, but it would also be a tricky victory, forcing it into a commitment to regions that, like the Middle East, are deeply volatile and in which Russia is bound to retain major influence.

Meanwhile, back in the East, Russia is still keeping its bargaining chips with Japan and the Western-style economies of the Pacific. It continues to hold out the possibility of a pipeline to the Sea of Japan.

Having lost out once, Japan should logically be even more keen to up its already very generous offer to foot the entire bill for the construction of the pipeline to Nakhodka. At the same time, Russia can--when needed--always pull out one old card, the status of the Kuril Islands, or play on Japanese fears that Russia might instead build a pipeline to South Korea.

So, the honors for this round of the Far Eastern Great Game go to Russia. But most of all they go to China for securing a much sought-after supply line. As Russia provides the oil that drives China forward, Putin will be able to contemplate the neglected truth about his vision of a multipolar world. It is China, not Russia, that has the power to become an alternative pole to the United States. Once junior to Russia/the Soviet Union, China is now the stronger and more dynamic of the two. The fundamental difference comes down to their economies: Chinas is now five times larger than Russias.

If Russia does want a multipolar world, it will need to double its GDP in 10 years, as Putin wants to do. That requires average growth of about 7 percent a year. Difficult, but China, for one, has shown that it is possible.

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