INTL 2/8/10 Diplomat Magazine| China Enters Asia’s ‘Great Game’

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China Enters Asia’s ‘Great Game’
Joshua Kucera
February 08th 2010

After taking a backseat to the United States and Russia in Central Asia since the collapse of the Soviet Union, China is finally making its mark in the region, says Joshua Kucera. But while the three powers vie for influence, it could be the ‘stans’ that are playing the wiliest game of all.

When the leaders of Kazakhstan, Uzbekistan, Turkmenistan and China gathered in the desert of eastern Turkmenistan in December to inaugurate a new 1,800-kilometre natural gas pipeline running from Central Asia to China, it marked China's dramatic entrance into a battle previously dominated by Russia and the West over access to the region's natural resources. It also was a measure of Beijing's increasingly confident foreign policy, and its growing ties to--and interest in--its neighbours of the former Soviet Union.

‘This project has not only commercial or economic value. It is also political,’ Turkmenistan's president, Kurbanguly Berdymukhamedov, said at the time. ‘China, through its wise and farsighted policy, has become one of the key guarantors of global security.’

Since the collapse of the Soviet Union, when the five ‘stans’ of Central Asia became independent countries, China has for the most part taken a back seat to the United States and Russia in this strategic region. In the 1990s, the United States began trying to gain influence largely to secure access for US companies to the oil and gas reserves that were just starting to be discovered, while also, through various democratization and human rights efforts, trying to get the authoritarian governments to liberalize their political systems. After the attacks of September 11, 2001, the US focus turned to military cooperation as it set up air bases in Uzbekistan and Kyrgyzstan. The region was a useful gateway into Afghanistan (which borders Turkmenistan, Uzbekistan and Tajikistan) and was also thought to be susceptible to the same sort of radical Islamism that vexed Afghanistan.

Russia has viewed all of this as an unwelcome intrusion into its backyard, and a threat to its own interests. The Soviet-era oil and gas infrastructure oriented all the export routes for Central Asia's petroleum resources through Russia, from which Russian state-owned companies profit handsomely. US democracy promotion campaigns look, from Moscow's vantage point, to be stalking horses for the sort of anti-Russian ‘colour revolutions’ that took place in Georgia and Ukraine. And US military bases in Central Asia compromise Russia's strategic depth in the region--Russia has its own large military base in Tajikistan and smaller facilities in Kyrgyzstan.

China, meanwhile, has carried out relatively quiet diplomacy in Central Asia, focused on narrow issues like delineating borders between it and the newly independent states, and in gaining cooperation on shutting down networks of dissident Uyghurs, a Turkic people closely related to Central Asians who were using the ‘stans’ as rear bases for anti-Beijing activities.

For most of the past 20 years, China's presence in Central Asia was innocuous enough to allow both the United States and Russia to believe that it benefited them. In US eyes, the primary goal was to loosen the grip that Russia had on these territories for centuries, and China would help in this. In addition, especially after September 11, the US welcomed China's cooperation in fighting terrorism in Central Asia.

Russia, too, cooperated with China in Central Asia, especially in trying to thwart a US military presence there, in both of their backyards. They formed the Shanghai Cooperation Organization, a regional security group originally billed as a ‘NATO of the East’ and including all of the ‘stans’ except Turkmenistan, which in 2005 called for the United States to leave its military bases in Central Asia.

And it worked: Shortly afterwards, the government of Uzbekistan forced the US to leave its base there; now it only has a base in Kyrgyzstan. (However, differences eventually emerged between Russia and China as to how the SCO should be oriented: while Russia wanted a more military-oriented alliance--the group still holds regular joint military exercises, though they've grown smaller in recent years--China was more interested in making it a tool for economic integration.)

But the opening of the Turkmenistan-China pipeline has changed the game, and has established China as a true player in the region, to the likely detriment of both Russian and US energy interests.

The focus of US energy policy in the region is getting natural gas to Europe from the Caspian Sea region without going through Russia. While the United States wouldn't get any of the Caspian gas itself, its aim is to break the monopoly that Russia has over the natural gas market in many European countries, especially former Warsaw Pact countries like Bulgaria and Romania that are most vulnerable to Russian pressure and also some of the most loyal US allies in Europe. The danger of that monopoly has been illustrated over several recent winters when Russia cut off gas supplies to Europe--ostensibly over pricing disputes, but targeting political nemeses like Ukraine.

To that end, a US-backed pipeline transporting gas from Baku, on the Caspian Sea coast, to eastern Turkey, went online in 2006. And the United States is now attempting to put its weight behind another pipeline project, either the Nabucco pipeline (which would take gas from Turkey to Austria) or the so-called Interconnector Turkey-Greece-Italy.

But no one will build such a pipeline, no matter how strong the political support from Washington, if it won't make money. And the question about these pipelines is, where would the gas come from? Azerbaijan has pledged some gas from the Caspian Sea, but the amount it could provide would not be enough to make the pipeline worth building. Iran--which has the second-largest gas reserves on Earth--has offered to take part. Turkey supports that, but it is of course not palatable to the Americans. Iraq is a possibility, but by far the most tempting options are from Central Asia: Kazakhstan and, especially, Turkmenistan.

Turkmenistan's known gas reserves are in the top five in the world, with the possibility of even greater discoveries to come. But no one is sure if it has enough gas to supply both China and the West, not to mention Russia (where Turkmenistan exported 70 percent of its gas until the Chinese pipeline started up) and Iran (with whom it also inaugurated a pipeline in December).

The Chinese pipeline could hurt Russia's monopoly position in Europe if it siphons off so much gas that Russia doesn't have enough to supply its European customers. But it could also thwart US plans. Turkmenistan's government says that it will have enough gas to ship some across the Caspian to Europe, in addition to supplying Russia, China and Iran, with whom it also inaugurated a new pipeline project in December. But it’s not yet clear if that’s true. And US officials have publicly acknowledged that China has made their bargaining position weaker: ‘It’s hard for us to compete with China in some of these countries, particularly countries that are a little more insular,’ said Richard Morningstar, the Obama administration's Eurasian energy envoy, at a congressional hearing last year. ‘It’s easy for Turkmenistan to make a deal with China, when China can come in and say, “Hey, we’re going to write a check for X amount of money, and we’re going to build a pipeline, and furthermore we’re going to lend you money so that you can explore, and we will be paid back in gas that you, ultimately, deliver to us.” You know, that's not a hard deal to accept. And we can’t compete in that way.’

Meanwhile, the US is correspondingly scaling back its energy ambitions in Central Asia, perhaps a tacit admission that they’re not likely to be achieved. In a January speech, Morningstar showcased a new Caspian energy strategy that was remarkable for its modesty. Morningstar said the United States would not necessarily object if Europeans chose not to build Nabucco and instead built one of the alternative pipelines that Russia backs. And he said Russia would even be welcome to participate in Nabucco if it wanted.

Thus far, China's economic gains in the region have not been matched by political influence. And Central Asian publics are much warier of China than they are of the United States or Russia: When Kazakhstan in December mooted the idea of leasing some of its farmland to China, rare public protests erupted.

So, in all this geopolitical back-and-forth, who is ‘winning’ in Central Asia? It's a common trope among armchair geopoliticians that the competition between the United States and Russia in Central Asia is a new ‘Great Game,’ referring to the spy-vs-spy intrigue between Britain and Russia in the 19th century, when each country manipulated the weak kingdoms and city-states of Central Asia as pawns against their rivals.

But these days, the Central Asian states are as likely to be using the big powers as pawns. For example, in 2008, while the Turkmenistan-China pipeline was under construction, Kazakhstan, Uzbekistan and Turkmenistan announced that they would dramatically raise the prices they charged to Russia for their natural gas. Says Central Asia analyst Martha Brill Olcott: ‘The increased bargaining power of the Central Asian states owes more to the entry of China into the market than to the opening of [the U.S.-backed pipelines going west].’

Kazakhstan's government even has a name for this tactic: ‘multi-vector diplomacy.’ Its government has dealt skilfully with oil companies, governments and militaries from Russia, China and the West to maximize its leverage and build the country into the success story of Central Asia. And its resource-rich neighbours, particularly Turkmenistan, are learning that lesson.

‘With an increasingly sophisticated understanding of the “game,” Central Asian governments have been able to bid up the price they are paid for their resources by playing one superpower off another,’ says Scott Radnitz, a Central Asia scholar at the University of Washington. ‘As Central Asian energy exporters increasingly diversify their export markets, the leverage anyone has over them will decrease.’

In the end, the ‘winner’ of all this 21st century intrigue might not be Russia or the US or even China, but the Central Asian countries themselves.

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China’s Russian Invasion
Joshua Kucera
February 19th 2010

Russian officials have mused openly about the prospects of a de facto takeover of the country’s Far East by Chinese immigrants (legal and illegal alike) reports Joshua Kucera. But a booming Chinese economy and disaffection with Moscow might actually be pushing Russians the other way.

China’s presence can be felt all over Blagoveshchensk, a Russian city 5,600 kilometres east of Moscow but only just across the Amur River from China. There are students learning Chinese, plenty of Chinese-manufactured clothes and electronics in the stores, and Chinese restaurants serving stir-fried potatoes chased down with vodka. Yet you won't find many Chinese people here.

When the Soviet Union collapsed and the border between Russia and China opened up, predictions were rife of a massive wave of Chinese heading north. And it seemed that was possible: there were numerous opportunities in that part of Russia, the easternmost part of Siberia known as the Russian Far East. There just weren't many Russians to take advantage of those opportunities.

Indeed, according to a United Nations survey, Russia's population could fall by a third over the next 40 years. And the prospects in Siberia and the Far East are even grimmer, as residents move in droves to the warmer climate and better economy of European Russia: the population of Russia east of Lake Baikal dropped from 8 million to 6 million from 1998 through 2002, and has continued to fall since.

Meanwhile, just across the river, China is bursting at the seams. The three provinces of north-eastern China--Heilongjiang, Jilin, and Liaoning--have 110 million people between them.

And China's supercharged economy means that those people need ever more fuel for their power plants, raw materials for their factories, and land to grow their food--all things in abundance in the Russian Far East. The area contains nearly all of Russia's diamonds, 70 percent of its gold and substantial deposits of oil, natural gas, coal, timber, silver, platinum, tin, lead and zinc, as well as rich fishing grounds and vast expanses of unpopulated land.

Such a wealth of resources has restoked perennial fears of a Chinese takeover of the Far East. After all, anti-Chinese sentiment has a long history in Russia. It wasn’t long after the easternmost part of Russia was settled in the 1800s that Russians first began to speak of a ‘yellow peril’ posed by Chinese immigration to the area. In 1900, in retaliation for a Chinese bandit attack on a Russian outpost, Russians in Blagoveshchensk drove, at gunpoint, all 3000 Chinese then living to the city into the Amur River. Most of them drowned.

But for most of the lifetime of the Soviet Union, the border was effectively closed. When it opened again in 1988, the fear of the ‘yellow peril’ resurfaced, based on a simple demographic reality: that Russians are hugely outnumbered by Chinese. Says Mikhael Kukharenko, head of the Chinese-government run Confucius Institute in Blagoveshchensk: ‘It's a law of physics; a vacuum has to be filled. If there are no Russian people here, there will be Chinese people.’

The Russian government, too, has taken notice. During a recent visit to the Far East, Russian President Dmitry Medvedev warned that ‘if we don’t step up the level of activity of our work [in the Russian Far East], then in the final analysis we can lose everything.’

Such dire predictions have given rise to rumours that the Chinese invasion has already begun. The Russian press has reported that there are villages in the Russian Far East, populated by thousands of Chinese, that don’t appear on any map. There have also been reports (not true) that there are Chinese members of the city council in Blagoveshchensk and statues of Chinese generals in the city squares. It is even widely believed in Russia that there are ‘secret’ Chinese maps that show the parts of the Russian Far East inside China's borders.

With such talk swirling, the Russian government has tried to make it difficult for Chinese to move to Russia. Visas are tightly controlled, and Chinese tourists have to come to Russia in a group, unlike Russian tourists, who can cross into China by themselves. As a result, there’s little visible Chinese presence anywhere in the Russian Far East, other than a few ‘Chinese markets’ selling cheap clothing and electronics. Indeed, there are more Chinese in Moscow than anywhere in the Far East. The truth is, no one knows exactly how many Chinese are in the Russian Far East, and those who are there tend to come and go frequently. However, it is thought numbers are only in the tens of thousands.

But if there are few Chinese people flowing to the Russian Far East, plenty of Chinese money is. Most of the new buildings in Blagoveshchensk, including the tallest building in the city, a new hotel, have been built by Chinese companies. The two countries have built a pipeline to ship oil from Russia to China, and last year signed an agreement under which China gave Russia a $25 billion loan in exchange for a 20-year supply of oil.

Compounding this are growing signs that Russians in the Far East are becoming disaffected with Moscow. There’s a widespread feeling in the area that the central government treats the Far East like a colony. Last year that tension boiled over in Vladivostok, when the government moved to shut down the thriving Japanese car-import business in that city, in order to prop up domestic car manufacturers (who are located in European Russia). The resulting protests were so serious that the government flew in riot troops from Moscow to quell them, apparently not trusting the loyalty of local forces.

The Russian government also has taken measures to strengthen Russian control over the Far East. It has introduced a program of incentives for ethnic Russians from Central Asia to move to the Russian Far East. They’ve also tried to mitigate the problem of the vast distance between the Far East and European Russia: Vladivostok, on the Pacific Ocean, is a seven-day train ride from Moscow, and seven time zones away. So the Russian government has subsidized airfares for some Russians in the Far East to travel to Moscow, and has proposed decreasing the number of time zones in the country to three or four so that businesspeople and bureaucrats at both ends of the country could work more easily together.

Moscow also hopes to establish Vladivostok as the country's ‘Gateway to the Pacific,’ and chose it to host the 2012 Asia-Pacific Economic Cooperation summit. To prepare for the big event it has promised a package of ambitious infrastructure improvements, like new bridges, highways and hotels.

The moves toward a more Asian orientation are in part inspired by Europe’s growing antipathy toward Russia, and Russia’s need to build relationships elsewhere.

‘In the 1990s, the Russian government had the view that for Russians to cross the Urals was a historic mistake: Moscow is the heart of Russia, and this is the tail,’ says Vladivostok-based political analyst Mikhail Shinkovsky. ‘But this is changing. Europe doesn't like Russia. But here, in this great region, we have neighbours who, maybe they don't exactly like us, but their feelings aren't as bad as Europeans.’

Because of China's economic advantages over Russia, some scholars are actually now predicting that, instead of a Chinese invasion of Russia, the reverse may happen. While long-term economic predictions are risky, it seems likely that Russia's economy, whose current boom is dependent on a (finite) supply of petroleum resources, will eventually be slowed by demographic decline. Meanwhile, China's economy looks set, for now at least, to remain strong even as demographic projections show China's population levelling off over the next several decades. As a result, it’s not hard to imagine Russians moving to China for better job opportunities.

Indeed, to a small extent that already is happening: While working class Chinese do try to come to Russia to trade or work on construction projects, many young, educated Russians are going the other way.

China has already been working on attracting Russians, both visitors and immigrants. Russia's well developed education system produces many of the skilled engineers, English speakers and other types of workers China needs to continue to grow, and Russians generally are eager consumers of China's cheap manufacturing. This has led to border cities in China posting signs in Russian to attract day-tripping shoppers from across the border, while local governments encourage talented Russians to settle there. One border city, Suifenhe, even started a project to create a ‘Russiatown’ that would apparently house 50,000 Russians (though the plan appears to have been abandoned in favour of letting Russians live wherever they want in the city).

But much of this is beside the point--specific incentives aren't needed to encourage Russians to come to China. China's dynamic economy, simpler bureaucracy and lower taxes and interest rates make it attractive to young Russian professionals and entrepreneurs. And while there’s still apprehension about China's intentions in Moscow, in the Russian Far East there is a good deal of Sinophilia. Chinese language studies are now popular than English at universities, and Russians travel to--and even buy vacation homes on--Hainan Island.

So, does all of this portend a future of Russians in the Far East moving en masse south to China? It's too early to know for sure. But today’s trends suggest this is more likely than a Chinese mass migration north.

‘China is the destiny of Siberia--our present and future depends in every respect on what happens in China,’ says Viktor Dyatlov, a scholar of Chinese immigration to Russia. ‘The only direction we can move in is integration and cooperation between Russia and China. We just can't predict what form that cooperation will take.’