World Economy

Sino-Russian Alliance to Rival Europe

Sino-Russian  Alliance to  Rival EuropeSino-Russian  Alliance to  Rival Europe

This nameless, secret market in southeastern Moscow is only known to Chinese expatriates and foodie Muscovites.

Hidden outside the sprawling Sadovod wholesale center, it consists of two dozen shops where one can buy Chinese spices, sauces and vegetables. Some traders speak broken Russian, and all of them object to having their photos taken, Aljazeera reported.

They have a reason to be weary–Chinese  labor migrants are feared as potential “colonizers” in Russia, whose dwindling population of 143 million occupies an area the size of the US and Australia combined.

Russia’s border with China stretches for 4,200km, and the two nations almost started a war in 1969 over a tiny island during the Sino-Soviet Border Conflict.

But the post-Soviet Kremlin is beginning to embrace Beijing as a new strategic ally, turning its back on the West, the traditional magnet for its political ambitions, cultural influences and hydrocarbon exports.

The alliance heralds a political makeover of Eurasia and challenges the post-Cold War, US-dominated world order, some analysts predict.

“The United States, which even 15 or 20 years ago could claim to be the Eurasian hegemon, will be watching from the sidelines,” Dmitri Trenin of the Carnegie Moscow Center said.

 The Catalyst

Russia has for centuries tried to be accepted into the European “family of nations”, and after the 1991 Soviet collapse, Moscow sought to forge a geostrategic alliance with Berlin that would rely on Russian resources and German technologies to respond to Washington’s supremacy.

But last year, the West slapped sanctions on Moscow over Ukraine, blocking access to credits and technologies. Meanwhile, falling oil prices crashed the ruble and crimped Russia’s economic growth.

Moscow realized that its status of an “energy superpower” that imposes its political will on Europe and ex-Soviet republics by granting or blocking access to its pipelines, was simply a mirage. The West served as a catalyst for Russia’s pivot to China.

“So far, a limit has been set–neither Russia nor China want to create a full-fledged alliance aimed at the West, at the US,” Sinologist Yakov Berger of the Far East Institute in Moscow told Al Jazeera.

  Redirecting Hydrocarbon Flow

Moscow has repeatedly threatened the EU with diverting the flow of its oil and gas to the Far East–omitting the fact that the Kremlin’s pockets are simply not deep enough for the investment.

China’s are–but instead of the two dozen nations that have been consuming Russian hydrocarbons for decades via Soviet-built pipelines, Moscow will have to deal with a picky customer that calls the shots. “The Chinese are tough negotiators,” Gennady Shmal, president of the Union of Oil and Gas Producers of Russia, told Al Jazeera.

In June, Russia became China’s largest oil supplier, leaving Saudi Arabia and Angola behind. It now exports more than 30 million tons of crude a year to China–about 15% of its output, accepts yuans instead of dollars, and imports equipment and materials used in oil production. 

Last May, Moscow and Beijing struck a historic, $400 billion accord to supply up to 38 billion cubic meters of gas to China annually for 30 years. But the yet-unsold amount is less than a fourth of the nearly 160 billion cubic meters Russia’s monopolist Gazprom sold internationally in 2014–mostly to Europe.

The deal has been criticized for the astronomical–up to $70 billion–cost of the pipeline that will reach China’s northeastern Heilongjiang province.

 Bone of Contention

When selling its hydrocarbons to China, Moscow also has to compete with ex-Soviet Central Asia. Turkmenistan, Uzbekistan, and Kazakhstan already sell their natural gas via three Chinese-built pipelines, and Kazakhstan has also been pumping its Caspian oil to northeastern China since 2006.

Central Asia is also the biggest bone of contention between the nations. Russia still considers the region its “soft underbelly”, while China sees it as its “Wild West”, a source of hydrocarbons, raw materials, and a market with more than 50 million customers.

China’s gargantuan Silk Road Economic Belt is expected to surpass the original trade route with the construction of railroads, highways, pipelines, and border crossings from Pakistan to Poland.

At the BRICS summit held in the western Russian city of Ufa in mid-July, Chinese and Russian officials pledged to “dock” both projects and “create a new heartland”.