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Russia fosters Chinese dependence

Moscow uses oil and investment to balance its neighbor's rising power.

A Chinese paramilitary officer stands guards at the China-Russia border on Aug. 28, 2009, in Manzhouli. Manzhouli is an important gateway for business in Inner Mongolia and receives 60 percent of all of China's trade to and from Russia and the rest of eastern Europe. (Feng Li/Getty Images)

MOSCOW, Russia — Many Western observers were shocked not just by what they found within the new military doctrine that Russia adopted last month, but by what appeared to be missing.

The doctrine, which spells out perceived threats and strategic priorities through 2020, for the first time in the country’s post-Soviet history named NATO — namely, its expansion — as the top threat to Russian security. It also made repeated mention of the country's readiness to respond to aggression with nuclear weapons, despite ongoing negotiations with the United States to drastically cut the number of both countries’ warheads.

What the report lacked was any mention of Russia’s steadily rising eastern neighbor, China.

“In practical strategic thinking, the Russian leadership is paying a lot of attention to the rise of China,” said Fyodor Lukyanov, the editor of Russia in Global Affairs. “There is an understanding that potentially Chinese development might cause a lot, if not problems, then at least challenges to Russia.”

If that is indeed the case, no one in Russia is talking about it.

“We don’t write about our allies in our military strategies,” said Vladimir Kozin, head of the foreign ministry’s Asia-Pacific research department.

Instead, Moscow has been seeking to develop ties with Beijing by forging security groupings like the Shanghai Cooperation Organization, pushing for energy projects to integrate Russia with the East and encouraging investment to foster mutual dependence.

In January, Rusal, the aluminum firm controlled by oligarch Oleg Deripaska, became the first Russian company and the first non-Asian company to list on the Hong Kong stock exchange. Granted, Deripaska forwent London, Russia’s current financial capital of choice, because he faces a lawsuit there by a former business partner. And true, the Hong Kong listing was met with a host of problems, including delays in regulatory approval and a less than stellar opening.

Yet the move was widely touted inside Russia, with other companies quick to say they were also looking to list in Hong Kong, which last year had more initial public offering (IPO) than any other exchange.

Shortly after the Rusal IPO, Viktor Vekselberg (who, it should be noted, chairs Rusal’s board as the result of the merger that created the aluminum giant), said he would seek to list a company in his Renova holding group, Kamchatka Gold, in Hong Kong by the end of the year.

“Russian investors have a big interest in going to Chinese markets, particularly IPOs,” said Sergei Sanakoyev, head of the Russia-China Center of Trade and Economic Cooperation. “Rusal wasn’t the most ideal company to start in Hong Kong — it’s too heavy. In the future we’ll see middle-sized companies, like those dealing with innovation, high-tech, trade.”

http://www.globalpost.com/dispatch/russia/100303/russia-china-relations-energy-security