China and Russia Fail to Finalize Gas Deal

The Summit of the Conference on Interaction and Confidence Building Measures (CICA) convened this week, bringing together the leaders of Central Asian nations as well as Russia and China. The conference, held every four years, was established under the auspices of a number of countries from throughout Asia and the Middle East, and recently has gained notoriety due to Russian President Vladimir Putin’s assurance that the talks will lead to “new security and sustainable development architecture in Asia-Pacific.” The conference’s stated goal has been overshadowed by the structuring of new gas pipeline infrastructure that would see Russia supply China’s gas-starved north with up to $400 billion in natural gas, while allowing China to reduce its reliance on coal. Representatives of Russian gas giant Gazprom stated that the pipeline could carry up to 38 billion cubic meters of natural gas annually, and would begin to flow as early as 2019.

Progress, however, has stagnated as the two sides failed to reach a substantive agreement in Shanghai, where the conference is seated. Gazprom has issued statements indicating that Chinese Premier Xi Jinping had in fact signed bilateral agreements with Russia, but that the gas deal did not factor in. The same representative gave assurances that the ten year old negotiations are still ongoing, though guarantees of their success were not provided. Gas prices have been the chief sticking point for China’s National Petroleum Corp.  and Gazprom, and once agreed upon should culminate in the deal being finalized.

The meetings between the second and ninth largest economies in the world have not been entirely negative for either side. Meetings between Jinping and Putin have given the latter  sorely-needed diplomatic support  with regards to Ukraine. The impact of the gas pipeline will almost certainly increase Putin’s own popularity at home, and will provide the Russian a means by which to diversify their client base and decrease dependence on the West, as the West looks to diminish its own dependence on Russia.

News Briefs: 

  • Russian Prime Minister Dmitry Medvedev urged Ukraine to settle its substantial gas debts and set up a payment schedule. This issue has been the source of many disputes between Russian energy giant Gazprom and the government of Ukraine, as the country depends on Russian imports for about half of its power supply needs. In total, Ukraine owes a debt of about $3.5 billion, and Russian demands for repayment have largely gone unanswered in the past. One of the reasons the debacle in Ukraine escalated was that Gazprom raised the price of LNG by 38% going through Ukraine, which caused power shortages and stoked animosity in Kiev.
  • The White House announced that the CIA is pledging not to use vaccine programs as covers for covert operations. Top counterterrorism advisor Lisa Monaco wrote to deans of 13 prominent health schools to announce the decision, in response to criticism from those very same deans about the CIA’s use of those covers in undercover intelligence operations throughout Afghanistan and Pakistan, leading to the arrest of a Pakistani doctor as a CIA operative.
  • Outgoing President of Afghanistan Hamid Karzai praised China over its role in rebuilding Afghanistan on Tuesday, citing their honesty and sense of fair play both economically and in terms of security expectations. This is another long series of jibs at the United States, whose relationship with Karzai deteriorated quite a bit over the course of the past year, with American officials urging Karzai to sign the Bilateral Security Agreement.
  • China and Kazakhstan jointly declared their pledge to enforce one another defensively after President Nursultan Nazarbayev visited Shanghai fr the 4th CICA summit during the state visit of Xi Jinping. Xi held official talks with Nazarbayev on Monday afternoon. Their public declaration of trust condemned terrorism, separatism, extremism, organized crime, and weapon and narcotics manufacturing. Both countries already work closely through the United Nations, Shanghai Cooperation Organization, and Conference on Interaction and Confidence Building Measures in Asia (CICA). This will mean both militaries will engage in joint exercises and prevent proliferation of small arms across their respective borders.
  • The president of Western Ural Machine Building Concern (ZUMK) Group, Aleksandr Pozdeyev, has been detained in Uzbekistan on suspicion of economic crimes last week. Defense lawyers are appealing his detention and attempting to secure his release by bail. Uzbek officials at the prosecutor general’s office were silent on the matter, but local news reports that Pozdeyev allegedly overcharged previously implemented contracts in southern Uzbekistan, which include about $180 million in the chemicals, coal, and mining sectors.
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