Russia, China and Their Relations with Central Asia: An Interview with Marlene Laruelle

In late March we had the chance to sit down with Marlene Laruelle, Director of the Central Asia Program at The George Washington University. Dr. Laruelle is also Research Professor of International Affairs at the Elliott School of International Relations, Associate Director of the Institute for European, Russian, and Eurasian Studies and the editor-in-chief of Central Asian Affairs. She has authored and co-authored a number of books related to the Former Soviet Union and China, including Russian Eurasianism: An Ideology of Empire (Johns Hopkins University Press, 2012) and The Chinese Question in Central Asia (Hurst, 2012), and has been published by The Washington PostForeign Affairs and FRIDE, among many others.

SD: The perceived “East-West” conflict revolving around Russia’s incursions into Ukraine has had the effect of pushing Moscow east. The two landmark Sino-Russian gas deals, each of which totaling hundreds of billions of dollars, made China Russia’s most significant trade partner, though only China’s tenth most significant partner, as of early 2015. How would you characterize the importance of strengthening relations with Russia to Beijing?

Laruelle: First off, the relationship is completely imbalanced, in terms of the importance that Russia gives it vs. the importance China gives it. For China, the deals aren’t tremendously important. It’s a victory for China’s Good Neighbor Policy as Beijing prioritizes constructive relations with Moscow and its Eurasian neighbors. In that sense, China is happy to have made deals with Russia, and has worked on this energy deal for years. Ultimately, however, the deals mean relatively little to China’s overall foreign policy; there are a number of more important issues for Beijing in Southeast Asia, and in its relationship with Japan, both North and South Korea, and the US.

With regards to Russia, the deal didn’t really come about as a result of the Ukrainian conflict. There are two different logics in play here: Russia has been advocating for an energy partnership with China for years. It is part of Russia’s long-term goal of reorienting its oil and gas distribution towards Asia in order to play East and West off each other.  The ongoing East-West conflict is also pushing Russia towards Asia insofar as it relates to the Kremlin’s narrative of alternative powers, i.e. the BRICs and a Russia-China led world order in lieu of a Western world order. At the same time, however, In terms of self-perception, the East-West conflict has forced Moscow to realize that its relationship with Europe is vital for its security. In that sense, the West– not China or Asia in general–has been at the core of the debate in Russia surrounding sovereignty, strategic interests and state legitimacy. The East is just perceived as a means to bypass and challenge the West, whereas most core issues, those related to international prestige and geopolitical states, lie in Russia’s relationship with the West.

SD: Realistically speaking, would it be reasonable to say that Russia views China as a more ideal business partner while bearing in mind that the West is at this stage still more important?

Laruelle: Russia uses different temporal scales in looking at the West and at Asia. Moscow realizes that the current sources of tension are with the West and its “near abroad” in Eurasia. In the long term, however, the lack of balance which characterizes Russia’s relationship with China does not work in Moscow’s favor. In that sense it is not a de facto turn towards the East, but rather an attempt to build an alternate world order with several new allies, many being based in Asia, but not only. Anyone that is opposed to the current global situation is welcome to join. The Kremlin has attempted to influence European politics by supporting far-right political parties to build some kind of conservative, international network. In that sense, Russia is building a long-term strategy to establish an alternative world order, much in the way that the Soviet Union did. Yes, China is part of this proposed new world order, but not all of it: Moscow hopes to win over friends in Europe, among the US conservative right, and in the Middle East, etc.

SD: Some of the discussion surrounding greater Russian-Chinese cooperation has focused on moves they’ve seemingly taken in unison. Foreign reserve currencies other than the dollar, for instance, is one area. Is this joint advocacy for a “different way?”

Laruelle: Russia realizes that if they do not win China over to its side, then creating this entirely new world order does not make sense. They need Chinese financial support and its political weight. China, for its part, wishes to challenge the world order, but in a less confrontational way. That is, by focusing mostly on trade and finance. For the moment, Russia and China are more or less on the same page, but the way China sees its own integration into the world order is completely different from how Russia sees itself. Moreover, many of these joint declarations about shifting from a dollar-based economy are mostly declaration of intention, done for branding purposes, and their implementation is usually minimal and slow.

SD: The current state of play between Moscow and Beijing has shifted in the past six months – with the price of oil, the devaluation of the ruble, slowing GDP growth in China, and economic sanctions from the West. In both countries, there seems to be a constriction in available resources to allocate to foreign policy initiatives. Who is winning currently in this current state of affairs? On which issues on a regional basis are Beijing and Moscow allies? On which issues are they rivals?

Laruelle: Russia and China have less competition over Central Asian energy than a decade ago, now that Gazprom is no longer interested in obtaining Turkmen gas. Economically speaking, Russia has begun to accept that China is the main regional economic partner and there is little it can do to challenge that. The way the Eurasian Economic Union was structured likely bears this in mind, as although Russia cannot compete with Chinese trade relations, it can foster regional connectivity toward Moscow, politically if not economically. For Russia the economic priorities with Central Asia are infrastructure, electricity, and transportation, while trade is let to China. On the other side, the Central Asian states will continue to embrace Russia at least as a bilateral partner (Uzbekistan and Turkmenistan refuse any Russia-backed multilateral organizations) as they need to counterbalance China’s dominance. The Chinese, for their part, were initially very unhappy with the Eurasian Union, because they thought it would limit the room for maneuver of the Central Asian economies. This is true, though the Chinese are for the moment fine with sharing the Central Asian space as it is with Moscow. The Shanghai Cooperation Organization continues to lose importance in Moscow; indeed, it is no longer considered a venue for Russia-China bilateral discussion, and the Collective Security Treaty Organization has been reinforced. So, China seems to have gotten the message that they are not to provide security for the region, that Russia still desires that role. This isn’t something that the Chinese are unhappy with. Beijing is not particularly interested in doing the dirty work, i.e. policing borders, etc., and would rather have Russia to oversee this kind of burdensome tasks. Tensions could arise if China progressively decide to be more involved in Central Asia’s domestic policies and security orientations.

SD: One of your areas of research centers on the effect of nationalism on Russian foreign policy. What role do you believe nationalism has played in provoking or contributing to Russian activity in Ukraine and, to a lesser extent, in Georgia? Moreover, on a broader scale, do you believe that these sentiments formed part of the thrust which led to the formation of the Eurasian Economic Union?

Laruelle: The short answer would be “no.” The longer answer would be that Russia is defending what it considers to be its strategic interests and its security, both in Georgia and in Ukraine. Nationalism has arrived a posteriori as a means of legitimizing the Russian narrative; it is an instrument, not a goal. Nationalism is the motivation that is displayed afterwards, but actions taken in Ukraine and Georgia were grounded in the Kremlin’s interpretation of what are Russia’s state interests in its sphere of influence. These are the key issues. The Kremlin has every interest in allowing nationalism to become more visible in Russian media, but for internal motivations, based on regime legitimacy mechanisms, in order to show the liberal opposition that it is the minority. What Putin and his entourage have been doing in Ukraine forms part of a pragmatic strategy of preventing Ukraine from integrating to European/transatlantic institutions. In Russia’s eyes, Ukraine has the right to sovereignty and to status as an independent nation, but not to maintain an anti-Russian foreign policy. Once the Kiev government crossed the red line of becoming anti-Russian, Russia considered that it had the right to act to protect its own interests.

The Eurasian Economic Union is a little bit different: it has been considered as a tool by which Russia could show that it remains a relevant economic power. The understanding held by Russia with regards to globalization is that a nation can only be successful in globalizing if it is part of a region. That is, as a single state Russia is at risk of becoming economically irrelevant, though it has more of a chance as a regional power. It is partially for this reason that the Eurasian Union has been focused on economy. It is also because Moscow has observed the EU trajectory and come to the conclusion that economic unity should precede political unity. The relationship between the EEU and nationalism is complex, because depending on how you pose the question, your responses will be completely different. For instance, if you ask the Russian public opinion if they favor the structure of the EEU as a means of emphasizing great power reassertion, then the answer will be in the affirmative. However, if asked if they are in favor of the EEU in the sense of an open space for integration with Central Asia and a visa-free regime with the southern republics, then the answer would be negative because the Russian public is dominantly xenophobic. As such, there is a gap between a Eurasian Union that is favorable to Central Asia and potentially to the South Caucasus, and the Russian public opinion in favor of everything but them. For the moment, Putin has been unable to manage this contradiction. Something that has become apparent during the Ukrainian crisis is that Russia is now less interested in promoting supranational institutions. The Kremlin reacted in a unilateral fashion in deciding, for example, on counter-sanctions on European food products. Moscow has become increasingly protectionist, even against Kazakh and Belarusian products.

SD: Sanctions against Russia have seen several rounds of escalation. One of the latest targeted the financing of the Ukrainian separatists in Donetsk and the bank believed to be handling their transactions. The EU recently voted down a bid to impose more severe sanctions in a bid to allow the most recent Minsk ceasefire to take effect. How harmful are these sanctions to the Russian economy, and how much do they appear to be deterring further actions? Will sanctions ultimately work in altering Moscow’s behavior? Do sanctions drive the Russian government closer with countries like China?

Laruelle: The impact of sanctions is still largely unclear. The Russian economic crisis was triggered primarily by oil prices, and the impact of sanctions has been minimal. The only sanctions now felt in Russia are those that target large corporations by eliminating their access access to international markets and international finance and prohibiting them from buying new technology or infrastructure. This is certainly the case with limited operations in the Arctic, and will be felt in new oil and gas extraction operations. The majority Russian populace principally feels the impact of the economic slowdown, not of the sanctions themselves.

Paradoxically, counter-sanctions imposed by Moscow on European companies have had a negative effect on the life of a number of middle class Russians. The Russian regime, as or it, thinks sanctions can be maintained for several years, and it is unclear if “business as usual” will return. But it believes in the country’s resilience and hopes that oil prices will again rise and breathe new life into the country’s economy and political legitimacy. Politically, it’s doubtful that the sanctions will work as the Kremlin will vehemently resist what it perceives as an illegitimate judgment of its actions, but it can be hurt economically more than they are prepared to.

SD: One area that you’ve researched and published on extensively is Russia’s strategy in the Arctic region. Although this element of Russian foreign policy has been overshadowed during the last few months, it appears that Russia is still quite interested in the Arctic and has active Soviet-era military bases as a result. How do you foresee competition for the Arctic playing out in the short-medium term? Does Russia still possess the ability to successfully compete with NATO states for control of the estimated 30% of the world’s natural gas reserves?

Laruelle: First, the majority of oil and gas reserves in the Arctic are not under any territorial disputes, so the issue is an economic, not geopolitical issue. Operations in that area of the world are highly capital intensive and logistically challenging, which up until now has made them commercially unappealing, especially given the availability of resources such as shale gas.  Arctic economic development was initially thought to be important, although now it is not, even in areas such as Alaska. Russia invested a lot of money in the Yamal megaproject, although exploitation has slowed and Russian companies know they will have to make use of fracking technologies in order to further exploit partially depleted western Siberian oil fields before they find themselves obligated to move to the Arctic,. This is due mainly to the associated economic burdens and the lack of international partners as a result of Western sanctions.

There is also the question of strategic, as opposed to economic, cooperation. Even before the present crisis, Russia was already at work reviving its bases in the Arctic and the relevant wings of its navy and air force. This was done mainly for economic, not strategic purposes. Putin was hoping to revive the military-industrial complex, which would have entailed significant updates to existing military infrastructure and an influx of capital into related public and private sector industries. It is doubtful that significant regional competition will take place. Russia and NATO are both there, and their relationship is fragile, but none of the Scandinavian NATO members such as Norway are interested in increased tension with Russia; their policies towards Russia in the Arctic are very pragmatic and designed to reduce tension. The Canadians tend to be more nationalistic with respect to Russia although Ottawa is also pragmatic, as it and other NATO members realize Russia’s importance in the region. They want Russia to be there and to maintain at least a minimal level of cooperation in multilateral institutions such as the Arctic Council.

SD: Central Asian economies have been affected adversely by the downturn in the Russian economy. Consequently, states that are heavily linked to the Russian economy have begun to seek additional partners, and have had to deal with a growing number of migrants returning to their countries due to fewer jobs in Russia. How do you foresee Central Asian states like Kyrgyzstan and Tajikistan adapting to these issues, particularly the latter? Will popular discontent and a lack of employment lead to a greater number of the discontented joining extremist groups? Will public discontent manifest itself more concretely in states with higher-than-normal unemployment?

Laruelle: Before public resentment becomes visible, several things would have to transpire. In any case, migrants would like to stay in Russia even if they make less money. They already have the experience of the 2008 crisis, and while the current crisis is not of the same nature that is something they are by and large unaware of. The large majority of migrants are ready to stay in Russia even though there will be fewer jobs and their wages will be lesser. There will also be more corruption and a more prevalent shadow economy, and fewer funds to send as remittances, but they will stay. Establishing a connection in the Russian economy is not easy for migrants, so once they’ve established one they do not want to lose it. They would rather wait for a period of, say, two years, with the hopes of a significant upswing in the Russian economy. If there is no upswing migrants will likely seek to go somewhere besides Russia, such as Turkey. Many Central Asian countries have visa exemptions with Turkey, making it an attractive destination. Some of the Gulf countries, as well, could be options, as could South Korea. If all of these options fail, they would be forced to return to their home countries, which would likely culminate in significant political and social discontent. But it is unlikely that all of these options fail. Russia will continue to be very important for Central Asian migrants, because the differential of GDP per capita will always make it attractive for Tajiks and Kyrgyz.

SD: Some of your research has focused on the perceived competition between India and China for influence in Central Asia. China has pledged to invest more than $15bn USD in order to improve regional infrastructure and bolster cooperation in areas of shared concern such as anti-terror, anti-narcotics and border security. Based on the relative paucity of Indian investment in the region, what role do you perceive India taking on in the near future? Is their interest primarily based on need (energy, commodities), like China’s, or is there more to India’s designs for Central Asia?

Laruelle: Significant presence in Afghanistan notwithstanding, the idea that India could become an important actor in Central Asia is wishful thinking by both India and the United States, as India would make a natural partner for the US in the region. This is a very long term perspective that could only become a reality in several decade, if at all. Economically, there are very few things that can be done. The only area that India could play a more important role is in energy, although that area too is complicated. The proposed TAPI pipeline has faced myriad delays and CASA-1000 is progressing very slowly. These are both long-term projects that could benefit both sides, as one can provide what the other needs. Just because they could be beneficial does not mean, however, that either project is feasible – other factors have to be taken into account, especially commercial recoverability and investments security. There is a long-term possibility that India may connect with Central Asia with these projects, but that will not be enough to make India an important external partner for the region. Economically, at least for now, India is unable to offer anything significant to Central Asian states outside of aid in specific sectors like aerospace, nuclear energy and, to a degree, the pharmaceutical sector. This is minor, however, especially compared to China’s trade with the five Central Asian states. India had made many projections about increased involvement with the region, but with very limited success. Delhi has a number of more pressing priorities domestically and in South Asia that will reduce the relevance of Central Asia.

SD: The Caspian Sea looks to be divided into several territories for each of the five littoral states. Will the official designation of the Caspian spur development on initiatives for Central Asian economies to bypass Russia to export natural gas and oil, like the Trans-Caspian pipeline? What other projects will become more feasible as soon as the Caspian’s legal status is finally set? Who will the primary stakeholders be?

Laruelle: The Caspian states are more or less content with the status quo. However, if Iran is reintegrated into the international community, then the Caspian Sea dynamic could change. Azerbaijan, Kazakhstan and Russia have already signed territorial agreements related to the Caspian Sea and have no more conflicting claims. Tensions between any of these three states are thus unlikely, though tension concerning Azeri-Turkmen or Iranian-Turkmen territorial disputes could arise. There is also the unanswered question of who would ultimately validate any future definition of the Caspian Sea, and how that definition would impact the construction of a Trans-Caspian pipeline. There’s not a lot of discussion about building one at the moment, although the Kazakhs and the Turkmens are hoping to develop infrastructure, i.e. tankers, LNG ports, etc., in order to ship oil and LNG across the Caspian. Because of the Caspian’s geopolitical significance, the littoral states don’t really expect any one definition to be wholly accepted by all involved. As a result, they will try to bypass the legal issue by using tankers instead of a pipeline.  As a result, the Caspian Sea will remain undefined and its potential as an avenue for oil and gas largely unrealized for both Kazakhstan and Turkmenistan.

SD: Much has been made of the potential impact of an unencumbered Iran. Is Iran’s emergence really viewed by Central Asian nations as a positive occurrence, or are there some that view it as a negative or unfavorable development?

Laruelle: For Central Asia that is a very complex question. Central Asian states certainly hope that Iran will be reintegrated, as it is a legitimate economic partner and a legitimate cultural power in Central Asia with largely amicable interstate relations with Uzbekistan the only exception. One benefit would be in overland transportation, as Central Asian states would have a quicker means of reaching Turkey. However, if Iran begins to export large amounts of oil and gas it will likely assume the role of supplier currently occupied by Turkmenistan and even Azerbaijan. Turkmenistan in particular stands to lose a lot if Iran is reintegrated.

SD: With regards to human rights issues, Central Asia has an enormous problem with dictators and a lack of democracy. How do the EU and US address these issues when negotiating with Central Asian governments, and is it effective? Which do you think will ultimately be a more effective approach for cooperation – China’s focus on economic development via the Silk Road Economic Belt or the Western approach emphasizing the creation of democratic institutions and Russian containment? Are human rights more of a policy liability or a policy asset in diplomacy with Central Asian countries?

Laruelle: Central Asian states have proven very resilient in resisting foreign interference in their domestic affairs, especially with regard to human rights issues. They also have Russia and China and the Gulf nations that support them unconditionally, so the West is really the only only one asking for political concessions, which does not play in its favor. Nevertheless, the West cannot totally put aside this political agenda, which is part of its “branding” and its own values. One problem is perhaps that too narrow of a focus has been made on human rights and democratization, while for many Central Asians a main concern is actually social rights, social justice, redistribution  of wealth and aspects of the welfare state that are attractive to them. This is an area that the West could possibly do better in promoting European-style social democracy, for instance. Brandishing human rights, in a restrictive, political sense, like having free elections, etc., speaks less to the majority population than having social justice as your main flagship. Moreover, the supposed vehicles for these issues, Western NGOs, have partly lost legitimacy as well. There was perhaps a window in the early 90s to impact the local perceptions, but these opportunities were not seized – or were not given the opportunity off — and that window is now closed.  Probably the social justice narrative advanced by Islamic associations now speaks to a larger group of the Central Asia public opinion – of course this is very different depending of the country –than the Western-style narrative on governance.

SD: Recently, microfinance nonprofits have been reported on favorably for targeting typically overlooked groups in Tajikistan and Kyrgyzstan. Do these organizations fall into the same category as those NGOs you’ve already alluded to as missing the mark, or do they represent something different?

These types of programs are potentially important because they empower average Central Asians from rural regions which are usually difficult to reach and are the ones typically “left behind.” Microfinance, thus, can contribute to improve conditions in regions which face huge difficulties and from which migrants depart in large numbers. More generally, creating human capital and investing in education should be the preferred long-term strategies for the region. Domestic change will not come as a result of Western influence; it should be made according to the societies’ own timelines and agendas. These agendas will doubtless be different from the supposed classic, liberal and individualistic values of the West, and will advance more conservative values. What is important to bear in mind is that domestic evolution will only be made possible if the new generations of Central Asians feel they are empowered.

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