By Anton Evstratov
The new American sanctions against Russia, on the one hand, prevent it from pursuing an active policy of Central Asia, and on the other hand, push it into the arms of China – up to including dependence on it.
U.S. has imposed new sanctions on Russia for its alleged involvement in the March 2018 nerve-agent poisoning, in Britain, of the former Russian spy Sergei Skripal and his daughter Yulia
The sanctions, which entered into force on August 26, do not look fatal for the Russian Federation. However, they include:
- A) a ban on international financial organizations, such as the World Bank or the International Monetary Fund, from lending or providing any technical or financial assistance to Russia.
- B) Ban US banks from lending to Russia, with the exception of situations with the purchase of food or agricultural products.
- B) A directive from the US Department of Commerce to deny Russia licenses for the export of chemical and biological products and technologies.
At the moment, the Russian side claims that these restrictions were laid down in its budget, and the situation is under control. Nevertheless, on the first day after the package came into force, the dollar reached an indicator of 66 rubles.
It is obvious that the Russian economy will not crash from this package, nor will it undergo fundamental changes. We are talking more about the general deterioration of economic conditions for Moscow, and this vector has been traced since 2014.
In this regard, we cannot fail to note the influence of the situation in general and specifically of this package of sanctions on Russia’s foreign policy. The most dangerous and problematic region for Moscow in this context will be Central Asia, where Moscow, already experiencing considerable financial difficulties front to the eight times more “wealthy” China, is forced to “go on the defensive” in the best case and retreat in the worst . There is no need to talk about an active foreign policy agenda for a state experiencing serious financial difficulties.
Given China’s active penetration into the economies of Central Asian countries, and its gradual integration into the military segment of a number of countries (Tajikistan and Uzbekistan), it is becoming increasingly difficult for Moscow to respond to it.
Moreover, the Russian Federation will be extremely difficult to fulfill even the contracts currently available. For example, she was forced to suspend the construction of the Akbulon and three Naryn hydroelectric power stations in Kyrgyzstan – the contracts on them have already been canceled, which cannot but affect the general influence of the Russian Federation in this country. In the Kyrgyz territory, a paradoxical situation arises in many respects – the country’s economy, which had previously experienced enormous financial difficulties, including the local gas monopolist, the Kyrgyzgaz company, was transferred to the control of the Russian Federation and, specifically, Gazprom in the hope of investment and cash infusion.
Initially, Moscow coped with the role of investor and main donor for Kyrgyzstan, however, in the light of the increasingly protracted sanctions loop, it does this to a lesser extent. Unprofitable and unprofitable from an economic point of view, transactions in Central Asia are becoming an increasing problem for the Russian Federation, and China cannot help but take advantage of this situation, which is separated only by the border from Kyrgyzstan.
And if the situation with Kyrgyzstan is not so critical for Moscow right now because the republic is included in the structures led by the Russian Federation – the EAEU and the Collective Security Treaty Organization, then in the case of Uzbekistan and Turkmenistan this is much more dangerous. Tajikistan has a similar situation, the borders of which are already being guarded by roadblocks built by the PRC, and the construction of the Rogun HPP invested by Moscow is delayed precisely because of Russian financial problems.
Turkmenistan, whose gas has practically ceased to flow to the Russian Federation, and through its territory to Europe, is in a new position in limbo. On the one hand, it is extremely beneficial for the republic to resume supplies to Russia, which is also doing its best to reorient the Chinese focus on Turkmen gas flows.
However, in light of the sanctions, Europe does not need additional gas supplies from the Russian Federation, and for Russia itself to buy Turkmen gas just like that is not profitable. Moreover, in the West, voices are increasingly heard about the need to stop the import of energy from Russia. And if this scenario is unlikely to be realized in the near future (Europe purchases 40% of the gas used in the Russian Federation), the Old Continent definitely does not intend to increase the share of Russian gas. All this calls into question the return of Russian influence to Turkmenistan, which, apparently, will continue to sell gas to the PRC, and politically go under the influence of Turkey, which is actively operating in the ideological plane of the region. In addition, Turkmen gas can also flow to Europe through Turkish territory – the Baku-Tbilisi-Ceyhan gas pipeline has been built and operates for this.
Russia’s financial difficulties also call into question the resumption of close economic interaction between it and its structures with Uzbekistan, whose president Shavkat Merziyoyev has repeatedly expressed a corresponding desire. In particular, he had in mind the expansion of cooperation with the EAEU, with countries of which 70% of the trade turnover of Uzbekistan passes. In the context of Russia’s “impoverishment”, the Union will be much less attractive to Tashkent.
Kazakhstan in this context occupies a certain intermediate position. Being integrated with Russia within the framework of the EAEU and the Collective Security Treaty Organization on the one hand, Nur-Sultan is more interested than other states in the region in its strong economy and adequate relations with the West. This is not surprising, because it is through the Russian Federation that 80 million tons of Kazakhstani oil is exported to Europe annually, and Russian companies (in particular, Lukoil) are the main investors in the key gas industry for the republic. In the event of a deterioration in the financial situation in the Russian Federation, even if planned and justified, Kazakhstan will experience no less serious economic problems.
Obviously, all those niches that the Russian Federation, due to its problems, will be forced to gradually abandon, China will try to occupy. At first, it will be difficult for the Chinese to do this – especially in Kazakhstan and Kyrgyzstan, integrated into the EAEU and the CSTO. However, economic feasibility, as part of the basis of social development, as a rule, takes precedence over any political restrictions, so the described scenario becomes a matter of time. In the event that Moscow does not gain a reliable and comparable source of income, it will have to leave Central Asia.
It is noteworthy that it is precisely the strengthening of interaction with China that is considered by some Russian politicians and experts as the key to the country’s economic survival under the conditions of sanctions, however, such interaction, in the context of the incomparability of the economies of the two countries and the rivalry of the Russian Federation and China in Central Asia, cannot and will not be equivalent. Rather, we are talking about a possible economic dependence that Moscow may fall into from Beijing.
This perspective, by the way, is also understood in the West – French President Macron spoke about this, arguing the expediency of Russia’s return to the G7. However, at the moment, the United States and Europe prefer to face the prospect of an independent and strong China, instead of a strong and loyal Russia. During the G7 summit, there were also opposed assessments of the situation, but the majority of countries in the West are still against Moscow, which means that it is still, albeit slowly and reluctantly, retreating under the economic pressure of China in Central Asia.
(The views expressed in this article belong only to the author and do not necessarily reflect the views of World Geostrategic Insights)
Image Source: Caravanserai