Ibn-Khaldun Paper Series April 2015

Resurgence of

Russia and China

Ibn-Khaldun Paper Series

April 2015

Resurgence of

Russia and China

1

IISA Annual Strategic Brief for the Resurgence of Russia

and China Programme

Contents

Summary.............................................................................................................................2

Introduction .......................................................................................................................3

Chapter 1: The destabilisation of Eastern Europe: Russia’s historical perception of

insecurity and its repercussions for modern Europe......................................................5

Chapter 2: ‘The Cold war is dead, long live the cold war’: Western response to the

Rise of Russia and China in perspective..........................................................................9

Chapter 3: Rise of an Empire? The Internal Dynamics of China...............................13

Chapter 4: The revival of gunboat diplomacy? China’s assertive push in the South

China Sea and its soft-power ambitions in the Asia Pacific.........................................18

Chapter 5: Syria and beyond - Russia & China in the MENA region........................26

Chapter 6: Russia and China in South Asia and the US Afghan withdrawal............33

Chapter 7: Russia and China in Central Asia: emerging trends................................36

Chapter 8: Global economics and the Sino-Russian relationship...............................39

Conclusion .......................................................................................................................45

References ........................................................................................................................50

About the Authors...........................................................................................................57

About IISA and the ‘Resurgence of Russia and China programme’..........................58

2

Summary

China has focused its attention on East and Southeast Asia, attempting to gain control of

the region through a combination of assertive tactics which stop short of military

intervention. China has combined this with attempt to build soft power by promoting the

‘Asia-Pacific dream’.

Russia’s annexation of the Crimea and intervention in Eastern Ukraine have their roots in

Russian fears of encirclement and it has used the tactics of 19th century ethno-nationalists

to justify this intervention.

The West has been slow to react to Russian actions in Ukraine but has ramped up

sanctions to hit the energy sector, vitally important to the Russian Economy.

Since becoming Chinese Premier, Xi Jinping has pursued the idea of the 'Chinese Dream',

creating prosperity and cracking down on corruption. This has increased the regime’s

legitimacy in many citizens’ eyes but also centralised power around Xi. This will have a

significant impact on both foreign and domestic policies.

In the MENA region Russia has taken a leading role in the Syrian conflict, vetoing

military action and leading the efforts to dismantle chemical weapons, whilst also

maintaining its relationship with neighbouring countries which fervently oppose Assad's

regime. China has increased regional links, with 60% of its oil supplies coming from the

region, meaning that it has increasing interest in stability.

Russia and China have a strong stake in South Asian stability, with both fearing it could

be a conduit for extremism into their territories, especially China’s Xinjiang region.

Russia has sought to shore up its influence in Central Asia by offering fast-track

citizenship to Russian speakers. However China is gaining increasing influence and

leverage over Central Asia and may be able to displace Russia in the future.

Russia’s deteriorating economic position has made it increasingly dependent upon China.

This is going to have a significant impact on global power distribution as China will have

more control over Central Asia and has used this power to begin to reshape global

financial institutions.

3

Introduction – Usama Butt

Since the dawn of the 21st century, the

Islamic world has been centre stage of

global power politics. The Islamic world and

its different regions has been the sticking

point around which international security

and governance agendas seemed to evolve;

from the US-led Global war on terror across

the Islamic World, to the internal turmoil of

the Arab Spring and post Arab revolution

crises that have shaped and reshaped global

security agendas. Yet, in an almost echo of a

forgotten history; Russia arises from its

shadows and the Crimea and Ukrainian

crisis emerges on the global stage. Equally

so, a more assertive China under the

leadership of its new premier Xi Jinping has

started using its military muscles in the Asia

Pacific and beyond, and started to transform

the internal system, thus forcing the US to

consider ‘rebalancing’ the Asia Pacific

region.

All of these developments seem to have

emerged in the last two years and western

strategy looks to be reacting to the rapidly

changing world around it, instead of shaping

the change. But is it really so? Has the world

around us change dramatically and

suddenly? A rational explanation is and

should be, of course not. Whilst the global

focus remained on denying Islamist Jihadist

forces, especially Al-Qaeda and its affiliates,

a stronghold (a strategy that backfired on

itself as the situation in Iraq, Syria and

Afghanistan demonstrates), as well as

making the international system -with all its

faults- work at all ‘costs’; other global

powers i.e. Russia and China have slowly

but steadily accumulated both soft and hard

power.

History is a cruel thing; it does not favour

those who do not pay attention to it and it

almost certainly does not forgive those who

do not learn from it. Yet the West - first in

its post-cold war ‘power mode’ and then in

its post 9/11 ‘avenger mode’ has made both

such mistakes repeatedly. Chinese

‘ambitions’ in different regions of the world,

including the Asia Pacific, Africa and

Chinese attempts at spreading its ‘cultural’,

as well as huge western trade deficit in

China’s favour have signalled a shifting

global power balance. Russian manoeuvring

in Central Asia, its use of energy weapons to

control its Eastern European neighbours and

last but not least Russia’s invasion of

Georgia should have been a stark reminder

that something was changing in the

international order. Russia was certainly not

a spent force and China was not just an

economic power that wanted to spread its

‘soft power’ from trade, investment and

culture.

In fact the western policy of ‘jumping in

first and evaluating later’ in the Islamic

world has given a huge advantage to Russia

and even more so to China. Whilst the West

got bogged down in almost unending wars

in Afghanistan and Iraq, the Chinese and

Russians used these policy disasters to their

advantage. The thing about ‘soft power’ is

very simple; to be effective, it needs to be

backed up with ‘hard power’. China in

particular has accurately understood what

4

‘power’ means but most importantly that it

comes in different forms. The Chinese may

have cleverly sneaked in where the US and

Western ‘hard power’ was creating gaps for

‘soft powers’ but quite oppositely the

Russian jumped in with their ‘hard power’

for example in Georgia where Western ‘soft

power’ was not backed up with their ‘hard

power’.

In this game of hard and soft power, known

as ‘smart power’, comes the Arab revolution

and the West again has not ‘acted’ but

‘reacted’ to events. This of course plays

right in the hands of Russia and China and

in an almost U-turn of global history, Russia

starts dictating terms in Middle Eastern

politics. Russia and China also converge not

just over the issue of Syria but on other

important global issues. Whilst the West and

the ‘new east’ i.e. Russia and China play cat

and mouse; the Islamic world where most of

it started is completely overlooked. The

universities, governments and think-tanks in

the Islamic world have almost no notable

programmes on China or Russia whereas

both Russia and China, through more

rigorous cultural diplomacy - be it

Confucius institutes or more assertive

diplomacy - have a more thorough

understanding and greater hands on

involvement in the different regions of the

Islamic world.

This is precisely why the Institute for

Islamic Strategic Affairs (IISA) started its

programme on the ‘Resurgence of Russia &

China; Implications on the greater Mid-East

and wider Islamic world’ in 2014.

Throughout 2014 and 2015 we have studied

and researched different angles of issues

relating to power, politics and diplomacy of

these emerging powers and their internal and

external dynamics, especially their

interactions with the Islamic world as a

civilisation and its different regions. This

paper is our annual strategic brief which

summarises the major trends and dynamics

pertaining to the resurgence of Russia and

China and how they have particularly

impacted on the Islamic world both

regionally and globally in 2014.

5

Chapter 1: The destabilisation of Eastern Europe:

Russia’s historical perception of insecurity and its

repercussions for modern Europe – Timothy Williams

In March 2014, Former US secretary of

state Hillary Clinton compared Putin’s

annexation of Ukraine’s Crimean peninsula

to Hitler’s annexation of the

Czechoslovakian Sudetenland in 1938.

Although the analogy clearly has its

weaknesses, namely the world being very

different to 1930s Europe, it did make a

pertinent point about the tactics which Russia

has used in Eastern Europe and in the way

that it views national security.

The formation of Russia,

from imperial power

under the Tsars, to Soviet

Communism and into the

post-Cold-War era of the

1990s has been one of

territorial ambitions,

imbued with a sense of

vulnerability. Positioned

on the fringes of Europe

and the steppes of Asia, with no geographical

protection, Russia’s raison d'État has been

expansionism to protect against attack. Yet it

is in the post-modern world that these fears

still remain and continue to influence Russian

foreign and domestic policy.

One of the major justifications for recent

Russian polices in Eastern Europe has been

to declare that Russia has a responsibility to

all Russian speakers. In March 2014, Putin

declared that it was Russia’s responsibility to

protect Russian speakers throughout the

world and that they had the right to Russian

citizenship.1 These are however justifications

for actions intended to increase Russian

‘security’. To understand why language is

used to justify intervention in Europe, we

must look at the history of Europe for the

past two centuries.

The use of language as a definer of which

nation people should belong to has its roots

in the formation of the ethno-nationalist

states of Europe in 19th and 20th Century.

Seen by many as a way to overcome the

injustices of European imperial rule, ethno-

nationalist movements

emerged to create their own

states. It did not take long for

these movements to be

exploited by nation states to

help further their territorial

ambitions through using

agent provocateurs to create

a crisis, which could then be

used to justify foreign

intervention to protect its

‘people’ lying within a foreign border.

European history is patchwork of empires

and states which have controlled different

parts of the continent at various times

throughout history and the same justification

of language would entitle several countries

domain over much of the globe due to the

prevalence of these languages. Putin has

therefore used the principles and tactics of

19th Century ethno-nationalism to further his

own territorial and geopolitical ambitions.

Putin has used the

principles and tactics

of 19th Century ethno-

nationalism to further

his own territorial and

geopolitical ambitions

6

Viewed through this historical lens, the

Ukrainian move towards the EU in early

2014, prompted by

overthrowing President

Viktor Yanukovych, was

seen as a shift away from

Russia’s sphere of

influence. Fearing losing

its buffer zone and a

potential NATO state on

its borders, Russia acted

to support small groups

of separatists in Eastern

Ukraine who were less

willing to join the West, seeing themselves as

more Russian than Ukrainian. Ukraine,

independent of Russian influence, was also

more likely to refuse to renew the Russian

lease on Sevastopol port for the Russian

Black Sea fleet, which would have removed

Russian access to a warm water port. Russian

belief that the Ukraine’s political shift was a

security threat has elicit the following

response.

Russia’s response began by sending

unidentifiable troops to the Crimea,

nicknamed ‘little green men’ (see figure 1

right) because of their lack of identifiable

allegiance. They were said to be ‘patriots’

who aimed to protect Russian speakers from

the rise of fascist groups in Ukraine, yet it

was quite clear from their equipment and

other factors that they were Russian soldiers,

a fact later confirmed by President Putin.2

Yet before these Russian soldiers arrived

there was no discernible rise in violence in

region, especially aimed at Russian speakers.

However with the Russian presence, the

Crimea seceded from Ukraine in a

referendum which had signs of clear

corruption. A leader of the ‘Russian self-

defence’ forces in Crimea, Igor Girkin, stated

that the majority of the law enforcement,

administration and army of Crimea were

hesitant to support the "self-defence" forces

and they actually had to

"forcibly drive the deputies

to vote [to secede from

Ukraine]", and only the

presence of regular Russian

army in Crimea "made the

whole thing work".3

Following the secession,

the Crimea was absorbed

into the Russian federation.

Putin has since confirmed

that he planned to annex

Crimea weeks before the referendum.4

Since the annexation, Russia has escalated its

intervention in Eastern Ukraine. In the

Eastern Ukrainian regions of Donetsk and

Luhansk, pro-Russian groups declared

independence from the Ukrainian

government and separatist groups started

carving out territory. Russia has provided

support to these groups with weapons and

manpower, giving them a distinct advantage

against the Ukrainian army beset by outdated

weapons and decimated by corruption.

Russian heavy weaponry and soldiers have

played a decisive role in enabling the

separatists to expand their area of control in

eastern Ukraine. Although it is unclear

exactly what Putin’s eventual aim is, it seems

that he seeks to expand Russian control in

Russian heavy

weaponry and soldiers

have played a decisive

role in enabling the

separatists to expand

their area of control in

eastern Ukraine

Figure 1. One of Putin’s 'little green men'

7

eastern Ukraine and eventually create a land

corridor with the Crimea and a buffer zone

against the rest of the Ukraine. Although

Putin has denied Russian involvement in

eastern Ukraine, the evidence clearly

demonstrates strong Russian support.

The episode also illustrates another element

of Russian policy shaped by its previous

history. In the Crimea and in Eastern Ukraine

Russia has been demonstrating the use of

Maskirovka, a Russian term for a holistic

tactic of denial and deception. It is a process

whereby you manufacture the fog of war and

create the uncertainties, allowing you to

exploit the confusion.5 It has long been an

integral part of Russian military training and

predates the Russian state by

centuries. These tactics have

been used to great effect by

Putin in Eastern Europe,

allowing him to slowly take

territory by using proxies,

whilst avoiding a clear state

on state war. This has been

exemplified by the use of

Putin’s ‘troll army’, a large

group of Russian’s paid to

post pro-Russian and anti-

Western propaganda online.6 This has helped

to confuse the narrative, allowing Putin to

benefit from the state of confusion.

Putin’s intervention to protect Russian

speakers and prevent the rise of neo-fascists

in Ukraine has created the problem which it

was ostensibly intended to solve. These

events have provoked a pushback from

Ukrainian citizens and created the violence

and internal breakdown of security which

was the original justification for intervention.

The Ukrainian military, significantly

weakened by corruption, a lack of resources

and fighting a superiorly equipped force

backed by Russia has had to rely upon militia

groups, some of which are made up of neo-

fascists, to bolster their capabilities. The

Ukrainian government is also resorting to

more draconian policies to help fight the war.

Having removed conscription in 2013, the

Ukraine reintroduced it in 2014. With over

85,000 men avoiding the draft in 2014,

Ukrainian officials have cracked down on

civil liberties such as restricting the freedom

of movement for military aged men.7

The conflict seems to be becoming

intractable as diplomatic solutions fail to

materialise. Despite several attempts at

ceasefires, most have broken down quickly,

with each side blaming the other. Although

there may be some truth in

these claims, it appears to be

another instance of

Maskirovka, as the pro-Russian

separatists have consistently

improved their strategic

positions following these

ceasefire attempts. The fall of

Debaltseve was a clear

indication of this tactic as pro-

Russian fighters took the

opportunity provided by a

ceasefire to take the strategically important

town.8 Russia continues to use the situation

for its own ends and rejected Ukrainian calls

for UN peacekeepers to monitor the

ceasefires. The current ceasefire is unstable

with each side using it to strengthen their

forces.

The longer that the conflict in Eastern

Ukraine continues, the more likely it is to

become a frozen conflict, allowing Putin to

create a small self-declared state similar to

South Ossetia or Abkhazia. This would

create a buffer zone which Putin desires.

There have also been indications that South

The West has

reacted to the

Russian threat by

training Ukrainian

soldiers and

providing other

non-lethal support

8

Ossetia and Abkhazia may be increasingly

absorbed under Russian control, having acted

as semi-independent states for several years.9

The West has begun to react to the threat

from Russia, with NATO forces becoming

more present and visible in member states

close to Russia. Rearmament is slowly

occurring in other Eastern European nations

and the Baltic States are increasingly feeling

threatened. Lithuania has reintroduced

conscription to boost its military capability.

The West is slowly moving

up the level of support with

the US and UK now

providing training to the

Ukrainian forces and non-

lethal aid. The US is also

mooting the idea of

sending weapons to

support Ukraine. This is

likely to help it in the short

term but not deter Russian

intervention, which will

likely increase. Russia is

likely to continue to

support the separatists and

try to create a land

connection to the Crimea, with the aim of

creating another frozen conflict and slowly

absorbing the territory into the Russian

federation. The Ukraine conflict is therefore

becoming a proxy war with Russia

continuing to arm, finance and provide

manpower to the separatists.

It is difficult to determine how Europe will

react to Russia in the long term. It may have

a beneficial effect on Europe, reversing the

increasingly separatist feelings within the EU

which threaten to pull it apart. It could

however exacerbate the separation and speed

up a European breakup. If European leaders

don’t tackle the grievances of southern

nations such as Greece and Cyprus, Russia

may step in to further ferment discord and

break up the union. Whilst there are some

genuine grievances from Russia, including

NATO expansion to the East and Western

failure to take account of Russian views of its

security, the Russian reaction has been

counter to both international law and the

general norms of state behaviour. Without

diplomacy and compromise from both sides,

then it seems likely that a second cold war

may be beginning, but with a very different

dynamic given Russia’s

growing dependency on

China (see chapter 8). We

must however consider that

a weakened Russia is a

dangerous Russia, with

Putin feeling threatened, he

is more likely to take risks

and attempt further

brinksmanship.

Without a settlement soon,

Ukraine may shift further

towards total war, with

foreign fighters being

drawn in. It has already

drawn in Chechen fighters on both sides of

the conflict, with it potentially becoming a

proxy battle for their own frozen conflict.10

The fighters are currently non-Jihadist and it

may help divert young Chechens away from

joining ISIS in Syria. However, in the long

run, it could help to import hardened Jihadist

fighters from Chechnya and Syria into

Europe. It is therefore imperative for Europe

to find a solution to the conflict, or the

security of Europe could be threatened, not

just by Russia, but also Jihadist fighters in

mainland Europe. Europe stands at a cross

roads; the way it deals with the Ukraine crisis

is likely to shape the whole nature of Europe

in the years to come.

It is imperative for

Europe to find a

solution to the conflict,

or the security of

Europe could be

threatened, not just by

Russia, but also

Jihadist fighters in

mainland Europe

9

Chapter 2: ‘The Cold war is dead, long live the cold

war’: Western response to the Rise of Russia and

China in perspective - Usama Butt & Angeliki

Kontodimos

The rise of Russia on world stage starts from

the decline of Boris Yeltsin and the

emergence of a new figure on the Russian

political scene; Vladimir Putin. An ex KGB

officer; Putin inherited an economically

stagnant, proto western, internally divided

and globally disoriented Russia. Putin,

unlike his predecessor, fully realised

Russian potentials and its geo-strategic

importance. He understood that although

Russian ideas may have been ‘defeated’ as

Soviet Union fell; its soft

and hard power remained

intact. He also understood

that Russia remained a

regional, nuclear and

military power.

Above all, Putin

understood fully that it was not an ‘end of

history’ as Fukuyma11 claimed and that the

world may have changed momentarily but

not completely. The rise of Putin coincided

with other internal and external phenomenal

developments including consistently high

global oil and gas prices and the events of

9/11, with the subsequent US/NATO

obsession to eliminate Islamists and

Jihadists ideologies. When President Bush

claimed that he had ‘looked into Putin’s

soul’12; he failed to observe that Putin had

also looked into his soul too. Russia had

been involved in the Middle East for

decades and Putin understood that US

ventures to change Middle Eastern dynamics

will not succeed.

While US and the west was involved in the

so called global war on terror (GWOT)

Putin, trained by the KGB, started to assert

his power internally by getting rid of

oligarchs and their monopolies. Having

largely defeated the Chechen rebellion in

late 90’s he was also successful in creating

an ‘enemy’ that Russians could align against

which rekindle once disoriented Russian

identity. The rise of Russia - put simply - is

intertwined with the rise of Putin and the

rise of Putin is intertwined

with the decline of the west

due to its ventures in the

Islamic world.

China on the other hand

fully understood that power

does not come in one form.

Chinese success has been due to its rigorous

understanding of how power works, in

particular how west has been able to use

different forms of power to consolidate

power over the centuries. The Chinese

cautiously welcomed capitalism and western

economic thinking in a way which would

benefit China without weakening the central

authority and power of the communist party.

China understood that to change the world

to China’s benefit, it had to understand how

western power works and then work within

it to eventually tilt the balance to its

advantage.

The process, which began in the 1990s, is

now starting to pay off. China have been

keenly observing the west and working

Putin understood

fully that it was not

an ‘end of history’ as

Fukuyma claimed

10

within the international system to their

strategic advantage. The rise of China once

again coincides with the western military

involvement in the Islamic world after 9/11.

China took full advantage of the gap in the

market for soft power in different regions of

the Islamic world and across the globe,

while US and the west was doing exactly the

opposite i.e. demonstrating its hard power

across the Muslim world in Counter-

terrorism efforts.

The near simultaneous rise of Russia and

China unsurprisingly coincides with short-

sighted western policies in Iraq, Afghanistan

and other parts of the Islamic world and the

global stage. In simpler

words; Russia and China

crept onto the global

power stage while the west

was looking the other way.

This brings us to the

situation in the past few

years i.e. post Arab

revolution period where

China emerges as a key

player in Asia Pacific and

Africa, and Russia in the

Middle East, Caucasus and

Eastern Europe.

In retrospect, western responses to Chinese

and Russian advances have at been at best

slow and at worse counterproductive. Both

Russia and China - taking advantage of

western engagement in the Islamic world -

have also been able to play one western

power against another. While NATO was

fully involved in Afghanistan over the last

decade; both China and Russia looked to

Europe. ‘Divide and rule’ may be too strong

a phrase to use but Sino-Russian policies

have been very close to this. Both China and

Russia took strategic advantage of the

economic meltdown. China in particular saw

a huge shift of trade deficits (Currently US-

China trade deficits stands over $300 Billion

whereas EU’s deficit to China is in excess of

$120 Billion)13. This of course is not to say

that economic meltdown did not impact on

Sino-Russian internal dynamics, but the

strategic advantage both countries enjoyed

outweighs the internal economic losses.

Furthermore, China in particular has been

very good at playing a ‘divide and rule

game’ with EU. It quickly realised that

Brussels does not have actual central

authority and member states often enjoy

independent policies. Beijing consequently

grew closer to German

block whilst keeping the

UK-French block at bay.

China has also invested

(diplomatically and

economically) in Eastern

Europe. Russians have also

established similar patterns

while establishing closer

strategic and trade

relationships with stronger

economic member states,

especially Germany. In

essence then; while Russia and China have

played a classic ‘divide and rule’ card; the

most important thing to remember is that

they did not, and to some extent, still do not

face any challenges and obstacles from EU

or other western countries that may hinder

this practise. Although now UK is coming to

realise the ‘Russian threat’. However, the

Ukraine episode and the subsequent

European response demonstrated that while

almost all member states and Brussels

agreed that Russia had to be stopped, the

West has largely remained slow and divided

in its strategic responses.

The western ‘strategy’

seems to hover

around four year

administration cycles

which are in effect not

a strategy but set of

‘short term policies’

11

This clearly points to a Western strategy of

‘not having a strategy’ both in peace and

war. The western strategy seems to hover

around four year administration cycles

which are in effect not a strategy but set of

short term policies. In retrospect; China in

particular, and Russia to an extent, have

clear strategic goals. One only has to

superficially analyse Chinese white papers

published in the last few

years. Chinese strategic

vision of 2020 and its

subsequent actions to

meet that strategic vision

are but one aspect of

this.

Western Economic Responses to Russia

Economics remain a pivotal driver of

international change and the economic

relations between the EU and Russia and

China in 2014 are important to observe.

Since the beginning of 2014, significant

capital flight has hit the Russian Federation,

mainly as a result of Russia's longstanding

structural economic problems causing a lack

of certainty and stability in the Russian

business environment. During 2014 capital

flight from Russia reached over US$150

billion.14 Although the business

environment, unattractive for investors, has

played a paramount role in the greatest

capital flight from Russia since the 2008

recession, the significance of the East-West

crisis for this capital flight cannot be

doubted. Western reactions to Russia's latest

strategic moves have contributed to a

growing perception of Russia as financially

unstable and the Russian government as

indifferent to how detrimental its stances

might be for its trade relations and

consequently to its financial standing in the

world order.15

Following the annexation of Crimea in

March 2014, Western governments have

suspended all trade negotiations with the

Russian Federation and have introduced a

series of punitive economic measures

against the country. Western countries have

been introducing economic sanctions

targeting specific companies, including

major oil firms such as

Rosneft, Transneft and

Gazprom, as well as the

financial, energy and arms

sectors.16 The United States

along with the European

Union have gone even

further by introducing

specific bans targeting individuals known to

be close to the Russian government and

Vladimir Putin.17

More recently, on the 3rd of October 2014,

the United States government announced

that Russia would no longer be eligible for

the Generalized System of Preferences,

according to which developing countries

benefit from preferential tariffs. The United

States has publicly justified this decision,

which is unlikely to have any concrete

impact on the Russian economy as the GSP

program expired in 2013 and Russian

imports to the US have not been subject to

preferential treatments since then, by

referring to the guidelines of the GSP

program.18 However, this move has been

seen by Russia as a symbolic move, which

despite it being unclear whether it will have

negative effects on Russian external trade,

represents a signal from the United States,

indicating its unwillingness to cooperate

with Russia in finding an amicable solution

to the Ukrainian crisis and normalizing their

trade relations.19

The West has stepped

up sanctions by

targeting the Russian

energy industry

12

The West has also stepped up sanctions by

targeting the Russian energy industry. They

have stopped the transfer of cutting-edge

technologies for the energy industry to

Russia, thus hampering their future

production. They have also banned loans to

state-owned banks and energy companies,

aimed at preventing the development of

further oil fields.20 With Russia so

dependent upon the energy industry, this is

having a significant impact, which is likely

to increase in the next few years as a lack of

access to Western oil technology is likely to

reduce output.

Russia’s economic problems have increased

since December 2014 with the sudden

collapse in the value of the Rouble. This has

been caused by several factors (see chapter

8), including Western sanctions. There are

also suggestions that the West is also

considering banning Russia from the Society

for Worldwide Interbank Financial

Telecommunication (SWIFT) interbank

transfer system. Were this to occur, it would

make money transfers with Russia

extremely difficult and would significantly

increase capital flight. In this circumstance

Russia has claimed that they would create a

rival bank transfer system and Russian PM

Medvedev has recently said that ‘our

economic reaction as with any other reaction

[to a SWIFT ban] will be unlimited’.21 What

this entails seems unclear, but it would

almost certainly involve using Gazprom to

cut off gas supplies to several Eastern

European countries, with other measures

likely. Unless there is a significant

improvement in the conflict in the Ukraine,

which seems unlikely, Russia is likely to

become increasingly isolated from the West.

China-EU Trade Relations

With trading of more than €1 billion a day,

the European Union is China’s biggest

trading partner, while China is the EU’s

second biggest trading partner.22 Along with

the adoption of the 2020 Strategic Agenda

for Cooperation in November 2013, China

and the EU announced the opening of

negotiations for an EU-China

comprehensive investment agreement.23 In

March 2014, the EU also committed to

opening negotiations for a Free Trade

Agreement (FTA) with China after the

successful conclusion of the Investment

negotiations.24 However, despite the

significant progress made in bilateral

cooperation, the EU believes that there are

still many structural issues in the Chinese

economic system that need to be addressed -

lack of transparency, non-tariff barriers to

trade and the minimal protection of

intellectual property rights - before

proceeding with a Free Trade Agreement.

These issues have also resulted to China and

the EU being parties in various trade related

disputes at the multilateral-WTO level.

China and the EU’s continue to have a

strong economic relationship and there have

been indications that China’s willingness to

maintain good economic relations with the

EU are impacting on their relations with

Russia. Several Chinese investment banks

have pulled out of investment talks with

Russian companies as they want to avoid the

ire of the West and do not want to be seen to

help Russia circumvent US and EU

sanctions. 25

The changing economic position vis-a-vis

Russia and China is having a dramatic

impact upon their relationship. With

Russia’s economy seemingly collapsing and

China benefitting, the terms of their

relationship is also changing. This will be

addressed further in Chapter 8.

13

Chapter 3: Rise of an Empire? Internal Dynamics and

Emerging Trends in China – Dani

The Leadership of President Xi: How Far

do his reforms go?

Although it is too early to provide definitive

judgements about President Xi Jinping’s

leadership, particularly if following the

pattern of China’s last top leadership

succession, which requires ten years, yet a

tentative assessment is still possible. This is

mainly based on the data since 2012, his

appointment as the General Secretary of the

Central Committee of the Communist Party

of China (CPC) and the Chairman of the

CPC Central Military Commission and later,

since 2013, his appointment as the President

of the People’s Republic of China (PRC)

and the Chairman of the PRC Central

Military Commission.

Moreover, this analysis

is necessary to interpret

what is happening and

presumably what will

occur in the future. The

dynamics and changes

of China of the last three decades, makes

this analysis more significant to see.

There has been a mixed reaction towards

Xi’s leadership, citing his strengths and

weaknesses.26 However, there is generally a

relatively positive appreciation of him,

especially from internal stakeholders,27 with

many seeing the spirit of renewal and

rejuvenation spreading across the country.

The ‘Chinese Dream’ is the neologism of

the regime, aimed at becoming the zeitgeist

for Xi’s China and is closely linked to the

path of transforming China into a developed

country, focussing on the two most

important centenary milestones for the

Chinese Communist Party to achieve this.

These are the century anniversary of

Communist Party of China in 2021 and the

formation of the People’s Republic of China

in 2049. To this end, some reform agendas

have been set and started. The anti-

corruption campaign is the flagship

programme that aims to catch both ‘flies’

and ‘tigers’ and thus hopefully promote

more effectiveness and efficiency of the

government. The economic reforms have

been intensified, strengthening the market

economy through furthering economic

liberalisation. The military modernisation is

proceeding, with the aim

of guarding and

maintaining national

security. Some other

improvements, including

legal reform have been

initiated; however, Xi’s

reform agenda lacks a clear of plan for

political reform to improve governance,

representation and diversity. This is one of

the strongest critiques against Xi’s

leadership.28

While there was a strong expectation that Xi

would be more accommodating to diverse

opinions and flexible in handling criticism

compared to his predecessor, owing to his

exposure to the West, including a short time

in the United States during 1980s, this hope

seems to be diminishing. He has increase

some limits upon civil liberties in the hope

of maintaining political stability. The tighter

control over public access to, and freedom

Xi Jinping’s anti-

corruption campaign is

his flagship programme

14

of expression on, the internet, the harsher

oppression against religious and ethnic

rights in some regions, and the stricter

approach to any dissidents, are but a few

examples of this. All of these are done in the

name of nationalism and public interests.

Xi’s reform agenda has been viewed by

some as a merely populist campaign,

intended to increase his political image and

gain broader support and legitimacy in the

eyes of the Chinese people. Moreover, Xi

has focused more on building his own

domestic legitimacy, a necessary step to

advance the rest of his reform agenda.29

As the fifth generation of China’s

Communist leadership, Xi is facing his own

challenges including several corruption

crises and significantly slower economic

growth after more than three decades of

miraculous growth. Xi’s

challenge is to make

significant changes,

while at the same time,

looking to build

continuity and stability.

It is also clear that Xi

would like to reform

some areas, but also maintain the status quo

on the other areas. His high level of

education and decisiveness also brings him

charisma comparable to the late Deng

Xiaoping and even Mao Zedong himself.

Yet, his one-man show is considered as a

betrayal against the collective leadership

implemented since post Deng period, and

acts as a reminder of the possibility of the

emergence of a strong man with higher

centralised authority, or even a dictator.30

His background as the son of Xi Zhongxun,

a national hero who fought with Mao during

revolutionary period, as well as his step-by-

step political career, gives him significant

legitimacy and knowledge to lead a possible

reform. However, these aspects also indicate

that there will be limits to the reforms.

While a certain degree of reform is

expected, there are fundamental questions

about how far or fundamental it will go.

Reflecting the paradoxes above, it is more

realistic not to expect too much from Xi.

Nevertheless, it is more appropriate and

accurate to keep watching and observing

him and his rest of the period, at least until

his first term which is going to finish in

2017 or 2018.

Reform Policies: How Important is the

Anti-Corruption Crusade?

The reform agenda cannot be separated from

the momentum of the top leadership change,

from the fourth generation of President Hu

Jintao and Premier Wen Jiabao to the fifth

generation of President

Xi Jinping and Premier

Li Keqiang. This reform

plan which came out

since the 18th National

Congress of the

Communist Party of

China in 2012, has to be

put into context of the economic and

political situation. Xi directly leads two

newly established groups dealing with the

issues; the Comprehensive Deepening of

Reform group and the National Security

Commission. While the economic reform

started in 1978 following the death of Mao

and the embraced capitalism, the current

reform plan is on the verge of the economic

sluggishness and the political crisis. The

case of Bo Xilai, for example, has shown a

bitter reality and deep impacts to the

Chinese people and the global public, as the

case did not only involve one of the highest

officials in the country but also foreign

actors. As shown by the legal decision given

Political and economic

reforms are likely to be

far slower than anti-

corruption reforms

15

to Bo, the problem is mainly associated to

the massive corrupted acts both in terms of

quality and quantity, which is particularly

pervasive in the circle of public sector

officials. As a result, the anti-corruption

crusade has become one of the most

essential points on the reform plan.

The anti-graft campaign under the slogan of

catching both flies and tigers has brought

significant changes. Data released by the

Chinese Communist Party indicates that

over 100,000 party members have been

disciplined as part of the investigations.31

The anti-corruption efforts have not shyd

away from high profile figures with Zhou

Yonggang, the ex-member of highest body

in the CPC, the Politburo Standing

Committee and the previous Secretary of the

Central Political and

Legislative Committee,

being charged with

corruption. Another

prominent figure caught

with corruption charges is

General Xu Caihou,

another Politburo member

and the Vice Chairman of

the Central Military

Commission during Hu’s period. These bold

actions are believed to be part of broader

reform agenda led by Xi.32 Without charging

high ranking officials, it seems likely that

the reforms will not succeed. The belief and

reality is that corruption is endemic within

the system, tightly woven into the system

which causes bureaucratic barriers and

inefficiency utilisation. To expand its

military power, modernizing the People’s

Liberation Army (PLA) also depends upon

cutting corruption with military

institutions.33 On the other hand, this

corruption probe may backfire, creating

distrust and instability, and threatening to

decrease support toward the Xi’s regime.34

This dilemma has forced Xi to take decision

prudently and strategically.

At the economic sector, after reaching two

digits for decades, the slowing of economic

growth is becoming the new normal, and the

main issue is to maintain growth which is

more economically, environmentally and

socially sustainable.35 To be more resilient

in facing the global crisis, is another

challenge to solve. The lessons from the

recent US and Europe crisis have indicated

the need for China to rely more on domestic

market than exports. Opening market and

financial liberalisation are being done,

including lessened control over the Yuan.

However, there are some issues, such as the

anti-monopoly law and the information

security which may

threaten any foreign

investments. In addition,

the huge inequality gap and

rapid environmental

degradation are still

haunting the Xi’s regime.

Other reforms are under

way too, like judicial

reforms which strengthen

the rule of law process in the local level.36

This legal reform is considered essential,

despite the many hurdles.37

In general, the anti-corruption plan has

become the highlight of the reform agenda.

On one side, it is fundamental due to its

contribution to executing other reform

agenda. The severity of corruption in China

definitely becomes a huge barrier for more

comprehensive and rapid reform. Yet, on the

other side, the anti-corruption crusade is

important in establishing a stronger

legitimacy among people, particularly about

Under Xi’s leadership,

China’s foreign

policies are not only

considered assertive,

but also proactive

16

the CPC’s rule in China. Worsening

corruption would certainly send the message

to the Chinese people that the regime cannot

be trusted and sustained anymore.

China Assertive Foreign Policies: A

Paradox?

Following its increasing soft and hard

power, China’s foreign policies have

become considerably more assertive in the

past few years. China has taken a more

assertive approach to protect its national

security interests and ensuring access to the

resources necessary to maintain economic

growth. Furthermore, China regards the

USA’s ‘pivot to Asia’ as a policy of

containment, which is a threat, both to

China’s quest of resources, but also to its

national security. Cyber warfare has become

the newest area of conflict between the two

nations, with each conducting cyber

espionage. The United States’ continued

relations with Taiwan and provision of

military equipment is a further source of

tension. The tension has been heightened by

US support for countries in the region which

feel threatened by China’s assertive policies.

The US has maintained strong ties with the

traditional allies in the region, such as Japan,

South Korea and has also sought to increase

ties with countries including the Philippines

and Vietnam. Yet, the two nations remain

deeply interdependent, with Xi suggesting

that they have established ‘a new model of

big power relationship’, with economic

interdependence key to prevent tension

turning into direct clash conflict.38

While China has many border disputes with

its neighbouring countries, the dispute in the

East China Sea has received particular

attention. The dispute over the

Senkaku/Diaoyu Islands with Japan is one of

the most important territorial disputes for

China because of its importance to its

national identity. Despite the East China Sea

border dispute also involving South Korea,

China has focused much more on its

engagement with Japan.39 It is quite clear

then, that nationalist sentiment plays

important roles in this issue, in which the

historical accounts are never left aside. The

South China Sea is even more complex due

to the greater number of countries involved,

and clashes with the Philippines and

Vietnam over this matter, has stirred up anti-

China movement, in each country.

Another important issue is China’s

relationship with the Central Asia countries

and Russia, which is not only about

economic cooperation but security ones due

to the problem of separatism and terrorism

in the Northwest area. While the Central

Asia region has significant potential to

supply China with resources, particularly oil

and gas, China’s cooperation with these

countries in the region is also influenced by

Russia. Yet, the shared interest to encounter

the US and its western allies’ dominance in

global politics always opens the door of

cooperation opportunity between China and

Russia, with the Shanghai Cooperation

Organisation (SCO) going from strength to

strength.

China’s foreign policies in other regions are

also pragmatic, especially in terms of the

economic benefits. The relationship with

India, very unstable since their

establishment, is also driven by the

economic exchange, limiting the impact of

border disputes. Chinese relations with the

European Union (EU) function in a similar

way; while China is criticised over its

17

human rights abuses, economic cooperation

continues to increases.

Under Xi’s leadership, China’s foreign

policies are not only considered assertive,

but also proactive.40 China is trying to take a

bigger role in determining the regional and

international political landscape. Its

increasingly dominant role that China plays

in developing and maintaining emerging

power organisations such as BRICS and the

Asian Infrastructure Investment Bank

(AIIB) clearly demonstrate this. Xi’s foreign

policies are far more assertive than those of

his predecessors. Deng’s formulation of

“Hide and Bide”, the 1990s policy of an

“amicable, tranquil and prosperous

neighbourhood” and the even more recent

“Peaceful Rise”, contrast significantly to the

reality of Chinese foreign policy. There is a

significant disparity between China’s self-

perception and other countries’ perceptions

of it. China’s assertive foreign policies are

meant to protect its sovereignty, territorial

integrity and political economic interests.

However, these policies are increasingly

counterproductive in achieving their states

purpose, frequently give opposite results.41

If China fails to take account of these

differences of perception, it may find that

many more states turn away from it.

18

Chapter 4: The revival of gunboat diplomacy? China’s

assertive push in the South China Sea and its soft-

power ambitions – Timothy Williams

China’s ‘peaceful rise’ has been the national

mantra since the 1990s and has been used in

an attempt to assuage fears that it would use

its growing international significance to

remodel the international system. Although

China has made strong efforts to use soft

power to further its interests and has

generally adopted a policy of non-

intervention, the South China Sea

has been the region to first feel

China’s hard power. Its increasingly

assertive foreign policy is

significantly altering the region, and

in the process is demonstrating that

this peaceful rise is on its own terms,

whilst simultaneously demonstrating

the limits of Chinese soft power to

influence other’s actions.

The significance of the South

China Sea

The South China Sea is important to

China for several reasons. The first

is the significant economic

importance as about half of the

world’s merchant tonnage flows

through the region, carrying $5.3

trillion of goods annually.42 The Sea

is also rich in natural resources with

about 10 percent of global fishing

stocks and potentially vast energy

resources. Estimates for the region vary

from only a few billion barrels of proven oil

and gas reserves to 125 billion barrels of oil

and 500 trillion cubic feet of natural gas in

undiscovered resources according to the

Chinese National Offshore Oil Company

(CNOOC).43 There are also potentially large

deposits of Methane hydrates, which have

been touted as a significant future energy

reserve. As China is now the world’s largest

energy consumer and has indicated its

intention to provide 85% of its energy needs

domestically by 2020, this is a significant

factor in ensuring greater energy security.44

The second major reason is the national

significance that the region has to China.

The Chinese claim to the territory is based

Figure 2. The 'nine dash' line

19

upon historical records which they assert

date back to the 13th Century, although the

territory has only been claimed in its current

form since 1947 by Chiang Kai-shek’s

nationalist government. In 1953 the claim

was modified and the notion of the ‘nine-

dash line’ (see figure 2 above) was created

to include all territory within it.45 One of the

aims of China’s rise has been to recover

from the perceived humiliation of

colonialism from the 19th Century and

return to the preeminent position in the

international system which China enjoyed

for millennia. Not to protect China’s

territorial claim would seem to be a similar

capitulation. In 2012 China made the South

China Sea a core national interest; to

relinquish control would send a sign to the

nationalists that the government is weak.

The rising tide of nationalism within China

has already led to a stand-off in the East

China Sea with Japan over the disputed

Senkaku/Diaoyu Islands, with nationalists

calling for China to actively assert itself in

the region. The same forces are starting to

shape Chinese perceptions of the South

China Sea.

The third is China’s strategic concerns. The

South China Sea forms part of the Chinese

strategy to overcome their asymmetric

military capabilities vis-a-vis the US by

pushing the US beyond the ‘First Island

Chain’ which runs from the Kurile Islands,

through the main islands of Japan, the

Ryukus, the Philippines, and Borneo (see

figure 3 below). This is to establish an anti-

access/area denial strategy (A2/AD), aimed

at deterring the US from being able to bring

its naval assets close to the Chinese

mainland, therefore buffering China from

direct military threat. The eventual aim

seems to be to push the US beyond the

second island chain.

The region has not

experienced full peace for

several decades, with minor

territorial clashes between

China and Vietnam and the

Philippines; however the

last few years have seen an

escalation of the territorial

disputes, both in severity

and number as China now

has serious disputes with

all of the countries with

maritime territory in the

South China Sea. China

appears to be seeking to

create a sphere of influence

in the South China Sea and

surrounding areas, similar to the USA’s

Monroe Doctrine of the 19th Century. To

achieve this it has undertaken a long term

strategy to assert its de facto control of the

region through a novel strategy which falls

short of armed conflict, but has allowed it to

Figure 3. The 2 island chains

20

significantly alter the regional status quo by

slowly establishing regional dominance.

Para-gunboat diplomacy

This phenomenon has been called ‘para-

gunboat diplomacy’ by Christian Le Miere

and has been characterised by the combined

use of the Chinese coast guard, civilian

vessels and non-state groups to control

maritime territory without the negative

consequences of using traditional military

force.46 They act as maritime paramilitaries

and by their nature this makes it difficult for

traditional navies to respond because there is

no official military threat and therefore no

acceptable recourse to force. This has been

undertaken with the triad of establishing

control of maritime

territory, building

artificial islands and

populating existing

islands with Chinese

Citizens.

For several years China

has been using its coast

guard to defend its

territorial claims within

the nine-dash line, with

particular efforts in several key areas

including around the Spratly Islands, the

Paracel islands and the Scarborough Shoal.

This has included regularly detaining non-

Chinese fishing boats which enter the

territory within the nine-dash line, even if it

legally falls within another state's maritime

territory. They have also been intercepting

supply ships from reaching islands and

territory held by other states, in an attempt

to force them to leave. Chinese ships have

also been blamed for ramming and

subsequently sinking a Vietnamese fishing

boat.

These tactics escalated in May 2014 when

the Chinese National Offshore Oil Company

(CNOOC) towed the Haiyang Shiyou 981

oil rig into a position close to the Paracel

Islands and 120 nautical miles from the

Vietnamese coast, which is within

Vietnam’s 200 miles EEZ. They also towed

a second oil rig even closer to the

Vietnamese coast. The stated purpose was to

test for oil reserves. The oil rigs were

protected by an armada of Chinese ships,

possibly numbering in the hundreds and

consisting of a combination of Chinese coast

guard ships and small Chinese fishing ships

which swarmed around the oil rig to protect

it and intercept Vietnamese coast guard

ships. These were used to prevent

Vietnamese ships from

coming close to the oil

rigs. The combined use of

civilian vessels and coast

guard ships make an

effective force for

imposing territorial claims

on the region, without the

negatives of using actual

naval vessels.

The second significant

tactic China has employed is extensive

building in the region, including the

construction of artificial islands and

lighthouses. China has begun a major land

reclamation project on the Johnson South

Reef, part of the Spratly islands. The island

seems likely to feature a military base which

would include a port and an airbase, and

would be at least double the size of the US

military base of Diego Garcia, which

occupies an area of 44 square kilometres. If

this comes to fruition, it will enable China to

control a large swathe of territory in the

region. China has also recently built

Para-gunboat diplomacy

allows China to control

maritime territory

without the negative

consequences of using

traditional military force

21

artificial islands on Cuateron, Johnson South

and Gaven Reefs.47 China’s proposed

construction of lighthouses on the disputed

Paracel Islands is a further sign of using

building to enforce control of maritime

territory.48 China may use these new

airbases to enforce an air-defence

identification zone (ADIZ) on the South

China Sea, as it did in East Asia, covering

the Senkaku/Diaoyu islands.

The third major tactic has been through the

settlement of existing islands. China has

stepped up efforts to settle the islands it

holds through upgrading its official control

of the region and establishing permanent

settlements on islands in the South China

Sea. In 2012 China announced the

establishment of Sansha city on Woody

Island (Yongxing

Island), the largest of

the Paracel Islands. This

was done with the

intention that it would

administer the whole

territory within the

nine-dash line and

included establishing a

military garrison, a small airport, a hospital

and recently a school. The island is only 13

square kilometres in size but was intended to

administer over 2,000,000km2 of ocean.

This settlement has been done for two

reasons.49 The settlement of civilians makes

any potential military action difficult

because of the risk of harming civilians and

it may potentially strengthen legal claims.

All of the above tactics are enabling China

to change the balance in the region and are

likely in breach of the Declaration on the

Conduct of Parties in the South China Sea

(DoC) made in 2002, aimed at preventing

any country changing the status quo. These

actions have elicited various responses from

regional countries.

Regional responses to China

One of the main responses has been the

increased regional defence spending as

many countries seek to create a credible

deterrence against China. East and Southeast

Asia has seen defence spending increase by

about 5% from 2012-13 and is set to

increase further.50 This has also stimulated

the growth of indigenous defence industries

as Indonesia, Vietnam and Japan are seeking

to boost their capabilities and boost defence

exports in the region.

Many countries are also resorting to tactics

similar to China’s, in order to counter China.

This has involved

strengthening and utilising

their coast guards as

paramilitary enforcers and

civilians to settle islands in

the Sea. The tactic of

settling small islands has

also been mirrored by the

Philippines on islands such

as Pagasa where small civilian communities

are being established on previously

uninhabited or sparsely inhabited islands.

Malaysia and Vietnam are also making

improvements to their existing military

bases on islands in the region.51 One

interesting tactic that Vietnam is employing

is the issuing of drilling licences to foreign

oil corporations for oilfields in its territory.

This has the benefit of demonstrating that it

has legitimate control of the territory and it

also makes it harder for China to use its

paramilitary forces against foreign oil

companies. This culminated in a deal signed

between Vietnam and India which gave

India oil drilling rights within Vietnamese

Non-traditional tactics

can help to reduce the

asymmetric power

disadvantage of small

states within the region

22

maritime territory, some of which was

claimed by China.52 These non-traditional

tactics can help to reduce the asymmetric

power disadvantage of small states within

the region.

The Philippines and Vietnam have also

resorted to legal measures to counter China

as it filed an arbitration case at the UN

arbitral court in The Hague, seeking

clarification on their entitlements under the

UN Convention on the Law of the Sea

(UNCLOS). China however refuses to

accept the arbitration. There have also been

attempts by ASEAN to create a legally

binding code of conduct for the South China

Sea, but it requires China to agree to the

terms, which appears

unlikely.53

The USA has been increasing

its presence in the region as

part of its ‘pivot’ to Asia by

moving a greater share of its

military resources to the

Pacific under the United States Pacific

Command (USPACOM). It has sought to

strengthen alliances in the region and

Obama’s regional visit in April 2014 was a

clear sign of this. Japan and the Philippines

got the most from the visit with the US

affirming that the disputed Senkaku/Diaoyu

islands were covered by Article Five of the

US-Japan Treaty of Mutual Co-operation

and Security. The Philippines also signed a

ten-year defence pact, called the ‘enhanced

defence co-operation agreement’; however

this has recently been challenged in courts

for being unconstitutional because it was not

approved by the Philippine senate.54 This

could significantly delay the ratification of

the treaty or even prevent its ratification

entirely and hostile views of the US may

continue to make it difficult for it to forge

closer regional ties. The USA has however

been strengthening relations with Vietnam

through the easing of its restrictions on the

sale of arms, Vietnam’s possible joining of

the US led Trans-Pacific Partnership (TPP)

trade agreement, a US-Vietnamese nuclear

energy agreement and further military

engagement. The US is also seeking to sell

coast guard vessels to Asian countries to

enable them to resist Chinese pressure.

Japan is also becoming a more important

regional player. China’s territorial dispute

with Japan over the Senkaku/Diaoyu islands

became a major area of regional instability

and conflict in 2012 after the Japanese

government nationalised the islands,

eliciting riots in China.

However in the last year the

number of territorial incidents in

East Asia has declined, with the

focus shifting to the South

China Sea. However the

significant change in 2014 has

seen Japan, under Prime

Minister Abe, become a major balancing

force to China. It has been developing its

military capabilities, especially its power

projection through the creation of flat top

destroyers which could become aircraft

carriers and the establishment of an

amphibious assault unit capable of securing

outlying Japanese islands if they are

invaded. The reinterpretation of Japan's

pacifist constitution to allow for collective

self-defence means that Japan could

militarily aid an ally if they were attacked.

Japan has lifted the self-imposed arms

export ban, meaning that it will be able to

sell weapons abroad. Japan has also recently

agreed to sell 6 coastal patrol boats to

Vietnam and 10 boats to the Philippines to

help each country to police their territorial

waters and prevent Chinese incursions.

Japan may

become a major

balancing force

to China

23

China has been trying to diminish Japan’s

ability to form closer regional alliances

through its public diplomacy campaign to

link Japan’s current rearmament,

constitutional reinterpretation and regional

ambitions to its imperial past. This

campaign has failed as many countries,

feeling threatened by China, are embracing

closer ties with Japan. China’s policies are

also having a destabilising impact on the

domestic politics within the region as

populations pressure their governments to

take a tougher stance against China as

protests and violence increase. This has the

potential to combine with ethno-religious

and other grievances to create significant

conflict in the region.

For many years

Indonesia has been a

mediating force in the

territorial disputes

between China and

other nations in the

region, having been

regarded as relatively

neutral because it didn’t

have a dispute with China; however these

positive relations are likely to be tested.

There have been a number of maritime

incidents in Indonesian territorial waters in

the past few years and these may increase in

the future as China’s nine-dash line contains

maritime territory owned by Indonesia. The

election of Indonesia’s new President Joko

Widodo is also likely to increase the

institutional forces pushing for a harder line

on Chinese territorial ambitions. His lack of

foreign policy experience is likely to make

him reliant upon his advisors, especially his

cabinet which contains tough individuals

including the Defence Minister Ryamizard

Ryacudu, who takes a strong view of

defence and is reluctant to cooperate

multilaterally.55 There have previously been

some altercations between China and

Indonesia on territory and if these increase

in frequency, Indonesia may be forced to

take a firmer stance. Indonesia’s new policy

of sinking ships found to be illegally fishing

in its territorial waters are a clear example of

this and may prove to be an areas of tension

in 2015.56 It may be a sign of a growing

trend of public opinion shaping foreign

policy in the region. Bilateral relations have

been maintained and they recently agreed to

share satellite intelligence57, yet they are

certainly ensuring military preparedness by

increasing military spending and also

recently announcing the creation of a new

coastguard.58 It therefore

seems that Indonesia is likely

to play a more assertive

regional role in the future.

The rising levels of piracy

and the recent pledge by Al-

Qaeda to attack Chinese

shipping in the region will

prove a significant hurdle to

China’s interests and could

derail plans for the ‘maritime silk-road’. The

best way to counter these threats is through

regional cooperation, which has been made

difficult through Chinese provocations. The

use of para-statal forces will also make the

use of Private Maritime Security

Companies, which have been relatively

effective against piracy elsewhere, far more

likely to spark a serious incident as the

distinction between pirates, civilians and

para-statal forces is becoming increasingly

blurred.

China used the latter

part of 2014 to try to

mend relationships

damaged by its

assertive actions

earlier in 2014

24

Regional rapprochement

In an effort to de-escalate the regional

tensions, China has been seeking

rapprochement in several ways.59 China has

sought to improve relations with Japan,

which culminated in a formal, yet

uncomfortable meeting between the leaders

of the two countries in November 2014.

China has also sought to reduce the

likelihood of a military accident with the

USA by establishing guidelines to notify

each other of military exercises and to create

a set of Safety rules for behaviour in Air and

Maritime encounters.60

Xi Jinping has also undertaken a new soft

power engagement strategy in the region

with the announcement that it was China’s

duty to fulfil the ‘Asia-Pacific dream’ of

peaceful regional economic development.61

This has taken the form of various free trade

and investment treaties and

institutions. The most

important of these is the

signing of the Chinese led

free trade area of the Asia-

Pacific (FTAAP)

agreement on between all

21 APEC members.62

China has also signed free

trade agreements with

South Korea and Australia, to secure much

needed resources and access to the tertiary

service sector.63 The second major element

of the dream is the provision of preferential

loans for regional infrastructure

development. As part of this, Xi has pledged

that China will contribute $40 billion to set

up a Silk Road infrastructure fund to

increase transport and communication links

across the region.64 This is in addition to the

Chinese led Asian Infrastructure Investment

Bank (AIIB) which will provide $100 billion

to improve regional infrastructure

development, which has received a mixed

regional reception as several countries,

including Indonesia declined to join. By

providing 50% of starting capital, China will

be able to dominate the organisation with its

voting power. However in 2015, the UK,

France and Germany have agreed to join the

AIIB as founding members. This is mainly

due to self-interest, to gain a return from a

rapidly growing region but it is a further

demonstration of how economic power has

shifted. With these nations joining, the

organisation will have greater legitimacy

and it will also dilute China’s voting power

within the organisation.65 China has

provided a further sweetener in the offer of

$20 billion in preferential and special loans

to ASEAN countries to develop

infrastructure, if they agreed to a treaty of

friendship and cooperation.66

Japan has sought to counter Xi’s

‘Asia-Pacific dream’ by

significantly increasing Japanese

investment in South East Asian

infrastructure. The aim is to

triple Japan’s infrastructure

exports to 30 trillion yen ($260

billion) by 2020, with the lions

share going to South East Asia.

In pursuing this goal, Asia, and

ASEAN members in particular, will be a

prime market for infrastructure projects;

demand in the region is estimated at 80

trillion yen annually. Much of this will be

carried out by the Japan Overseas

Infrastructure Investment Corporation for

Transport and Urban Development, which

was established in October 2014.67

Competition for investment in the region is

going to be a big benefit to countries in the

region.

The ‘Asia-Pacific

dream’ is a key

element of China’s

new soft power

strategy

25

The regional countries are warily welcoming

this prospect but are still cautious of China’s

intentions, especially as China’s regional

ambitions have become clearer. Even as

China has sought to improve relations, it has

continued to alter its strategic position in the

South China Sea by building increasingly

sophisticated islands with military bases.

China’s tactics have enabled it to change the

regional dynamic without creating an armed

conflict; however they have alienated

regional countries with which it previously

had good relations. The rising tension and

increasing militarisation of the region by all

sides makes war a possibility; however it is

unlikely in the near future. It is likely that

the small scale conflict will continue with

state and non-state actors being used to

further China’s interests. By making the

region a core interest and allowing

nationalist sentiment to be stoked has made

it difficult for China to compromise on

sovereignty. This has increased their

bargaining position as the other states in

conflict know how damaging it would be for

China to compromise. The demonstrated

effectiveness of ‘para-gunboat diplomacy’

may lead to a proliferation of these tactics

throughout the region and possibly beyond,

including other parts of the Islamic world.

China’s soft power in the region is not yet

having the desired effect as more countries

are being drawn to the US and Japan to

provide security, fearing China’s ultimate

aims. Even though China is putting renewed

efforts into promoting soft power, the past

year has demonstrated that China has not yet

mastered the art of combining soft and hard

power to create smart power and this failure

has opened up opportunities for other

regional powers, especially Japan, to thrive.

Until it figures out how to combine them

successfully, the Asia-Pacific is going to

continue to resist Chinese pressure.

26

Chapter 5: Syria and beyond - Russia & China in the

MENA region - Katie Welsford & Usama Butt

The re-assertion of Russia

In the wake of the Soviet Union’s collapse,

Russia played only a minimal role in the

Middle East. Today, however, we are seeing

a huge shift as Russia positions itself as a

central player in the region’s politics -

arguably taking advantage of the US retreat

and attempting to reassert itself as a credible

power and partner for Middle Eastern states.

Moscow’s role in Syria - backing Assad,

removing the chemical weapons stockpile -,

its friendship with Egypt, and its position

with Iran all demonstrates the country’s re-

assertion within the region, and its quest to

resume its role as a key global power.

“Russia is on equal footing

now as a power in the

Middle East,” said Leon

Aron, a Russia policy

expert at the American

Enterprise Institute.68

Involvement in Syria,

and wider implications

Russia may have only

played a minor role in the

so-called ‘Arab Spring’,

but there is one exception: Syria. Since the

conflict’s outset in 2011, Russia has played

a key strategic role in propping up the Assad

regime - ensuring its closest Arab ally is not

toppled and that it takes a stand at the

international level against the US. Russian

officials may have made statements to the

contrary - such as PM Dmitri Medvedev

who, in 2012, said “Russia does not support

anyone in this conflict, neither President

Assad (contrary to popular belief) nor the

rebels.....Unfortunately, some countries have

a more one-sided approach”69. But even to a

casual observer, such a line carries little

resonance, with Moscow’s stance clearly far

from neutral.

On the international level, Moscow has

firmly stood beside Assad - installing deep

divisions within the UN Security Council.

Moscow (along with Beijing) has used its

power of veto four times so far in the

conflict, preventing a tough stance being

taken against the Assad regime - be it in

terms of sanctions, external military force or

political intervention. In

2013, as the west geared

up for intervention

following the chemical

attack in Ghouta, Putin

stood firmly by Assad,

claiming that there was

insufficient evidence that

the regime stood behind

the attack. “No one doubts

that poison gas was used in

Syria. But there is every

reason to believe it was

used not by the Syrian Army, but by

opposition forces, to provoke intervention

by their powerful foreign patrons, who

would be siding with the fundamentalists,”

wrote Putin in an op-ed published by the

New York Times70. And when, in

September, a Russian-led proposal to place

Syria’s chemical weapons stockpile under

international law and for Russia to work in

dismantling them, thus halting military

intervention, it seemed that “Putin and his

On the international

level, Moscow has

firmly stood beside

Assad - installing

deep divisions within

the UN Security

Council

27

foreign minister Sergei Lavrov emerged as

kingmakers”71.

But Russia’s support of Assad is also more

underhand - with Russia flooding Syria with

weapons. Indeed, the sale of arms to the

Assad regime constitutes an estimated 10%

of Russia’s global arms sales (valued at

$1.5billion)72. Russian military advisors are

known to be advising the regime officials,

Russian-supplied Mi-8 and Mi-17

helicopters have reportedly been used for

dropping the horrifyingly deadly barrel

bombs on the citizens of cities such as

Aleppo73, and Moscow is believed to have

supplied equipment including drones,

armoured vehicles, and spare parts -

essentially providing Assad with a lifeline

which has ensured his continued survival as

president.

But what of the impacts of this across the

Middle East more widely?

On a popular level, there is

widespread dissatisfaction

across the Sunni world

regarding Russia’s role in

Syria. In Lebanon, for

instance, security has had

to be severely stepped up

at the Russian embassy in

Beirut74. “We hate Assad,

and we hate Russia too.

It’s because of Russia that Assad is still

there,” said one Jordanian national in

Amman this summer. Interestingly,

however, this has not prevented Russia from

maintaining - and developing - friendly

relations with Sunni-dominated

governments in the region.

Consider Turkey, whose government has

firmly backed the Syrian opposition since

the start of the crisis and whose territory -

according to the Turkish Disaster and

Emergency Management Agency (AFAD) -

now hosts over 1.3 million Syrian

refugees75. There have certainly been

tensions between the two governments -

such as when Turkey forced a Syrian aircraft

transporting weapons from Russia to Syria

to land when it flew over Turkish airspace.

But relations have otherwise remained

relatively friendly, with trade ties continuing

to grow. Today, 55% of Turkey’s energy

supplies are from Russia, as are 12% of its

oil supplies76. Plans for Rosatom to build

Turkey’s first ever nuclear power plant in

Akkuyu are still going ahead (construction is

forecast to begin in spring 2015)77, whilst

Turkish companies were actively involved

in building the infrastructure for the Sochi

Olympics78. For Turkey, a country which is

facing economic difficulties, it simply

cannot afford to lose these economic ties

with Russia - and thus strategic issues such

as Syria, or the Crimea79,

cannot be allowed to get in

the way of bilateral

relations.

Jordan is a similar case.

The country has seen large

numbers of Syrian

refugees flooding its soil,

and its population is

growing increasingly

frustrated by the war’s impact on their

standard of living. Yet, the Kingdom has not

let this disrupt bilateral relations. In 2013,

King Abdullah visited Moscow to discuss

growing trade ties, the possibility of Russian

involvement in the construction of Jordan’s

first nuclear power station, and military-

technical co-operation. He also made a

repeat visit this year, reportedly with the aim

of discussing the need to find a peaceful

solution to the Syrian conflict. “It’s a great

On a popular level,

there is widespread

dissatisfaction across

the Sunni world

regarding Russia’s

role in Syria

28

honour for me to reconfirm the good

relations between our two countries and our

personal relations,” said King Abdullah

following his April visit80. Rosatom has also

won a $10 billion contract to build the first

nuclear power plant in Jordan - which is

scheduled to open in 2020. For Jordan, this

plant (which is forecast to produce 12% of

the country’s energy needs), such a

development is particularly valuable -

especially given the current unreliability of

the Egyptian pipelines.

Simply put, in the current economic climate,

governments such as those in Turkey and

Jordan simply cannot afford to allow

strategic issues to stand

in the way of bilateral

relations.

In more recent

developments, Russia has

once again tried to play

some ‘conciliatory role’

in Syria. ‘Moscow talks’

held in January 2015

attempted to bring

different groups on the

table in Moscow,

however, the talks have not produced any

positive results.

Egypt, and the return to the days of

Nasser

When President Morsi was removed by what

some have called a ‘democratic coup’ in the

summer of 2013, many international

governments were quick to criticise the

move. “We are deeply concerned by the

decision of the Egyptian armed forces to

remove President Morsi and suspend the

Egyptian constitution” said Barack Obama81

in the immediate aftermath. The EU quickly

suspended the provision of military aid, with

the US following suit in October, partially

suspending military aid to Egypt (including

Apache helicopters, harpoon missiles and F-

16 warplanes).

In such an environment, Russia has stepped

forward, capitalizing on Egypt’s crisis and

the international response to it in order to

boost its own position in the region -

seemingly returning to the days of Nasser in

which Russia and Egypt shared strong ties.

It is true that Russia had supported the

Brotherhood (despite the Kremlin listing the

group as a terrorist organisation since 2003),

with Sergei Lavrov the first international

politician to visit Morsi

following his election.

However, fears of waning

Russian influence had

grown during Morsi’s year

in power, and last summer’s

coup was thus rapidly

responded to, with Moscow

speedily siding with the

military and stepping

forwards as a favourable

partner to secure its security

needs.

In November 2013, Sergei Lavrov and

Sergei Shoigu met with Abdel Fattah al-Sisi

and Nabil Fahmy in Cairo - the first meeting

of such a kind since the days of the Cold

War, and one which was repeated in

Moscow in February 2014 as Sisi made his

first overseas trip. Whilst the US seems to

stumble forwards indecisively with its

attitude to military aid, delaying deliveries

despite promises otherwise, Russia has

stepped in - signing a $2 billion weapons

deal agreement with Cairo in December

2013. As Sergei Lavrov said in November

2013, “they are looking at other options

Russia has stepped

forward, capitalizing

on Egypt’s crisis and

the international

response to it in order

to boost its own

position in the region

29

following the US decisions to block some

military aid, as any other country would” 82.

The two countries have also agreed to hold

joint military exercises in 2015.

The Ukraine crisis and subsequent western

sanctions on Russia are also set, according

to Al Ahram, to deepen ties between the two

countries. Indeed, whilst Russia has banned

the import of food and agricultural products

from the west, trade with Egypt is expected

to grow - with Egypt

looking set to increase its

agricultural exports to

Russia to replace Western

goods83. “As the Arabic

saying goes, “The

misfortunes of some are the

benefit of others””, wrote

Al Ahram.

Iraq, and a cautious ‘battle’ against IS

When the Islamic State of Iraq and al-Sha m

(now simply the Islamic State [IS]) swept

across northern Iraq in June 2014, Russia

once again enacted its ‘arms supply

diplomacy’ - just as it has done in Syria and

Egypt. Moscow quickly provided the Maliki

governing with second hand planes (Soviet-

era Su-25 fighter jets) to confront the

militants sweeping across Northern Iraq -

stepping in as Baghdad grumbled about the

length of time it had taken the US to deliver

weaponry.

However, further than this, Russia has not

strayed. Moscow was not invited to join

Obama’s so-called ‘coalition of the willing’

against IS, the Ukraine crisis standing in the

way of any effective coordination. Instead,

Russia has used the situation as a means of

building its anti-western narrative. First,

when IS seized Mosul, Lavrov is quoted as

stating “the events in Iraq illustrate the total

failure of the adventure involving the United

States and Britain” 84. Then, when the West

began airstrikes in Iraq, Moscow attacked

the US for dealing in double standards - “it

is especially strange when some countries

condemn any terrorist organizations in Iraq,

but take a different look at the activity of the

same groups in Syria” said Vitaly Churkin85.

And then, when Obama extended airstrikes

to Syria, Moscow once

again condemned the

action, pivoting on its

previous assertions and

quickly condemning such

action as an unnecessary

act of aggression lacking

UN sanction.

Clearly, Russia must step

carefully in dealing with

the ‘IS problem’, its relative proximity to the

militants’ self-proclaimed ‘Islamic State’ no

doubt causing ripples of concern within the

Kremlin. Not only is there a fluidity to IS’

battle lines, but perhaps more importantly, a

large number of Russian speaking militants

(largely from the Caucasus) are known to

have joined IS (such as the notorious

Tarkhan Batirashvili [nom du guerre - Abu

Omar al-Shishani]). Indeed, a large number

of those attacking the Syrian-Turkish border

city of Kobane are believed to be from the

North Caucasus, led by al-Shishani.

Already, threats have been made. In August

2014, IS militants released a video taunting

Putin and vowing to liberate Chechnya and

the Caucasus86 - something Chechnya’s pro-

Russian leader Ramzan Kadyrov slammed

in an Instagram tirade: “These bastards have

no relations to Islam.... I emphasize that they

finish their days under the hot sun in Syria

In August 2014, IS

militants released a

video taunting Putin

and vowing to liberate

Chechnya and the

Caucasus

30

and Iraq, and in the first instant of death

meet their eternal flames of hell”87 . For

Russia, perhaps more than many other

countries, a wrong step could easily lead to

retaliatory militant action inside its own

borders. A suicide bombing in Grozny on

5th October killed 5, demonstrating just how

volatile the area is and quite what a threat is

posed. As analyst for Al Arabiya, Maria

Dubovikova, writes, “Russia’s interest is not

to provoke the return of fighters, otherwise

we will witness how they will open a new

ISIS front and launch one

more “holy” war, but this

time within Russian

borders”88.

Since the start of

‘coalition’s operations’

against IS; Russia has been

stepping up its influence in

Kurdistan. Russian

influence with one of the

groups in Kurdistan is

growing stronger. Russia seems to

understand the notion that Kurds are

becoming an important if not ‘key’ players

in the region.

Replacing the US in the Israeli-

Palestinian peace negotiations?

The Israeli-Palestinian conflict has long

been viewed primarily in connection to the

US - a succession of US presidents all

attempting to negotiate a settlement between

the two sides, with others in the Middle East

quartet such as Russia being shunted to one

side. But with Kerry’s 2013-14 ‘shuttle

diplomacy’ failing to reinvigorate peace

talks, and with Russia seemingly developing

improved relations with both sides, Moscow

seems increasingly likely to seek a role

within future peace negotiations - something

Moscow deems vital to the region’s

stability.

There are close relations between Russia and

Israel - Israel has the largest Russian

speaking diaspora outside the former USSR,

and Russian tourists make up the second

largest group to visit Israel89. Both countries

regularly co-operate militarily and

strategically - such as the joint production of

weaponry - as well as enjoying various

energy agreements90. Moreover, when the

UN General Assembly

voted on the 27th March

regarding the Crimean

Referendum, Israel was

strangely quiet. Whilst

striking diplomats were

blamed, fears of damaging

bilateral relations with

Russia, and an acute

awareness that Russia

holds sway over events in

Syria and Iran, are more

likely the cause. Meanwhile, Russia has also

worked on its relations with the Palestinians.

It has remained supportive of Palestine’s

quest for statehood, has hosted discussions

with both Hamas and the PA, has

announced plans to step up trade and

cultural co-operation, and this summer voted

in support of a UN Human Rights Council

probe into ‘war crimes’ in Gaza (something

the US opposed).

Previous peace negotiations arguably failed

in part due to a lack of balance in power

between Israel and Palestine - given that

Israel has historically enjoyed

disproportionately high levels of support

from the US. As Ahmed Qurei, the

Palestinian engineer of the Oslo Accords,

wrote “Israel and the US are two sides of the

same coin”91. Perhaps we will soon see

Perhaps we will soon

see Russia seeking a

greater role for itself

within peace

negotiations between

Israel and Palestine

31

Russia seeking a greater role for itself within

peace negotiations, drawing upon its

relations with both sides to push the current

stalemate forwards - something Abbas

himself requested when he met Putin in

Moscow in January 2014.

China, and the hedging of bets

Until recently, China has retained a low

profile in the Middle East. Today, however,

Chinese passivity in the region is over, the

country’s behaviour a reflection of its trade

and energy interests and its desires to sustain

its own economic growth. Indeed, as

China’s economy has boomed in more

recent years and the country’s reliance on

foreign energy imports has grown, the

country’s attitude towards the region has

changed. Whilst China was once able to

support itself through local oil fields such as

Daqing north-east of Beijing, today it relies

on foreign imports with 60% of its oil

supplies coming from

the Middle East - thus

substantially out-

weighing the US which

is today working in

boosting its domestic

oil and gas production.

Added to this, of course, is the value the

region plays in terms of trading partners.

In its bid to ensure undisrupted energy

imports and trade relations, China has

worked to ensure a continued friendly status

with key states in the region. Whilst the

country adheres to its long-held policy of

‘non-interventionism’, the aftermath of the

post - Arab Spring upheavals has seen

Beijing becoming more willing to engage

politically, placing heavy emphasis on the

need for stability. Naturally, many Middle

Eastern states approve of the growing

relations with China - not only because the

country acts as an extremely valuable trade

partner, but because of its role as a model of

economic growth which was not coupled

with political liberalisation. According to a

University of Maryland report, 23% of

Arabs surveyed would prefer China to be the

world’s superpower - versus 7% who would

chose the US92.

The country’s quest for friendly relations

has resulted in it seeking to ensure it takes a

balanced approach to conflict in the region,

seemingly in a bid to ensure it is not

sidelined in any future post-war

environment. Consider Syria, a country with

which China has previously enjoyed

relatively substantial trade relations

(bilateral trade in 2009 was estimated to be

$2.2 billion - and in 2010 Syria was ranked

as China’s third largest importer). Whilst

Beijing has stood by its belief that the

conflict is an entirely internal affair, vetoing

UN Security Council votes to

block external intervention

challenging Assad, the

country has simultaneously

received several opposition

delegations - the most recent

of which saw Ahmad Jarba

(former head of the opposition National

Coalition for Syrian Revolutionary and

Opposition Forces) meeting with Chinese

Foreign Minister Wang Yi and deputy

Foreign Minister Zhang Ming in April this

year 93. China has repeatedly demonstrated

its desire not to take sides - tactically

avoiding placing blame on either side for the

use of chemical weapons, and frequently

urging the Assad regime to talk with the

opposition and agree to political changes.

Similar strategies have been seen in regards

to the Israeli-Palestinian conflict. China

60% of China’s oil

supplies come from

the Middle East

32

enjoys substantial relations with both Israel

and Palestine, and has been continuing to

boost these. This year has seen

developments in terms of Russia and Israel

agreeing to a deepening of bilateral ties -

such as a partnership between Israel’s Tnuva

Food Industries and China’s Bright Dairy &

Food Company. Meanwhile, upon news of

the Fatah-Hamas unity deal in April,

China’s foreign ministry quickly greeted the

move positively. “[China] believes this will

be conducive to Palestinian unity, and

fundamentally conducive to the

establishment of an independent Palestinian

state and peaceful coexistence between

Israel and Palestine”94. Repeatedly voicing

its support for the need for a peace

settlement, Beijing has attempted to take a

balanced approach to the two sides. During

this summer’s military escalation, Beijing

was quick in voicing its concerns -

immediately condemning the kidnapping of

the three Israeli teens, whilst simultaneously

calling for restraint in the Israeli military’s

response.

Whilst not a conflict situation, a similar

approach has been taken by Beijing in

Egypt. Since the toppling of Mubarak in

2011, China has greeted each successive

government warmly: building relations with

the transitional authorities, Morsi and Sisi.

33

Chapter 6: Russia and China in South Asia and the US

Afghan withdrawal - Usama Butt

In March 2014, IISA’s strategic brief Ibn-

Khaldun Paper (written for the programme

US Afghan withdrawal analysis; regional

and global security implications)’ 95

discussed role, interests and ambitions of

Russia and China at length. The key

arguments are worth repeating here. To start

with China; its key strategic interests are due

to its internal and external situation.

Internally, China wants to develop the

Xinjiang region. The region not only has

huge natural resources but has strategically

became very important for China in the past

few years. This in turn is due to the external

dynamics of China; particularly the US

‘rebalancing’ attempts in South China Sea.

Chinese assertive para-

gunboat diplomacy

discussed above is

designed to win regional

wars but also to counter

US PACOM’s

‘rebalancing’ attempts.

Japanese assertive

manoeuvring is but another addition to

China’s worries. Hence, the Ibn-Khaldun

paper asserted that by developing Xinjiang

China wants to open up more options for

some kind of ‘strategic depths’ in Central

Asia and to the warm trade routes by

‘reopening’ Silk Road route. The Silk Road

will connect China to Central Asia at one

end and to Pakistani strategic port Gawadar

on the other. However, both regions are

fraught with socio-political unrests and

security issues.

Since the publication of Ibn-Khaldun paper

in March 2014; there have been key

developments to Chinese ‘strategic

backyard’ strategy both internally and

externally. Internally, Xinjiang - the key

region for this strategy - has since further

unrest which one of IISA’s reports discusses

in detail.96 Furthermore, militants from

Xinjiang region have penetrated into the

Chinese mainland by carrying out public

attacks.97 On the external front, Chinese

para-gunboat diplomacy is resulting in

creating counter-measure by Japanese

government as well as further asserting

PACOM’s role in ‘rebalancing’ attempts. In

order to counter Chinese ‘strategic backyard

strategy’ i.e. reopening Silk trade route; the

US is preparing to build a port in Oman

which will directly challenge Gawadar

port’s strategic

importance.98

The US Afghan

withdrawal comes in this

strategic context. Officially

the Chinese have

welcomed Bilateral

Strategic Agreement (BSA) that will allow a

chunk of US and NATO special and training

forces to remain in Afghanistan. China does

not want to see further instability in

Xingjiang which may emanate from

Afghanistan, if Taliban control or

Talibanisation was to extend to Afghan

peripheral regions closer to Xinjiang.

Therefore, Chinese interest will converge

with those of the US and other regional

powers such as Iran, India and Russia.

China however has other strategic priorities

in South Asia. China is cautiously concerned

about the rise of India and although it does

want to see a militancy free Afghanistan - to

China does not want

instability spreading

from Afghanistan into

Xingjiang province

34

protect its interests in Xinjiang and

reopening Silk Road - it equally does not

want to see a much more assertive India.

Pakistan becomes a key player in all of this.

Its closer relations with the Taliban

movement and its strategic location as per

Gawadar mean that China would not want to

completely isolate Pakistan. However, China

is increasingly staying away from giving a

‘protector’ kind of image to Pakistan. In a

recent visit to India, the Chinese premier did

not stopover in Pakistan. BSA is also

perceived very cautiously at best or

negatively at worse by Pakistani

establishment and China has not made any

public statements to share Pakistan’s

worries. In addition in a

recent visit of a very

senior Chinese military

official with Pakistani

Presidency the focus of

conversation remained

limited in pushing

Pakistan to ‘do much

more’ to stop ETIM

militants (which are based in Pakistani tribal

regions) to return to Xinjiang.

In short, China is cautiously working to

protect its strategic interests in South Asia.

Despite its stated policies in South Asia; the

year 2014 has demonstrated that Chinese

interests are squarely limited in protecting

its internal and external interests. In so doing

China will strategically converge with

whoever is closer to achieve these, whether

it is BSA, Afghan government or Pakistani’s

etc. Given the fluidity of situation in South-

Asia; it will be a challenging task for China

and the next few years will determine how

best Chinese policies and hedging has paid

off. This is why Chinese have taken due

interest in facilitating a dialogue between

Taliban and the Afghan government. China

wants to be seen as an international

peacemaker while protecting its key

interests in South Asia.

Russian interests in South Asia are

intertwined with its key strategic interests in

Central Asia (which are discussed briefly in

the following chapter). In South Asia

Russian interests converge with that of

India, China and Iran. The key Russian

interest remains minimising or completely

stopping any spill over from Afghanistan

into Central Asian states which remain key

to its Eurasian union and other ambitions.

To that end, Russia has shared some

intelligence and its influence in the region in

facilitating US/NATO led

efforts in Afghanistan to

contain first Al-Qaeda and

then Taliban.

Russia is also increasingly

concerned about the US-

Iranian nuclear deal.

Given the situation in

Syria and Russian attempts to consolidate

more power whilst denying the west a

strategic upper hand in Caucasus region;

Iran becomes a key focus for Russia. Iranian

strategic location and influence remains

stronger in regions where Russian strategic

interests lie i.e. Caucasus, Iraq/Syria and

Afghanistan/Central Asia. Given both

countries face western sanctions, Iranian

concerns of a larger US role in Iraq and the

ongoing situation in Yemen, Russia and Iran

will likely find more convergences of

interests. For South Asia; Russian interests

already converge with Iranian interests i.e.

denying Talibanisation of the country but

given above Russia may favour a more

Iranian

Russia is also

increasingly concerned

about the US-Iranian

nuclear deal

35

rather than a Western way forward for

Afghanistan and Pakistan in the near to mid-

term future.

Last but not least; Sino-Russian relations

remain strong but Russia is keeping its

options open and traditionally has had a

good strategic and military relations with

India. The blowback of Ukraine has led

Russia to ‘depend’ on China for energy and

trade deals. Russia in the longer run would

be uneasy for this ‘dependency’ to grow and

will use India, Iran and Pakistan in South

Asia to further their interests.

36

Chapter 7: Russia and China in Central Asia:

emerging trends - Zenobia Homan & Angeliki

Kontodimos Russian language in Central Asia

In Spring 2014 Russia created legislation

offering fast-track citizenship to Russian

speakers anywhere within the former Soviet

Union.99 The global press has been fast to

point fingers: beginning with Ukraine,

Russia is supposedly trying to resurrect the

Soviet Empire. One Russian wrote “I think

giving Russian speakers living in Central

Asia fast-track citizenship

is setting the stage for

Russian expansion”.100

Another Russian pointed

out that the legislation may

instead be related to the

inner workings on Russia:

“…for the country to keep

developing its population

it needs to be growing and

Putin understands that. The

population in Siberia is

declining rapidly as people

mostly want to move west.

More than anywhere else,

somebody needs to

populate these lands.”

While some people from Central Asia will

welcome the opportunity to rely on Russian

stability and its relatively strong economy,

others are tired of post-Soviet

compartmentalisation.101 A Kyrgyz citizen

wrote “I don't see anything substantially

dangerous for our country in this [Putin’s]

statement. Instead, if the process of granting

Russian citizenship becomes easier, it might

constitute an extra economic burden for

Russia itself, while providing Kyrgyzstan

with extra input into the economy.”

Interviews with speakers of Russian in

Oskemen (Kazakhstan) reveal that they

consider President Nazarbayev not only a

guarantor of minority rights but also a

guarantor of political and social stability.

“The situation in Kazakhstan is completely

different to Ukraine,”

Vadim Obukhov, deputy

head of the Russian

Cultural Centre, said. “We

don’t have any

confrontation between

Kazakhs and Russians […]

and Russia isn’t seen as

some sort of enemy

here.”102

Russian language

instruction has been a

significant point of debate

in education across Central

Asia. On one hand they

wish to promote their own national

languages, separate from Russia. On the

other hand, Russia remains the lingua franca

of Central Asia, and it remains the primary

language of business and education while

English is still unpopular and under-used. In

Tajikistan concerned parents increasingly

see Russian-language instruction as the best

available option for their children’s futures.

Knowledge of Russian remains a vital skill.

With few jobs available in Tajikistan, each

year over a million people – perhaps one-

While some people

from Central Asia will

welcome the

opportunity to rely on

Russian stability and

its relatively strong

economy, others are

tired of post-Soviet

compartmentalisation

37

half of working-age men – go to Russia to

work.103 On the other hand, life as a migrant

worker is rarely one of luxury, and the

question whether this should be encouraged

is a complicated one.

The many migrant workers from Central

Asia in Russia are poor, undereducated and

often without hope for a better future. This

has made them a relatively easy target for

Jihadist recruiters. While numbers are

basically impossible to verify, an estimated

500 people from Central Asia have joined

various militant groups in Syria and Iraq,

including IS.104 Most of these were recruited

abroad, primarily while working in Russia.

In addition, Soviet influence on Central Asia

caused Islam to transform from public to

private. The region’s nomadic ancient

history, and Russian

recent history, caused

Islam in Central Asia to

become a personal,

family-oriented

religion.105

All Central Asian nations

attempt to maintain a

clear separation between

religion and state, causing public discourse

over religion to virtually vanish. By

controlling the premise of worship —

through registering mosques and appointing

imams — the state prescribes its own

version of Islam. Formation of political

parties with an Islamic platform has had

little public or parliamentary support. The

HNIT (Islamic Renaissance Party of

Tajikistan) is the only Islamic party in post-

Soviet Central Asia that is officially

registered and represented in a parliament,

and it is not popular with everyone.106

Currently, it seems likely that IS is using

Central Asia not only for recruitment, but

also for transport. The governments are all

worried about the vulnerability of youth to

extremist ideas, and have been trying to find

effective ways to respond. For instance,

Kyrgyzstan recently introduced a textbook

in schools which covers the history of all

major religions. It includes a list of banned

movements and the reasons for banning

them; an explanation of ways to distinguish

radical from traditional religious ideas; and

the consequences of joining prohibited

movements.107 This summer, Tajikistan

introduced a law making participation in

foreign wars punishable by 12-20 years

imprisonment.108 Uzbekistan has publicly

stated that it strongly rejects IS ideology109,

and all governments have taken measures

against Jihadist recruitment.

While radical Islam is

holding the Middle East

hostage, there is no space

for peaceful Islam to

develop. Like the blunt

comparison to Ukraine, it is

not necessarily a direct

worry that IS will attempt to

conquer Central Asia. However, this does

not take away the fact that Central Asia

finds itself in an increasingly uneasy

position, between Russia, China and now

also the Middle East. In the short-term,

panic is unnecessary. In the long-term,

caution is advisable.

To combat the threat of extremism, the

Shanghai Cooperation Organisation (SCO)

has gained in importance. It hopes to expand

to add new members to include India,

Pakistan, Afghanistan and Iran, with the aim

of becoming the dominant security

institution in the region. The military

It seems likely that IS

is using Central Asia

not only for

recruitment, but also

for transport

38

exercises it hosted in August are the largest

it has hosted to date. It has however

primarily been used to combat terrorism,

separatism and extremism in the region and

is useful for its members because it allows

easy rendition of suspected militant Uighurs

to their countries of origin.

Trade in Central Asia

Since the collapse of the Soviet Union, trade

has been one of the main ways that Russia

has sought to retain control of Central Asia,

yet China is growing in influence in the

region. In 1991 Russia, China, Korea and

Mongolia developed the Tumen River Area

Development Program, now Greater Tumen

Initiative (GTI), supported by the United

Nations Development Program (UNDP).110

The objectives of the GTI focuses mainly on

the development of the Transport, Tourism,

Trade and Investment, Energy and the

environmental sectors, but have also made

considerable progress institutional capacity

building and regional cooperation for

growth.111 In September 2014, the four

countries agreed to sign the legal agreements

that will make the GTI a trans-governmental

organization.112

Since 1996, China has also been cooperating

with nine Central Asian countries under the

Central Asia Regional Economic

Cooperation Program aiming to promote

development in the region through economic

cooperation and trade facilitation.113 By

2013 the CAREC program has raised

investments of over 22.4 billion US dollar

for regional projects related to transport,

trade and energy infrastructure.114

China has undertaken a number of other

independent investment projects under

various bilateral agreements that it has

signed in Central Asia and is planning

investments over 150 billion US dollars by

2020 covering the energy,

telecommunications and transport sectors.115

Following the launch of the 'Silk Road

economic belt' project, Chinese Premier Xi

Jinping stated his intention of investing 117

billion US dollars in rail infrastructure in

Kazakhstan and prompted ASEAN countries

to contribute to the development of a

Maritime Silk Road.116As a result of these

changing dynamics, Russian dominance of

Central Asia may be drawing to a close as

China gains more influence, as Chapter 8

demonstrates.

39

Chapter 8: Global economics and the Sino-Russian

relationship – Timothy Williams

One of the most important changes that

occurred in 2014 has been a change in the

global economic balance, which has had a

significant impact upon the geopolitical

arena, especially on Sino-Russian relations.

China overtook the USA as the largest

economy measured in Purchasing Power

Parity (PPP) with a size of $17.6 trillion,

five years ahead of previous estimates,

signalling a shift in global economic power

which many believed would take far

longer.117 Although the economy is still in a

transitional state and the average wage in

China is far lower than the

USA, China has been

increasingly willing to use

this economic clout to

begin to change the global

economic order. This has

been demonstrated in

Chapter one as China

promotes the prospect of

the ‘Asia-Pacific dream’,

combining both an

emerging challenge to the

Western dominated

International financial system, and using

these to build soft power in Asia to build

support the ‘Beijing consensus’. As a result,

the ASEAN region is likely to experience

significant economic growth through its

links with China, yet the ability to turn this

into soft power is debatable in the short to

medium term.

The most significant shift however, has been

the changing Sino-Russian relationship;

caused by several underlying reasons, but

with economics being the main driver of this

change. Russia has been seriously affected

by economic problems, which has led to a

deepening of the asymmetric dependency

upon China. This change has occurred for

three main reasons.

Structural weaknesses of the Russian

economy

The first is the structural weaknesses within

the Russian economy. The Russian economy

went into serious long term recession in the

1990s as part of the shock treatment

intended to quickly transition it from a state

managed economy to a

capitalist one. It recovered

in the 2000s, buoyed by

high oil prices which

allowed Putin to begin to

make major reforms to the

Russian military and

helped to stabilise the

Russian economy,

providing Putin a broader

base of legitimacy with the

Russian population.

However structural

reforms were not undertaken and the

Russian economy remains dependent upon

oil and gas revenues for public finances.

This failure to diversify the economy has

made Russia particularly vulnerable to price

fluctuations in global energy market because

they accounted for 68%118 of exports and

over 50% of government fiscal receipts in

2013.119 Russia has remained dependent

upon high oil price and has not diversified

its economy. This leads into the second

important issue; oil prices.

The shifting global

economic balance has

had a significant

impact upon the

geopolitical arena,

especially on Sino-

Russian relations

40

Oil prices

The oil price crash at the end of 2014, has

had profound geopolitical impacts for

Russia, China and the international system.

The past decade has experienced oil price

fluctuations but oil prices have generally

remained high because of high demand, with

some dips in price due to the global

economic slowdown in 2008, but prices

recovered to over $100 in 2011. However

since then, major developments have

changed the global oil market. The most

prominent of these include; the large scale

adoption of shale oil and gas in the USA,

compounded by slowing demand for oil in

Asia. This slowing demand for oil in Asia

has been caused by China’s economic

growth rate slowing, thus leading to a

reduced demand has also dropped because

of slowing economic

growth in China and as

demand has slowed and

production stayed

constant, prices have

fallen.120

As oil production has

stayed above market

demand, prices have

naturally fallen but the drop in the price of

oil in the later part of 2014 has however

been more a matter of political intervention,

or lack thereof. OPEC’s control of global oil

markets can be overstated as oil prices have

fluctuated and the lack of cohesion can

make it difficult to reach a consensus, but it

does generally keep prices at a sustainably

high level. Failure to reach an agreement

without one member cheating the system

and benefitting from not cutting oil

production, the so called prisoners dilemma,

is a weakness of OPEC which has been

exploited.

When major price changes occur, it is

normally within all members’ interest to

collectively reduce production in order to

maintain a certain price. However Saudi

Arabia, the most powerful State within

OPEC has decided not to agree to reduce

production for multiple reasons. As The

Economist has suggested, it is in part a ploy

to reduce the economic viability of shale oil

which has boosted production.121 The

process of shale oil extraction is far more

expensive than extraction of onshore

traditional deposits in Saudi Arabia where it

costs on only a few dollars per barrel to

extract compared to US hydraulic shale at

about $65 per barrel.122 With global prices

below this level, shale production is likely to

drop.

The oil price that Saudi Arabia

requires to balance its budget is

however around $100 per barrel,

far above the price which oil is

being kept at. This therefore

helps to explain the second major

reason for the low oil prices;

Saudi Arabia’s geopolitical

security concerns. Saudi Arabia

has been impatient with the

USA’s Middle East policies for several

years and has been vocal at expressing its

displeasure that the USA has been

negotiating with Iran on its nuclear program

and the USA’s failure to take military action

in Syria in 2013. Saudi Arabia has therefore

taken matters into its own hands to achieve

its foreign policy goals. It sees an Iranian

nuclear capability as an intolerable

development and so it has sought to

undermine its economic position, which has

already been severely weakened by a

combination of structural economic issues

and the international sanctions regime in

Saudi Arabia has

helped to depress

global oil prices to

punish Russia and

Iran

41

place since 2011. Iran requires an oil price

of $131 per barrel to maintain current

spending levels, higher than Saudi Arabia

and with far smaller reserves; it is unable to

tolerate low oil prices for very long.123

Saudi Arabia has also decided to punish

Russia for its support for regimes not

tolerated by the Saudi government, namely

Assad in Syria and because of its multiple

economic deals with Iran in an attempt to

overcome the effect of sanctions. They have

also significantly hit Russia’s public

finances. Russia needs a global oil price of

about $105 per barrel for its public finances

to break-even but with

price so low, it is in a

significant deficit.124

Responding to this, Russia

passed a budget with

massive cuts to most

public services, yet an

increase in defence

spending.

Russian support for these two regimes has

made it very difficult to achieve diplomatic

solutions to the conflicts. Saudi control of

oil prices has thus given it the ability to

harm Russian interests. In an effort to

maintain revenues, Russia has increased oil

production to a post Soviet Union high of

10.667 million barrels a day in December,

but this is helping to push oil prices

lower.125

Western sanctions upon Russia

The third reason is Western sanctions upon

Russia. Western sanctions on Russia started

off fairly limited, although they increased in

intensity in the later part of 2014. Sanctions

have come in three main waves with the first

mainly consisted of travel bans on important

Russian officials; the second extended the

business and travel bans on several Russian

officials and business people; the third and

most extensive sanctions included sanctions

upon Russian energy companies, banks and

restrictions upon the Russian defence sector.

The significant impact of sanctions has been

the way that it has increased capital flight,

making it harder for business to occur and

threatening the industry which is the

backbone of the Russian economy. The

withholding of technology from the Russian

energy industry also threatens to severely

curtail Russian output.

Although sanctions are not

the only reason for

Russia’s economic issues,

they are significant and

have increased capital

flight from Russia as

instability has made Russia

increasingly risky for

investors. As noted in

Chapter 3, Capital flight from Russia

reached up to $150 billion in 2014.126 Even

many Chinese companies are reluctant to

deal with Russian companies, partly because

they fear the economic uncertainly

(especially now because of the Ruble’s

collapse) and because they don’t wish to

raise the ire of Western Governments, their

major markets, as a result of dealing with

Russia. Russia is a potential market to

Chinese companies but they are still far

more dependent upon the West than Russia

and so do not wish to jeopardise this if they

face the potential of secondary sanctions.127

This is a good example of the major impact

of sanctions which is often from capital

flight and fears of instability, not the

sanctions themselves.

Western sanctions

have increased

Capital flight which

amounted to $150

billion in 2014

42

Russian reliance on China

These three major economic changes have

created a perfect storm for the Russian

economy, which as noted, is under severe

stress. Despite its significant problems,

Russia has prevented a complete economic

collapse with a combination of internal

reasons, including large foreign exchange

reserves and external ones, mainly from

Chinese support. As Russia has delinked

from the West, it has become more closely

aligned with China economically, although

it is not doing this from a position of

strength. Russia has

signed several major

energy deals worth

hundreds of billions of

dollars each, yet the price

China has paid is likely to

be far below the market

rate which Europe has

been paying. This has

trapped Russia into long

term deals with low profit margins.128 China

has recently become Russia’s lender of last

resort, displacing the IMF. As the Ruble’s

value collapsed, China provided loans worth

$24 billion in a currency swap, which has

helped Russia to stay afloat but will not

provide a long term economic solution.129

Although China has also provided currency

swaps to other countries including Argentina

and Venezuela, it is indicative of China’s

growing influence over Russia’s finances.

To help with its deteriorating economic

position, Russia expedited the signing of a

Sino-Russian gas deal in mid-2014. This had

been in negotiation for years previously, but

given its increasingly weak position, Russia

made major concessions on price to get a

deal with China. A further gas deal

followed, clearly demonstrating the shift in

direction of Russian gas supplies. At the

same time as gaining good deals on Russia

gas, China has reduced its energy

dependency on Russia by making large

investments in oil storage facilities to reduce

its vulnerability to oil price shocks.130 This

also comes after China released an Energy

strategy paper indicating its intention to be

85% energy self-sufficient by 2020.131

Russia and China have also begun major

joint efforts to build alternative financial

institutions, partly to help Russia escape

Western control of financial markets, but

also to begin to give China

more control itself. These

include the development of

the BRICS investment

bank132, the establishment

of a joint credit ratings

agency133 and the

increasing use of the

Chinese Yuan as a trade

currency. Pre-empting a

potential ban from the SWIFT money

transfer system as part of sanctions against

it, Russia has launched its own version of

SWIFT. 134 It is only domestic and can’t yet

transfer money across borders but it may

help enable Russian trade and allow it to

continue to trade with China and other

countries.

The Sino-Russian relationship

Over the past few years, there have been

signs of a growing ideological, political and

economic alignment, yet this should not be

viewed as a cosy alliance, more a marriage

of convenience. The above factors are

combining to make Russia asymmetrically

dependent upon China, which will have

significant implications for their future

relationship if this continues and it may

To compensate for its

lost income form the

West, Russia has

become increasingly

reliant upon China

43

mean that China is more able to dictate

Russia’s foreign policy and takes a junior

role in the relationship. If Putin remains in

power he will resent this an attempt to

prevent it but it will be difficult given the

circumstances. These developments are

partly a result of Chinese opportunism,

which has taken advantage of the situation

to increase its control of the global financial

system and over Russia’s economics.

This changing relationship may also have an

important impact upon Russian and Chinese

territory and could bring the two nations into

conflict. Russia has used the Russian

language and historical claims to the Crimea

and Eastern Ukraine to justify annexation of

the Crimea. China has also employed a

debatable historical claim

to the South China Sea to

justify its increasingly

aggressive tactics to secure

the region. Both of these

actions run counter the

general principle under

international law to not

unilaterally altering

international borders. Yet

both are willing to stretch

international law, or ignore

it in order to secure

territory. Both nations have also used

nationalist rhetoric to inspire their soldiers

and citizens to claim territory. They have

also directed non-state actors to claim

territory through sending ‘patriots’ to

eastern Ukraine or using fishing boats and

oil rigs to control important areas of the

South China Sea. There are however risks

involved in stoking revanchist and

irredentist feelings in order to gain territory,

mainly because once instilled they can

become difficult to control. This may have

serious impacts for Sino-Russian relations in

the future, given their historical territorial

relationship and the continued territorial

issues between the two countries.

In the 19th and 20th Century’s, China has

ceded vast areas of territory to Russia during

periods of relative weakness, with much of it

containing significant oil, water and timber

resources. China arguably has a far stronger

historical claim to the territory than over the

South China Sea, which as indicated above,

has become a major foreign policy goal to

gain control of. The rise of Irredentism

within China, especially centred in the East

and South China Seas and the

Senkaku/Diaoyu islands means that it is not

inconceivable that these forces may arise to

return the territory ceded to Russia. Whilst

these border issues have

been successfully

negotiated for the past

several years this could

change if relations

decline.135 As China

becomes increasingly

dominant vis-a-vis Russia,

it will increase its

leverage and be more able

to dictate terms. One of

China’s long term goals is

to reverse the Centuries of

humiliation at the hands of European

powers, regaining these territories from

Russia would be a defining point of success,

in addition to the resources it would acquire.

Putin will try to avoid falling into this

position and there have previously been

indications from some European countries,

namely Germany and France, that they may

loosen the sanctions on Russia if Putin de-

escalates the Ukraine conflict. This would

signal an easing of Russia’s isolation, but

this appears unlikely as there is no clear

Russia’s growing

reliance on China will

have a major impact

on future diplomatic

relations, both

bilaterally and

multilaterally

44

ending to the Ukrainian crisis and Europe is

increasingly wary of dealing with Putin.136

With this growing separation form the West,

many now declaring that the world is

entering a new cold war. With no indication

of improving relations with the West and

many indications to the contrary,

circumstances are going to make it very

difficult for Russia to avoid falling into this

position.

Russia has tried to overcome this by looking

for further trade and investment in North

Asia, including investing in North Korea

and looking to supply energy to the Korean

peninsula and Japan. This may impact upon

the politics of North Asia, but is not

significantly going to improve Russia’s

economic position. Yet the economic

problems are also causing internal instability

as the Ruble collapse in late 2014 seems to

be testing the social compact between Putin

and the Russian oligarchs which has been in

place since the beginning of Putin’s

premiership. He agreed to maintain security

and stability in return for the oligarchs

remaining out of the political realm. With

severe economic conditions hitting the

oligarchs, it seems that they have decided to

re-enter the political sphere. There have

been suggestions of a potential coup attempt

against Putin in December 2014, although

these are unconfirmed. It does however

indicate that the Putin’s position is not

secure and he is likely to seek to consolidate

his position further. The way that the world

reacted to a short absence in March 2015137

also demonstrates that Russia is so

dependent upon Putin that very few know

what would happen if he left office. We do

however know that if Putin does lose power

in the future, any successor would inherit a

weakened Russia that is dependent upon

China.

With the Sino-Russian relationship

becoming increasingly essential to the

shifting world balance of power, all eyes

should be on it. If trends continue, then

China may be able to consolidate its position

and be able to start to restructure the

international system, economically, military

and possibly normatively.

45

Conclusion – Usama Butt

The resurgence of Russia and China -

particularly in the contemporary global

system- has remained under studied.

Although a fair amount of attention in the

western world has been paid to certain

aspects of the rise of Russia and China,

however the focus was mostly ‘issue

specific’ and not ‘strategic’ in its approach.

In the Islamic world, even the ‘issue

specific’ approach has been missing. Apart

from some studies sanctioned by certain

governments on key issues; almost no

attention has been paid on how the world

and the contemporary global system that we

live in is changing in dynamics. This is

particularly striking as the Islamic world has

been at the heart of key dynamics that may

bring seismic changes to the world and the

global system including the Arab revolution,

Jihadism and militancy to name a few. The

study of resurgence of Russia and China,

however, cannot be done in isolation whilst

only focusing on the Islamic world. This

paper and programme therefore looks at the

wider picture and then attempt to analyse

how Islamic world and the global system at

large is being impacted - by the rise of

Russia and China- and will be impacted in

the near to mid-term future.

The resurgence of Russia and China on to a

global stage - as this strategic brief has

argued- has been a slow but a steady process

in the past couple of decades. However, the

last few years have been extremely

important in putting both Russia and China

as key global players on the map. This, we

discussed, is due to multiple reasons

globally, including the economic meltdown,

lack of strategic thinking and foresight in the

west and western engagement in futile wars

abroad. The Islamic world has also played a

huge role in increasing the Sino-Russian role

on the global stage, both intentionally and

unintentionally. The Arab revolution and the

subsequent Syrian conflict played a huge

part in bringing back Russian involvement

in the region. Although, Russian strategic

advantages are a direct result of western

‘reactive’ policies, the Arab revolution did

create a major upheaval in the global system

which could and should have been used by

the west to atone for recent policies in the

region; improving not just its image but also

to securing its interests in the Islamic world.

By default, Russia filled the large vacuum

created by the situation on the ground.

Russia has now further extended its outreach

in the Islamic world and has once again

managed to rekindle relations with Egypt,

Iraq, Iran and many others. It has also

started developing relations with states very

close to the west, especially Jordan.

However, reacting to Russia’s policies,

Saudi Arabia’s oil gamble has significantly

affected the Russian economy and in doing

so has contributed to the shifting power

balance between Russia and China, laying

the foundations for an even greater global

power shift.

China’s focus has been less on the Middle

East and has been concentrated mostly on

Africa, the Maghreb, South Asia and Asia

pacific. The Chinese role in Africa in 2014

needs particular attention. China used its

naval capability to evacuate thousands of its

citizens in Libya and it has extensive

investment in key African states. In addition,

Chinese labour has poured into multiple

countries within Africa and is working on

Chinese led or invested projects. Chinese

claims of investment led soft power

46

projection have begun to be challenged in

2014, with Libya one example of many.

Concerns are being raised by African

governments and private sector entities

alike, that cash flow is in reverse and

Africa’s trade deficit to China is ever

increasing. There have been increasing vocal

voices within civil society organisations, the

intelligentsia and now some governments,

stating that China is leading the new

scramble for Africa.

This is particularly important to observe as

Africa has been a supposedly prime example

of China’s ‘soft approach’. Factoring in

para-gunboat diplomacy in Asia pacific -

discussed earlier in this brief - there are

striking similarities in the outcomes of

China’s ‘soft’ and ‘hard’ powers. In essence

it can be argued; Chinese ‘soft and hard’

powers - in 2014- are backfiring and are

likely to continue to in 2015. The blowback

in Asia pacific has led to key changes in the

region and has escalated tensions. The

blowback in Africa has raised equally

serious concerns about to the way China

wields its economic power. Add this to

American attempts to counter Chinese

attempts in both regions i.e. ‘rebalancing

attempts’ in Asia Pacific and ‘countering

China’ attempts in Africa (as per the US

Africa summit), Chinese soft and hard

power is not just backfiring but also facing

direct challenges.

Within China the internal situation does not

look settled. The anti-corruption campaign

coupled with serious economic and military

reforms look promising, but they stop short

of much needed political reforms that are

needed not just on the top echelons of

communist party but on its bottom ranks too.

The economy is starting to slow down and

the government’s attempt to shift economic

focus away from state-led economy to an

open market economy is facing challenges.

Military reforms are enabling China to catch

up with the west and 2014 has seen for the

first time a large undisclosed budget

dedicated to improving Chinese naval and

cyber capabilities to win ‘informationised

wars’. This might help China to protect its

multiple investments as well as facing off

US challenges, but they are not enough to

fully secure crucial internal challenges in

key regions such as Xinjiang. As 2014 has

demonstrated; multiple internal challenges

such as the Hong Kong protests, the militant

attacks in mainland China and its border

regions have only increased. Without due

political reforms; military reforms may not

be enough to fully secure China’s internal

security situation. Chinese internal interests

are therefore linked with the region that it

lives in - which in return - are rife with

multiple socio-political, security and ethnic

problems, especially South Asia and the

Asia Pacific. Chinese internal interests are

therefore directly linked to its multiple

external frontiers, some of which China can

influence, but with many can do little more

than apply economic and diplomatic

pressure. Worse, in some of these regions;

the US and other regional powers are much

more involved i.e. Afghanistan (which

remains key to Chinese interests in

protecting Xinjiang). This is why China is

trying to get involved in some of the

reconciliation efforts i.e. Afghanistan.

If analysed superficially it seems that the

blowback to Chinese soft and hard power

can open up a room for the US or the west to

muscle in, however, things are more

complicated. China is increasingly

conscious of the blowback and is now trying

to rectify the situation in the Asia Pacific by

seeking rapprochement with key regional

47

counties including Vietnam and Indonesia;

and in the long term to build Chinese

development led soft power. Second, there

are other regional powers who may also take

advantage of this blowback (or already

doing so) such as Japan, India and even

Russia. Thirdly, the west is now once again

involved in yet another ‘war’ in the Islamic

world against Jihadist organisations,

especially IS. Last but not least; western

strategic response to China have at best been

very slow or at worse completely absent and

this trend is not about to change even if

there is a window of opportunity created by

the current blowback. All of this may in fact

still play in the hands of China.

Russia is not different in terms of a

blowback. Russian attempts to thwart

‘western influence’ on its ‘turf’ are starting

to backfire. Although Russia has instilled

sizeable pro-Russian forces in Ukraine and

has annexed Crimea, it is equally paying a

high economic price because of imposition

of economic sanctions and which has

exacerbated underlying structural economic

weaknesses. The worst effects of the

economic sanctions are perhaps not on the

Russian economy directly, but its interlinked

Russian defence, security and foreign

policies. Russia has also embarked on

military reforms but given the sanctions and

economic problems, the reforms are looking

increasingly hollow. It is now becoming

increasingly dependent on regional countries

to counter Western sanctions, thus putting it

in an increasingly weakened position. Sino-

Russian relations are a case in point. The

recent gas deal hugely favours China and

Russia would not have signed on those

terms if it was not facing those sanctions.138

The likelihood of the deal being fully

realised are also in doubt as China has failed

to pay the $25billion it pledged to help build

the gas pipeline.139

It is equally important to observe the

leadership of Russia and China and how this

may impact the current and future

discourses. As this paper has highlighted,

both Putin and Xi are dominant figures in

their own rights. While Putin has taken on

the Russian Oligarchs, Xi is determined to

take on corrupt officials and general

corruption. Both Putin and Xi have

consolidated firm control on defence and

security establishments. Both leaders see

themselves as international statesman and

are determined to make key strategic gains

for their respective countries in the future.

Though it may seem that there are synergies

in their ambitions; the reality may be quite

the opposite. While China is attempting to

strengthen its ‘strategic depth’, Russia is

equally determined to ‘maintain’ its own.

And it is not just in Central Asia where both

leaders may find divergence of interests but

other regions such as Eastern Europe as

well, where Chinese investment and trade

interests are part of its overall policy to

counter EU and NATO.

Russian attempts in creating the Eurasian

Union and Chinese attempts in creating an

alternative financial system to the IMF have

faced difficulties and challenges this year.

Although both projects are still an increasing

possibility, they are likely to face further

challenges in the coming year. China and

Russia both are keen to explore ideas to

create or bring about an alternative

economic models to the western model but

2014 has shown that despite economic

meltdown in global economy; they have still

some ground to cover. The above mentioned

loss of credibility of soft power in Africa

and Asia does not help either.

48

China in particular, and Russia to an extent,

have been trying to modernise their

militaries to catch up with western

superiority. Although China has made some

progress in its quest for winning

‘informationised wars’ by developing its

cyber and anti-satellite facilities; the US and

west have also redoubled their efforts to

countering it. The US government’s

CyberCom is supposedly an answer to

Chinese cyber warfare but the level of

Chinese activities in this year have been

quite significant. China also uses other

covert means for its strategic purposes

which include its Diaspora and merchant

community based in the West.

While Russia and China’s resurgence to the

global stage has been a steady upward

progress - they may now be facing blow

back and challenges as discussed above - the

general trends in the Islamic world have

been downwards. Almost every region in the

Muslim world has serious socio-political,

economic and security issues. The year 2014

has brought further challenges, namely the

situation in Syria and Iraq which has been

complicated by the rise of the IS and its

ripple effect across the Islamic world, the

increasing socio-political rifts amongst

ideological lines, the regional blockings

within the Sunni world and last but not least

the Sunni-Shia divide that is an increasingly

serious threat to the Islamic world and the

Islamic civilisation. The Saudi led strikes in

Yemen (not covered in this paper) are a case

in point.

Putting all of this in perspective; Russia and

China have been resurgent in 2014 but this

resurgence may cost them diplomatically

and in soft power currency. However, given

the lack of strategic responses in the west

and its entanglement with yet another ‘long

war’ in the Islamic world - on the back of its

reactive strategic policy making- and given

the downward trends on multiple socio-

political, ideological and sectarian lines in

the Islamic world leave both Russia and

China not just a ‘window’ of opportunity but

a ‘door’ of opportunities to further their

strategic interests across the Islamic world.

Counting on this, Russia and China will

strategically use the West’s and the Islamic

world’s missed opportunities to further their

interests in 2015. China will attempt to

repair its soft power in parts of Africa, Asia

Pacific and South Asia. Given that the US

and western hard power may once again be

more assertively imposed; China will try to

use the language of soft power across the

globe and in the Islamic world. They will

also try to influence the regions which are

essential to its ‘national interests’ i.e.

Afghanistan, Pakistan in South Asia, some

states in Central Asia and of course in the

Asia Pacific region. China will let the US

and the west get bogged into yet another

‘war against terror’ in the Islamic world and

will not physically interfere.

Russia on the other hand feels a direct threat

from the situation in Syria and the links to

Central Asia and Caucasus, but will largely

be unable to decisively move things either in

countering the Jihadist threat or furthering

its interests in key regions of the Islamic

world. It will rather look to expand its reach

in key areas i.e. Kurdistan. Together Russia

and China will attempt to consolidate their

gains from 2014, such as Ukraine/Crimea

and maritime supremacy in Asia Pacific

respectively. China in particular will push

for creating alternative economic models

while Russia will focus on countering

economic sanctions by supporting Chinese

49

attempts to build an alternative financial

system.

The year 2015 will see a further increase of

anarchy and chaos in key regions of the

Islamic world, especially South Asia,

Middle East, Maghreb and Sahel, which will

further complicate involvement. Russia and

particularly China will attempt to build on

this to continue their resurgence.

50

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00144feab7de.html?siteedition=uk#axzz3G8UtiWnx

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About the Authors:

Timothy Williams – Lead Researcher/Programme manager of the Resurgence of Russia & China Programme and Editor for this paper Timothy Williams is the researcher on the Resurgence of Russia and China Program; Implications on Greater Mid-East & the wider Islamic-world and he focuses on the Asia-Pacific region. He holds a BA in Politics from Nottingham and an MA in International Studies and Diplomacy from SOAS. Timothy is interested in international security, geopolitics and political risk, where he specialises in the Middle-East and the Asia-Pacific. He has articles published in several online outlets including e-International Relations and SecurityNewsDesk.com and he has also worked with Wikistrat Crowd Sourced Consulting. He can be followed on Twitter @Timothy_iisa

Usama Butt – IISA Founder and Executive Director Usama Butt is the founding and executive director of the Institute for Islamic Strategic Affairs (IISA). His academic interests mainly focus on the Islamic-world and global security, US foreign policy, foreign policies of different Islamic governments and emerging global powers , Inter Islamic & intra-Islamic conflicts, Security Sector Reform (SSR) and Disarmament, Demobilisation and Reintegration (DDR), civil military relations, conflict transformation & peace building, post conflict reconstruction and intelligence studies etc. He has an academic back ground in ‘Security studies’ and has conducted field researches in the Middle East, North and West Africa and South Asia on conflict resolution, humanitarian analyses, SSR/DDR and conflict resolution. He has been involved – directly and indirectly – in some reconciliatory efforts.

Dani - Global Researcher (Indonesia) Dani has graduated from UN-Mandated University for Peace, majoring in Peace Studies. He has experience working for United Nations Regional Centre for Peace and Disarmament in Asia and Pacific in Nepal. His Research interests include: peace studies, conflict transformation, preventive diplomacy, inter-cultural & interfaith dialogue. He also, has interest about Asia, particularly South-east Asia and East Asia. Dani is currently working for IISA Russia-China programme. He can be reached via Twitter, @dan1_iisa

Katie Welsford - Resident Researcher (London) Katie Welsford is a Middle East researcher at IISA, working on ‘Neo-Jihadism’ programmes. She has an MSc in Middle East Politics from Birkbeck College, London and a BA in Geography from Durham University. She has lived and worked in both Egypt and Jordan, and has spent considerable periods of time in both Palestine and Syria. Her key areas of interest are Islamic activism within Egypt and the Levant, Shi’ite politics, the social and political repercussions of the Syrian conflict upon the wider region, and the ‘Jihadi Spring’. @katiewelsford

Zenobia Homan – (Resident Researcher (London) Zenobia has a BA Joint Honours in Ancient History & Archaeology from Durham University and an MPhil in Assyriology from the University of Cambridge. Currently she is a PhD student in the department of Department of the Languages and Cultures of Near and Middle East at the School of Oriental and African Studies (SOAS), London. She is interested in analysing communication methods in order to understand links between power, identity and cultural change. Consequently, her focus at IISA is to infuse historical

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context with current issues. At the moment she monitors Central Asia for the Russia-China programme. She can be reached @Zenobia_IISA

Angeliki Kontodimos - Global Researcher (Belgium) Angeliki is a global researcher on the Resurgence of Russia and China; Implications on Greater Mid-East & the wider Islamic-world program with a focus on the use of Trade and Investment as strategic tools. She has a B.A. in Political Science from the Free University of Brussels and is currently pursuing her Master’s degree in European Studies: Transnational and Global Perspectives at the University of Leuven. Her research interests include international security, comparative political economy, trade policy and strategic studies.

About IISA

IISA is a think-tank and an intellectual forum for addressing the current and future dynamics of

the Islamic-world and its interaction with Western civilisation. Based in London, IISA will

create trans-Islamic and global reach. IISA seeks to establish a platform where Islamic-world's

dynamics, trends, issue, problems or crises are analysed within the Islamic-world and by working

on local models and realities and not against any external standards or perceptions. We will be

one of the leading think-tank on the Islamic-world and its role in the contemporary global

system. In a short span of time we have attracted great academic support and a reputation for

both open and track-II dialogues. IISA is the only think tank initiative that goes beyond national

and regional inclinations and addresses strategic and socio-political issues/crises of the Islamic-

world in its totality. For more information i.e. our mission statement, current programmes and

our academic and regional expertise please visit the following links:

Website: www.iisa.org.uk

Blog: http://iisablog.org/

Twitter: https://twitter.com/IISA_org

Facebook: https://www.facebook.com/pages/IISA-Institute-of-Islamic-Strategic-

Socio-Political-Affairs/118608928247992?ref=hl

About ‘Resurgence of Russia and China programme’:

As the US starts to scale down its ‘heavy footprint’ from the Islamic-world; the resurgence of

new powers becomes crucial to evaluate. The rise of today’s regional and tomorrow’s global

power and their internal and external policies will determine future discourses. Among the rising

economies and military powers; Russia and China stand out the most.

Russia has become a key global actor in the aftermath of Syrian revolution. It is the first time

since the end of the cold war that Russia is not only directly involved in managing global affairs

but has even managed to dictate them in Syria as well as in Georgia Taking further advantage

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from its new role of an emerging global power; Russia is now seeking new relations in different

regions of the Islamic-world i.e. Middle East (Egypt, Syria), Central and South Asia etc.

Chinese foreign policy in the different regions of the Islamic-world can be seen as a combination

of foreign policy approaches. The over-riding themes of Chinese foreign policy however remains

limited to the projection of ‘soft power’ mixed with economic interaction and developmental

strategies. This paradigm may not be sustainable in the near-future as the global system seems to

shift towards multi-polarity. Chinese inter-relations with the US hard power and their economic

interdependency may empower its soft foreign policy approaches. If however, these trends

continue to change as the current geo-strategic trends demonstrate, Chinese foreign policy may

have to radically change in terms of projecting its economic and military power in order to cater

for its huge energy demands, resources and raw material etc.

Furthermore; although China and Russia may have different geopolitical interests; they have also

found common grounds and convergences of interests on different global issues. As the US tries

to ‘rebalance’ Asia Pacific and Eastern Europe: the convergences of interests are likely to

steadily grow in the near to mid-term future.

Finally; as the internal unrest grows in many parts of the Islamic-world; the role of emerging

power such as China and Russia will be hugely important to monitor.

Key Features of the programme:

Analysis of China and Russia’s historic development in the last few decades

Analysis of contemporary socio-political trends within China and Russia

Analysis and evaluation of current Chinese and Russian foreign policy models and

paradigms, particularly in the regions of the Islamic-world

Exploration and evaluation of China and Russia’s military and defence strategies

Exploration and evaluation of Chinese cyber-warfare capabilities

Analysis of fragility or sustainability of western power and Pax-Americana

Analysis of the inter-relation of the emerging powers i.e. India, Brazil, Vietnam,

Indonesia, Myanmar etc. with China and Russia

Analysis of new blocs particularly Shanghai cooperation organisation (SCO) or ASEAN

and Chinese influence and Russian led ‘custom’ and ‘trade’ Unions

Establishment and anticipation of different Chinese and Russian foreign policy models,

using ‘futurology’ studies and by the above mentioned analyses of current and emerging

trends etc.

Front Cover Image from Flickr Creative Commons