The Future Is Asian

by Parag Khanna

  The Asianization of Russia

  In July 2017, I was jogging through Moscow’s Red Square on the eve of the launch of the Silk Way Rally. On the cobblestone path descending from Lenin’s mausoleum, dozens of shiny, colorful trucks with giant treaded tires and covered with corporate decals were prepped to race from Moscow across the Ural Mountains and Siberia through Kazakhstan to Xi’an in central China. On that day, Moscow felt not only like Russia’s present capital but also like the capital of the Northern Silk Road.

  More than 80 percent of Russia’s 140 million people live in its European zone west of the Ural Mountains, while less than 20 percent of its population is spread across the 80 percent of its territory in Asia, mostly bordering Kazakhstan, Mongolia, and China. Its federal capital, Moscow, and strategic port (and second largest city), Saint Petersburg, are both in Europe, but most of the country’s enormous oil and gas reserves are located in Siberia and serve Asian markets. Is Russia simply a wayward Western empire or a great Asiatic conduit between Europe and East Asia?

  From repelling the Mongols to maneuvering against the British in the nineteenth century “Great Game” to challenging the Qing to defeating Japan in World War II and tilting the balance in the Korean and Vietnam wars, Russia has long had Asian interests. A decade ago, speculating about Russia’s seemingly inevitable geopolitical drift to Asia was taboo. At the time, the Kremlin was launching incremental measures to stimulate its vast and dilapidated Far East region. A decade on, Russia’s fears over losing its eastern flank have eased. Unlike a century ago, today neither Japan nor China will provoke Russia by invading it to take the oil and gas that they can easily buy—and Russia is eager to sell. Russia’s Asianization has graduated from a censored topic to an explicit strategy.

  Western strategists have been telling themselves since the collapse of the Soviet Union that Russia would come to accept NATO expansion and a junior partnership with the United States and Europe. After all, the story went, Moscow’s ultimate goal would have to be acceptance by Washington and European capitals. In the 1990s, the Clinton administration had declared Russia a “strategic partner and friend.” Now, two decades later, Western analysts lament Russia’s rejection of the Western rules-based order—as if it were not vesting itself in any order at all.

  But Russia is positioning itself as a pillar of the Asian system. By the time President Obama and his secretary of state declared America’s “pivot to Asia,” Russia had already launched its “pivot to the East” strategy, accepting massive Chinese investments into its oil, gas, and mining sectors to make them serve China’s voracious demand more efficiently. Then came the sanctions imposed on Russia after its invasion of Ukraine and seizure of Crimea in 2014, which, combined with collapsing oil prices, forced Russia into a series of desperate deals to accept large-scale Chinese stakes in upstream gas fields. After Russia’s cyberhacking of the US Democratic Party and interference in its 2016 presidential election, a Cold War–like atmosphere ensued. Dmitri Trenin, a respected Russian geopolitical scholar, told me over tea in Moscow that he believes Russia’s relations with the West are fundamentally conflictual: even if Hillary Clinton had won the 2016 election, the stalemate over Ukraine, Syria, and other hot spots would have persisted.

  True to its geography, Russia still has significant European ties. Half its trade is with European countries, and its largest investors are France and Germany. Despite tough talk against Russia after its seizure of Crimea, former German chancellor Gerhard Schröder has both chaired Gazprom and become a director of Rosneft, which is 20 percent owned by Great Britain’s BP. European companies despise the Western sanctions on Russia, which undercut their business interests, and resent US efforts to block their planned Nord Stream 2 pipeline to Russia so America can instead boost its own liquefied natural gas (LNG) exports to Europe. Given how divided the West is about Russia, it is common—and naive—for Western commentators to stand by their belief that Russia’s interactions with Asia are superficial as Moscow waits for the West to reopen the door. Yet it is Western relations that have become both shallow and outright hostile due to Russia’s transgressions from Ukraine to Syria, its usage of toxic nerve agents to assassinate its opponents on British soil, and aggressive cyberscams and propaganda aimed at influencing Western elections. There is clearly a lot to be sorted out before Russia can be considered a member of the West.

  Once sanctions ease, Russia will welcome the return of large-scale European investment into its energy, real estate, finance, and other sectors. But Europeans have also learned their lesson from the unpredictable natural gas supply cutoffs that Russia has inflicted in the past and have made significant efforts to secure oil and natural gas from the United States, Algeria, the Arctic, and the Caucasus and to increase alternative energy inputs from their own wind, solar, and nuclear sources. Europe may be just a decade away from relying on Russia for just 10 or 15 percent of its oil imports. Meanwhile, Asia is ever more a destination for Russia’s energy exports.

  Russia and China are today strategically closer than at any point since the heyday of their 1950s Communist alliance. Since 2014, they have moved toward an entente they call an “all-embracing strategic partnership.” Two-thirds of Chinese military hardware imports come from Russia, which has sold it Su-35 fighter jets and S-400 missile defense systems that enhance China’s control over the South China Sea. Their navies have conducted drills together both in the Pacific Ocean and even at NATO’s doorstep in the Mediterranean and Baltic seas, and they are increasingly coordinating their militarization of space. For his first overseas visit since becoming China’s defense chief in 2018, General Wei Fenghe traveled to Moscow and stridently stated that the purpose of his visit was to “let the Americans know about the close ties between the armed forces of China and Russia.”1 At the 2018 G7 summit in Canada, Donald Trump called for Russia to be readmitted to the group—but Russian president Vladimir Putin was busy receiving China’s highest award while attending the Shanghai Cooperation Organisation (SCO) summit.

  Sino-Russian energy ties are also deepening. While Japan and Korea have traditionally been larger destinations for Russian energy than China, the parallel Gazprom Power of Siberia gas pipeline and Transneft’s Eastern Siberia–Pacific Ocean (ESPO) oil pipelines pump energy from Yakutia to the Sea of Japan and, as of 2019, directly to China. Russia’s Arctic geography is also strategically critical to East Asia. Whereas Norway and Canada are the primary diplomatic brokers for the North American and European portions of the Arctic, Russia is the gatekeeper for Asia’s Arctic access. That is why the Export-Import Bank of China and China Development Bank have provided half the capital for Russia’s Yamal Peninsula gas extraction, the world’s largest LNG megaproject. In preparing to drink up Russia’s Arctic gas output, Japan, China, and South Korea have sped their production of LNG tankers to haul gas from the Barents Sea through the Bering Strait to East Asia. Along this northern sea route, China is also investing in port and rail facilities from Murmansk to Arkhangelsk to facilitate the flow of Russia’s inland commodities to world markets.

  Russia and China are harmonizing their respective efforts—China’s Belt and Road Initiative (BRI) and Russia’s Eurasian Economic Union (EEU)—to ensure fluid commerce across the former Soviet Union. Former Soviet republics such as Belarus and Kazakhstan were far less enthusiastic about Russian proposals for a customs union until the endeavor became less about Russian hegemony and more about collecting fees for allowing seamless transit from China to Europe. To strengthen its role as a logistics hub for BRI, China is investing $7 billion in upgrading Ukrainian infrastructure from farms to roads to ports. (Ukraine has declared 2019 the “Year of China.”) China is upgrading many Russian railway links such as that from Moscow to Kazan and the fabled Trans-Siberian Railway. Millions of Chinese tourists are lining up at border towns such as Manzhouli (near the intersection with Mongolia), a gateway to Russia’s majestic natural treasures such as Lake Baikal, and Bianjiangzhen (whose name literally means “bo
rder town”), where a third of the population is Russian or Chinese Russian and Russian men take Chinese names. In Peking University’s index of BRI member countries ranked according to their trade, financial, and policy coordination ties to China, Russia ranks first.

  While Russia’s total trade with Europe is still higher than that with Asia, the latter is growing far more rapidly. China recently replaced Germany as Russia’s largest trade partner, and Sino-Russian trade has reached as high as $88 billion in 2015. China has gained a surplus as the price of Russian oil exports has fallen while the value of Chinese electronics exports rises. Jack Ma, the founder of the Chinese technology conglomerate Alibaba, who meets regularly with Vladimir Putin, has witnessed the revenues of AliExpress.com jump by double digits annually since 2010 despite the ruble’s slump. Shortly before Putin’s flagship Valdai Discussion Club forum in 2017, Ma announced that Moscow would be the site of one of Alibaba’s seven new research labs due to the strength of Russia’s engineering research community. Unlike Europeans, Asian investors are willing to comply with Russia’s very Asian-style “localization” laws, which require companies to bring technology into the country and create local jobs. No Western defense contractor would ever open a joint industrial park for next-generation weapons outside Moscow, as China is doing. Russian state-owned companies have been replacing Western computers with Chinese-made ones.

  Russians are aware of their vast economic and demographic mismatch vis-à-vis China. For Russia, this asymmetry is why it must maintain good relations with China in the first place—much as Canada does with the United States. For its part, China needs Russian resources and prefers that Russia’s nuclear strategy remain focused on the West rather than on the East. Russia’s growing ties to Asia are thus less about cultural affinity than economic complementarity and strategic necessity. Though two-thirds of Russians view their relations with China as friendly, Russian officials say they need Asian partners more than they trust them. Indeed, Russia wants China to be included in any future arms-control agreements for precisely this reason.

  Russia’s relations with Asian states are often portrayed as an authoritarian axis, but the reality is much more complex. Russia is equally keen on elevating ties with democracies such as Japan and India. Like China, Japan seeks to tame rather than awaken Russia. Japanese businesses are as annoyed as their European counterparts with Western sanctions that penalize their interests in Russia, especially as bilateral trade between Russia and Japan had risen to $35 billion in 2014. Indeed, from the Japanese viewpoint, the sanctions have only pushed Russia further into China’s arms. Russia has also been rekindling the ties with India that lapsed after the Cold War. Today a full 40 percent of Russia’s arms exports go to India. Despite China’s frosty strategic relations with India, Russia lobbied successfully for India to be included as a member of the Shanghai Cooperation Organisation (SCO) in 2017. Between 2014 and 2017, Russia and India signed more than forty agreements covering frigates, jet fighters, nuclear reactors, and fertilizers, increasing their bilateral trade volume to nearly $20 billion. Russia’s trade with Southeast Asia’s ASEAN countries had already reached that amount in 2014 and continues to grow at 20 percent per year, with Russia seeking to export nuclear power technology to Vietnam and boosting arms sales to the Philippines to aid that country’s counterinsurgency campaign. Several ASEAN countries are now buying Russian cyberdefense products to fend off Chinese hackers.

  Russia’s Asia strategy is also visible in its forays into Southwest Asia. Russia and Iran have propped up the Bashar al-Assad regime in Syria (which has allowed Russia to enlarge its Mediterranean fleet at the port of Tartous), angled to commercialize Syria’s modest oil and gas industry, and signed $30 billion in new energy cooperation agreements that protect Iran from the uncertainty of Western sanctions policy. Their cooperation was visible in the first-ever international gathering of Russia’s elite Valdai Discussion Club held in Tehran in April 2018, with senior officials and academics from both sides building channels of communication to coordinate strategies. One month later, Iran was admitted to the Eurasian Economic Union in spite of US efforts to tighten sanctions on Iran. More such gatherings will be necessary in the years ahead to navigate regional contradictions such as Russia’s selling weapons to the Kurds, who are opposed by Russia’s nominal friends Syria, Iran, and Turkey. Despite the spike in tensions with Turkey after it shot down a Russian jet over Turkey in 2015, Putin and Turkish president Recep Erdoğan quickly reconciled. Their trade has grown to $20 billion annually, with Russia sending Turkey metals and wheat in exchange for machinery and vegetables. Russian nuclear reactors are being sold to Turkey as well to gradually reduce the latter’s enormous energy costs.

  Despite Russia’s historical rivalry with Saudi Arabia in global oil markets (and tensions over Russia’s warm ties with Iran), the two have collaborated to suppress oil production to prop up prices, something both countries need to fund economic diversification, as well as launched a partnership to increase joint gas exploration and production activities. Saudi Arabia also wants to move away from its dependence on US goods, indicating a willingness to buy Russian products from weapons to nuclear reactors. Russia’s sale of the S-400 missile defense system to Turkey and potentially Saudi Arabia and Qatar (as well as India) demonstrates how Asians are keen to do military business with each other despite US sanctions against Russian entities.

  Separately, even as Russia has blocked Qatar’s efforts to build a trans-Syrian gas pipeline, it has gladly taken $3 billion in Qatari investment into the state-run energy giant Rosneft. One of the UAE’s leading sovereign funds, Mubadala Investment Company, is the anchor investor in the $6 billion Russian Direct Investment Fund (RDIF), which targets infrastructure and growth businesses across both Russia and Central Asia. It helps that for nearly a decade the Emirati ambassador to Moscow has been the charismatic Omar Saif Ghobash, who happens to be half Russian. And even though Russia and Israel are on opposite sides of the Syria conflict, Russia has turned to Israel for high-tech weaponry, and the two countries maintain robust cultural ties spanning historical migrations and religious pilgrimages by Jews and Orthodox Christians. “Moving forward, it looks like all the new deals are with Asians,” a European expat confidently observed over lunch with me at the base of the glittering towers of the new Moscow City district, most of whose commercial occupants are Arab or East Asian companies.

  With all of the positive momentum in Russia’s twenty-first-century diplomacy coming from Asian partners, Russia is reorienting. For centuries Russians have debated whether their cultural soul belongs to Europe or Asia or represents values unique to their motherland. As Westernizers sought greater ties to Europe, Slavophiles wanted Russia to maintain its independent identity, and anti-Westernizers emphasized Russia’s organic historical linkages to Turkic, Mongolian, and Chinese peoples. With an authoritarian government and commodities-dependent economy, Russia fits more into the broader Asian scheme than into the Western liberal democratic paradigm. Putin and his coterie prefer unitary rule to confronting the uncertainty, risk, and opportunities they see surrounding them.

  No doubt many Russians—especially the largely Slavic population concentrated closer to the heart of Europe—still retain the West as their psychological pole. Russian elites keep their money in Europe, send their children to schools in the West, buy EU passports through the citizenship schemes of countries such as Cyprus and Malta, and take vacations on the Riviera and in the Alps. Even though Europe may never grant them visa-free travel, they nonetheless feel they belong to Europe. But this doesn’t make Russians European. It makes them ethnically European people in an increasingly Asian state. Thousands of Russians have become fed up with Western visa holdups and discovered Thailand to be a sunny, visa-free hideaway for their children and their money—or Goa, where the Russian mafia is increasingly active.

  Nor are all Russians Slavic people claiming European heritage. Vladimir Lenin himself descended in part from the Mongol Zhungarian Ka
lmyk people who migrated to the western Caspian region in the seventeenth century. Russia today is far from a monochrome society. Travel to Moscow or other major cities such as Kazan or Novosibirsk, and you’ll notice that the societal complexion is not the same as that of the country’s ice hockey team. Russia is home to nearly 6 million Tatars, almost 4 percent of the population. It is also a magnet for migrants, especially from the poorer Central Asian republics whose economies have barely modernized in the past quarter century. Its food markets, construction sites, and taxi lines are full of Azeris, Uzbeks, and Tajiks.2 The same country whose polyglot empire dominated these minorities a generation ago now racially profiles and harasses them, but these Muslim Asians and their higher birth rates are a reminder that there is not a single Russian ethnic reality. And as the size of Russia’s workforce declines with Russians’ lower fertility rate, Russia will need ever more minority migrants, not just for its urban bazaars but for the vast eastern expanses that form its economic foundation.

  Climate change will further accelerate Russia’s Asianization. Global temperatures are rising fastest at the polar latitudes, meaning that the world’s two largest countries—Canada and Russia—could have climates resembling that of the United States by 2040. In the past decade, Russia’s wheat harvests have doubled and its grain exports have tripled. For the first time, Russian grain exports in 2017 beat out those of both the United States and the European Union, with exports to South and East Asia growing by 60 percent in a single year. As arid southwest Asian countries suffer crippling droughts, Iraq, Syria, Saudi Arabia, and Iran will become ever larger importers of Russian wheat, alongside the hungry East Asian importers China and Korea. Russia’s largest private equity funds, such as Sistema, are not only expanding their agriculture and infrastructure portfolios but also opening more Asian offices to attract investment to Russia’s eastern frontier. Russia is Asia’s twenty-first-century breadbasket.