More Russian troops near Ukraine border
Prolonged crisis unlikely; pontoon bridge confirmed
Most observers (including myself) have assumed that Putin will make some decision within the next two weeks. But could he prolong the crisis? There are some upsides for him to drag tensions out for several weeks, or even longer. First, he may regard a prolonged crisis as a way to degrade Ukrainian nerves, sap readiness, and diminish the credibility of Western governments, which have been warning about escalation dangers for months. Second, escalation uncertainty is severely weighing on the Ukrainian economy. Third, a prolonged crisis supports energy prices and Russian export earnings (and may create opportunities for Russian financial traders to leverage geopolitical insider information).
If Putin prolongs the crisis he will likely incur more costs than benefits, however. Russia lacks the capacity to go dollar-for-dollar with NATO, and Western governments are already moving to supply additional financial credits and grants to Kyiv. Moreover, it's not certain that the Russian macroeconomy is benefitting from the standoff. In fact, the opposite may be true. While the uncertainty from the crisis is supporting energy prices and export earnings, it's also pressuring the ruble, lifting inflation, and souring important parts of the economy. MOEX, the Russian stock index, is off about 16% from its Oct 2021 highs. Russia’s hydrocarbon sector, while still very important, does not dominate the economy the way it did in the 1990s or 2000s. Putin’s buffer of financial reserves can enable him sustain the crisis for quite some time, although, as Nick Trickett points out, Russia’s currency reserves may prove to be a false strength. Relatedly, if Putin prolongs the crisis amid economic difficulties he may exhaust the patience of Russian popular opinion at both the elite and mass level.
Other, more technical factors could also inhibit Putin’s ability to prolong the crisis. Many military experts believe it would be difficult and costly to maintain Russia’s force posture indefinitely. Finally, Putin will (at least temporarily) lose some natural gas leverage as Europe leaves the winter heating season. If Putin prolongs the crisis into March, April, or even longer, European countries will have more time to diversify energy supplies, manage demand, and rebuild natural gas inventories for the 2022/2023 winter. While there are limits to Europe’s ability to diversify its energy supplies, particularly in the short-term, the EU may be able to gain firmer footing over the next several months.
On balance, Putin does not appear to gain much by prolonging the crisis, and in fact may run greater risks by dawdling. He will likely escalate – or begin to deescalate – within the next week or two. I still think escalation is likely, given Putin’s domestic political incentives, as well as his recent actions. But I hope I am wrong.
Russian military movements continue to be highly alarming and provocative. U.S. officials have said that Russia has not pulled its troops from the Ukrainian border and has, in fact, increased its troop presence by at least 7,000. Maxar satellite images also confirmed that Russian/Belarusian military forces constructed a pontoon bridge spanning the Pripyat River, although the bridge appears to have since been removed.
Contents of this edition of The Report: 1) PRC and Europe; 2) Implications for Taiwan
1) PRC and Europe
Putin, Scholz agree on need to avert war amid Ukraine tensions – People’s Daily
Both Russian President Vladimir Putin and visiting German Chancellor Olaf Scholz on Tuesday underlined the need to avoid a war over Ukraine and to settle the crisis via diplomatic efforts.
"Regarding whether we want this (war), of course we don't. This is why we have put forward proposals for the start of a negotiation process in a bid to reach an agreement ensuring equal security for everyone," Putin said during a press conference with Scholz following their talks in the Kremlin.
Scholz said despite that the positions of the North Atlantic Treaty Organization (NATO) and the European Union may differ from those of Russia, dialogue remains crucial.
Europe is faced with one of its most dangerous crises in decades and there is an urgent need to defuse the tensions regarding Ukraine and prevent a possible war, the German leader stressed.
As a war in Europe is "unimaginable," Scholz considered it the duty of both Putin and himself to prevent any military escalation on the continent.
"Diplomatic opportunities have not yet been exhausted ... We have heard that some (Russian military) units are being withdrawn (from the borders) and this is a good sign," Scholz said.
As for Russia's security concerns, Scholz assured Putin that NATO's expansion is not even on the agenda.
However, Putin said that postponing Ukraine's possible accession to NATO will resolve nothing for Russia, and Moscow wants its security concerns to be addressed seriously.
Russia will act "in accordance with the plan" and its moves will reflect the latest realities, but no one can predict how the situation will unfold, Putin said, adding that Moscow, nevertheless, will strive to resolve all the existing issues by diplomatic means.
Xi, Macron agree on deepening cooperation – People’s Daily
In the new year, Chinese President Xi Jinping said, China and France should keep up with the positive, healthy and upward trajectory, adhere to the principle of mutual respect and equality, strengthen dialogue and exchanges at all levels, enhance mutual understanding and trust, and push for new achievements in bilateral cooperation.
BEIJING, Feb. 16 (Xinhua) -- Chinese President Xi Jinping and his French counterpart, Emmanuel Macron, on Wednesday agreed to deepen cooperation between China and France, as well as to advance China-EU relations….
He recalled that in 2021 he and Macron held two phone conversations, attended two China-France-Germany video summits, and actively promoted the development of bilateral ties.
Those efforts have yielded fruitful results, he said, noting that bilateral trade exceeded 80 billion U.S. dollars last year, and China's total imports of agricultural products from France increased by 40 percent year on year.
The first China-France seminars on artificial intelligence and agri-tech cooperation were held in succession, and the first guidelines for collecting joint laboratory projects were released as scheduled, he added, pointing out that all those efforts were of pioneering significance.
In the new year, Xi said, China and France should keep up with the positive, healthy and upward trajectory, adhere to the principle of mutual respect and equality, strengthen dialogue and exchanges at all levels, enhance mutual understanding and trust, and push for new achievements in bilateral cooperation.
He noted that since taking over the rotating EU presidency this year, France has made quite some efforts to enhance solidarity within the bloc and strengthen Europe's strategic autonomy.
Xi said he has repeatedly stressed that China and the EU should uphold a correct understanding of each other, and stick to mutual respect, dialogue and cooperation, and mutual benefit.
The two sides should work together to build the greatest common ground and steer China-EU relations towards new development, he added.
China, he said, stands ready to work with France to make a success of the China-EU leaders' meeting and the new round of high-level dialogues on strategic, economic and trade, green, digital and people-to-people affairs, and advance the ratification and implementation of the China-EU investment agreement, so as to bring tangible benefits to the people on both sides.
Macron said that as the current international situation is fraught with tension and turbulence, such a backdrop has strengthened France's hope to deepen its comprehensive strategic partnership with China.
France, he added, is satisfied with the major achievements the two countries have made over recent years in bilateral cooperation in such fields as technology, agriculture, aviation and nuclear energy.
He said his country is ready to work with China to explore ways to overcome the impact of COVID-19, strengthen personnel exchanges, enhance friendship and mutual trust, and deepen mutually beneficial cooperation.
During its EU presidency in the first half of this year, France will make every effort to advance the positive agenda between the EU and China, and work with China to ensure the success of the EU-China leaders' meeting and push forward the development of EU-China relations, he added.
The French president also expressed his hope for progress in the ratification and implementation of the EU-China investment agreement.
The two heads of state reached multiple important agreements on bilateral cooperation for the next stage.
First, push for early implementation of cooperation on agricultural technology and between agricultural industries with local advantages. The Chinese side encourages more French agrifood enterprises that meet China's requirements to register in China.
Second, deepen the China-France green manufacturing partnership initiative and each provide a fair, equitable and non-discriminatory business environment for enterprises from the other country.
Third, support more French banks and financial infrastructure in joining the RMB Cross-Border Interbank Payment System. The Chinese side will review in a positive manner French banks' applications for financial qualifications in accordance with relevant procedures and standards.
Fourth, support aviation enterprises of the two countries in deepening cooperation in various forms, and promote mutual airworthiness certification for aircraft.
Fifth, accelerate the implementation of the list of the fourth batch of demonstration projects in third-party market cooperation.
Sixth, hold the space and cyber sub-group meetings of the China-France Strategic Dialogue at an early date, carry out polar and maritime dialogues, and strengthen military dialogue and exchanges at all levels.
Macron presented his view on the current situation in Ukraine.
Xi stressed that related parties should stick to the general direction of political settlement, make full use of multilateral platforms including the Normandy format, and seek a comprehensive settlement of the Ukraine issue through dialogue and consultation.
The two sides also exchanged views on other issues of mutual concern. [bolded by The Report]
During this first exchange of the year, the two Presidents set the priorities for the bilateral relationship, foremost among which is the implementation of the action plan approved during President Emmanuel MACRON's visit to China in November 2019. Within the framework of the Franco-Chinese strategic and global partnership, the authorities of our countries will redouble their efforts to support projects in the aeronautics, civil nuclear and space sectors….
In the context of the Presidency of the Council of the European Union, the President of the Republic pleaded for a close dialogue between the European Union and China in order to address all the subjects, both common objectives and points of divergence, and to move towards a rebalancing of the Euro-Chinese relationship towards greater reciprocity. He encouraged China to lift sanctions against Lithuania and address Chinese demands through dialogue [bolded by The Report]
The two Heads of State agreed to continue their joint actions on the fight against climate change, the preservation of biodiversity, global health and the treatment of the debt of the most vulnerable countries. Following the summit on the oceans, China was expected to support the creation of marine protected areas in Antarctica, the negotiation of a treaty on biodiversity in the high seas and the High Ambition Coalition for nature and people.
The Head of State recalled French and European expectations regarding the ratification of the fundamental conventions of the International Labor Organization, in particular on forced labour, and expressed his concern about the situation in Xinjiang. [bolded by The Report]
Heads of State discussed Iran. They agreed to continue and strengthen their joint efforts to reach an agreement in Vienna and to ensure that Iran fully respects its nuclear obligations.
Regarding the Russian-Ukrainian crisis, the Presidents discussed the need to continue efforts to reduce tensions and resolve the crisis through dialogue. The French President recalled the importance of respecting Ukraine's sovereignty and territorial integrity. [bolded by The Report] The Chinese President praised the action of France and Germany within the framework of the Normandy Format and reiterated his full support for the implementation of the Minsk Agreements.
Comment: Note that Xi’s readout didn’t mention Ukraine’s sovereignty and territorial integrity.
2) Implications for Taiwan
What does the Ukraine crisis mean for Taiwan? That's up for debate. – Japan Times
As the crisis over Ukraine threatens to explode into a full-blown Russian invasion of the country, Taiwan is closely watching from thousands of kilometers away to see how the U.S. responds and what, if any, lessons can be gleaned from the events so far.
But just what those lessons are is something that is being hotly debated.
In the current geopolitical moment, the differences between Ukraine and Taiwan are far more important than their similarities… The United States should not continue to divert limited resources away from the Indo-Pacific, where the military balance is shifting in China’s favor over the next decade, to a region that is both less crucial to American interests and where the balance of power is more advantageous to Washington. U.S. prioritization, not reputation, is what really matters for Taiwan’s security.
v/r,
Joe Webster
The China-Russia Report is an independent, nonpartisan newsletter covering political, economic, and security affairs within and between China and Russia. All articles, comments, op-eds, etc represent only the personal opinion of the author(s) and do not necessarily represent the position(s) of The China-Russia Report.