Putin's miserable G20 and the RIC trilateral
Xi visits Portugal; Putin bros out with MbS
Hi Everyone,
Welcome to this, the second weekly edition of The China-Russia Report. For new subscribers: The Report is published every Monday (barring major developments).
Very quick hits:
Putin had a mostly miserable G20; Russia-India-China (RIC) held their second-ever trilateral between heads of state after a 12 year hiatus; China said the EU is “prudent” to not impose additional sanctions in the wake of the Kerch Strait incident; General Secretary Xi will visit Portugal this week amid the EU’s growing concerns over Chinese investment; and the Senkakus territorial dispute is de-emphasized in an authoritative People’s Daily infographic, although an expert on Japan/Asia (Dr. Kent Calder) doesn’t expect any fundamental changes to China’s position.
Four Takeaways:
Vladimir Putin appeared to have a rather miserable G20, although things could have gone worse for him.
Putin was unable to secure a formal meeting at the G20 with Donald Trump, who tweet-cancelled the meeting by expressing concern over the Ukrainian-Russia naval skirmish in the Kerch Strait. (Perhaps also noteworthy: many legal observers expect Special Counsel Robert Mueller to take additional actions at Manafort’s breach of the plea agreement filing, which must take place by Friday.) Putin was reduced to requesting a meeting with Trump sometime before the next G20 meeting in 2019 (and appearing to be a supplicant plays very poorly in Russian domestic politics). British Prime Minister Teresa May also refused to meet with Putin, while Western leaders such as French President Emmanuel Macron and German Chancellor Angela Merkel lambasted Putin’s aggressiveness in Ukraine. Putin’s standing in the West will likely continue to deteriorate.
Imbalances in the China-Russia relationship were also on display at the G20 summit: Xi will be the St. Petersburg International Economics Forum’s “main guest” in June while Putin will be but one of many “participants” at the 2nd BRI summit in April. Nevertheless, Putin appeared in very good spirits during photographs with Xi.
Mohammed bin Salman and Putin, the two semi-pariahs of the summit, exchanged a “bro five” while Saudi Arabia pledged to invest $2 billion in Russia. The world’s two largest oil exporters are growing closer. The implications for China, the world’s largest oil importer, are unclear.
Putin’s confidence, even swagger, at the summit in spite of (mostly) unfavorable news seems somewhat disingenuous and for show. Still, Putin avoided some major disasters. A repeat of the Helsinki summit could have been politically disastrous for Trump and increased calls for severe US sanctions; EU leaders didn’t raise the prospect of additional sanctions after the Kerch Strait incident; Putin’s didn’t appear completely isolated; and the trilateral meeting with India and China could demonstrate to the West – and Xi – that Russia retains options.
Russia-India-China trilateral pressures Trump overtly (and, quietly, Xi)
Russia, India, and China held their first heads-of-state trilateral meeting in 12 years. The meeting readouts praised multilateralism, multilateral economic institutions, while criticizing unilateralism, etc – unsubtle pushback against Trump. At the same time, India’s inclusion dilutes Chinese leverage within the grouping and enables Russia (and India) to subtly counterbalance/pressure China at minimal political cost.
Russia is a major weapons supplier to India and conducted combined military exercises with India at the height of Doklam dispute in 2017. Expect Russia to continue to balance China by pulling India into more bilateral meetings. The triangular relationship’s evolution in the post-Trump and post-Putin eras, whenever that happens, will be fascinating.
For further Russia-India-China reading, I strongly recommend Bobo Lo’s New Order for Old Triangles: The Russia – China – India matrix - via IFRI
Worth noting that Japan, America, and India also held a trilateral meeting at the G20.
The Kerch Strait incident: China says EU “prudent” to forego sanctions/more anxiety in Ukraine
Remember the Kerch Strait incident? From a week ago? It’s faded from the news, perhaps too quickly. Xinhua said a “large-scale conflict is unlikely to erupt” and claimed the EU was “prudent” to forego sanctions.
Ukrainian President Petro Poroshenko says Russia is amassing forces along the Ukraine-Russia border. Poroshenko has domestic political incentives to hype the threat; Putin would also pay a steep domestic political cost for further expanding the war. But Putin regards the bridge over the Kerch Strait as a vulnerable node and has threatened to establish an overland route to Crimea for years. And Putin has confounded observers before. More escalation by Putin in Ukraine is very unlikely but can’t be ruled out.
General Secretary Xi to visit Portugal on return leg of trip
Xi flies to Lisbon amid greater, politically sensitive Chinese investments in Europe and European electricity markets. For Xi’s G20, particularly Xi’s meeting with Trump, see Sinocism’s post.
China – Russia
Xi Jinping meets Vladimir Putin – Xinhua (Chinese language)
Comment: The General Secretary and Putin seem to be enjoying themselves in the picture.
Standard language in Xinhua’s announcement, references to both BRI and the EAEU as well as “effective coordination in international and regional affairs.”
As The Report has noted before, however, observe how China and Russia reference the BRI/EAEU when meeting with Kazakhstan and other Central Asian [i.e. regional] countries.
Curious that Xi mentioned energy as a potential source of cooperation while Putin did not in the Xinhua readout. Worth noting that no new deals or initiatives appear to have come out of last week’s inaugural China Russia Energy Forum. Wonder what progress, if any, is being made on the Power of Siberia 2 natural gas pipeline.
Xi Jinping accepts Putin's invitation to attend St. Petersburg Economic Forum next year - TASS
“Russian President Vladimir Putin has invited Chinese President Xi Jinping to the St. Petersburg International Economic Forum (SPIEF) in 2019. "We are preparing for your visit next year. I know that you already received our invitation to time your visit with the St. Petersburg International Economic Forum. I ask you to look at your schedule. If this works, we will be glad to see you as the main guest [at SPIEF]," Putin said.
Xi Jinping accepted the invitation. "I will gladly visit your country next year and take part in the St. Petersburg International Economic Forum," Xi said at the meeting with Putin. The Chinese president in turn invited Putin to participate in the 2nd summit "One Belt One Road" at the end of April of 2019 in China. "I invite you to take part in the 2nd summit 'One Belt One Rod' at the end of April next year. We will have many meetings next year. I am confident that close contacts will take Chinese-Russian relations to a new level," Xi said.”
Comment: Note that Xi will be the SPIEF’s “main guest” (in June) while Putin will be one of many “participants” to “take part” at the 2nd BRI summit. This meeting wasn’t displayed prominently by TASS.
Russia and Ukraine confront each other – Xinhua (Chinese language)
Comment: Xinhua says “It is unlikely that a large-scale conflict [over the Kerch Strait] will erupt… It is unlikely that Ukraine will take extreme action….” Also mentions the Ukrainian presidential election next year as a factor in the dispute.
Chinese language included in foreign college entrance exams – People’s Daily
“As of 2019, Mandarin will be included in Russia’s Unified State Exam, a national exam that every student must pass after school to enter a university or a professional college. Anzul Muzayev, deputy director of Federal Service for Supervision of Education and Science, told Russia Today that currently, over 17,000 students are learning Mandarin as their second language, while in 2019, hundreds of students will pass the Mandarin test in their Unified State Exam. According to Russia Today, the exam will include 42 questions and will be divided into four sections to focus on listening, reading, grammar and vocabulary, and writing, and those taking the exam will have three hours to complete it. Over the past 10 years, the number of Mandarin learners in Russia has grown significantly. In 1997, around 5,000 Russians chose to study Mandarin, while in 2017, that number stood at 56,000.”
Comment: Would be interesting to compare this figure to the number of students learning English, French, German, etc.
Speaking of which, if you or someone you know can read Russian and would like an internship, please send an email with resume to editor@ChinaRussiaReport.com
The EU is not eager to sanction Russia, Ukraine seeks NATO protection – Xinhua (Chinese language)
“乌方先前要求西方国家就俄罗斯扣船事件对俄方施加更多制裁。 欧洲联盟28日就俄乌争端发表声明，没有提及追加对俄制裁的可能性。 …
欧盟审慎
欧盟外交和安全政策高级代表费代丽卡·莫盖里尼28日在一份声明中说，俄方使用武力令欧盟“无法接受和失望”。..
俄罗斯总统府克里姆林宫28日证实，总统弗拉基米尔·普京与土耳其总统雷杰普·塔伊普·埃尔多安通话时讨论了俄乌海上争端；美国白宫同一天说，美、土元首通话时提及这一话题。”
Comment/summary: Xinhua says the EU is “prudent” to not sanction Putin for the Kerch Strait, seems to suggest that Ukraine’s calls for NATO/EU protection are falling flat.
Also, Sputnik apparently reported that the White House is encouraging Turkey to mediate the dispute. Take Sputnik’s reporting with a massive grain of salt but interesting if true.
Putin isn’t the only actor judging to see how far NATO/EU can be pushed…
Russia-India-China Trilateral Meeting at G20
India, Russia, China hold 2nd trilateral meeting after 12 years – The Economic Times
“Prime Minister Narendra Modi, Chinese [President] Xi Jinping and Russian President Vladimir Putin on Friday held a trilateral meeting, the second among the three countries after a gap of 12 years, on the sidelines of the G-20 summit here to discuss cooperation in various areas…
Earlier in the day, India, Japan and the US discussed major issues of global and multilateral interests in their first trilateral meeting, which assumed importance in the wake of China flexing its muscles in the strategic Indo-Pacific region. At the meeting, India underscored its firm commitment to make the Indo-Pacific a region for shared economic growth.
Asserting that India will "continue to work together on shared values", Modi said, "When you look at the acronym of our three countries -- Japan, America, and India -- it is 'JAI', which stands for success in Hindi."”
Xi, Putin, Modi agree to increase trilateral cooperation – People’s Daily
“The three countries, [Xi] added, should actively champion a vision of common, comprehensive, cooperative and sustainable security, strengthen regional and global counterterrorism cooperation, promote political settlement of hotspot issues, and play an even bigger part in safeguarding peace and security in the region and the world.”
Comment: Despite largely boilerplate statements from the meeting, it’s significant that China, India, and Russia are holding trilateral meetings. Noteworthy but unsurprising that Putin earned pride of place over Indian Prime Minister Narendra Modi in the People’s Daily [word order is important in the Chinese language and particularly in Chinese state media]. Curious if these trilateral meetings will be institutionalized going forward or not.
This is a very complicated triangular relationship: China is a very important economic partner to both India and Russia. At the same time, there are significant political tensions between India and China and uncertainties in the China-Russia relationship.
India and Russia held combined military exercises during the height of India and China’s Doklam territorial dispute in the summer of 2017; Russia is also a major supplier of India’s military equipment. Any skirmish or conflict between India and China could pit Indian-operated Russian hardware against Chinese forces.
India purchased Russia’s advanced S-400 Triumf anti-aircraft missile system for $5bn in October despite concerns the acquisition could fall afoul of US sanctions. Unclear if US sanctions will occur since India’s acquisition of the S-400 could drive a wedge between the PRC and Putin’s Russia.
India is also annoyed by Trump’s sanctions on Iran, one of its major oil suppliers.
India’s perspective on the “Russia-India-China Trilateral” – Indian Ministry of External Affairs
“The three leaders exchanged views on expanding mutual cooperation in international forums, and to encourage greater interaction among the three countries. They agreed on the importance of reform and strengthening of multilateral institutions which have benefitted the world, including the United Nations, WTO and well-established as well as new global financial institutions. They underscored the benefits of a multilateral trading system and an open world economy for global growth and prosperity.
The three leaders also agreed to have regular consultations at all levels to jointly promote international and regional peace and stability, to strengthen cooperation through BRICS, SCO and EAS mechanisms, to address global challenges such as terrorism and climate change, and to encourage peaceful resolution of all differences. The three leaders acknowledged the importance of cooperation in RIC format and have agreed to hold further such trilateral meetings on multilateral occasions.”
Comment: From Bobo Lo’s New Order for Old Triangles: “The foreign ministers of Russia, China, and India have been meeting in the troika format since 2001; the 14th meeting took place in April 2016.”
New Order for Old Triangles? The Russia-China-India Matrix – Bobo Lo for IFRI
Comment: From 2017, but an excellent explainer of this evolving triangular relationship.
Xi Jinping meets Indian Prime Minister Modi – Xinhua (Chinese language)
“印方愿同中方增进互信，发挥边界特代会晤机制作用，维护好两国边界地区和平与安宁。
From Xinhua: The Indian side is willing to enhance mutual trust with China, develop the role of the border special meeting mechanism, and safeguard peace and tranquility in the border areas of the two countries.”
Putin suggests Chinese, Indian leaders should hold regular meetings in RIC format - TASS
“At a meeting with the Chinese and Indian leaders Russian President Vladimir Putin suggested holding meetings in the Russia-India-China (RIC) format on a regular basis, in particular on the sidelines of large summits and international events.”
Comment: Expect Russia and India – but particularly Russia – to push for more meetings in the RIC format. India has other mechanisms (the US-led alliance system, its own massive internal market, etc) to hedge against Chinese economic and political power, while Putin’s Russia has few options.
China – Europe
China’s Golden Era in Portugal – Philippe Le Corre for the Diplomat via Carnegie
“Overall, in Beijing’s eyes, Portugal is not just a medium-sized European country about to host China’s supreme leader for a state visit. Since 2004, it has been engaged in a “strategic partnership” with the People’s Republic of China. The financial crisis, which hit Portugal between 2008 and 2013, served as a catalyst for a Chinese offensive, as Lisbon, under the terms of external creditors, was forced to privatize state-owned assets. Up to today, Chinese foreign direct investment (FDI) amounts to a total of 12 billion euros, ranging from energy (Galp, REN, Energias de Portugal-EDP) to transportation (TAP), along with a significant presence in insurance (Fidelidade), health (Grupo Luz Saúde), financial services, real estate and media – and the speed of such investment does not seem to be decreasing. A few months ago, a Chinese state-owned company, China Three Gorges, offered to take a majority stake in the capital of EDP, the country’s formerly state-owned top grid company, where it currently holds a 23.3 percent stake, acquired gradually since the 2011 bailout. EDP owns several subsidiaries in the field of renewable energy in Spain, Brazil, and in the United States. In addition, the company still receives subsidies from the Portuguese government. This attempted takeover raised eyebrows in Europe and in the United States.”
China expands role in Portuguese Electricity Grid – People’s Daily
““Energias de Portugal (EDP), an integrated generator, supplier and distributor of electricity in Portugal, has regained vitality after choosing China Three Gorges Corporation as a long-term cooperation partner. “Thanks to Chinese company for keeping us in Portugal,” Antonio Mexia, CEO of EDP, told the People’s Daily, explaining that several major energy corporations from Germany, France, Spain and Brazil proposed cooperation intentions when EDP decided to sell part of its stocks, but they chose the Chinese partner out of a string of concerns.”
Comment: General Secretary Xi will visit Portugal this week amid the EU’s growing concern about Chinese investment.
Xi meets with French President Emmanuel Macron (Chinese-language) Xinhua
Comment: Macron and Xi will meet again in China in January.
Central Asia
Committee To Protect Kyrgyz People In China Established In Bishkek –RFE/RL
“A committee to protect ethnic Kyrgyz in China has been established in Kyrgyzstan amid fresh reports of further repression by Beijing of the multiethnic indigenous community in China’s northwestern region of Xinjiang.”
Northeast Asia
Comment: Along with some rather unsubtle representation of Chinese claims in the South China Sea, the infographics don’t appear to depict a dashed line corresponding to the Senkakus’ geographic position. There’s been some political warming between Japan and China of late, and the economic benefits from any East China Sea offshore oil and gas reserves have diminished due to increasingly efficient onshore exploration techniques. Still, an expert warned against over-interpreting the infographic.
"I think the term "Indian Summer in Japan-China Relations" is apt here, on both the Japanese and Chinese side," said Dr. Kent Calder, Director of the Edwin O. Reischauer Center for East Asian Studies at Johns Hopkins SAIS. "For China, I think the subtle map changes are just a de-emphasis -- both want to balance against Trump's pressures. I don't think, however, that it is a basic change."
Japanese prime minister to visit Russia at the beginning of 2019 — TASS
Comment: Doesn’t directly mention any discussion of the Northern Territories/Kuril Islands, although “the new mechanism for resolving the issue of the peace treaty” is mentioned. Warming Japan-China ties may have opened up some political space for Russia in NE Asia.
Middle East and North Africa
Putin and Saudi crown prince share fraternity bro shake - Politico
Comment: Mohammed bin Salman has been moving closer to Putin, particularly after the Khashoggi murder. Saudi Arabia and Russia are the world’s two largest oil exporters and the two largest sources of Chinese oil imports; China is the world’s largest oil consumer. Unclear how China would regard closer MBS-Putin ties.
Kremlin: Concrete dates of Putin's visit to Saudi Arabia to be coordinated – TASS
Russian, Saudi energy ministers meet on G20 sidelines - TASS
RDIF says $2 billion will be invested in Russian economy from joint Russian-Saudi fund
Xi Jinping meets with MbS in Buenos Aires – Xinhua (Chinese language)
Comment: The fact of the meeting is more important than its content given MBS’s near-pariah status in the international community.
The Khashoggi killing had roots in a cutthroat Saudi family feud – Washington Post
Comment: An absolutely nuts story. MBS tried to deceive the Ministry of State Security (the PRC’s external intelligence service) into extraditing one of his rivals to Saudi Arabia. The MSS ultimately didn’t extradite the rival.
Is Libya Finally Ready for Peace? – Frederic Wehrey and Jalel Harchaoui for Foreign Affairs
“There have been encouraging developments in Libya over the past few months. These include progress reining in Tripoli’s militias, economic reforms by the GNA, and a weakening of Haftar’s national position. Taken together, these developments offer, for the first time in years, reason for guarded optimism about Libya’s future. The international community must capitalize on this momentum while mitigating a number of looming risks.”
Comment: Libya is a major oil exporter to the EU and possesses substantial gas reserves. I don’t claim to understand much about Libya’s complicated domestic politics and external relations - but worth noting that Russian and Chinese interests aren’t necessarily aligned in Libya, as Libyan energy production reduces world (notably European) oil and gas prices.
China
Two U.S. Navy ships pass through Taiwan Strait – Reuters
Is the Taiwan Strait Heading Toward Another Crisis? – Jie Dalei for Carnegie
“A manageable but dangerous situation”
PLA keeps eye on US ships in Taiwan Straits – People’s Daily
Comment: Taiwan – mainland relations are not in a good place.
There Is No Grand Bargain With China – Ely Ratner for Foreign Affairs
“Any agreement in Argentina will be a tactical pause at best, providing short-term relief to jittery stock markets and beleaguered U.S. farmers, but having no material or long-lasting effect on the slide toward a high-stakes geopolitical competition between the United States and China. The days when the world’s two largest economies could meet each other halfway have gone…
No one should be surprised if [Trump]chooses to make a deal, declare victory, and go home. By earning symbolic and politically salient concessions, Trump could minimize short-term risks to U.S. markets while claiming that he alone finally stood up to Beijing.”
Comment: Ratner is very hawkish on China. But the US foreign policy community has moved closer to his views over time.
Stop Obsessing About China – Michael Beckley for Foreign Affairs
“Instead of spending trillions of dollars building a 355-ship navy, for example, the United States should strengthen existing power relationships in East Asia by helping China’s neighbors develop defensive military capabilities and deploying U.S. antiship and surface-to-air missile launchers on allied shores along the East and South China Seas.”
Comment:
The Intermediate Nuclear Forces (INF) Treaty banned the US from deploying intermediate-range conventional ballistic similar to the anti-ship DF-21 and DF-26 “Carrier Killer” missiles. The termination of the INF could enable the US to deploy intermediate-range missiles for potential contingencies in the Indo-Pacific. For more on conventional deterrence and ground forces read here.
Arguably the US should build a 355-ship navy (particularly submarines) AND deploy US antiship and surface-to-air missile launchers astride the East and South China Seas.
Full text of Xi's remarks at Session I of G20 summit in Buenos Aires – Xinhua (Chinese language)
Russia
Putin’s Ancien Régime - Maxim Trudolyubov for Riddle
As Russia’s economy falters, what are Putin’s options? – Samuel A. Greene for IISS
Russia to build 2 more Borei-A strategic nuclear-powered submarines by 2028 – TASS
Mattis: Putin a 'slow learner' who tried to 'muck around' in midterms – Politico
"Mr. Putin is clearly a slow learner. He is not recognizing that what he is doing is actually creating the animosity against his people," Mattis said. "He's not acting in the best interests of the Russian people, and he is actually causing NATO to rearm and to strengthen the democracies' stance, the unified stance of all the democracies together."
Putin says he did not talk with UK prime minister at G20 summit – TASS
Putin-Trump meeting may be held at G20 in 2019 - Kremlin aide - TASS
Russian President Vladimir Putin and his US counterpart Donald Trump may meet in June 2019 at the next G20 summit in Japan, but it’s vital for Moscow and Washington to find a chance to hold these talks earlier, Kremlin Aide Yury Ushakov said in an interview with the program "Moscow. Kremlin. Putin" on Rossiya 1 TV channel on Sunday.
"If we speak about international forums, this may happen at the G20 summit in June. But it seems to me that it is crucial for us and our colleagues to find an option to meet earlier," he said. The two leaders planned to hold a full-fledged meeting in Buenos Aires at the G20 summit, but on the eve of the event Trump announced its cancellation via Twitter over the recent incident with Ukraine’s vessels in the Kerch Strait. However, during the summit the two presidents had a brief conversation, Putin told reporters. The Russian president explained to Trump his view of the incident in the Black Sea even though Trump has a different position on the matter.”
Trump’s cancellation of meeting with Putin unlikely to complicate relations, expert says – TASS
“The US President Donald Trump’s decision to call off his meeting with Russian leader Vladimir Putin on the sidelines of the G20 summit in Argentina is unlikely to seriously complicate relations between the two countries, which already are complicated enough, Chairman of the Board of the Valdai International Discussion Club’s Development and Support Foundation Andrei Bystritsky, told TASS. "Since relations are not very good to start with, it is quite possible that there will be no further actions," he said. "A thing to note is that for some time, the West showed rather moderate response to the Kerch Strait incident. The West has its experience in dealing with Ukraine, which is confusing, to put it mildly. Perhaps, Trump’s response will not have any significant consequences," the expert pointed out.”
Novak on future of OPEC+ deal: Current price range comfortable for all - TASS
“ - The OPEC+ monitoring committee has recently met in Abu-Dhabi. Unlike your colleagues from the Middle East, you didn’t speak out in favor of cutting oil production in 2019. Is there a final stance on the issue today?
Novak [Russian Energy Minister]: Basically, all participants of the Abu-Dhabi talks have agreed that there is no need to make any serious joint statements because we can still watch the market in November.”
- What were the export destinations?
Novak: On average, 65 percent is supplied in the Western direction with the remaining 35 percent flowing eastwards. It is impossible to track what happens with this crude afterwards. There are numerous contracts, and traders.
- Let’s talk about the future of OPEC+ a bit more. Saudi Arabia’s Energy Minister said in an interview with TASS that the new organization will have its own secretariat, and that Russia should take the leadership in creating it. Are there any steps in this direction already?
Novak: The issue is not being debated at the moment, and no decisions on setting up the secretariat have been made yet. I think that the existing system will be maintained.
- Russia is meanwhile discussing joining OPEC as an observer. Is there any progress?
Novak: This idea has been voiced, it does not cause rejection, but requires a careful and balanced approach. In this regard, there cannot be hasty decisions.
- And what about other partners, for example, China? Can we speak about a trend towards stepping up the use of national currencies in mutual settlements for energy resources?
Novak: We do our best. But that is not so easy because specific conditions in the financial and economic spheres need to be created. Our financial and economic services along with central banks are working on it.
- Will Russia keep plans to build a 1,200 km gas pipeline from Iran to India?
Novak: The project is on the agenda, we gradually conclude intergovernmental documents.”
That’s all for this week, folks. If you enjoy this newsletter please share with your friends and follow The Report on Twitter.
Until next week,
Joe Webster
The China Russia Report is an independent, nonpartisan weekly newsletter covering political, economic, and security affairs within and between China and Russia. All articles, comments, and op-eds represent only the personal opinion of the author(s) and do not necessarily represent the position(s) of China Russia Report.