China Races for Energy Security to Keep Pace with GDP Growth

With Putin’s star rising, Russia has aspired to block China’s energy ambitions in Central Asia. When China embarked on a Sino-Kazak strategy, Boris Yeltsin was still president. Since then, Putin and his inner circle of Chekists (named after the Soviet Union’s first secret police squads) have begun tightening the noose around the ex-Soviet states. The mandate driving Putin’s fellow ex-KGB insiders is Russia’s return to superpower status.

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This became evident on October 26th 2005, when SCO’s top officials met in Moscow for their annual conference. Because India’s Foreign Minister and Pakistan’s Prime Minister attended as SCO-invited observers, Putin boasted the populations represented by SCO member states and observer countries exceeded three billion people. He bragged he had gathered “half the planet” at the Kremlin. At the top of the SCO agenda were energy issues, such as expanding the oil and gas sector and exploration of new hydrocarbon reserves. Of course, these are the issues which are clearly foremost on the mind of the Chinese silk road economic belt.

But has Putin’s mood swung further toward impudence? When Chinese Prime Minister Wen Jiabao announced the Sino-Russian bilateral trade turnover might surpass $28 billion, Putin challenged, “I hope this happens.” While even Russia’s media suspected Putin used the SCO conference as his egocentric publicity showcase, Russia depends upon China’s economic prowess to uplift its own economy. Will there come a time when Russia is less fearful of China’s economic might? This might be well into the future. Russia’s economy continues to require an ally in China. Politically, Russia depends upon China politically as a buffer from the U.S. The September EU-China Summit to be held in Helsinki should offer clues about the tentative Sino-Russo alliance. Chinese Premier Wen Jiabao will give the keynote address, and possibly helping to forge closer alliances with Russia’s neighboring Finland. After all, Nokia is based in Finland, and China is the world’s largest consumer of mobile phones and services.

One has to wonder if Russia has been slowly closing China’s door to Central Asia over the past few years. Gazprom’s press secretary, quoted in a 2004 interview in Vedomosti, announced, “… sharing mineral resources with foreign countries is against our policy… In fact, sharing oil with the Chinese would be even more inappropriate.” Gazprom, for example, is now developing Uzbekistan’s gas fields for export to the West, and not to China. (See part two of this series.)

The delicate equilibrium between Russia and China – one where both countries hope to maneuver against further U.S. meddling (or as cynics call it, imperialism) in the Middle East – requires yielding as few concessions to the other as need be conceded. When China moves too boldly, Russia plays upon its alliance with Japan to keep China in check. Both use their U.N. Security Council vetoes as negotiation tools in carving out petroleum, and other commodity interests, to preserve their energy security issues.

China serves Russia’s political aspirations in quelling U.S. expansion into the Middle East. Having decades-long ties with Iran and other Muslim states, Russia has a convenient ally in China, when using Iran as a thorn in Washington’s backside. And China still remembers the oil concessions it lost in Iraq, after the U.S. invasion of that country. China likely frets about the unending squabble over Iran’s uranium enrichment aspirations in light of having lost those Iraqi oil concessions.

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