1. 1 Russia’s Foreign Policy in Northeast Asia Mikhail A. Molchanov Associate Professor Department of Political Science St. Thomas University, Fredericton, Canada Visiting Scholar, Waseda University, Tokyo, Japan molchan@stu.ca

2. 2 Grand narratives Utopian globalism: Gorbachev Primitive westernism: Yeltsin-Kozyrev Eurasianism: Primakov (1995-99) Pragmatism: Putin I Nationalism/Eurasianism : Putin II Back to pragmatism and global engagement?

3. 3 Key Priorities Sovereignty and territorial integrity Reclaiming the status of a global power Multilateralism/multipolarity (UN, UNSC) Economic development International and regional stability Active neighborhood policies

4. 4 Regional priorities Integration in the framework of the CIS Developing ties with the EU Containing NATO’s growth Reviving the Russia-US dialogue The Asia-Pacific integration (APEC, ARF, SCO) Strategic partnerships with China and India

5. Source: Goskomstat RF5 Russia’s trade with North-East Asia

6. Source: Federal Customs Service, RF6 Structure of foreign trade (%)

7. 7 Trends in Russia’s foreign trade (%)

8. 2007 WDI; IMF; Reuters; CIA; countries 8 Largest reserves holdings Economy US$ bln 20042005200620072008Import coverage (2005) China622.9831.41,068,51,5271,68014 months Japan844.7846.9895.0973.41,02016 months Russia126.3182.3304.0476.4494.511 months India131.6137.8192.0275.3288.312 months Taiwan247.7260.3266.2270.1272.814 months Korea199.2210.6238.8262.2262.48 months Singapore112.2115.8136.3162.9167.65 months Hong Kong123.6124.3133.2150.4159.94 months Germany97.2101.7111.6136.2153.01 month USA190.5188.354.970.673.51 month

9. 9 Main security concerns Expansion of NATO: Georgia, Ukraine U.S. Ballistic Missile Defense (BMD) in Europe Chinese demographic and economic expansion in RFE (unvoiced) Political Islam, terrorism and separatism Nuclear proliferation Global economic vulnerabilities

10. Source: SIPRI database10 Russian defense expenditure

11. 11 Regional policy drivers Bilateral Multilateral China’s growth Balancing or bandwagoning? US & NATO expansion Balancing/engaging Unrealized potential in relations with Japan Separating politics from economics The two Koreas The trade/security nexus UN/UNSC N Korea; Six-party talks Japan’s bid for UNSC G7/G8 Hokkaido Toyako summit Russia’s 2006 presidency SCO / CSTO APEC / WTO ASEAN /ARF ACD, EAS, others

12. 12 Russo-Korean relations: Politics Key concern – security Denuclearization of the peninsula: the “Ukraine model” Equal relationship with both Koreas Conflict prevention (security cost) Stability at the borders Nuclear non-proliferation in NE Asia: Japan, ROK, Taiwan Geopolitics and the balance of power Reaffirming Russia’s relevance in NEA Checking the US hegemonic ambitions Soft-balancing China together with the South Establishing spheres of influence in the North

13. 13 Russo-Korean relations: Economy Korea as Russia’s gate to NE Asia The “Europe-Korea” railway link (TSR/TKR) Unified energy system for continental NEA Gas/oil trade, E&D (Sakhalin/Kamchatka) A bridgehead to Asia Pacific A market for high value-added exports A partner in the development of RFE

14. 14 Relations with Japan: Key areas “Creative partnership” Trade/investment/technology Law enforcement, defense and security Cultural and interpersonal exchange Political dialogue, international cooperation, peace treaty Problem issues Japan’s “territorial claims” Insufficient level of trade & investments

15. 15 Relations with Japan: Economy Strengths Weaknesses Trade grows 30-40% a year Reached $19 bln in 2007 Industry leaders started taking interest in Russia Automotive: Toyota (2005), Nissan-Suzuki-Isuzu (2006- 07) Banks: Tokyo-Mitsubishi UFJ, Mizuho, Mitsui Sumitomo (2005-2006) Program of development of the Far East and Trans- Baikal region up to 2013 Russian sovereign funds look to invest in Japan Investment < 2% total cumulative $2960.4 mln direct $292.8 mln Sakhalin II: A traumatic experience for Japan The East Siberia-Pacific Ocean Oil Pipeline: A prolonged debate Skovorodino (China) first By rail to Kozmino Bay (Japan) second Japanese SME in Russia suffer from regulatory burden and corruption

16. 16 China: “a relationship of trust” Drivers: First, Russia’s fear, then – admiration Same vision of key global issues Economic incentives on both sides Resisting American hegemonism Geopolitical positioning in the world and vis-à-vis each other Super-task: emulating China’s success Present goals: security, stability, regime preservation, rebuilding of the state, economic revival Instruments: trade, political and military cooperation, strategic uses of state-led regionalism in Eurasia

17. 17 Trade and investment Trade: 2006 - $28.7 bln; 2007 - $40.3 bln, 41-48% growth/year Goal – US$ 60+ bln by 2010 Interregional ties: 70 out of 89 Russian provinces have direct contacts with their Chinese counterparts. Good outlook for the future - $5.2bln in trade contracts in 03- 10/2007, incl. $500mln to Russia’s machine building industry Oil – 10 mln ton exported in 2007 (10% of Chinese demand, 4 th place in the Chinese market after Saudi Arabia, Angola, and Iran Gas – an agreement to export 30-38 bln m 3 /a Chinese investments in Russia ($5bln pledged) – capital construction, pulp mills, agriculture. Potentially - port renovation & infrastructure projects (Vladivostok-2012, Sochi-2014). By Nov 2007: $1.6 bln in accumulated bilateral investment (Russia’s inward>90%). The goal is $12bln by 2020.

18. 18 Political and military aspects Treaty of Good-Neighborliness, Friendship, and Cooperation (2001) Arts. 7-9 on security-related cooperation The Outline on Implementing the Treaty (2005-2008) Borders no longer an issue (Oct. 2004) But Chinese demographic and economic pressure remains: 108 mln in 3 NE provinces vs 27 mln in all of Siberia/RFE Joint military exercises became routine Russia’s arms have modernized PLA Chinese purchases saved Russian military-industrial complex New tensions over co-production, licensing Putin: military cooperation "will continue” (03/2007)

19. 19 Shanghai Cooperation Organization Neither the “Chinese” nor the “Russian” tool interdependence, complementary interests Central Asians not easy to push around From confidence building measures to a multifunctional regional club in 5 years A new “geopolitical axis” or “we did not plan it that way”? Prospects for the future: “deepening before widening” The Iran controversy India vs Pakistan Diverging attitudes toward the West

20. VTsIOM, March 2007 national poll N=1600, p<3.4% 20 Public opinion and foreign policy What is Russia? A part of Europe, their 21 st century destinies will be closely intertwined – 38% Not quite European, but a unique Eurasian civilization; in the future, its interests will be shifting to the East – 45% Russia’s rise and strengthening Is a threat to the European nations, which do not want this to happen – 49% Answers the interests of the European nations, since Europe is our common home – 34% Positive (negative) associations (%): Europe: 77 (11), CIS: 59 (21), EU: 56 (18), Asia: 56 (24), the UN: 55 (21), the West: 52 (31), WTO: 49 (19), America: 34 (50), NATO: 19 (57)

21. 21 Conclusion Is there a Russian strategy for Asia? Yes: Putin’s plan, Medvedev’s career No: inconsistencies, lack of planning Eurasian regionalism – the main avenue for Russia’s great power revival SCO remains the key CIS – Medvedev’s first priority RFE – “we need to develop, finally, the system of state policies toward the Far East” (Medvedev, 07/02/2008)