Monterey Institute of International Studies, Monterey, California

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1 Russia As A Regional Power in East Asia Tsuneo Akaha Monterey Institute of International Studies, Monterey, California Introduction Historically, East Asian countries have generally seen Russia as a distant neighbor, with a distinct civilization neither European nor Asian and political and strategic interests at odds with their own. 1 Since the end of the Cold War, however, Russia has undergone sweeping and often tumultuous changes, politically, economically, and socially, and its foreign and security relations with the neighboring countries of East Asia have improved substantially. Today, as Putin and Medvedev look to stabilize national politics and modernize the nation s economic foundations, Moscow is paying greater attention to Russia s role in regional integration in East Asia, 2 hosting the APEC summit in September 2012 in Vladivostok, the largest city in Russia s Far East. Moscow is reported to have invested $15 billion in the Primorsky region ahead of the summit, the amount being 60 times Vladivostok's annual city budget. 3 Does Moscow have a realistic strategy for taking advantage of its Asian neighbors economic dynamism by further expanding bilateral political relations and become part of the development of multilateral cooperation and integration in East Asia? Does Moscow have a realistic vision and effective strategy for turning its Far Eastern territories, long a front-line fortress against foreign threats, into a bridge to East Asia? The Russian government is investing tens of billions of dollars in large-scale infrastructure development in this long-neglected part of the country. Russia s growing engagement with Asia is also evident in its participation for the first time, along with the United States, in the East Asia Summit (EAS) held in Indonesia in November Many obstacles remain, however, to Russia s constructive and effective participation in the deepening regional integration in East Asia. 1

2 Geographically, Russia is very much a part of East Asia. In other aspects, however, Russia s position in this region is not as definite today. Politically, Russia has more or less normal relations with all East Asian countries, both small and large, developed and developing, although the depth, the scope, and the nature of those relations vary widely. Its bilateral trade and economic relations with the regional neighbors vary from somewhat significant, as with China and Japan, to virtually negligible, as with most Southeast Asian countries. Russia s impact on the international relations of the region has long been based largely on its ideological and military interests vis-à-vis the other major contenders for influence in Northeast Asia, i.e., Japan in the first half of the 20 th century and the United States and China during the second half of the 20th century. However, with the end of the Cold War and the demise of the Soviet Union came the end of ideological and military rivalries among the regional powers and the precipitous weakening of Moscow s political influence in the region. Most importantly, post-soviet Russia virtually disappeared from the strategic radar of the United States, the lone superpower in the world and the dominant political actor in post-cold War East Asia, forcing Moscow to reach out to Beijing in forging a strategic partnership to counter the dominance of the United States in the regional political landscape. Moscow s cooperation with Beijing, both bilaterally and multilaterally, e.g., through the Shanghai Cooperation Organization (SCO), has helped Russia maintain its relevance to regional politics. Moscow has also retained a modicum of influence in the region through its participation in the Six-Party Talks over the nuclear development in North Korea. Today, however, none of the big powers in the region considers Russia a major security factor, positively or negatively. One area where Russia is an important and growing factor is the energy sector. The nation has the potential to exploit its energy resources namely oil and natural gas not only for its economic development but also as a source of political influence in the region, particularly vis-à-vis the energy-hungry Northeast Asian countries, China, Japan, and South Korea. Energy is no longer simply an economic asset but also holds important implications for Russia s strategic position in the region and beyond. With some of 2

3 the world s largest oil and natural gas reserves within its territory, Russia has developed an active energy diplomacy wooing foreign energy trade partners and foreign investment in the exploration and exploitation of its rich reserves. 4 Elsewhere Moscow has attempted to exploit foreign partners dependence on its energy supplies in its foreign policy. 5 Today, one cannot describe Russia s role in international relations without reference to the energy dimension. One may go so far as to suggest that energy has become one of the essential parts of Russia s identity vis-à-vis the rest of the world. What are the implications of Russia s unbalanced presence in East Asia for its role in the region s future, which will be characterized by deepening market integration and institutionalized multilateralism for facilitating and managing regional integration? This brief analysis will look at Russia s position in East Asia, examine its relations with the region s major powers in political, economic, social, and military-defense spheres, and explore its prospects as a constructive partner in regional integration. Key Indicators of Russia s Power One of the key indicators of a nation s relative power is its population size. Russia s population in 2013 was 142,470,272 persons, the third largest among the East Asian countries, after China (1,355,692,576) and the United States (318,892,103), and ahead of Japan (127,103,388). However, demographic trends in Russia (along with Japan) indicate a declining vitality, with the population growth estimated at percent (- 0.13% in Japan), compared with the estimated growth rates of 0.77 percent in the United States, and 0.44 percent in China. (See Table 1.) Table 1. Key Indicators for Selected East Asian Countries, 2013 Population Pop growth (%) GDP (PPP) (in US$ million) GDP per capita (PPP) (in US$) Defense spending (in US$ million at 2013 prices) Russia 142,470, , China 1,355,692, ,

4 Japan 127,103, , DPRK 24,851, ,800 No figures available ROK 49,039, , US 318,892, , Source: CIA World Factbook, Military expenditures are from SIPRI Military Expenditure Database, Russia s GDP in PPP (purchasing power parity) terms in 2013 stood at $2.55 trillion, far smaller than the United States $16.72 trillion, China s $13.37 trillion, and Japan s $4.73 trillion. Russia s GDP per capita at $18,100 compared favorably with China s $9,800 but lagged far behind the United States $52,800, Japan s $37,100, and South Korea s $33,200. (Table 1) Russia s weight in East Asia has long been based on its military might and its military presence in the region, and the nation still remains a formidable military power. Its defense spending, estimated at 87.8 billion in 2013, was the third largest in the region, after the United States ($640 billion) and China ($188.5 billion) and exceeded Japan s $48.6 billion and South Korea s $33.9 billion. 6 (Table 1) Russia s Political Relations with the Major East Asian Powers With its population shrinking, its economic performance wanting, yet its military capacity remaining substantial, Russia s political performance in East Asia has been very limited. As the processes of regional integration around the world have social, economic, security, and political dimensions, the prospects for Russia s potential role in regional integration in East Asia are mixed. Russia s most important political partner in East Asia is China. 7 However, the relationship, defined as strategic partnership, has its limits. 8 Moscow and Beijing share a common interest in denying the United States monopoly on the regional political agenda. They have resolved their long-standing border dispute, enjoyed frequent reciprocal visits by their leaders, and been united in opposition to U.S. political 4

5 interests, such as with respect to the US-led invasion of Iraq, the nuclear development in Iran, the Arab Spring, and the impending civil war in Syria. The generally strong political ties between Russia and China are limited, however, by a number of bilateral issues. Bilateral trade has been growing at a much slower pace than their leaders had hoped. Moscow s ambiguous position on the supplying oil and gas to China via pipeline has frustrated China s aggressive energy import policy, confounding the Sino-Japanese competition for the energy resources in Siberia and the Russian Far East. 9 The presence of Chinese traders, workers, and tourists in Russia s Far Eastern territories has also complicated bilateral policy coordination, exposing different interests and priorities between the two countries central governments and their regional leaders. 10 Although earlier fears of China s creeping expansion or peaceful invasion into the Russian Far East have dissipated as a result of improvement in bilateral migration management between Moscow and Beijing since the mid-1990s, such fears may be easily rekindled as the balance of economic power between the two countries continues to grow in China s favor. 11 Even the notable progress Russia and China have made in forging multilateral cooperation through the SCO is unlikely to help the two sides overcome the effects of the mutual suspicion and changing balance of economic power between Russia and China. 12 Russia has expanded bilateral trade and economic relations with Japan to their highest level since the end of the Cold War, but they are far from reaching the full potential indicated by their geographical proximity and the complementarity of their economic assets and needs. 13 Although Russia s political relations with Japan are potentially as important as those with China, the long-standing sovereignty dispute between the two countries over the southern Kuriles/Northern Territories remains a formidable barrier to building a relationship of mutual trust. 14 Recent events have elevated the political salience of the territorial dispute. The leadership in Moscow has intensified its appeal to patriotism and used the islands issue to this end. On July 7, 2010 the Russian Duma passed legislation establishing September 2 as the day to commemorate the end of the Great Patriotic War, that date in 1945 being the day when Japan signed the 5

6 instrument of surrender. On September 28, President Dmitry Medvedev and Chinese President Hu Jintao issued a joint statement commemorating the 65 th anniversary of the war and pledged further deepening of the Sino-Russian strategic partnership. This was followed by Medvedev s visit to Kunashiri Island on November 1, 2010, which prompted Prime Minister Naoto Kan to criticize it an unforgivable outrange. An ultranationalist group in Japan desecrated the Russian national flag in its anti-russian demonstration near the Russian embassy in Tokyo. Ironically, Medvedev s visit to the disputed island is a demonstration of Moscow s interest to develop the economic infrastructure of the Russian Far East, including the southern Kuriles, for which Russia sees Japan as an important economic partner. Japan also sees mutual benefits in closer economic ties with Russia to diversify its energy supplies, particularly after the March 2011 nuclear reactor meltdown in Fukushima and the subsequent shutdown of all 64 of the nation s nuclear reactors pending safety checks. For example, Japan has indicated interest in cooperating with Russia in building a liquefied natural gas (LNG) plant in Vladivostok. The project is designed to further diversify sources of LNG supplies to Japan and reduce its current heavy reliance on Asian and Oceanic sources. In fiscal 2009, Russia accounted for 6.5 percent of Japan s LNG import, but the planned project will boost the level above 10 percent. 15 We will turn to this aspect of Russia s policy in East Asia below. Following the resumption of presidency in May 2012, Vladimir Putin expressed readiness to resolve the island dispute if Japan was willing to compromise. With nationalist sentiments mounting on both sides, however, the prospects for a resolution of the territorial impasse are very dim. In addition, the fragile political leadership in Japan severely constrains Tokyo s maneuverability on this issue. Russia s relations with the United States are important on their own merit as well as for the influence they exert on Moscow s relations with both Beijing and Tokyo. During the early years of the Cold War Russia and China were ideological allies opposed to the United States but the political rift and border disputes between the socialist giants led to a split in the socialist camp and paved the way for Sino- 6

7 American rapprochement in the 1970s. The end of the Cold War seemed to remove any ideological sources of division between Moscow, Beijing, and Washington, but the United States emergence as the sole superpower after the demise of the Soviet Union brought the former socialist allies closer. The resolution of Sino-Russian border disputes in the 1990s also brought Russia and China closer. 16 Similarly, Russia s ideological conflict with the United States defined its political relations with Japan during the Cold War, but the end of the superpower conflict slowly led to the development of Russo-Japanese relations. This seemed to raise hopes for a territorial resolution between Russia and Japan but, ironically, it also elevated the political salience of the island dispute in Japan. The Korean crisis, namely North Korea s nuclear weapons and missile development, has also brought Moscow, Beijing, and Tokyo into closer cooperation, although their differences remain. Until North Korea s repeated nuclear weapons tests and missile launches in 2009, Moscow and Beijing rejected Washington and Tokyo s call for sanctions against Pyongyang. Following North Korea s threatening behavior and its declaration not to return to the Six- Party Talks, however, Russia and China have come to accept the need to use sanctions to induce a more conciliatory policy from Pyongyang. All said, however, Moscow s influence in the Six-Party Talks is very limited, especially in comparison with that of China and the United States. 17 Russia s opposition to U.S. hard-line policies toward North Korea, as well as toward Iran and Syria, is likely to continue under Putin s leadership. Russia s engagement with the Association of East Asian Nations (ASEAN) is a fairly recent phenomenon and its influence at present is marginal. 18 On November 29, 2004 Russia acceded to the Treaty of Amity and Cooperation in Southeast Asia of 1976 (Bali Treaty) and has been a Dialogue Partner since In November 2011, Russia, along with the United States, joined the East Asia Summit for the first time, indicating the growing acceptance of Russia by the ASEAN countries. Russia also participated for the first time in the ASEAN Defense Ministers Meeting in October 2010, along with the ten ASEAN members, China, the United States, Japan, South Korea, India, Australia, and New Zealand. Russia long 7

8 wanted to join ASEM (Asia-Europe Meeting) since the multilateral dialogue forum began in Foreign Minister Sergei Lavrov s participation in ASEM in Brussels in October 2010 marked Russia s first appearance at the forum. The question of whether Russia should be considered a European country or an Asian country stood in the way of Russia s participation in ASEM. Having failed to join as a European country (because technically Russia is not a member of EU), Russia was able to join ASEM as a Eurasian country. 20 Russia s Place in the Northeast Asian Economy How important is trade within Northeast Asia to Russia? In 2011, Russia s trade with its Northeast Asian neighbors, including the United States, constituted percent of its worldwide trade. Clearly, Russia finds most of its trade partners elsewhere in the world. By contrast, China (excluding Macao and Hong Kong) conducted percent of its global trade and Japan s intraregional trade accounted for percent of its total international trade. South Korea conducted percent of its global trade with the other Northeast Asian countries. (See Table 2.) Table 2. Northeast Asian Countries Intra-regional Trade as % of Their Global Trade, 2001 and 2011 (%) China Macao Hong Kong Japan ROK DPRK Mongolia Russia USA Source: Calculated from data in International Monetary Fund, Direction of Trade Statistics Yearbook,

9 How important is Russia to the other Northeast Asian countries in terms of international trade? In 2011, Russia s two-way trade with Japan represented a mere 1.93 percent of Japan s global trade, and the comparable figures for the other countries of the region were 2.19 percent for China, 2.03 for South Korea, 1.53 for North Korea, percent for Mongolia, and 1.17 percent for the United States. 21 In short, Northeast Asia is a small part of Russia s global trade and Russia is a small part of the other Northeast Asian countries world trade. That is, Russia is the least integral part of regional trade in Northeast Asia. However, Russia s potential role in regional trade is substantial, particularly in the energy sector. As noted at the outset, Russia holds huge reserves of oil and natural gas. In 2013, Russia was in 8 th place among the countries with the greatest proved crude oil reserves. Russia (with 80.0 billion barrels) followed Venezuela (297.6 bb), Saudi Arabia (267.9 bb), Canada (173.1 bb), Iran (154.6 bb), Iraq (141.4 bb), Kuwait (104 bb), and United Arab Emirates (97.8 bb). Its proved natural gas reserves (1,688 trillion cubic feet) ranked Russia in first place on the list of the countries with the largest natural gas reserves, ahead of Iran (1,187 tcf), Qatar (890 tcf), the United States (308.4 tcf), Saudi Arabia (287.8 tcf), Turkmenistan (265 tcf), United Arab Emirates (215 tcf), Venezuela (195.1 tcf), Nigeria (182 tcf), and Algeria (159.1 tcf). 22 If successfully developed, these resources can boost Russia s economic profile to unprecedented levels. This has several implications. First, to the extent that Moscow relies on its ability to develop and export its energy resources for pursuing some of its foreign policy goals, global energy prices will have a major impact on Russia s ability to leverage those resources. Second, the development of the resources in question requires substantial investment in infrastructure development, including pipelines and other transportation facilities as well as refineries and petro-chemical production facilities. This in turn calls for investment from foreign partners. Third, the nation s energy reserves may also be exploited to fuel political rivalry between their potential importers, such as China and Japan. Indeed, there is already much written on this aspect of Russia s international behavior. 23 9

10 Fourth, while Russia enjoys unprecedented energy export revenues, the nation also needs to diversify its economy, gradually reducing its dependence on that very lucrative sector. Does Moscow have the wisdom and the political will to allocate a growing portion of its revenue to non-energy sector? In contrast to the modern and postmodern economic structures of its East Asian neighbors, will Russia remain largely an exporter of primary commodities and importer of high-value-added products? President Medvedev answered this question in the negative when he stated in his speech Go Russia in September 2009: The global economic crisis has shown that our affairs are far from being in the best state. Twenty years of tumultuous change has not spared our country from its humiliating dependence on raw materials. Our current economy still reflects the major flaw of the Soviet system: it largely ignores individual needs. With a few exceptions domestic business does not invent nor create the necessary things and technology that people need. We sell things that we have not produced, raw materials or imported goods. Finished products produced in Russia are largely plagued by their extremely low competitiveness (emphases added). 24 The Russian leader went on to point out that contemporary Russia is plagued by three social ills and that the nation needed to overcome them if it is to regain its great power status in the increasingly competitive world. One of the social ills, as he put it, is [c]enturies of economic backwardness and the habit of relying on the export of raw materials, actually exchanging them for finished products (emphasis added). 25 We will return to this question when we discuss the role of the Russian Far East in the nation s relations with the neighboring Asian countries. The Social Dimension 10

11 Evidence of the social dimension of Russia s relations with other Northeast Asian countries is much harder to come by than indicators of the economic dimension. An in-depth analysis of the social dimension is beyond the scope of this study. What follows are statistics on the number of students from each Northeast Asian country and the United States who are studying in Russia and other countries of the region and Russian students who are studying in the other countries in Table 3 shows the number of students from Mongolia, Russia, North and South Korea, and Japan studying in China in The number jumped from 39,093 in 2001 to 100, 854 in Together, these students accounted for 34.46% of all international students studying in China. The largest number came from South Korea (62,441), representing 21.33% of all international students studying in China that year, followed by Japanese students (17,961; 6.14%) and Russian students (13,441; 4.56%). Table 3. Students from Selective Northeast Asian Countries Studying in PRC (excluding Hong Kong and Macao), Total Number of Selective Northeast Asian Country Students in PRC Mongolia , ,715 4,774 5,684 6,211 7,112 Russia 1,056 1,492 1, ,035 8,939 10,596 12,481 13,340 DPRK ROK 22,116 36,093 35,353 43,617 54,079 57,504 66,806 64,232 62,957 62,441 Japan 14,692 16,084 12,765 19,059 6,941 18,363 16,733 15,409 16,808 17,961 TOTAL 39,093 55,308 51,040 63,640 62,251 84,332 97,252 95,921 98, ,854 Selective Northeast Asian Country Students in PRC as % of Total International Students in PRC Mongolia Russia DPRK

12 ROK Japan TOTAL Source: Data from the China Association for International Education unless otherwise indicated Japan has also been a popular destination for Northeast Asian students studying abroad. As Table 4 shows, students from China, North Korea, Taiwan, Mongolia, Russia, and the United States in Japan doubled between 2001 and 2011, growing from 51,504 students to 112,521 students. Together, they accounted for 81.5% of all international students studying in Japan in Chinese students, numbering 87,533, represented 77.8% of the students from those six countries and 63.4% of all international students studying in Japan in They were followed by students from South Korea, numbering 17,460 and representing 15.5% of the students from the five countries and 12.6% of all international students in Japan that year. Table 4. Students from Selective Northeast Asian Countries Studying in Japan, Total Number of Selective Northeast Asian Country Students Studying in Japan China 3, ,180 51,656 77,713 80,592 74,292 71,277 72,766 79,082 86,173 87,533 ROK 1,7905 1,8899 1,9062 1,5533 1,5606 1, ,274 1,8862 1,9605 2, ,460 Taiwan Mongolia Russia US 1,066 1,156 1,175 1,456 1,646 1,790 1,805 2,024 2,230 2,348 1,456 TOTAL 51,504 61,907 72,658 99, ,248 97,607 96, , , , ,521 Selective Northeast Asian Country Students in Japan as % of Total International Students in Japan (%)

13 China ROK Taiwan Mongolia Russia US TOTAL Selective Northeast Asian Country Students in Japan as % of Total Northeast Asian Students in Japan China ROK Taiwan Mongolia Russia US TOTAL Note:. indicates data not available. Source: OECD ( ); Japan Student Services Organization ( ) Table 5 shows the number of students from selective countries/area of Northeast Asia, including the United States, who were studying in South Korea in The 47,477 Chinese students studying in South Korea in 2011 far outnumbered students from other counties and accounted for 75.8% of all international students in South Korea that year. They constituted 90.0% of all students from the five countries and one area listed in the table. There were 1,190 Japanese students studying in South Korea in 2011, representing 1.9% of all international students and 2.3% of the five source countries and one area shown in the table that year. 13

14 Table 5. Students from Selective Northeast Asian Countries/Area Studying in South Korea, Selective Northeast Asian Country Students Studying in South Korea China 1,645 2,407 4,025 6,462 10,093 15,288 23,097 30,552 39,309 45,757 47,477 Japan ,106 1,212 1,235 1, ,147 1,190 Mongolia Russia Hong Kong US ,170 TOTAL 2,664 3,542 5,701 8,134 12,066 17,787 26,037 33,731 42,945 50,496 52,724 Selective Northeast Asian Country Students in South Korea as % of Total International Students in South Korea (%) China Japan Mongolia Russia Hong Kong US TOTAL Selective Northeast Asian Country Students in South Korea as % of Total Northeast Asian Students in South Korea (%) China Japan Mongolia Russia Hong

15 Kong US TOTAL Source: OECD Some additional statistics on Russia or Russian students also indicate the small presence of Northeast Asian students studying in Russia, with the exception of Chinese students, who numbered 11,867 and 11,736 in 2009 and 2010, respectively (see Table 6). Table 6. Percentage of Northeast Asian Tertiary Students Studying in the Russian Federation, (%) Total number of NEA students ,867 11, China Japan North Korea South Korea Mongolia United States Notes: China includes Macao and Hong Kong; 0.0% indicates either no students, unavailable data, or percentage value is too small. Source: United Nations Educational, Scientific, and Cultural Organization (UNESCO) Institute for Statistics In summary, Northeast Asian countries are attracting increasing numbers of students from within the region, with Chinese, South Korean, and Japanese students being the largest national contingents in their neighboring countries. Again, Russian students represent a much smaller presence in the educational institutions in the other countries of the region. Similarly, the number of Northeast Asian students studying in Russia is very small. 15

16 The Military Dimension As already noted, Russia s weight in East Asia, particularly in Northeast Asia, has long rested on its military might and its military presence in the region. The nation still remains a formidable military power. Military power is less significant as an integrative factor in East Asia because military security policy divides some countries of the region while it unites others. Moreover, although Russia s military power is an important factor in Russia s growing defense cooperation with China, it is highly unlikely that the two countries militaries will reach the level of integration seen among the NATO allies, or even the level of defense cooperation and coordination that exits between the United States and its allies in East Asia, namely Japan and South Korea. Given the strong if not trouble-free security ties among the latter three countries, Russia s ability to affect the overall alliance pattern in the region is very limited unless Russia and China form a clear alliance against the U.S.-led alliances in the region, which is not likely if not impossible in the foreseeable future. On the contrary, the North Korean problem is likely to sustain even elevate the level of bilateral and multilateral consultations seen among the four powers. This is clearly in Russia s interest, for a failure to remove or contain North Korea s nuclear and missile threats will likely trigger a very destabilizing arms race between Japan, the country that feels the most threatened by North Korea, and China, which stands to gain from Japan s self-constrained defense policy within the U.S.-Japan alliance. In the meantime, Russia is gradually expanding its defense cooperation with Japan, primarily as a confidence-building measure and for limited joint rescue operations at sea. Russian Views Culturally and civilizationally, Russia is a distant neighbor to most East Asian societies and most Russians are oriented more toward Europe. The post-soviet search for national identity among the Russian 16

17 elite says much about their ambivalence toward the international community, including East Asia. This does not necessarily mean that there is no possibility of Russians developing social and cultural ties with other peoples of the region. The presence of Asians in Russia, including in its Far Eastern territories, as well as the growing number of Russians resident in the neighboring Asian countries will no doubt contribute to the growth of transnational networks of individual and professional linkages involving Russian nationals. For the networks to become a significant integrative force in East Asia, however, tens of thousands, even hundreds of thousands of Russians need to join those networks, but this is not a likely prospect in the foreseeable future. On the contrary, the population in the Russian Far East has dropped from the peak of around 8 million in the late 1980s to about 6.5 million today, a consequence of internal migration from the region to European Russia in the post-soviet years of economic stagnation and social instability in the Russian Far East. How do the Russians themselves view their own country and its relations with the neighboring countries of Asia? Some recent public opinion polls in Russia offer interesting answers to this question. According to a 2009 public opinion survey by Levada Center, 26 Russians tend to view their own political evolution as a unique experience and not readily comparable with the experience in the West (Table 7). Nor do they have any illusions about the state of their economy, with one-third of the people thinking their country is a backward country with a primitive raw material-based economy (Table 8), echoing President Medvedev s concern mentioned earlier. Table 7. Levada Center 2009 Survey: Do you agree or disagree with the opinion that Russian democracy should not copy Western examples? (%) Full agree/tend to agree 72 Tend to disagree/completely disagree 17 Difficult to answer 11 Source: Levada Center, Moscow, (accessed December 1, 2009) 17

18 Table 8. Levada Center 2009 Survey: Do you agree or disagree with the opinion that Russia now is a backward country with a primitive raw material economy? (%) Full agree/tend to agree 36 Tend to disagree/completely disagree 60 Difficult to answer 4 Source: Levada Center, Moscow, (accessed December 1, 2009) According to a Levada Center s public opinion survey in Russia in early June 2014, Russians see China as Russia s closest friend and ally in Asia, second only to Belarus (Table 9). In comparison, Japan is in 19 th place on the same list and South Korea in 20 th place. The United States does not even appear among the top twenty countries on the list; on the contrary, it is considered by far the most hostile and unfriendly country toward Russia, followed by Ukraine. Japan appears in 12 th place on the list of hostile and unfriendly countries, North Korea in 16 th place, and South Korea in 20 th place. Table 9. Levada Center 2014 Survey: Name five countries you consider closest friends and allies of Russia and most hostile and unfriendly toward Russia. (%) Closest friends and allies of Russia Most hostile and unfriendly toward Russia Belarus 51 USA 69 China 40 Ukraine 30 Kazakhstan 37 Lithuania 24 Armenia 15 Latvia 23 India 13 Estonia 21 Cuba 10 Georgia 19 Azerbaijan 9 Great Britain 18 Bulgaria 8 Germany 18 Tajikistan 8 Poland 12 Moldova 7 Canada 7 Uzbekistan 6 Afghanistan 5 Kyrgyzstan 6 Japan 5 Serbia 5 France 5 Venezuela 5 Iraq 3 Turkey 4 Iran 2 Germany 4 North Korea 2 Israel 4 Israel 2 Syria 4 Romania 2 Japan 4 Azerbaijan 2 18

19 South Korea 3 South Korea 2 Source: Levada Center, Moscow, (accessed June 16, 2014) Levada Center s opinion surveys in 2005 and in 2009 indicates that Russians interest in their cooperation with Japan relates to technological and economic aspects, although their interest in the role of bilateral relations in the overall political balance in Asia-Pacific is not negligible (Table 10). This somewhat contradicts Japanese focus on bilateral cooperation in the energy sector and the territorial dispute. While a majority of Russians pragmatically sees the need to find a solution to the territorial impasse to improve bilateral relations (Table 11), an overwhelming majority (82% in 2009) is opposed to territorial concessions to Japan (Table 12). Table 10. Levada Center 2005 and 2009 Surveys: Do you think Russia should strengthen its ties with Japan now and if yes, which areas of cooperation should be identified as priority? (%) Aug. 05 Aug. 09 Energy (extraction, pumping of oil and gas) High tech Joint development of territories of the Russian Far East and Eastern Siberia Political balance in Asia-Pacific Region Other 0 1 Should not strengthen ties with Japan 3 7 Difficult to answer Source: Levada Center, Moscow, (accessed December 1, 2009) Table 11. Levada Center 2005 and 2009 Surveys: Perhaps you know that after World War II, Russia and Japan did not conclude a peace treaty. How important do you think it is for Russia and Japan to conclude a peace treaty? (%) Aug. 05 Aug. 09 Very important Somewhat important Not very important It does not mean much 7 11 Difficult to answer 8 15 Source: Levada Center, Moscow, (accessed December 1, 2009) 19

20 Table 12. Levada Center Surveys, various years: For many years the territorial dispute has been a stumbling block in relations between Russia and Japan. In principle, are you for or against Russia transferring these islands to Japan? (%) Nov 91 Aug 92 Apr 93 Oct 98 Dec 02 Nov 04 Aug 05 Aug 09 For Against Difficult to answer Source: Levada Center, Moscow, (accessed December 1, 2009) The Role of the Russian Far East If Russia is to be integrated with East Asian countries, bilaterally or multilaterally, the nation s Far Eastern territories will be an essential link. 27 Russia s Far Eastern territories represent both an opportunity and a burden for Moscow. They are an opportunity as the territories geographical proximity to Russia s neighboring countries promise closer trade and economic ties with them. The Far East also serves as an entry point for capital, technology, services, and labor from the dynamic East Asian economies. During the Soviet period, however, Moscow failed to develop the necessary infrastructure and industrial structure in the Far East to take advantage of these complementarities with the neighboring countries. Although post- Soviet Russia appears eager to engage China, Japan, Korea, and the United States in economic transactions based on market principles, its behavior has been characterized by unpredictability and ambiguity. The stop-and-go offshore energy development projects off Sakhalin are the most visible example. The numerous pipeline projects in Eastern Siberia and the Far East have also suffered from the lack of consistency and stability in Moscow s economic strategy vis-à-vis the potential partners of development, namely China, Japan, and South Korea. The following lists indicate the real and potential opportunities as well as liabilities that Russia s Far East represents for Moscow: Advantages 20

21 a. Abundant natural resources: The rich natural resources in the region are an important part of the complementary relations between the Russian and East Asian economies. b. Proximity to Asian markets: The geographical proximity offers Russian exports an advantage in accessing Asian markets. The export of value-added products in Russia stands a good chance of improving the nation s balance of trade vis-à-vis the Asian economies. c. Proximity to Asian investment capital: The Russian Far East needs large investment capital for its industrial modernization and infrastructure development and Asia s high savings and capital accumulation might be exploited if Russia could substantially improve the investment climate in the Far Eastern region. d. Proximity to Asian technology: The rich technological base of Asian economies offers substantial promises for industrial modernization in the Russian Far East. e. Proximity to Chinese labor: The problem of labor shortage in some economic sectors in the Russian Far East, namely agriculture, construction, and services, can be ameliorated by the importation of cheap and abundant Chinese labor, provided Moscow and Beijing can develop a sustainable bilateral migration regime that does not pose a perceived threat to the social, economic, and political future of the Far Eastern territories. 2. Disadvantages a. Small and declining population: The small and declining population of the Russian Far East limits the vitality of the region s economy in terms of economic output and consumer market. After peaking at around 8 million in the late 1980s, the region s population has been declining due to emigration to the western part of Russia and natural population losses due to economic dislocation and social problems in the region. The population in 21

22 the Far East is estimated at around 7 million today, with further declines expected beyond b. A raw materials appendix?: The abundance of natural resources in the region is also a source of its weakness to the extent that Moscow defines the Far East s role as a source of raw materials, for domestic use or for export and the infrastructure development in the region is limited to that which relates directly to the exploration and development of those resources to the neglect of modern industrial and social infrastructure needs. A related problem is the harms the development of natural resources has done and continues to do to the region s natural environment and the health of the local populations. 30 c. Huge infrastructure needs: The transportation, communication, and other basic infrastructure of the region needs substantial improvement and expansion if it is to support the level of economic activity and population growth required to sustain the region s viable future in the context of regional integration with the neighboring territories of East Asia. d. Little local investment capital: The seriously strained economic development in the region means there is very little indigenous investment capital. Therefore, the region continues to depend on the subsidies from Moscow and investment from foreign sources. e. Distance from Russia s center: Given the continuing dependence of the Russian Far East on financial injections from Moscow, it is crucial that Russia improve the efficiency of transportation between the eastern and western parts of the country. However, the sheer geographical distance and the long neglect of the Far Eastern region s infrastructure needs will keep the transportation costs quite high. As noted below, foreign investment in infrastructure development in the region would lighten the burden on Moscow but largescale investment is not likely unless and until Moscow shows unequivocal commitment to 22

23 the economic development and modernization of the region and stable supply of raw materials export to foreign partners. f. Disparate Center-region priorities: The strategic partnership between Moscow and Beijing has not been translated into a stable relationship between the Russian Far East and China s northeastern provinces. On the contrary, the visible infrastructure development and the continuing migration pressure on the Chinese side of the Sino-Russian border have been a source of serious concern among the political elite in the Russian Far East. 31 Does Russia have the political will and commitment to invest the necessary financial resources to advance the advantages and reduce the disadvantages of its Far Eastern territories? What is required is a transformative reorientation of Russia s priorities toward its Far Eastern territories. Will Moscow translate its recent public pronouncements about mounting investments for the development of modern infrastructure and facilities in the region in anticipation of the 2012 APEC summit into a sustained development program long after the photo opportunities at the international meeting are over? Skeptics who have watched Moscow s numerous past plans for the region s development and modernization fail may well be justified with their continuing doubts. On the other hand, will the neighboring countries, namely China, Japan, and Korea, commit their public funds into the infrastructure development required even to realize the existing pipeline projects in Eastern Siberia and the Far East? For this to happen, Moscow must be unequivocal and fully committed to develop and deliver the promised oil and natural gas supplies to its East Asian neighbors. Unfortunately, there are as many international skeptics as there are domestic doubters in this regard. In May 2014, Russia s Gazprom and the China National Petroleum Corporation signed a $400 billion gas deal after nearly a decade of negotiation. The largest gas contract for Russia since the collapse of the Soviet Union will run for 30 years and it envisages the construction of pipelines and other 23

24 infrastructure requiring tens of billions of dollars in investment. 32 The timing of the deal reveals Russia s desire to move closer to China both politically and economically. Politically, Russia wanted to demonstrate solidarity with China against the United States and its European allies in the face of mounting international sanctions against Russia s annexation of Crimea and its alleged support for pro-russian militia in eastern Ukraine in the prolonged crisis in Ukraine. Economically, Russia was pressed to secure markets for its energy resources should it need to reduce natural gas delivery to European markets as a lever against Europe. Russia in Multilateral Regional Frameworks Relevant to East Asia Table 10 lists the main multilateral regional frameworks of relevance to East Asia, in which Russia has been participating or will be participating soon. Russia joined APEC in 1998 and, as noted earlier, is hosting the 2012 APEC Summit in Vladivostok. To that end, there is substantial and visible investment in infrastructure development in and around Vladivostok. The question remains, however, whether Moscow will sustain such investment far beyond the summit or whether the investment is more a shot in the arm with only short-term and limited benefits to the region. 33 As noted earlier, Russia s relations with the ASEAN and its individual countries lack the depth and scope of involvement seen in Chinese, Japanese, or US cases, where their political, economic, and security interests and concerns overlap in some areas and compete in other. In Northeast Asia, Russia has been a participant in the Six-Party Talks for addressing the problem of North Korean nuclear and missile development since 2003, when the four-party framework involving North and South Korea, China, and the United States that had begun in 1997 was expanded to include Japan and Russia. Moscow s influence in the multilateral talks is limited, but it can and has had its influence felt by coordinating its position with Beijing on the carrots vs. sticks questions vis-à-vis Pyongyang, consistently arguing against sanctions against North Korea. It has been suggested that the Six-Party Talks 24

25 should or may be turned into a more permanent security framework for Northeast Asia, but the impasse following the military provocations by North Korea against South Korea against the backdrop of the nuclear and missile development in North Korea precludes such a prospect in the foreseeable future. Russia has supported the idea of establishing a more permanent multilateral security framework for Northeast Asia beyond the Six-Party Talks, but Russia s marginal influence in the current framework means that it will have even more limited role in the development of a regional security architecture post Six-Party Talks. 34 Russia is a member of G8 and G20. Decisions reached within either of these groupings will have a bearing on East Asian regional integration in terms of open regionalism. Finally, fourteen regional governments in the Russian Far East are members of the little known Association of Northeast Asia Regional Governments, which was formally established in 1996 with participation by regional governments of China, Japan, South Korea, and Mongolia. The association of includes the Republic of Buryatia, Republic of Sakha, Primorski Territory, Khabarovsk Territory, Amur Region, Irkutsk Region, Kamchatka Region, Sakhalin Region, Zabaikalsky Territory, Krasnoyarsk, Tomsk Region, Republic of Tyva, Altai Territory, Magadan Region, along with their counterparts in China, Japan, North Korea, South Korea, and Mongolia. The association members meet every other year to discuss regional-level cooperation. It has subcommittees on the economy and trade, the environment, cross-border issues, tourism, mineral resources development, women and children, education and cultural exchange, disaster prevention, science and technology, ocean and fishery, and energy and climate change issues. 35 Table 10. Russia s Multilateral Engagement in East Asia APEC: Russia joined APEC in 1998 and is hosting the APEC summit in Vladivostok in ASEAN Dialogue Partner: On November 29, 2004 Russia acceded to the Treaty of Amity and Cooperation in Southeast Asia of 1976 (Bali Treaty) and has been a Dialogue Partner since

26 ASEAN Regional Forum (ARF): Russia has been participating in this forum since its inception in 1994, discussing security issues in the Asia-Pacific. ASEAN Defense Ministers' Meeting: On October 11-13, 2010 Russia participated in this meeting for the first time, along with the ten ASEAN members and China, the US, Japan, South Korea, India, Australia, and New Zealand. ASEM: Russia, along with Australia and New Zealand, was a new participant in this multilateral dialogue forum when it met in Brussels in October East Asia Summit (EAS): Russia, along with the United States, is scheduled to join the ASEANcentered summit in November Six-Party Talks: Moscow has been participating in the multilateral forum to address North Korea s nuclear weapons development since 2003 but its influence is limited. G8 and G20: Decisions reached within either of these groupings will have a bearing on East Asian regional integration in terms of open regionalism. Association of Northeast Asia Regional Governments: The association of regional governments in Northeast Asia includes the Republic of Buryatia, Republic of Sakha, Primorski Territory, Khabarovsk Territory, Amur Region, Irkutsk Region, Kamchatka Region, Sakhalin Region, Zabaikalsky Territory, Krasnoyarsk, Tomsk Region, Republic of Tyva, Altai Territory, Magadan Region, along with their counterparts in China, Japan, North Korea, South Korea, and Mongolia. Implications for Regional Integration in East Asia Regional integration may proceed along economic, political, security, and social-cultural dimensions. As seen above, Russia s economic link to the region is underdeveloped and the nation s impact on the rest of the regional economies is limited. However, the region s integration as a whole is 26