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Chinese President Xi Jinping (L) and his Russian counterpart Vladimir Putin attend the opening ceremony of the "Year of Chinese Tourism in Russia" at the State Kremlin Palace in Moscow, March 22, 2013. (© POOL New / Reuters/REUTERS)
Chinese President Xi Jinping (L) and his Russian counterpart Vladimir Putin attend the opening ceremony of the "Year of Chinese Tourism in Russia" at the State Kremlin Palace in Moscow, March 22, 2013. (© POOL New / Reuters/REUTERS)

The bear and the dragon: Russia pivots to China in the face of Western sanctions Add to ...

It is a major shift for Russia, which has long treated China with suspicion, out of fear that too closely aligning with China could effectively make Moscow an effective “junior partner” of Beijing, said Bobo Lo, a British academic who has spent decades studying Russia’s foreign policies and geopolitics. Though three-quarters of its land is geographically Asian, Russia has traditionally seen itself as a largely European power, with a historically dim view on its eastern holdings. Czar Alexander II sold Alaska in 1867, and Joseph Stalin saw in Siberia a land suitable for labour camps and little else.

Russia’s relationship with China, too, has been often uncomfortable. Russia sends timber, metals and other commodities to China in exchange for manufactured goods. It is, for China, a relationship much “like they have with developing countries in Africa and Latin America,” Mr. Lo said. For Russia, that is “psychologically a bit humiliating. It’s quite hard being a raw materials appendage to a country you felt superior to for the better part of the past 300 years,” he said.

Russia must also overcome efforts by the U.S. to limit the expansion of its reach in Asia. In echoes of a new Cold War, U.S. diplomats are actively working to isolate Russia, an effort that will involve seeking to have China, too, push back the Kremlin. This week Washington and Tokyo issued a joint communiqué saying they “are consulting closely on further measures against Russia over its deplorable conduct” in Ukraine – a sign that Mr. Putin’s lobbying of Japan, to whom Russia also wants to sell more gas, may have difficulty succeeding.

China, meanwhile, has shown its own willingness to keep Russia at some distance. Last fall, Mr. Xi travelled to Turkmenistan, Kazakhstan, Uzbekistan and Kyrgyzstan. He signed a flurry of deals that will see more Central Asian energy flow to China. The trip also saw agreements on cultural and political exchanges that suggest a deepening relationship with the region. China routinely speaks about bringing back to life a Central Asia “Silk Road” trade corridor that is a geographical broadside to Russia, with its own ambitions to act as a bridge between Asia and Europe. As Russia turns to China, China itself is quietly moving to displace Russia in parts of its traditional territory. The Warsaw-based Centre for Eastern Studies observed that “China has replaced Russia as Turkmenistan’s patron and main sponsor.”

Culturally, too, there is dissonance between the Russia and China: Lawyers say deals between the two tend to be negotiated in English and consummated in U.S. dollars.

But Mr. Timchenko, the oil trading tycoon, said he wants to swap Russian gas for Chinese yuan. And Russia and China are now “close to agreement” on a major long-sought gas deal, Russian media recently quoted Arkady Dvorkovich, a deputy prime minister, as saying.

The deal’s conclusion would serve as an unmistakable sign of a changing relationship. Over the past decade, China and Russia have agreed seven times to the basic outlines of an agreement. Each has failed, amid disputes over price and the role Chinese companies might take in building the pipe and extracting the gas it will carry.

At stake, if those issues are near resolution, is a disruptive project with a massive pricetag. If China is prepared to buy the gas, Gazprom has outlined a near-$40-billion (U.S.) plan to develop gas fields in Eastern Siberia and lay the 4,000-kilometre Power of Siberia pipeline, capable of carrying 61-billion cubic metres per year of gas.

Throughput on the 1.4-metre diameter pipeline would be equivalent to one-third of Canada’s entire output last year. Some would be exported as LNG to other Asian countries, including Japan and Korea. But 38-billion cubic metres would come to China, which last year imported 53-billion cubic metres from all other countries, Turkmenistan primary among them. In 2012, Russia exported just 0.51 billion cubic metres to China.

“At the moment, the bulk of revenue for Gazprom’s gas sales is in Europe – some 55 per cent comes from Europe, while Asia represented only 6 per cent in 2013,” said Geoffroy Hureau, secretary-general of Cedigaz, a Paris-based association that gathers global natural gas statistics.

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