Spearhead Analysis – 06.02.2017
By Hira A. Shafi
Research Analyst, Spearhead Research
For Russia- nearly 60% of its earnings are from energy exports, followed by arms trade and civil nuclear technologies and others. Nearly 60% of its exports are to Europe and 30% to Asian markets.
Economic growth is sluggish and several government sectors lack the funds for technological upgrades. Rules regarding private ownership were relaxed after the reforms in early 90’s ; on formerly restricted areas of defence and energy; the role of Russian private firms has been on the rise globally.
But, the country’s wealth disparity is believed to be one of the highest in the world. For Russia-under Putin- the prime focus would most likely be, getting the country’s economic uplift on track while also not entirely embracing decentralisation. And in this journey, all friends and foes would be evaluated under the light of maximum benefits to Russia.
For Russia, a partnership with China is valuable -for now- given China’s dependency on energy and Russia’s dependence on funds, both are also pushing out in the same direction via commonly shared infrastructure– i.e to the West and Africa.
Retaining strong ties with Central Asia: allows it prevent energy price disruptions due to regional divides and helps create somewhat of an OPEC-like arrangement , in this context Iran : with its own energy reserves would continue to be significant and with hopes to have them operate under the Russian price umbrella.
At its core, these regions- with same abundant supplies are less of natural allies and can serve as disruptive.
Apart from a collective market share approach, they also serve as important trade routes via Caspian and Persian Gulf along with land routes; to Europe, Africa , China and a big potential market India. This, at the same time– allows it to not offer too much leverage to China, and China also appears to be avoiding crossing boundaries for now.
In the wake of several internal changes in Europe; For the US– at best– its offer to Russia could be in the form of allowing it to retain a significant say in Central Asia, and ignoring events in Eastern Europe, to a certain extent. Trump’s recent sanctions on Iran, would most likely do little harm to major players– but instead helps them gain leverage. Only in case of an attack , Russia may be compelled to act.
India– for its securities in the Persian Gulf, has actively been deepening its ties with the Gulf states and Iran. To broaden its own trade routes and energy supplies, it too aspires for a place in Central Asia; Russia under the framework of EEU would find this arrangement beneficial.
The routes could either be formed from Russia-Central Asia-even Afghanistan Iran- across theArabian Sea to India, Russia- Central Asia- Afghan -Pakistan- to India; either arrangement could work for Russia– Tensions between the neighbours in the South- namely India and Pakistan ; might not require it to choose extreme sides.
Though it has recently, promised India to stand by no matter what happens. Perhaps from its own action-filled adventures, it realises that a defeat in terms of one opponent economically draining the other might be more likely than either actually blowing up the other. And – in the worst case scenario- for its preserving its own securities – it could– just like the US —‘stand by’ – Just, as China would for Pakistan.
For trade purposes with and via south , it appears that Russia has other alternatives which could work out without Pakistan; its generous arms sales to India, too have little to do with its never ending love for India but more to do with India’s needs and its ability to buy.
But for the war against terror and ensuring stability in the region , it might require Pakistan’s assistance.
India nonetheless, describes its Russian alliance in a rather poetic prose , Pakistan appears to crave an assurance. India’s rise does not harm Russia -for now.
Russia’s relations with China as opposed to US comes with the added benefit of regional stability and what appears to be a stable cooperation. Russia perhaps realises the importance and its interlink to economic development and long term implications too.
But, as a sovereign state carrying the ability to exercise its own foreign policy–. Russia- in the midst of this new great game, would for sometime more- appear aloof, yet remain observant and owing to the unique imprint it appears to have left on minds, its resources, location –would continue to be offered various offerings and keep EEU regions as its prime areas of influence.
But , it’s alliance with US comes with a cost of disrupting a certain order in European security , which might not happen anytime soon, thereby somewhat still causing Russia to engage more with China.
Russia’s influence in swaying the southern neighbors in any extreme direction of alliances appears unlikely too.
For Pakistan , expecting Russia to break up with India –appears to be out of the question , and vice versa— despite the ‘great game’, As it too aspires to find its unique leverage and voice.
Pakistan might have to work out ways to engage Russia into a long term mutually beneficial alliance, keeping in view that it is a separate entity at its core.
India, for now- falls under the US alliance, while Pakistan stands on the opposite side.
Any substantial , peaceful engagement with India remains dubious for now.
But, the regions to its west appear to carry potential as their ‘allegiances’ are still shaky and find themselves dragged into pro-Russia, pro-India, pro-China , but anti- US – type of dilemmas– especially Iran and a set of slightly varied permutations exist in Afghanistan. Turkey appears to be an ally for now, but the rest of the Middle East requires more attention too. Adapting to the ripples created by this dawning multipolarity might need to be focused on.