China is the Likely Winner in Ukraine

BSA CENTER
By David Goldman
May 19, 2014

EXECUTIVE SUMMARY: The Ukraine crisis has created a catalyst for Sino-Russian rapprochement. Events in Ukraine have persuaded Russia that it cannot rely on Western Europe as its primary market for hydrocarbon exports. Consequently, after decades of negotiations between Moscow and Beijing for a long term natural gas mega-contract, it seems that Russia has finally relented to China’s terms, with China becoming the senior partner in a lopsided China-Russia relationship.

There is broader context to the struggle over sovereignty in the Ukraine, and China may emerge as the victor. After a decade of negotiations between Moscow and Beijing for a long-term natural gas supply contract, it appears that Russian President Vladimir Putin is likely to sign a 30-year deal during his state visit to China next week. Events in Ukraine appear to have persuaded Russia that it cannot rely on Western Europe as its primary market for hydrocarbon exports. It has therefore chosen to turn towards China. Evidently, Russia is willing to make price concessions that China has long demanded and Russia has long resisted.

China’s “New Silk Road” investment program is one of the most ambitious undertakings in world economic history. Beijing plans to build high-speed rail and broadband networks from China through to Turkey, with major spurs to Southeast Asia in the South, and through Israel and Egypt in the West. China will spend $7.3 billion to build a 3,700 kilometer pipeline from Turkmenistan, as well as shorter energy pipelines through Pakistan and other areas.

China’s economic presence in Russia’s Central Asian “near abroad” now dwarfs that of Russia. According to a report by GlobalRiskInsights,

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