Carnegie Moscow Center
Russia’s efforts to find an acceptable place for itself in the U.S.-led Western system have ended in a bitter disappointment. The changing trading patterns point to a new era in Moscow’s foreign relations, in which Sino-Russian relations will be taking center stage.
The effect of the new sanctions on the Russian oil and gas industry might be very sensitive while at the same time saving large sums of money on projects with impossibly long payback prospects. Either way, Western governments are now doing basically what the Russian leader always wanted, staying away from Russia’s oil and gas.
Ukraine’s position as an important transport corridor for Russian gas has resulted in various periods of conflict between Ukraine and Russian-state owned gas companies. But, even though both recognize they will not reach a long-term agreement quickly, one can easily see that the number of disagreements between them is not great. Both realize the need to compromise.
Tensions in Ukraine threaten to alter the security environment in the Arctic. Russia must, therefore, proceed with caution if it wants to maintain previous levels of cooperation. Only time will tell if the hawks in the Kremlin will be willing to engage in cooperation rather than see the region as a zero-sum game.
The fundamental dilemma of Moscow’s policy lies in whether it is worth cooperating to achieve a comprehensive agreement with Iran, which would primarily be a success for the United States, under conditions of confrontation with the West over Ukraine.
Russia could use the U.S.-led sanctions to begin its long-delayed re-industrialization and to start building a modern economy.
Russia must know that an exclusive alliance with China will incur its own cost.
A number of complex questions remain unresolved as negotiations on Iran’s nuclear program enter their final stage. The main question is whether the cooperation between Russia and the West would continue at the previous levels in the midst of the crisis in Ukraine.
The Sino-Russian gas deal emphasizes and accelerates the fading of Russia’s until-now special relationship with the EU. The partnership between Russia and China is acquiring truly strategic depth.
The secretive nature of the gas agreement between Gazprom and China National Petroleum Corp may show that the contract contains something the Russian negotiators could not be proud of in the limelight of Russian public opinion.