RUSSIA-CHINA TIES STRENGHTEN

Submitted by: Donald Hank

Why China is right on the future of Ukraine

The Chinese are urging patience, calling for talks after the referendum

By Liam Halligan

4:22PM GMT 15 Mar 2014

 

 

This Crimean crisis is, perhaps, reaching its apogee. As a referendum is held on the Black Sea peninsula, a territory 25pc bigger than Wales and home to 2m people, the stand-off between Russia and the West continues, dominating the global news cycle.

Talk of a new Cold War is deeply alarmist. Politicians on both sides are posturing in front of each other and their respective electorates. Be in no doubt, though, relations between Russia and the US are now at their lowest ebb since the Soviet Union collapsed more than 22 years ago.

While the possibility of East-West military confrontation remains remote, the war of words is casting a pall over global financial markets. Investors worry that argy-bargy between Moscow and Washington, and a Ukrainian sovereign default, could spark another Lehman-style “systemic moment”.

Crimean voters are today almost certain to back closer ties with Moscow. Two-thirds of them are ethnically Russian and there is widespread anger at last month’s mob-ousting of Ukraine’s elected president.

While Viktor Yanukovich had become unpopular, his 2010 election was “fair” and “competitive” according to the Organisation for Security and Co-operation in Europe. And he wasn’t up for re-election until 2015.

Yanukovich would almost certainly have lost that ballot – with many Russian-speaking Ukrainians voting against him, too. That natural democratic process, a milestone on the road to Ukrainian nation-building, was thwarted by rock-throwing thugs – thugs openly backed by the West.

Across Crimea, as with other majority Russian-speaking parts of Ukraine, there is concern that EU and US governments supported a protest movement, replete with nasty Right-wingers, that violently removed an elected president.

There is shock that the deal struck on February 22 and signed by three EU foreign ministers – for a government of national unity and a thorough investigation of the Kiev sniper shootings that killed almost 80 – has been ripped up.

There is outrage that Ukraine’s “interim” government and new parliament – both formed in a manner that was opaque and at odds not only with last month’s deal, but also the Ukrainian constitution – have practically no connection to the country’s Russophile east.

On top of that, among the new administration’s very first actions was to repeal a long-awaited 2012 law recognising Russian as an official regional language. This deliberately incendiary move was bitterly criticised right across the nation, not only by Russian-speaking regions but Ukrainian-speaking strongholds, too.

These are some of the contemporary reasons why Crimea will vote to join Russia – reasons that combine, of course, with centuries of shared history.

I say all this to emphasise there are two sides to every story and, I must say, most Western analysts present just one. Take the question of Russian troops in Crimea.

Under an internationally ratified agreement struck in 1994, Moscow can station 25,000 soldiers on the peninsula, not only at the Sevastopol naval base, but also on bases throughout the country. The latest figures from informed Russian and Western sources put the total at around 16,000.

We don’t actually know if additional Russian troops have entered Ukraine – which is why, having initially screamed “invasion”, more responsible Western broadcasters now talk of Russia’s “intervention” in Crimea. Certainly, if invasion footage existed, it would be all over our airwaves. I’m not saying it doesn’t exist, but I’ve yet to see it.

Yes, Russian troops may have left their bases. But what would British troops in, say, Cyprus do if the island suddenly saw riots and was on the cusp of serious bloodshed?

What would we (and the world) expect them to do? We’d expect them to leave their bases and keep the peace, perhaps paying special attention to the safety of British citizens.

Consider, too, international law. Moscow still sees Yanukovich as the legitimate president, who requested the deployment of Russian troops right across eastern Ukraine (which hasn’t happened), not just Crimea.

If Crimea does vote overwhelmingly to join Russia, Western protests could be seen as thwarting the will of the people, a violation of self-determination rights enshrined in the UN Charter.

It’s anyway not clear whether Russia will allow Crimea to join, as that could lay Moscow open to accusations of ignoring Kiev. There are precedents here, including South Ossetia. The Kremlin has so far said only that it accepts the right of the Crimean parliament to hold a referendum.

A strong pro-Russia result may instead be used to cut a deal securing Crimea’s status as an autonomous region or protectorate. We’ll see.

Such nuances have been thrown to the wind. Because it’s Russia, everyone loses their heads, goes into uber-conflict mode, claims the moral high ground and – with little regard for the facts – barks loudly for a punitive response. As such, European foreign ministers could approve sanctions against Russia tomorrow.

This would be madness – partly because it’s a complex situation in which ancient cultural and political forces are at work. Various local parties feel aggrieved, are right to, and are pursuing their national interest.

What business is that of ours?

While arguably not warranted, sanctions would also be deeply counter-productive – and not just economically. EU-Russia trade has grown from €90bn in 2002 to €335bn 10 years later. Russia is the world’s eighth largest economy, Europe’s second-largest retail market and it supplies a third of the EU’s natural gas.

Western banks have $242bn (£145bn) of exposure to Russia, compared with just $160bn of assets held by Russians in the West.

These commercial realities, along with huge direct investments made by leading US and European firms, mean sanctions won’t involve trade, and are unlikely to extend beyond symbolic asset freezes on a handful of individuals.

To have threatened “significant repercussions” that we never would nor could impose undermines the West, weakening the positive influence we may have had on events in Ukraine.

To have then intervened with such belligerent and cack-handed rhetoric has ensured our contribution has so far been negative, fanning the flames of conflict, rather than making bloodshed less likely.

Perhaps the most enduring damage we’ve done – even if sanctions don’t happen – is diplomatic, harming relations not only with Russia but also its even more powerful allies. For, in recent days, China has entered the fray.

“We don’t see any point in sanctions,” said Shi Mingde, Beijing’s ambassador to Germany, this weekend. “Sanctions could lead to retaliatory action, triggering a spiral with unforeseeable consequences.”

The Chinese are urging patience, calling for talks after the referendum.

“It is time for Western powers to abandon their Cold War thinking,” China’s Xinhua state news agency boomed last week. It gives me no pleasure to write this, but beyond the EU and US diplomatic corps, the vast majority of those following events in Ukraine, from wherever in the world, will think the Chinese are correct.

Enemies for much of the Cold War, Russia and China have built serious commercial ties across their 2,700-mile border. Bilateral trade has grown sevenfold since 2002, to almost $100bn annually, as both sides recognise the economic synergies between the world’s largest energy exporter and the world’s most populous nation and biggest manufacturer.

China’s penchant for agricultural produce and steel and coal-based imports means it’s now also Ukraine’s second-largest trading partner – after Russia, of course.

The emerging Russia-China axis is among the most under-reported major trends of our time. The stronger it gets, the more power the West cedes to the East. Our response to Ukraine is strengthening relations between Moscow and Beijing, uniting them in opposition to our actions. Serious diplomatic damage has been done – and it could get a lot worse yet.