Russia has tended to be seen as the frontier of the West, an endless expanse of a new and different people, who stand aloof from western democracies and the values they project. Its dealings elsewhere around the world have often gone understated.In recent years, Russia has stood large again against the West: in Syria, in American elections, but most vividly in the seizure of Crimea. Commentators have been quick to jump to the idea that this is the ‘New Cold War’, but it isn’t, it’s more than that. The world is no longer polarised, and it’s Russia’s interactions around the world, particularly with Europe and China that are responsible for allowing Putin to control the ‘Nova Russia’ of the 21st century.
From Central Asia, to Iran and the Pacific, the effects of ‘Nova Russia’ is churning up world politics and markets. For an outward looking China, this is proving to be incredibly beneficial.
Nova Russia, like the later Soviet Union has been hugely dependent on oil and gas exports which make up around 50% of the federal budget. What is highly interesting about this is that in being so reliant on prices, Nova Russia has limited the way in which it engages with other powers.
For example, Kazakhstan’s Kashagan oil field is one of the of the main sources of the new Kazakhstan-China pipeline being constructed through Belt and Road. Kazakhstan has always posed itself as a region that is in Russian influence, but now it is competing with Russia in world oil markets. This must be considered a limiting factor in Russian global power. The same is true with Iran.
While brief coverage often portrays Russia and Iran as working together in areas like the Middle East, both countries are in the top three of gas producers. They are in competition. This produces some limit to their cooperation, but this will not be a cause of tension until the market dries up, which it shows no sign of doing, so long as China continues to act as the endless hole of oil and gas consumption. Belt and Road exists partly to facilitate that need.
Why isn’t demand drying up in China? This is due to a combination of factors, mainly the large demand for energy anyway, which has been further strained by the growth in domestic consumption and the collapse of oil prices in 2014 which led to the slow decline of domestic production in the face of competition.
It’s cheaper for China to import it, and if you want to interpret Belt and Road as an imperial venture, then it also facilitates good relations with other nations who, like Russia, need you to buy their exports.
However, Nova Russia is not just turning East because of the rapidly growing demand, but also there is an element of push from the West.
Though western sanctions on Russia in 2014 over the seizure of Crimea didn’t do much to hamper Russia’s dominance of Europe’s energy market, the rise in tensions has led to an uneasy future. Denmark has acted to allow itself to now block the building of Nord Stream 2, a Russian sourced pipeline to facilitate the spread of oil through Europe, which planned to run through the country. Further up the coast, Poland has constructed new terminals to receive oil imports, one example of which was from Iran, Lithuania is taking similar actions in constructing these terminals.
Despite this, we are still seeing a growth in Russian oil and gas going to Europe. But it’s future is no longer secure, and if Putin’s Russia continues to agitate the West then it seems a terrible idea to consider them as a guaranteed and secure source of trade.
And so, Nova Russia looks East. Its strong-arm attitude funded by the growth in the Chinese demand. The West, in sanctioning Russia is leading China to secure better, cheaper, deals with Russia and perpetuates the spread of Chinese influence.