President Barack Obama has ended his long planned visit to Japan, South Korea, Malaysia, and the Philippines. Although there were no spectacular events, and Obama could not get final nods of other leaders to the ambitious free trade agreement TPP (Transpacific Partnership Pact), he put new strength to the United States’ position as guarantor of stability and security in this part of the world. Obama explicitly expressed readiness to guard the Senkaku Islands, which China claim on Japan, and the Philippines has reinstated the arrangement to offer her bases for use by the U.S. armed forces.
Thus, the U.S. position in Asia has been secured, and Obama can feel reassured in dealing with the situation in Ukraine. Asia mostly needs the presence of the U.S. Navy and the Marines, which are not needed so much in Europe. Russia, for its part, has now increased the number of its reconnaissance flights over the Sea of Japan, but this issue can be dealt with by Japan and other neighboring countries.
Ukraine is a decisive factor for Russia’s future. If Moscow finally “loses” it in favor of the West, Russia’s coveted idea of “Eurasian Union” will not fully materialize. On the other hand, even if eastern and southern Ukraine are forcibly incorporated into Russia, this will ruin the Russian economy. The federal budget will have a huge deficit and the ruble will plummet, causing a severe inflation. If the United States also reaches a deal with Iran, the oil price will plunge, another blow to Russia’s finance. When that happens, many CIS countries will “abstain” from the Eurasian Union, as they did on March 27 in the UN General Assembly’s voting to condemn the referendum in Crimea.
All this will induce Russia to excessively depend on China. And China, which is not so dependent on Russia, will demand a price for its friendship. The Chinese claims will not be limited to a discount on the price for Russian natural gas, and can go as far as a proposal to fold the Eurasian Union into China’s own “Silk Road Economic Belt” concept.
In my view, it would be better for Russia to quickly reach an agreement with the West—the Ukrainian oligarchs could function as an intermediary—on the territorial integrity of Ukraine, coupled with an assurance of its permanent neutrality and a simultaneous accession by Ukraine to the Association Agreement with the EU and to the Russia-led Customs Union. Russia contends that it does not want a free trade with the EU, but its accession to the WTO will anyway lead to it. Russia may lose revenue from the customs fees on its trade with the EU, but its consumers will enjoy cheaper goods from the EU. More importantly, Russia will obtain an opportunity to eventually build a robust economy with the help of a large influx of foreign direct investments.
Looking at the present ordeal around Ukraine, one cannot help but think that the absence of a modern economy is the cause of all problems for Russia. If Russia were able to attract others through its economic prosperity, it would not have to resort to military means in her foreign policy.
The Crimean War of 1853-1856 led to the emancipation of the Russian serfs in 1861. I can only hope that the current conflict in Ukraine can lead to the emancipation of the Russian economy.
