How does an energy deal decades in the making go from the back burner to signed, sealed, delivered in a few weeks? Simple – find motivated buyers and sellers. In this case, Russia and China have found common cause for compromise after years of negotiations, motivated by the perception of meddling from the United States and the desire to find alternate streams of energy and revenue that are tied to more sympathetic global partners.
Past the obvious gains (gas for China, money for Russia) here’s how this deal could profit each nation:
Russia is under increasing international pressure over its conduct in Ukraine, including recent U.S. sanctions against individual Russians involved in the 2009 death of Russian lawyer Sergei Magnitsky that are widely viewed as politically motivated (the sanctions were in the works before the Sochi Olympics, but delayed over fear of upsetting the host country). With the threat of more sanctions and the perception that Russia has lost control over the security picture in Eastern Ukraine, the energy deal helps right Russia’s ship, lends an air of stability, and ties Russia closer to a country that is more sympathetic to its operating style and similarly bothered by the United States’ refereeing. Underlying it all is the $400 billion price tag and thirty years of guaranteed patronage from the world’s second largest economy.
China also gains much from the deal, beyond a much-needed flow of energy into a country desperate to expand its natural resource options. China has recently accused the U.S. of meddling in the Pacific, blaming the “Asian Pivot” as a catalyst for tensions in the South and East China Seas. By partnering with Russia in sidestepping America’s attempt to exert influence in their respective regions, China adds bite to their bark – showing the U.S. that despite being their primary trading partner that they are not the only trading partner or source of resources.
While it is unlikely that deals such as this could lead to a scenario where Russia, China, and other “sympathetic” nations dealt mainly or exclusively with each other (a la the closed economies of the 20th century), these deals are a canny power play by the two nations. Both wish to be seen as larger and more legitimate players on the global stage, and to circumvent the US both economically and diplomatically. The timing of this deal is perfect for both nations, and problematic for the US.