Saturday, September 15, 2012

Pivoting towards Asia

Historically, Russia has looked west to Europe, but economic realities are prompting a new focus on Asia. In a recent piece in the Financial Times, David Pilling quotes Russian president Vladimir Putin talking at the APEC summit in Vladivostok: "The global economic landscape is changing literally as we speak." Well, not quite that fast, perhaps, but fast enough.

As Pilling points out, diplomatic links between Moscow and Beijing are strengthening and Russian trade with China is already running at significantly higher levels than its trade with Germany and at much higher levels than its trade with the U.S. ($80 billion as against $50 billion and $36 billion).

And Russian trade with China, South Korea and Japan is set to increase rapidly. An oil pipeline terminating in the far-eastern port of Kozmino (near Japan) is nearing completion.

Russia will also be a crucial source of gas, timber and grains. According to Mr Putin, Russia is planning to double or treble its export of grains to Asia.

Over the past year or two the U.S. has made a show of asserting its presence in the Asia-Pacific region, but so far this has been more rhetorical than substantive and seemingly focused more on military and strategic factors than on economics or trade. Though U.S. trade with Asia has obviously increased, there has been much unproductive talk about various possible future multilateral 'architectures'.

Meanwhile other countries in the region and beyond are doing more, more quickly. For example, New Zealand already has a bilateral free trade agreement with China.

Even tiny Samoa made a substantive (and symbolic) shift in its geo-political orientation. Last December they jumped the International Date Line so as to be closer to Australasian and Asian time zones. The switch reverses a decision made 120 years ago to move to the east of the date line in order to be more closely coordinated with the U.S. and Europe.