Asian powers are unlikely to ease Russia’s economic woes | Russia-Ukraine war

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“Where the enemy advances, we retreat. Where the enemy retreats, we pursue,” Mao Zedong, China’s founding father, once said to highlight the importance of strategic dynamism at times of crisis. After embarking on an all-out invasion of Ukraine, which has triggered a crippling wave of Western sanctions and left its economy in need of an urgent lifeline, Russia is now expected to follow Mao’s playbook and seek new opportunities in the East.

The problem, however, is that Russia’s unprovoked aggression in Europe may have ruined its once sky-high chances of making a successful pivot towards the lucrative markets of Asia.

Indeed, while China has offered some diplomatic and economic support to Russia since the invasion, many other economic heavyweights in the region have made it clear that they are horrified by Russian President Vladimir Putin’s brutal actions.

Asia’s most industrialised economies – Japan, South Korea, Taiwan and Singapore – imposed sweeping sanctions on Russia. The vast majority of Association of Southeast Asian Nations (ASEAN) members backed the United Nations General Assembly resolution, which unequivocally condemned Russia’s armed aggression against a sovereign neighbour. Crucially, even traditionally pro-Moscow nations such as Vietnam are struggling to conduct trade with Russia amid sweeping international sanctions, which now extend to global shipping lines as well as financial institutions. Thus, after being completely pushed out of Western markets, Moscow is unlikely to find itself a welcoming new home in Asia.

Marching to the East

For centuries, the double-headed eagle has been a symbol strongly associated with Russia, representing the powerful empire’s desire to expand its influence both to its West and its East. Yet, it wasn’t until the formation of the Soviet Union and the beginning of the Cold War that Russia – the beating heart of the union – really began to carve out spheres of influence across Asia, including much of Indo-China. In particular, Moscow served as a key ally to the communist forces in Vietnam, which managed to defeat France, the United States and eventually China.

The collapse of the Soviet Union in the early 1990s, however, ushered in a prolonged era of Russian absence from East Asian strategic affairs. Hobbled by economic crises at home, and troubled by North Atlantic Treaty Organization’s (NATO) expansion across Central and Eastern Europe, Russia largely remained on the defensive – and uninterested in East Asia – way into the first decade of the 21st century. But in the last decade or so, the Eurasian power began to consciously reorient its strategic focus. In 2012, for example, it spent a whopping $21bn on its easternmost major city, Vladivostok, in preparation for the Asia Pacific Economic Cooperation (APEC) Summit that was to be held there. The following year, President Putin reiterated his country’s pivot to the east at the St Petersburg International Economic Forum, where he vowed to revitalise public infrastructure in the Siberian region as well as seek new opportunities in Asian markets. Not long after, Russia finalised a massive, 30-year energy deal with China worth $400bn, setting the stage for a new era of economic cooperation with Asia’s leading economic powers.

In 2016, Putin personally visited Japan to improve strategic and economic ties with the world’s third-largest economy. Russia also offered space technology and energy resources through a proposed trans-Korean pipeline to neighbouring South Korea, another Asian economic dynamo.

In return for its efforts, Russia welcomed consumer goods as well as manufacturing investments from Asia.

A golden opportunity

Especially since its 2014 annexation of Crimea, which triggered Western sanctions and a consequent recession, Russia has been focusing its attention on lucrative Eastern markets. It is not surprising that it was in Southeast Asia where Russia found the most promising market opportunities. After all, the region is home to several of Russia’s traditional allies such as Vietnam, Laos and Myanmar, which have historically relied on Russian weaponry and military training to beef up their national defence.

Between 1995 and 2019, Vietnam alone purchased $7.4bn worth of Russian armaments, including submarines, amid rising territorial and maritime tensions with China. In 2019, the Southeast Asian country also signed a $350m contract to acquire training aircraft from Moscow. In the past two decades, Russia exported as much as $10.7bn in military hardware to Southeast Asia, eclipsing the export volume of both China ($2.6bn) and the US ($8.2bn).

Crucially, the recent rise of strongman populists in Southeast Asia’s two largest nations, Indonesia and the Philippines, presented a golden opportunity for Russia.

Shortly after coming to power, Philippine President Rodrigo Duterte described the Russian president as his “favourite hero”, marking the beginning of a new era of bilateral defence cooperation between Manila and Moscow. Soon, Russia began regularly deploying warships to the country’s waters for goodwill visits. Moscow also assigned a defence attaché to the Philippines – the first in the history of the country’s relations – in order to expedite large-scale defence deals.

Meanwhile, Indonesian defence minister Prabowo Subianto, a former general notorious for his Putin-style macho antics, started to pursue massive arms deals with Russia to modernise the Southeast Asian country’s defence forces.

Many Southeast Asian countries also invited major Russian energy companies to invest in their offshore energy resources across the South China Sea and waters off the coast of Indonesia’s Natuna Islands.

When the pandemic hit Asia, Russia also became the first major power to offer COVID-19 vaccines to Southeast Asia, and even entered into joint-production ventures with Vietnam and Indonesia. Overall, Russia successfully presented itself as an alternative “third force” amid intensified Sino-American competition across the region.

All fall down

With its invasion of Ukraine, however, Russia placed its hard-earned strategic capital in Asia in jeopardy. So far, North Korea is the only state in the region that has consistently and publicly supported Moscow’s latest gambit and, among ASEAN nations, it was only Laos and Vietnam who abstained from the vote on the UNGA resolution condemning the invasion.

As former victims of colonialism, much of Asia has been distraught by Russia’s unprovoked invasion of a sovereign neighbour. Singapore’s foreign affairs minister Vivian Balakrishnan condemned Russia’s “act of war” and described it as an “existential” concern for his country. In a rare move, the city-state, which serves as a global financial hub, joined the major regional economies of Japan, South Korea and Taiwan in imposing sweeping sanctions on Russia.

Even prior to its invasion of Ukraine, Russia was struggling to expand its trade and investment footprint in the region due to Western sanctions. In 2019, Russia-ASEAN bilateral trade stood at only $18.2bn, dwarfed by China’s ($644bn) and the US’s ($292.4bn). Japan, South Korea and Taiwan also made sure that they are relatively less dependent on Russian oil and gas imports, instead preferring to deal with Middle Eastern producers.

Amid a new round of even more punishing sanctions, which target key sectors of the Russian economy, it will become even more difficult – if not impossible – for Moscow to expand its energy exports to Asia’s most industrialised nations or fully implement its recent free trade agreements with the likes of Singapore and Vietnam. Above all, Moscow will likely also suffer major setbacks in defence equipment exports. For years, the prospect of US sanctions dissuaded key Southeast Asian states from procuring large-scale Russian weaponry. Following the events of the past two weeks, they will likely be even more reluctant to involve themselves in such transactions with Russia.

Earlier this year, Indonesia scrapped a multi-billion-dollar defence deal with Moscow in favour of agreements with France and the US, partly due to concerns over Western sanctions. With Washington further tightening the noose around Russia’s industrial-military complex following the Ukraine crisis, more regional states, especially US allies such as the Philippines, are expected to reconsider any major purchases from Moscow. Already ostracised in Europe, a heavily sanctioned Russia may also struggle to find much love in Asia.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

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