Putin's China visit watched for strategic signals

Reuters News
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Posted: Oct 09, 2011 5:09 AM
Putin's China visit watched for strategic signals

By Gleb Bryanski

MOSCOW (Reuters) - Vladimir Putin visits China on Tuesday in his first foreign trip since revealing plans to reclaim Russia's presidency, addressing a challenging relationship with a giant neighbor whose growth is both an opportunity and a potential threat for Moscow.

For Putin, whose main focus has been domestic in nearly four years as prime minister, the trip sets in motion a return to forefront of Russian foreign policy ahead of a March election in which he is expected to win a six-year term as president.

Beneath talk of strategic relations and shared stances on world affairs, wrangling over a gas pact worth a potential $1 trillion points up the tough issues he will confront in dealing with Russia's far more populous, faster growing neighbor.

China, facing its own leadership transition next year, may try to gauge Putin's plans for what could be 12 years at the helm of a country whose natural resources and nuclear arms make it a factor in Beijing's economic and geopolitical strategies.

"The significance of this trip exceeds that of a normal prime minister-level visit," said Zhao Huasheng, director at the Center for Russia and Central Asia Studies at Shanghai's Fudan University.

Putin will bring an army of executives including the CEOs of state-controlled energy firms Gazprom and Rosneft and aluminum producer UC RUSAL, all eager to exchange their wares for Chinese cash.

His meetings with Chinese President Hu Jintao and Prime Minister Wen Jiabao will feature warm affirmations of friendship and solidarity on big global issues between two countries that often move in lockstep to counter the United States and Europe.

VETO

Their double veto last week of a European-drafted, U.S.-backed U.N. Security Council resolution to condemn Syria's crackdown on pro-democracy protesters was a warning against Western meddling in their own countries and others worldwide.

Putin may use the trip to show the West an emphasis on China as Russia's geopolitical partner and a customer for its energy.

He did just that in a televised meeting with Gazprom CEO Alexei Miller on October 3, pointedly ordering him to prepare proposals on expansion into Asian markets, seen as a way to diversify Russian energy exports away from stagnant Europe.

President Dmitry Medvedev has not been cool to China since Putin steered him into the Kremlin after his own 2000-2008 presidency, but his emphasis has been on presenting a friendlier face to the West and improving ties with the United States.

Putin's meeting with Miller followed European Commission raids on offices of Gazprom subsidiaries in Europe that underscored persistent tensions over the continent's heavy reliance on Russian gas, which EU members want to reduce.

But China's friendly political ties with Russia, and their partnership in the loose BRIC grouping that also includes India and Brazil, do not make Beijing less of a tough customer when it comes to energy deals.

GAS DEAL

Putin will likely seek to resolve the price disagreements that have prevented Russia nailing down a 30-year deal to supply China with up to 68 billion cubic meters of gas per year.

But Gazprom's export chief told Reuters last month that the five-year-old negotiations might not end this year, pushing back initial deliveries beyond the latest target of 2016.

Meanwhile, China is cultivating other sources of energy supplies, particularly in ex-Soviet Central Asia.

A report this month by the Stockholm International Peace Research Institute (SIPRI) said China was gaining the upper hand in the relationship as it becomes less reliant on Russia for advanced weapons and looks elsewhere for some of its energy.

It said Russia's significance to China would continue to diminish in the coming years, and that "there are strategic planners in Beijing and Moscow who view the other side as the ultimate strategic threat in the long term.

While Putin may use China as a foil against the West, the pragmatic former KGB officer is well aware of such concerns.

As he prepares for what could be two six-year terms as president, "the risks from China's growth will be watched more closely than the opportunities," said Fyodor Lukyanov, editor of the journal Russia in Global Affairs.

At an investor conference on Thursday, Putin used a joke to play down the challenge posed by China's faster growth after TPG Capital co-founder David Bonderman outlined China's path to becoming the world's largest economy.

"He got me worried. He said that the United States is so far the world's biggest economy but China will undoubtedly take over. So we now need to keep our foreign currency reserves in yuan while the Chinese will keep them in dollars," Putin said.

"That will be an interesting Russian doll."

(Additional reporting by Michael Martina in Beijing; Editing by Steve Gutterman and Kevin Liffey)