2 February 2014

China–Ukraine Increasing Bonhomie

 by Brig Amar Cheema in IDR 31/1/14

Ukraine Geostrategic importance

In the altered geostrategic map of 1992,Ukraine has started understanding its strategic importance. West’s interest in Ukraine, to become a part of European Union may be frustrated for now, as Ukraine has temporarily suspended signing the Association Agreement with the EU. But this signifies a tussle between the Russians and the European Union to control Ukraine. By trying to severe Ukraine from Russia through a de facto “Orange Revolution” US had plans to dominate Eurasia, via its allies the EU, the reminiscence of the Cold War era quiet evident. Meanwhile the seeds in the garb of democracy, economic prosperity and stability are in the process of crafting another fragile nation; protestors had demonstrated their wrath at the Independence Square in Ukraine against their government’s failure to sign political and free-trade accords with Europe. The country is politically divided and is economically in debt. At this stage two important events, namely Russian President Vladimir V. Putin’s intervention in supporting Ukraine through financial aid, by offering $15 billion in loans and a steep discount on natural gas prices[1] and the Ukraine President Viktor Yanukovych visit to China, illustrates the presence of undercurrents in this region. For Ukraine, the president’s visit to China, may fulfill dual target , firstly to get the much required financial help from China, because China’s largesse are well known especially to those nations which are strategically important , secondly to use it as a leverage to manipulate Russia and buy time to deal with EU. Whether Ukraine succeeds, depends on the reciprocity shown by these two countries.

China’s nuclear umbrella to Ukraine will not directly impact India but it is an indicator that China is surely capitalizing all its opportunities to become a major power to reckon with.

Russian Interest

Ukraine is geo -strategically important to Russia, because firstly both the countries share a long border (Moscow is 480 kms from Ukraine) and Russia could get cut off from Caucasus if Ukraine- Kazak opening were tempered with, secondly Ukraine gives Russian the access to the Black Sea. Russia’s naval base is at Sevastopol and more so Russia does not want its military encirclement via NATO. Therefore, the Ukraine President’s recent decisions of not becoming a member of EU or NATO can be considered as a victory for the Russians, but this is a very fragile one and in future it will test Russia’s capabilities in having a friendly Ukraine as its neighbor. Meanwhile the reemergence of Russia is due to Russia adopting some smart maneuvers, especially asymmetric ones, which comprise liberal manipulation of its energy resources through diplomacy and its inherent military strength. Russia’s North –South-East –West energy strategy if played intelligently can bring big dividends. Russia as such has the World’s largest known reserves of natural gas, and the demand for this in Europe has increased significantly .Considering UK, amongst other nations, has become a gas importer from being an exporter depicts a shift in the energy game. Russia’s giant company Gazprom has signed contracts not only with Denmark, Netherland, Belgium but also with France Germany and England. Russian oil initially use to pass through Ukraine ,hence Ukraine had played an important part as a transit country, but its hostility to Russia and the disruption in supply chain, made Russia rethink its strategic options. In a move to lessen its dependence on hostile transit nations Russia has diversified its options. Its Nord Stream gas pipeline completely bypasses Ukraine and Poland. Its South Stream also bypasses Ukraine, but in a strategic move Russia involved the former WARSAW nation and now a NATO and EU member Bulgaria, to participate in its South Stream Project. This onshore section will cross Bulgaria, Serbia, Hungary and Slovenia and the gas pipeline will end at the Tarvisio gas metering station in Italy.[2]

Apart from these, When dealing with Ukraine, Russia alternates its strategies from playing hard ball, by slapping trade restrictions especially on imports from Ukraine, and soft ball by giving energy discounts and financial packages. Ukraine is also dependent on Russia; because apart from oil a quarter of Ukraine’s total export goes to Russia. Also Moscow has argued that any Association Agreement with the EU will mean the end of the free-trade arrangement Russia currently has with Ukraine, raising the specter of a sudden tariff wall dropping on trade routes, and tightening border checks.[3] Gazprom in November demanded immediate payment of $1.3 billion in natural gas debts, however it then soft-pedaled the issue and offered an extension to pay the bills, thus showing that on friendlier terms with Russia, Ukraine, which currently pays high tariffs for gas, may be able to expect softer payment terms and discounted rates.[4]Russia is also keen for expanding the Eurasian Union, where the members will be mostly the erstwhile Soviet states .Russia dominated Custom Union has already upgrading its Quality standards and all countries along with Ukraine will have to adhere to these. All these will force Ukraine to introspect and come up with new approaches whereby their strategic interest could be safeguarded. They have already made the beginning, by building a strategic relation with China, as it gives them the opportunity to diversify their economy.

Ukraine – China Relations

China is of paramount importance to Ukraine not only from financial point of view but it could also act as leverage against Russia. China on its part has a more strategic interest in Ukraine namely geostrategic and import of hi-tech military technology. The two countries long term bilateral relation was transformed into a strategic partnership in 2011, when erstwhile President Hu Jintao, visited Ukraine .Since then the partnership has grown tremendously. China has become the second biggest trading partner of Ukraine with a total trade hitting 7.3 billion US dollars in the first eight months of 2013 [5].Its export had jumped to 46 percent consisting of hardware and spare parts. The Ukraine –China trade increased primarily because Russia had put constraints on the export of certain military technology to China, due to Chinese tendency of reverse engineer their technology .The Chinese resolved this by acquiring the military design and technology from Ukraine which the latter inherited from the Soviet era. Infect the Russians have cautioned the Ukrainians about it and this had been one of the irritants in Russia-Ukraine relationship. It is believed that Beijing bought a half-finished Soviet Aircraft Carrier, the Vanyag from Ukraine for $20 million in the 1990s and refurbished it into China’s first carrier the “Liaoning”[6] Previously China had also bought 250 AI-222 jet engines, for its JL-15 trainer.Ukraine’s Antonov aircraft design and manufacturing company has provided Beijing with key services, helping produce China’s Y series of military transport and surveillance planes.[7] Ukraine also built for China the Zubr-class amphibious hovercraft, the world’s largest, which the Chinese navy has used as the vessel in amphibious assault exercises in the South China Sea [8]Ukraine also believes that China considers Ukraine as an important bridge connecting Asia with Europe.

China on its part continues to be the follower of the great mercantile philosophy; with economic resurgence, it has used financial aid as a bait to augment its expansionist policies. The Chinese have used this special bilateral relationship with many European nations such as Hungary, Greece etc. Its main objective is to become a formidable trading partner with EU, which it has successfully achieved, because now China is second most important trading partner next only to the United States. China exported €289.7 billion in goods to Europe in 2011 and in 2012, bilateral trade in goods and services reached 483.5 billion euros, or $650.9 billion, according to the European Union delegation to China.[9] So it has exploited its relationship with various countries to make inroads into Europe.

…Russia is the only Nuclear Neighbor of Ukraine. Hypothetically does it mean that China will intervene, if Ukraine is threatened by Russia.

China’s Nuclear Umbrella

During Ukraine President’s visit to China a bilateral treaty was signed between the Chinese President Xi Jinping and Ukraine President Victor Yanukovych in which a four point proposal was initiated by the former. The joint statement further stressed the deepening of the strategic partnership between the two. In 2011 China had given the negative security guarantee to Ukraine whereby it had pledged not to use Nuclear weapon against Ukraine. The 2013 agreement was in continuation with its declared policy; however thistime it went one step forward and offered to provide nuclear security guarantee or Nuclear Umbrella, if Ukraine was threatened with nuclear weapons. They further discussed that both countries would not allow their territory to be exploited by any separatist, terrorist organizations or any such group which will harm their territorial sovereignty. One needs to see whether it was just rhetoric, or is there any substance to it, because Russia is the only Nuclear Neighbor of Ukraine. Hypothetically does it mean that China will intervene, if Ukraine is threatened by Russia. Crimean peninsula can be the vulnerable area, because the port of Sevastopol in Crimea is important to Russia as it has the Russian fleet stationed there. The tensions were also palpable during the pro-Western President Viktor Yuschenko’s time but since then, Russia has influenced the current president to extend the lease for another 25 years. It is highly improbable that both Russia and China can indulge in nuclear brinkmanship because of this base. So what can be the actual reason? Is it a gimmick by China to enhance its position by offering nuclear security to nations, which are vulnerable to USA or Russia? Or is it a sign of the rise of another power, which wants to shift the balance?

One also needs to see whether this nuclear deal, is a one off deal or the trend can be seen in other vulnerable areas particularly Middle East, Central Asia or the Balkans. Whatever the reason may be, one thing is sure that China has made inroads in Russia’s backyard and Russia needs to monitor not only its periphery, but also counter Chinese economic and military strategies. China through its fiscal power has already engaged many Central Asian countries and now by giving military options to partners like Ukraine, it is making multipolar world a viable option .It is already in the process of modernizing and acquiring hi-tech military technology as is evident from the fact that China has become a significant exporter of Small and Light Weapons (SALW), and amongst its customers are nations from South Asia, Middle East and Africa.

Implications for India

India is a late starter as far as Indo-Ukraine defence deals is concerned, but has made significant progress. The bilateral agreements between the two nations are in important areas like space, science and technology and nuclear energy. India however; needs to be wary of Ukraine as two of India’s adversaries also have a robust defence relationship with Ukraine; secondly India needs to ensure that its bilateral trade with Ukraine does not impact its relationship with its long term defence partner Russia.

China’s nuclear umbrella to Ukraine will not directly impact India but it is an indicator that China is surely capitalizing all its opportunities to become a major power to reckon with. One needs to observe these small indicators because often these small changes bring major strategic shifts

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