The Obama Administration just discovered their sanctions against Russia were feckless. Moscow and Beijing, after years of price haggling, will pen a multi-billion dollar oil and gas trade agreement in the wake of European Union and U.S. trade barriers.
By pushing the Russians into a reluctant deal with China because of U.S. failure to craft a foreign policy over the past 5 years, it has netted an unforeseen consequence in the global energy markets. China has the largest electricity production in the world, alongside the corresponding demand for electricity. The long sought after deal with Russia, for their oil and gas supply contracts remained in a stalemate for years; until the U.S. threat to sanction the Russian economy resulted in a natural interest to preserve their energy trade.
The Russian Federation had a long-standing policy of courting new trade relations with the US and European markets out of concerns for Chinese encroaching growth. Global Russian scholars and policy makers consistently proposed an US/Russian trade deal teaming up to counter the Chinese economic dominance in the region. This proposal met with political resistance, driven by so-called media propagandist casting Russian goals as determined to reviving the Soviet empire. Facts and political realities disprove those claims consistently.
Russian foreign policy is driven by merchant trade not by any sort of militarism, outside the normal conduct of any super-power like the U.S., which is engaged in several wars and military engagements throughout the Middle East, Central Asia and Africa. Russia’s military action was limited in duration, scope and took place on their borders.
Trade relations between Eastern European countries like the Ukraine, linked with social and cultural realities translated into a strong political relationship between Kiev and Moscow. Small business supply contracts between privately owned businesses in the two countries, many associated to supporting the oil/gas pipeline from Russia through Ukraine is an economic mainstay, creating a rising middle class, binding the two countries business communities.
The Ukraine controversy arose out of the European Union and International Monetary Fund flirtation with Kiev to lure their currency and strong labor resources into an integration. The U.S. injected itself by enabling a perfidious affair by back channel pay-off’s to politicians and financing street demonstrations. The resultant Coup d’ Etat, toppled the overwhelmingly elected government. That set into motion the string of events and outcomes we are witnessing unfold.
Comes now the China card realities ignored by US foreign policy makers. The rising Yangtze River super economic zone of Shanghai and Zu-Hou are integrating their local economies in that Delta region. It will be the biggest economic zone and engine to financial growth in China. This region has over 200 million residents and produces 3 trillion dollars in free market trade. This one delta region’s economy alone is growing stronger and larger than the European Union, and would “dwarf” most European nations.
The free trade investment opportunities are an alluring magnet for foreign trade agreements, such as the one Russia will enter. It will serve their economies, having the opposite effect the US sanction attempted to harm it with. In other words, in the long-term, US policy pushed Russia into the arms of China, while the Russians were rebuffed by the US when asking for a closer relationship.
The 1.2 billion kilowatts of electricity production in China is projected to grow 7.6% over the next year, the largest in the world. Even with this growth there is an anticipated energy shortage during the summer months. So the demand for new sources of energy, to include new technology is growing with the strong projected demands by 2020. In part, thanks to the US policy; Russia is now poised to circumvent the U.S. sanctions and meet the growing China demands and prosper immensely.
Bloomberg news reporter Kateem Katakey wrote: “China imported a record amount of Russian crude last month, 2.72 million metric tons, about a supertanker full every three days. The total more than tripled in a decade, and Russia now represents 12 percent of China’s crude imports, customs data show, among the highest levels in the past seven years.China National Petroleum Corp. last year paid the first $20 billion advance of an estimated $70 billion prepayment to OAO Rosneft. The payment was part of a $270 billion, 25-year oil supply agreement, which would make China Russia’s biggest market for its oil.”