Bonds, Commodities, Currencies, Emerging Markets, Frontier Markets, Stocks

China-Led New Silk Road Meets Russia-Led Eurasian Union

By Pepe Escobar, Sputnik News

Golden Eagle Silk Road.  Photo courtesy of Flickr/Marth de Jong-Lantink.

Golden Eagle Silk Road. Photo courtesy of Flickr/Marth de Jong-Lantink.

Any – exceptionalist – wishful thinking that Russia and China will abandon their solid “win-win” strategic partnership, fully crafted to their mutual national interests, was dispelled by a crucial visit to Moscow by Chinese Foreign Minister Wang Yi.

In Moscow, Wang stressed both Russia’s Look East policy and China’s Go West – which essentially encompass the massive New Silk Road(s) project – “have created historic opportunities for docking the two countries’ development strategies.”

And fully “docked” they are. Russia’s Look East strategy is not only about China. It’s as much about Eurasian integration as China’s New Silk Roads – as Moscow needs Asia-Pacific to develop Eastern Siberia and the Russian Far East.

The always-evolving strategic partnership is not only about energy – including the possibility of Chinese-controlled stakes in crucial Russian oil and gas projects – as well as the defense industry; it’s increasingly about investment, banking, finance and high technology.

The partnership’s reach is extremely wide, from Russia-China cooperation within the Shanghai Cooperation Organization (SCO) to the Russia-China stake in the new BRICS development bank, and to Russian support to the Chinese-led Asian Infrastructure Investment Bank (AIIB) and the Silk Road Foundation.

Beijing and Moscow, along with the other BRICS nations, are fast moving to trade independently of the US dollar, using their own currencies. In parallel, they are studying the creation of an alternative SWIFT system – which will necessarily be joined by EU nations, as they are joining the AIIB. For instance, in theory Germany might afford to lose its trade with Russia because of Berlin’s politics – much to the dissatisfaction of German industrialists. Yet Germany simply cannot afford not to buy Russian energy. And for Germany to lose trade with China is beyond unthinkable.

The Trans-Siberian on Steroids

Two days after his Moscow visit, Wang went one up as he met Mongolian Foreign Minister Lundeg Purevsuren, stressing that the New Silk Road will develop a “new platform”, a trilateral economic corridor linking Russia, China and Mongolia.

What Wang was referring to is the planned Eurasian transport corridor — which will feature a $278 billion, brand new high-speed Trans-Siberian railway connecting Moscow and Beijing, and everywhere in between, in only 48 hours.

So inexorably it was up to Wang himself to connect the dots Washington refuses to acknowledge; “The construction of the China Mongolia-Russia economic corridor would connect China’s Silk Road Economic Belt to Russia’s transcontinental rail plan and Mongolia’s Prairie Road program.”

What we have here, above all, is the China-led New Silk Road(s) directly connecting with the Russia-led Eurasia Economic Union (EEU). China and the EEU are bound to set up a free trade zone. Nothing more practically natural, as this is all about Eurasian integration. The details will be fully discussed when Chinese President Xi Jinping visits Moscow next month, and at the St. Petersburg Economic Forum in June.

The Chinese IP Connection

China’s breathtaking Go West policy is also finally unblocking a key Pipelineistan gambit in the New Silk Road; the Iran-Pakistan (IP) pipeline, which was originally the IPI (including India), relentlessly harassed by both Bush and Obama administrations and blocked by US sanctions.

The 560-mile Iranian stretch, up to the Pakistani border, is already finished. What remains of IP – 485 miles, at a cost of $2 billion — will be mostly funded by Beijing, with technical work performed by a subsidiary of CNPC. President Xi is bound to announce the deal in Islamabad later this month.

So what we have here is China actively intervening – “win-win”-style — to facilitate an umbilical steel energy cord between Iran and Pakistan, even before sanctions on Iran are lifted, gradually or not. Call it the entrepreneurial spirit of the New Silk Roads – the South Asia chapter – in action.

Of course there are also myriad benefits for Beijing. Iran is already a matter of national security for China – as a top supplier of oil and gas. The pipeline will go through the strategic Indian Ocean port of Gwadar, already under Chinese management. Gas could then be shipped to China by sea, or – better yet — a new pipeline from Gwadar to Xinjiang, parallel to the Karakoram highway, may be built over the next few years, thus bypassing the Strait of Malacca, which is a crucial objective of China’s complex energy diversification strategy.

And then there’s Afghanistan – which from Beijing’s point of view fits into the New Silk Road project as a resource corridor between South and Central Asia.

Beijing ideally wants to invest in Afghanistan’s infrastructure development to access Afghanistan’s resources and solidify yet another land bridge from Xinjiang to Central Asia and further on to the Middle East. Made in China products, so far, have to be exported to Afghanistan via Pakistan.

CNPC and the China Metallurgical Group Corp. are already in Afghanistan, investing in the Amu Darya oil river basin and the massive Anyak copper mine. It’s been messy, but that’s a start. Both Russia and China inside the SCO have a profound interest in a stable Afghanistan ripe for business in both the New Silk Road and the EEU. The key question is how to keep the Taliban “satisfied”. Certainly by not applying Washington’s methods.

Meanwhile, the Pentagon’s “proposal” for what new chief Ash Carter describes as “this part of the world” is to deploy – what else – new weapons, from the still-in-production THAAD missile defense system to the latest stealth bombers and cyber warfare units. Eurasian economic cooperation? Forget it. For the Pentagon and NATO – which, by the way, have recently lost a 13-year war to the Taliban – economic cooperation is for sissies.

Pepe Escobar‘s latest book, just out, is Empire of Chaos. Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

The statements, views, and opinions expressed in this article are solely those of the author and do not necessarily represent those of EMerging Equity.

Courtesy of Sputnik News, © 2015 Sputnik


No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow Us On Social Media

Google Translate

Like Us On Facebook

Our Discussion Groups

Facebook Group
LinkedIn Group

Follow EMerging Equity on

Our Social Media Readers


Get every new post delivered to your Inbox.

Join 258 other followers

%d bloggers like this: