#17 - JRL 7208
Asia Times
June 3, 2003
Hu makes his mark in Central Eurasia
By Sergei Blagov

MOSCOW - Chinese President Hu Jintao's first tour abroad as leader of the world's most populous nation involved trips to Russia and Kazakhstan, key players in Central Eurasia, during which he put his signature on a strategic energy pact with that of Russian President Vladimir Putin, and also attended the summit of a major Eurasian body, the Shanghai Cooperation Organization (SCO).

Hu's speeches during his trip to Moscow included references to a multi-polar world and a need for the United Nations to play a central role in Iraq. In an interview with state-run Russian RTR television and Interfax news agency on the eve of his trip, Hu also hailed "Russia's political stability under President Putin's leadership".

Russia and China have emphasized their desire to increase bilateral trade to US$20 billion a year, from the current $12 billion per annum. Hu also stressed that bilateral trade turnover reached $4.5 billion in the first four months of 2003, or 30 percent up compared to last year.

Russia is one of the world's major exporter of energy resources, while China is major importer, hence bilateral energy cooperation has "broad prospects", Hu told RTR and Interfax.

Russian oil major Yukos and China's National Petroleum Corp have signed a $150 billion oil deal to pave the way for a pipeline to China to ship up to 700 million tons of oil from 2005 to 2030. Under the agreement, CNPC will buy up to 5.13 billion barrels of Russian oil, worth $150 billion, between 2005 and 2030. The $2.5 billion pipeline will run from Russia's Western Siberian field to China's Daqing.

The two countries also agreed to strengthen their defense cooperation. Chinese Defense Minister General Cao Gangchuan met with his Russian counterpart on May 30 to discuss arms trade, ties between the two countries' militaries and global conflicts. Cao, who accompanied Hu, told reporters after meeting with Defense Minister Sergei Ivanov that the Russian-Chinese summit was a "complete success".

"As defense ministers, we agreed that we will make joint efforts to widen our bilateral cooperation," Cao said after talks with Ivanov. "I am glad to note that Russian-Chinese relations are developing very positively, and that this includes the important military sphere," Ivanov told Cao at the start of the meeting. Neither he nor Cao would give any details after the talks.

China has become the top customer for Russia's arms industry, purchasing billions of dollars worth of jets, missiles, submarines and other military hardware. India is the second largest importer of Russian-made arms.

Indeed, the leaders of the world's two most populous nations met directly. On May 31, Hu met Indian Prime Minister Atal Bihari Vajpayee in St Petersburg. Vajpayee reportedly introduced new Indian initiatives to normalize relations with Pakistan, while Hu invited Vajpayee to visit China on June 22-26, according to RIA.

Meanwhile, Russia and India vowed to increase bilateral cooperation, including joint military exercises and space programs. After a dinner banquet for the foreign guests marking the 300th anniversary of St Petersburg, Putin's hometown, Putin met Vajpayee on May 30.

"We are working together in the most sensitive areas. I am not speaking only of economic cooperation ... but also of developing military-technical cooperation, cooperation in space," Putin said. Putin stated that the two nations "cooperate in most sensitive areas", including space program. Vajpayee reportedly retorted that "our cooperation in various spheres is going very well. Russia is our trusted friend, and we are very good friends and we have high hopes in Russia."

Putin noted that Russia had helped India launch a rocket into space earlier this month and that the two countries were holding their first joint naval exercises in the Indian Ocean. The exercises by a large task force of Russian surface ships and nuclear attack submarines simulated attacks on US aircraft carrier groups. The exercise was coordinated with a mission by long-range bombers. Several Russian strategic bombers - Tu-95 Bears and Tu-160 Blackjacks - flew from a base in Central Russia to the Indian Ocean to simulate an attack by long-range cruise missiles on US navy ships and Diego Garcia air base.

However, St Petersburg's tricentennial festivities witnessed no renewed calls for a Moscow-Beijing-New Delhi axis, an alliance of three nuclear-armed countries of some 2.5 billion people that theoretically would be able to balance US power in coming years.

In December 2002, Putin traveled to China and India, and speculation re-surfaced about the three countries ganging up together to form an "axis" due to a perceived sense among all three that American power must somehow be checked. Russia, China and India have a number of converging interests that could add substance to axis talk. All three were disturbed by the Iraq war and protested against what they viewed as a rejection of the rules of the international game. They still back the primacy of the UN Security Council in solving crises, and support the principle of non-intervention in internal affairs of sovereign states. All three countries have been opposing missile-defense systems seen as detrimental to their respective nuclear deterrence.

Apart from shared concerns of American dominance, the three have other common interests and mutually reinforcing needs. All three are weary of militant Islamic groups, and want stability in Central Eurasia. However, axis talk has so far remained a matter of speculation.

The Shanghai Cooperation Organization has been seen as a convenient forum for the trilateral axis. Now SCO includes China, Russia, Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan, while India has been touted as a potential candidate to join. India's admission could raise SCO's significance, Putin stated in December last year. However, India's accession was not mentioned during the St Petersburg meetings.

The presidents of the SCO states gathered in the Kremlin on May 29 to discuss how to make their organization a full-fledged institution. The six leaders decided how and when to form a budget for SCO, with the aim of turning it , which was formed as a five-member group in 1996, into a viable international body by 2004, according to their joint declaration. No concrete details were given.

China's ambassador to Russia, Zhang Deguang, was appointed the executive secretary of SCO. The leaders also approved the organization's emblem and flag. From 2004 on, SCO will have a secretariat in Beijing and a regional anti-terrorist force in the Kyrgyz capital of Bishkek, the declaration said. The force is due to jointly tackle such threats as terrorism, separatism, extremism and drug trafficking. One sign of SCO's transformation is a plan to hold joint anti-terrorism exercises later this year in Kazakhstan, involving the armed forces of all six members.

In addition to discussing beefing up SCO, the presidents joined forces in calling for strengthening the role of the UN and a multi-polar world. The declaration they signed refers to the UN's "fundamental significance" and "important role", a muted criticism of the US-led war on Iraq.

Kazakh President Nursultan Nazarbayev, who presided over the summit, took the lead at a news conference in praising the progress of SCO, declaring that "the first phase of formation is virtually completed". Putin stressed that SCO members all agree there is no alternative to the UN as a "universal mechanism" and believe the "UN's efficiency should be increased".

The group has drafted an anti-terror convention and urged the UN to play a major role in efforts to eradicate global terrorism. Presumably, SCO had been originally intended to band together Russia, China and Central Asian nations in order to contest America's growing influence in Central Eurasia.

It has been understood that China views SCO as a vehicle to consolidate its position and raise its clout in Central Eurasia without antagonizing Russia, the traditional power which has long dominated the region. China has also been keen to check the US's influence, which has been on the raise in the wake of September 11, 2001.

Subsequently, Hu's first tour abroad involved a trip to Kazakhstan for two days, ending on Tuesday, during which he will meet Kazakh President Nursultan Nazarbayev, Prime Minister Imangaly Tasmagambetov and other Kazakh officials, as well as sign a bilateral cooperation blueprint for 2003-08. Hu's trip to Astana "indicates China's special attention to Kazakhstan", the Kazakh foreign ministry has said in a statement.

However, CNOOC Ltd and Sinopec Group of China were shut out of a recent deal to buy stakes in the giant Kashagan field in the North Caspian Sea. CNOOC agreed in March to pay $615 million for half of the Britain BG Group's stake, or one-twelfth of the total; the Sinopec Group agreed to the same terms for the other half. Yet both firms, which are controlled by the Chinese government, have not clinched the deal. Arguably, Chinese clout in Central Eurasia remains to be further strengthened.