How sanctions are backfiring to fuel a new Eurasian alliance

Posted on : 2024-06-25 17:12 KST Modified on : 2024-06-25 17:12 KST
Despite Western sanctions, Russia and China seem to be doing better than ever
Russian President Vladimir Putin (left) and North Korean leader Kim Jong-un (right) speak at a joint press conference held after their summit in Pyongyang on June 19, 2024. (EPA/Yonhap)
Russian President Vladimir Putin (left) and North Korean leader Kim Jong-un (right) speak at a joint press conference held after their summit in Pyongyang on June 19, 2024. (EPA/Yonhap)

A multipolar system being pioneered by China and Russia is gaining further momentum as a challenge to the US-led “rules-based liberal international order” in the wake of Russian President Vladimir Putin’s recent visits to Asia.

Putin’s visits to North Korea and Vietnam last week came at a time when the war in Ukraine has turned in Russia’s favor, while the international community has become increasingly vocal in its criticisms of Israel and the US over the war in Gaza.

Amid suggestions by analysts that the two wars in western Eurasia have dealt a strategic blow to the West, Putin visited North Korea and Vietnam, both of which hold strategic implications in eastern Eurasia.

Far from ending up isolated amid the intensive Western sanctions imposed after its invasion of Ukraine in late February 2022, Russia has not only steered the war in its favor but also expanded its diplomatic influence.

During his visit to North Korea on Wednesday, Putin signed a comprehensive strategic partnership agreement with leader Kim Jong-un. Article 4 of that agreement committed both sides to providing military assistance without delay in accordance with Article 51 of the UN Charter and each country’s laws when one of them is faced with a state of war due to an armed attack.

While the terms were not as strong as those of a 1961 alliance treaty between North Korea and the Soviet Union — which committed each to “immediately extend[ing] military and other assistance with all the means at its disposal” in the event of one of them suffering armed attack — observers said they effectively revived a defense agreement on par with a military alliance.

During Putin’s visit to Vietnam on Thursday, he reaffirmed the comprehensive strategic partnership established between that country and Russia in 2012, while effectively upgrading their ties with terms including an agreement to support the establishment of a nuclear science and technology center in Vietnam.

In effect, Putin has been using a strategy of rallying countries that have not participated in the US-led order by offering them Russian raw materials and military science and technology, which it has been unable to market elsewhere due to US sanctions.

At the time of his visits to North Korea and Vietnam, Putin published contributions to local state-run media, emphasizing a new security structure in Eurasia and “trade and mutual settlement mechanisms not controlled by the West.” Both of these are areas that China has also selected as key elements of a multipolar order.

In a contribution published in North Korea’s Rodong Sinmun newspaper, Putin called for developing “alternative trade and mutual settlements mechanisms not controlled by the West” and “shap[ing] the architecture of equal and indivisible security in Eurasia.”

In another piece published in the Communist Party of Vietnam newspaper Nhân Dân, he wrote that Russia “see[s] Vietnam as a like-minded partner in shaping a new architecture of equal and indivisible Eurasian security on an inclusive and non-discriminatory basis.”

“The possibility exists for our countries to carry out settlements in national currencies — the Russian ruble and the Vietnamese dong [rather than US dollars],” he also said.

On the same day as Putin’s visit to North Korea, Russia held security discussions in a top working-level national security council meeting with Iran.

According to Russia’s TASS news agency, Aleksandr Venediktov, the deputy secretary of the Security Council of Russia, held discussions in Tehran with his Iranian counterpart, Mohammad Mohammadi Alamuti, on detailed areas in connection with security cooperation, with representatives attending from related offices on both sides.

A meeting of the highest working-level security officials from both countries signifies that matters of mutual national security and military cooperation between Moscow and Tehran are no longer just a topic of discussion. They have already entered the execution phase. 

According to the Wall Street Journal, Iran helped build a factory for lethal offensive drones in Russia's Tatarstan region. The newspaper reported that US officials believe the factory is now operational and can produce thousands of Iranian-designed HESA Shahed-136 kamikaze drones. US officials think the factory will expand its operations to produce other kinds of offensive drones.

Russian President Vladimir Putin (left) and Vietnamese President Tô Lâm (right) speak at a joint press conference after their summit in Hanoi on June 20, 2024. (EPA/Yonhap)
Russian President Vladimir Putin (left) and Vietnamese President Tô Lâm (right) speak at a joint press conference after their summit in Hanoi on June 20, 2024. (EPA/Yonhap)

The Wall Street Journal reported that Russia has rapidly rebuilt its war machine with help from Iran, North Korea and other “US foes” following the Kremlin’s war campaign against Ukraine, and that US officials are also concerned about the increased industrial capacity of Iran, North Korea and China for producing weapons and military equipment. 

“The speed and depth of the expanding security ties involving the US adversaries has at times surprised American intelligence analysts,” the paper observed. 

In his book “The Grand Chessboard,” former US national security adviser Zbigniew Brzezinski, said that the greatest post-Cold War threat to US hegemony is the “Eurasian alliance” of Russia, China and Iran. When Putin vowed to “shape the architecture of equal and indivisible security in Eurasia” that rivals a US-led Western world order ahead of his summits in Asia, this is what Brzezinski was talking about.

The powerhouse behind this Eurasian security architecture is China. After Washington’s efforts to decouple from China-dependent supply chains and international sanctions against Russia in the face of the war in Ukraine, China began to proactively build a trade and economic network to counter the US and the West. This network comprises not only Russia, Iran and North Korea — nations openly hostile to the US — but also nations that did not partake in sanctions against Moscow: India, Brazil and South Africa, or BRICS.

When the US and the West sanctioned Russia, Iran and Venezuela, China began buying up their oil and raw materials. In turn, they were able to purchase Chinese-made goods, making for a win-win situation. Meanwhile, Saudi Arabia and Mexico, who also did not partake in the sanctions against Russia, have stuck to fence-riding equidistant diplomacy.  

According to China’s customs authority, trade between Russia and China last year was recorded at US$240.1 billion, representing an increase of 26% compared to the previous year. Russian Foreign Minister Sergey Lavrov has declared that the US dollar has been almost completely removed from Russia-China relations, with more than 90% of mutual payments being done in either the Russian ruble or the Chinese yuan. 

While this may be seen as a desperate move in the face of US sanctions, it is a concerning indication of a military and economic partnership between the world’s factory and a superpower with high-grade military technology. Moreover, China made a deal with Brazil in April of last year to exclude the US dollar in bilateral trade and rely on each other’s national currencies. 

Saudi Arabia has also agreed to accept the Chinese yuan for purchases of oil. On June 5, the Saudi Central Bank announced its participation in Project mBridge, China’s multinational central bank digital currency project. Monitored by the Bank for International Settlements, Project mBridge encompasses 135 countries.

“Saudi Arabia's interest in currency diversification marks a small but symbolic step down the road toward de-dollarization,” the Atlantic Council, an American think tank, diagnosed. 

According to the International Monetary Fund, the US dollar’s share of global forex reserves fell from 70% in 2000 to 55% last year. Amid the US’ decoupling campaign, China has turned to trade with Russia and other nations. In turn, other nations that trade with China have followed suit by ditching the dollar. 

This year, BRICS added the United Arab Emirates as a member in its effort to counter the Group of Seven, essentially doubling its size. The GDP of the G7 in 2023 amounted to US$45.9 trillion, still considerably more than the collective US$30.8 trillion fielded by BRICS members. Last year, BRICS accounted for 31.6% of world GDP when it came to purchasing power parity, however, compared to the G7's 30.3%. While BRICS is a purely economic collective that does not have the same G7 connotations of military cooperation, it is definitely succeeding in creating room for a China-Russia trade bloc that is outside the dollar.  

During their virtual summit in November of 2021, just three months before Russia’s invasion of Ukraine, Chinese President Xi Jinping and Putin released a joint statement that they would construct an independent financial network that is not influenced by third parties — namely, the US. The US has since responded with a sanctions network of unprecedented scale against Russia, coupled with a decoupling from China, but to no effect. Rather, Russia and China seem to be doing better than ever, while the US is hurting.

By Jung E-gil, senior staff writer

Please direct questions or comments to [english@hani.co.kr]

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