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Putin's Swiss statement, North Korea, and 'plateau' in Russia's economic relations with Beijing

19 June, 2024 Wednesday
14:41

Putin's recent moves highlight Russia's delicate balancing act with China amidst geopolitical shifts, aiming to maintain stability and delay US influence

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Few remarks on the topic of geopolitics and its interpretation.

1. There are several things that can already be partially put together in the puzzle of the Russian economy. According to the Russian Ministry of Finance, subsidies to the oil refining industry already account for 1.7% of GDP. Simply put, the industry is increasingly becoming a recipient of the budget from a donor.

The second aspect that is important to keep track of is that despite record oil supplies to China, the Russia-China trade balance is heading for a negative (!) mark. One of the important conclusions is that the trade model of oil in exchange for cars and equipment + non-interference in the war is becoming, if not unprofitable, then low-margin for Russia.

2. The de facto transfer of part of Russia's territory to China went completely unnoticed, allowing Beijing to gain direct access to the Sea of Japan through the Tumanaya River, where the Russian-Korean border runs.

China has been granted direct access to this passage without any restrictions, and this is apparently a payment of the bills issued to Putin during his visit to Beijing. We have to understand one important thing: Putin has almost nowhere to retreat: the only thing further is the transfer of territories for China's infrastructure projects on the Northern Sea Route. Please note that all this is happening against the backdrop of US sanctions against Novatek and its ability to build LNG tankers (for some reason, these sanctions have hardly been noticed in Ukraine).

3. Putin's statement about his peace plan, as I have already written, is about cutting off the escape routes for himself and his entourage. But it is important to emphasize that the main recipient of this statement is Beijing, which wants to play the peacemaker.

Putin conveyed to Xi, first and foremost, that his red line and the only way to remain a subject is to continue the war.

Putin realizes that Beijing is not ready to take drastic steps to reduce purchases of Russian raw materials, while the main task Putin set himself - to saturate the military-industrial complex with new machines - has largely been accomplished. Therefore, he has a certain backlash in time.

4. What will he try to use this backlash for? First of all, to create complex systems of counterbalances, where it will have points of influence on China through third countries. That is why Russia is so active in Africa. And this is the reason for Putin's visit to North Korea. These are all unobvious steps, but they are a matter of survival for the Putin regime.

5. Putin understands that his main task is to prevent a China-US agreement before the US elections (the likelihood of such an agreement is low, but still exists). At the same time, if there is no agreement, he definitely has until the beginning of next year. During this time, he needs to build a model of relations with China that will prolong the status quo for at least a year. His only strategy today is to stall.

We need to understand this and think about what we can do in a conventional Vietnam, Laos, or Cambodia to disrupt Putin's plans. And it's much harder than just saying that dictatorships are looking for their own kind.

Source

About the author: Vadym Denysenko, political scientist.

The editors do not always share the opinions expressed by the blog authors.

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