Russian invasion of Ukraine could embolden China 

The Russian invasion of Ukraine is on. Russia has captured Kharkiv, the second-largest city in Ukraine, and is closing in on Kyiv, the Ukranian capital. Russia’s villainy stems from the fact that its actions didn’t match its words. All through, at the onset of its amassing troops on the Ukrainian border, it had maintained that it would not invade Ukraine. But it acted in contradiction. What is worse, it has now placed its nukes on high alert. 

Russia also, last week, recognised the Donetsk Peoples’ Republic and the Luhansk Peoples’ Republic, restive regions (with Russian-speaking majorities) of Ukraine.  

The US’ and NATO’s response seems tepid, despite strong rhetoric of inflicting debilitating action on Russia. Sanctions include expelling selected Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial messaging system and imposing restrictive measures on Russia’s central bank to limit Moscow’s ability to access its overseas reserves. 

SWIFT is the world’s main banking messaging service which links around 11,000 banks and institutions in more than 200 countries. Eliminating banks from SWIFT is deemed to be a harsh hindrance, because almost all banks use the system. Russia is heavily reliant on the SWIFT system for its key oil and gas exports. 

US President Joe Biden said the move would further isolate Russia from the international financial system and Western economies. 

Earlier, the US and Western allies implemented full-blocking sanctions on two large Russian financial institutions, VEB and their military bank. This implies comprehensive sanctions on Russian sovereign debt. Russia’s government is now cut off from Western financing. It can no longer raise money from the West and cannot trade in its new debt on US markets or European markets. 

The leaders of the US, the European Commission, France, Germany, Italy, the United Kingdom and Canada also decided to launch a joint task force to hunt down assets of sanctioned Russian companies and oligarchs. 

Sanctions have also been placed on Russian President Vladimir Putin and Foreign Minister Sergey Lavrov, as well as other members of Russia’s security council. 

In addition, the US imposed sanctions against Russian Defence Minister Sergei Shoigu, and chief of the general staff of the Russian armed forces, first deputy minister of defence, and general of the army Valery Gerasimov. 

Besides, Germany has said that the Nordstream 2 gas pipeline project, that was to supply Russian gas to Germany, will not proceed.  

The fallout of these sanctions has been that Russia’s currency has plummeted. 

But Putin has not been cowed down by the threat of sanctions. The tensions between the West and Russia have come to a boil because Putin has acted decisively and with a heightened degree of villainy in response to NATO’s expansion endeavour in Europe. ..indeed, right up to Russia’s door-step, with scant regard for Russia’s strategic insecurities. In that sense, the US is no less culpable. It was literally no business of NATO’s to expand into the Baltic (Latvia, Lithuania and Estonia), just a stone’s throw away from Russia’s second-largest city of St Petersberg. NATO also had plans to include Ukraine as its member state. 

Ukraine, with a nominal GDP of $204 billion, an area of 603,628 square kilometres, a population of 44.39 million, a defence expenditure of merely $5.23 billion and no nuclear warheads is no match for Russia with a nominal GDP of $1.7 trillion, an area of 17,125,191 square kilometres, a population of 144.4 million, a defence expenditure of $65.1 billion (the fourth highest in the world) and an estimated 6400 nuclear warheads (more than half the world’s total). The US, and NATO, had said, at the onset, that they wouldn’t militarily fight Ukraine’s war. Perhaps, invoking Russia’s initiative at brinkmanship. 

Besides, Russia is not going to be browbeaten by sanctions, having persevered through too many already. It is not only Russia that will be the loser with the economic embargo. Russia has around $640 billion in foreign exchange reserves and is vindicated by rising oil prices. It would be a worry for Europe as well, whether it can survive without Russian energy supplies in the immediate future. 

One major global dimension arising from the Ukraine crisis, is that the Xi-Putin nexus will only get stronger. Both Russia and China see the US as a common opponent. Russia, on the European front, and China, in the Indo-Pacific. This, perhaps, prompted China to abstain from the US-sponsored vote on Russian aggression in Ukraine, at the UN Security Council, twice this month (February). China, in fact, came out in wholesome support of Russia’s stand on NATO expansion in Europe. It avoided joining the West in fulminating the Russian invasion. It has displayed no qualms, at this juncture, of establishing exactly where its priorities and allegiances lie. China owes a lot of its military technology and machinery to Russia. 

Russia-China trade is now worth over $100 billon. Besides, for Russia, China could be the perfect foil to Western sanctions by way of trade and investments. Putin’s recent visit to Beijing saw an agreement being signed between the two neighbours on new Russian oil and gas deals with China worth an estimated $117.5 billion; and China promised to ramp up Russia’s Far East exports. 

A new 30-year contract to supply 10 billion cubic meters (bcm) per year to China from Russia’s Far East was signed. 

Separately, Russian oil giant Rosneft signed a deal with China’s CNPC to supply 100 million tonnes of oil through Kazakhstan over 10 years, effectively extending an existing deal, which is worth an estimated $80 bn. 

Russia sees an alliance with China as a buffer to mitigate any actions taken by the West to harm its economy. In turn, China sees Russia as a forceful ally in the new alleged Cold War with the US. For China, the reality that the West exercised restraint over military intervention in the Ukraine crisis is a veritable signal that it can continue its belligerent ways in the Indo-Pacific, as also for a future attempt at invading Taiwan.  

The invasion of Ukraine is not only a pyrrhic victory for Russia, but also a yardstick for China, about how far the West will go to maintain and retain its sphere of influence in the world.