International Affairs

What’s Russia’s real power? The power of the purse

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President-elect Donald Trump caused a bit of a controversy when he took a phone call from Taiwan President Tsai Ing-wen. Officials believe it is the first time a president or president-elect has spoken with a leader from Taiwan since 1979. People — especially the media — went crazy thinking the call could harm America’s relations with China.

If you think about it, a few incidents with President Obama have angered China, but it never went past threats or words. That made me think — would China do something to a country it relies heavily on?

{mosads}Probably not. What is the one thing more powerful than an army or a nuclear bomb? The wallet. This applies to China and America’s relationship, along with other relationships around the world.

 

Over at Legal Insurrection, I list a few articles that provide evidence that the Chinese and American marriage has become too complicated and messy for either one to even think about a divorce.

During Obama’s first term, for instance, he endured China’s wrath after he met with the Dalai Lama. A Communist Party official said this meeting “would ‘seriously undermine the political foundation of Sino-U.S. relations’ and would lead to ‘corresponding action’ — a phrase made more ominous by its utter vagueness.”

Zachary Karabell, the author of the article, reminded his readers that China “holds more than $1 trillion in U.S. assets, mainly in U.S. Treasuries.” Experts considered 2009 a bad year when “Chinese exports to the U.S. were approximately $300 billion.” Even in an off year, that money “is a vast source of income for China — one that no other part of the world can provide.” 

The dependency on America kept growing. In 2012, Gordon Chang wrote in Forbes that “175.6% of China’s overall trade surplus last year related to sales to the United States.” This led Chang to conclude that China’s economy had become “even more hooked on selling things to the United States.” 

Bloomberg News reported in 2015 that consumers in America “bought almost $1 out of every $5 worth of goods that China exported in May.” This occurred when China did not ship as many goods to Europe and other countries in Asia, but shipments “to the U.S. climbed 7.8 percent.”

I looked at the United States Census Bureau for more evidence of China’s dependency on the American consumer. Chinese exports outnumber American imports by $257 million between January and September of this year.

But it’s incidents between other countries that led me to this conclusion.

I covered the war between Russia and Ukraine since Euromaidan kicked off in Kiev, Ukraine, in November 2013. Pro-West Ukrainians became angry with Russian-backed President Viktor Yanukovych after he chose to align the country more with Russia instead of accepting an association agreement with the European Union. 

After a few months of protests, which led to 100 deaths from attacks by police and the military on Yanukovych’s orders, parliament ousted Yanukovych on Feb. 22, 2014. This caused a collapse in east Ukraine from pro-Russian Ukrainians and backlash from Russia, which annexed Crimea after a referendum. Reports flew of Russian soldiers and aid in east Ukraine and Russian soldiers on the border of Ukraine.

Of course these actions led to immense criticism from the West. But that is all Ukraine has received. The West promised to back Ukraine, but only gifted the torn nation words and the hashtag #UnitedForUkraine. Why is that? Economic ties.

The West relies on Russian gas. I have lost count how many times German Chancellor Angela Merkel, French President François Hollande and Secretary of State John Kerry have met or spoken with Russian officials. Either way it is the same thing. They all have “concerns” or they send Russia “strongly worded letters.” Russia never felt much punishment for its aggression toward Ukraine.

The EU and America have placed sanctions on Russian officials, but if you look closely, a lot of them barely made a dent. Again, this points to economic ties. If they wanted to punish Russia they would have sanctioned Rosneft and Gazprom, Russia’s largest gas and oil companies, but that would cause too many problems with American and European energy companies. The sanctions list includes Igor Sechin, the president of Rosneft, but the U.S. Treasury told ExxonMobil it can still work with Rosneft since officials only listed individual people in the company. 

But the Malaysia flight MH17 that crashed in east Ukraine in July 2014 remains the meat and potatoes of the American/EU/Russia marriage. Russia immediately blamed Ukraine, while Ukraine claimed the pro-Russian separatists used equipment from Russia to shoot down the plane that killed almost 300 people.

After a two-year investigation, international experts found that the pro-Russians used a Buk 9M38 missile system from Russia to take down the plane. The experts said they have 100 people involved, but did not list them. They also refused “to make any statement about the involvement of Russia, or Russians, in the downing of the plane.” Yet, with evidence of Russian soldiers in east Ukraine and the separatists receiving Russian aid, one could conclude that Russia was somehow involved.

Still, there is silence from the West, even though the dead included citizens from EU and NATO countries.

Europe talks about finding alternatives to Russian energy, but have they? In July, Energy Post reported that Russia remains Europe’s biggest supplier of oil and that the dependency has grown to 30 percent in 2015 — a year after the war in Ukraine started.

“As in the gas sector, Russia is by far the largest suppier [sic] in oil. Russia accounted for one third of EU imports (around €50 bn). The report also assesses what companies instead of countries benefit from the EU’s oil imports. Over 80% of the imported crude oil in 2014 was supplied by non-European companies. Rosneft — the state-owned oil company with close ties to President Putin — is the biggest supplier of oil to Europe.”

The wallet has proven itself over and over the power it has over a country. Time and time again China has shown it will express anger toward America but will never do anything because it needs America’s money. Russia can tick off all the world powers, but those powers will not do anything because Russia has the energy it needs to operate.

 

Chastain is a contributing editor at Legal Insurrection, where she covers international news, with a focus on Ukraine and Russia. Follow her on Twitter @mchastain81


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Tags China Crimea Diplomacy Donald Trump European Union John Kerry Russia Taiwan Ukraine

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