MOSCOW. (Ian Pryde for RIA Novosti)
Russia and China are becoming increasingly integrated into the global economy, and both have stepped up their activity sharply in Africa, Latin America and Asia in recent years, trends that are only likely to accelerate in the future.
But Russia's motives in the developing world are rather different from those of China, which explains the rather different reaction to the two countries both there and in the West.
Hu Jintao's third presidential tour of Africa last week was accompanied by local criticism that China was exploiting the continent in its continuing search for energy and minerals and that Chinese companies operating there only benefit China and only employ ethnic Chinese.
The West, on the other hand, is becoming increasingly concerned about the rising competition for these scarce and finite resources.
President Putin's lightning official visit to the Middle East this week provoked no such fears of exploitation among the locals.
During the Cold War, the Soviet Union was a self-sufficient economy and could find all of the twenty-plus minerals required for a modern industrialized nation on its own territory, giving it a considerable strategic advantage over the United States, which was dependent on access to scarce resources in unstable African countries.
Nowadays, in the global race for energy and raw materials, Russia still has precious little need of imports. Quite the contrary - it is sitting on some of the biggest hydrocarbon reserves in the world and last year overtook Saudi Arabia as the world's largest oil exporter. It is also a major exporter of ferrous and non-ferrous metals, timber, coal and other commodities.
Russia will therefore continue to avoid the charges of exploitation leveled at China during Hu's recent African trip, but it will be rather harder to allay the West's concerns.
Russia is keen to join the World Trade Organization and continue its policy of joining the global economy, but it has few comparative and competitive advantages and therefore has little option but to exploit them as far as possible.
As a result, the main items in Russia's trade with many countries are energy, energy infrastructure and equipment - which means not just oil and gas, but also nuclear power - other commodities, and arms sales.
During his many trips to the developing world since becoming president, Putin has frequently invoked the ideal of cooperation. In January, for instance, he told Indian journalists in televised remarks on the eve of his official visit to India's independence celebrations that Russia had developed a more trusting relationship with India as a result of collaborating on joint projects in the military sphere, rather than just buying and selling.
But Russia is also busy developing ties in other areas as well. Its close and wide-ranging cooperation in the transport sector with virtually all of Eurasia is a good example. Russian Railways, for instance, is one of Russia's largest companies and the monopoly owner of most of the country's rail infrastructure. To fulfill its strategy of making Russia a land bridge between Europe and Asia, Russian Railways cooperates closely with countries as far apart as Germany and Finland, Iran and India, North and South Korea and China.
Putin's visit to the Middle East therefore reflected Russia's increasing efforts to promote its business interests internationally. In what was Russia' biggest-ever delegation to Saudi Arabia, Qatar and Jordan, Putin's entourage included CEOs and other senior executives from most of the country's energy majors, as well as from Russian Railways, which will participate in a tender to build a railway line between Mecca and Medina and other infrastructure projects, probably in conjunction with Italy's railway company and Finmeccanica. Russia's car industry is also interested in cooperation with Jordan.
Picking up the theme of cooperation, Putin also proposed that Russia and Saudi Arabia establish "joint financial structures," adding that under Russian legislation it was also possible to establish banks in Russia with 100% Saudi capital. The Russian delegation included the CEOs of several of Russia's leading financial institutions. As Putin pointed out, with energy the mainstay of the economy in Russia and Saudi Arabia, both countries are in great need of diversification.
To take Putin at his word, Russia sees these ties as purely pragmatic, but he is more concerned about the one-sided nature of Russia's exports.
On February 6, President Putin said at a roundtable with Russian industrialists and businessmen that Russia must process far more of its energy and other natural resources such as coal, timber and ferrous and non-ferrous metals at home and export semi-finished or finished products with much higher value added rather than the much cheaper raw materials.
The experience of many countries shows that this will be easier said than done, but progress is being made. Russia is trying to concentrate increasingly on high-tech areas, including space and satellite technology, and has already launched seven Saudi satellites, with another six scheduled. In Riyadh, Putin also emphasized Russia's Glonass global positioning and navigation system.
Success in these areas will be a welcome and necessary diversification of Russia's economy. But Putin's assertion that Russia had not ruled out the idea of a gas cartel along the lines of OPEC will cause further concern in the West following the gas wars and the closer ties now developing between Russia and various energy exporters such as Algeria, which, like Russia, supplies large amounts of natural gas to Europe.
Russia's self-sufficiency means it is much less at risk from dependence on imported energy and raw materials than China. Indeed, Russia has already benefited hugely from the high oil and commodity prices of recent years. On the other hand, it will remain very exposed to any recession in the developed world or falls in energy prices until it can develop other sectors and diversify its economy
Much of Russia's international business and trade activities are thus problematic for the West, especially the U.S. Besides the alleged use of oil and gas as political weapons, there is unease that Russia is developing close ties based on energy and/or arms with regimes and countries about which Washington has misgivings for one reason or another, such as Iran or Hugo Chavez's Venezuela.
Russia under Putin is determined to continue with its current strategy, not least because it has few options. Judging by Putin's speech criticizing the U.S. and Western defense policy at a security conference in Munich shortly before his trip to the Middle East, and the response of Robert Gates, the U.S. secretary of defense, Russia's activities in Latin America, Africa and Asia can be expected to add to disagreements with Washington in the future.
Ian Pryde is CEO of Eurasia Strategy & Communications, Moscow.
The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.
