Power And Dollar

Where Are The Teeth Of Russia-China Agreement?

How to assess the impact of the Russia-China anti global missle defense agreement?  This anti global missle defense agreement produces no action.  The key will be India.  How can US protect its interests? 


Both Russia and China do more business with the West (United States) than with each other.  This anti global missle defense agreement is a symbol.  However, China is the first overseas trip for the new Russian President.  This is also a symbol.  But this symbol is carried with action: the first visit.


Heads of states visit overseas after inauguration, no different than you meeting your peer managers after your promotion or you meeting your neighbours after your move.  The thing to watch is the order of the visits.  The first one is China means China is now the important country to Russia.  


Other than action, the next thing to check is: are there incentives to substantiate the agreement?  Or there disincentives to substantiate the agreement?  Given US is the biggest trading partner of China and Russia takes up only 12% of that US-China trade, any action will come with only political will without popular support.  Therefore, it will be a long process for the two countries to build up the substance.  Russia-China trade is focused on very few items: Russia exports heavy industrial products, especially with technology transfer; and natural resources.  China exports everything it manufactures, no different than what it does to US or Mozambique.


Following that, are China and Russia looking for more friends to join this “multi polar” tent?  If so, then they acknowledge that they alone cannot accomplish that goal at this time and they need help to dilute the US influence.  China is taking that move already. 


India is an observer in Shanghai Cooperation Organization (founded in 1996) while China is an observer in South Asian Association of Regional Cooperation (founded in 1985).  China is now considering having India as a full member so that India can participate in regional security matters.  Similarly, China wants to be a full member of SAARC. 


Where is the vested interest?

Both countries want to have more access to oil, be it from Iran or Sudan.  And they both see the United States as manipulating word oil supply.  


India sees China’s involvement in Central Asia as building up a thick and heavy pressure on India’s north.  If India becomes a full member, India will feel more secure and melts more ice.  India wants to focus on domestic economic issues and sees border issues against China and Tibetans’ movements as a liability.  


India also sees US support to Pakistan as a check on India.  Therefore, any US counter offer is met with skeptism.


Same for China.  China wants to be a member of SAARC so that it can get involved in the regional security issues.  This can be interpreted as a hedge against the instability of Pakistan.  However, by being more friendly with India, China will have it back secured from US containment.  Oil supply route will pass through a long series of friendly countries without fear of interruption.  Its ports at Pakistan and Myanmar will have no questionable threat agents in between.  For India, it can support anti global missle defense to the extent it does not affect its economic development.


China-India trade has been increasing by 50% annually.  There is enough domestic support to strengthen a political tie based on economic ties.  Therefore, this is a much easier route to strengthen the common interests than through Russia.  


For Russia, by being an important partner in Shanghai Cooperation Organization, Russia’s eastern front is a lot more secure that is west, when NATO refuses Russia to join.  And if India becomes a member, Russia will not have to worry about US building its base from Persian Gulf eastward.   


Therefore, the next thing to watch is: Will India want to play along? 


What can US do to protect its interests?


London has been getting a lot of foreign companies’ listing business in their London Stock Exchange.  By having a lot of investors owning the shares of the biggest Indian companies, English now have influence on the boards of the more influential institutions in India.  If US wants to be heard in India or China beyond its inter-governmental relationships, then one peaceful means to use the its superior financial environment to attract more companies to list their stocks in NYSE.  Most of the retail investors do not vote.  Board seats are held by institution investors, each usually with only a few percent points.  US has been the melting pot.  Melt them into US economy so that their companies see that their interest is the interest of the US.  


May 23, 2008 - Posted by | China, Current Events, India, opinion, politics, Thoughts, wordpress-political-blogs


  1. […] unknown wrote an interesting post today onHere’s a quick excerptHow to assess the impact of such an agreement? This agreement produces no action. The key will be India. How can US protect its interests? Both Russia and China do more business with the West (United States) than with each other. … […]

    Pingback by Where Are The Teeth? | Dental Care Issues - Toothpaste, Toothbrush, Dental Floss | May 23, 2008 | Reply

  2. Quite a thorough piece. Indeed informative.

    Comment by HemRaj Singh | May 23, 2008 | Reply

  3. I think the missile shield dust up is a bit silly. It is clearly aimed at Russia and to a much lesser extent the countries of Pakistan and Iran. I personally think it is more an economic and political play than a military one. On the military side the Russians are the only ones responding in a hostile military kind of way. The two funniest parts of this “controversy” are these. The Russians have made statements that they would host the same type of base the US wants to build in Czech or Poland. Number 2,everyone is getting worked up over a “deal” that probably will go south after the next election or will take years to be completed.
    On the points you make about India I’d just say the USA and India could have a much better relationship that if fostered by the USA properly would trump anything Russia and China could bring to the table.

    Comment by Alfie | May 23, 2008 | Reply

  4. IBD ed that makes some good points.HERE

    Comment by Alfie | May 25, 2008 | Reply

  5. Somehow i missed the point. Probably lost in translation 🙂 Anyway … nice blog to visit.

    cheers, Hospitalet

    Comment by Hospitalet | June 21, 2008 | Reply

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