The Geopolitical Implications of the Recent China-Russia Gas Agreement
…by William Engdahl
Washington’s escalating military pressure against both Russia and China is bringing both Eurasian giants into close economic and even military cooperation. The latest indication of this is the signing in recent days of a mammoth natural gas agreement between Beijing and Moscow valued at $400 billion over the next 30-years. The agreement, signed after almost two decades of stalled negotiations, has major geopolitical implications.
The historic accord between Russia’s state-owned Gazprom and China’s state-owned CNPC (China National Petroleum Corporation) is the largest single trade deal in world history. It was signed in the presence of Russia’s President Putin at the end of a major two-day of strategic talks with China’s President Xi Jinping. It calls for delivery of 38 billion cubic meters of Russian natural gas to China. By comparison, Gazprom’s sales to Europe rose by 15% last year to 174.3 billion cubic meters.
Since 2000 the natural gas demand in China for its growing industrial base has expanded by more than 600% with no end in sight. Now with a long-term infrastructure link with Russia, the two economies are likely to come closer than ever before.
Russia will invest some $70 billion in pipeline and related infrastructure to bring the East Siberian gas to China’s border where China will invest another $22 billion to bring the gas to its final destination in China’s industrial cities. Gas is set to flow as early as 2018. Russia will also double its oil exports to China to 1 million barrels a day. The deal is a landmark in tying the economies of the two Eurasian powers closer together.
It also marks a major setback for the Washington geopolitical strategy of
dividing the powers of the Eurasian continent to prevent a powerful rival to what Zbigniew Brzezinski calls America’s unchallenged hegemony. According to Bilderberg watcher Daniel Estulin, the geopolitical significance of the major Russian-China deal figures prominently on the agenda of the Bilderberg Atlantic elites’ closed-door meeting in Copenhagen these very days.
When Vladimir Putin took office as President a second time he announced that creating of an Eurasian Common Economic space would be his top priority. Russia and Kazakhstan, Belarus and more recently Armenia have agreed to formally initiate an Eurasian Economic Union by 2015. Indeed, the decision by the Viktor Yanukovic government in Ukraine last year to join Russia’s Eurasian union triggered the protests that enabled Washington to launch its illegal coup d’etat and install a puppet regime in Kiev hostile to cooperation with Russia.
Putin ‘Pivots’ to Asia too
The gas and oil deals are only one part of what is becoming a multi-faceted strategic partnership, if you will, Putin’s reply to Obama’s US military “Asia Pivot.” China’s President Xi has made construction of a “New Economic Silk Road” a strategic priority for China. It includes construction of new high-speed railway lines across the terrain of the historic silk route of Central Asia and runs through Russia on to European ports at Hamburg, Bremen and elsewhere.
In a recent trip to China I witnessed directly the importance the Chinese government places on the silk road infrastructure project to economically link all Eurasia and build new markets for trade ties. Daily, Chinese state media featured detailed historic and actual reports about the significance of the silk road. Ordinary Chinese spoke of the project proudly, with optimism for what would come. If the Silk Road infrastructure links also to Turkey, it would draw that vital state into the emerging Eurasian economic space.
Turkey today could become a vital economic crossroads between Central Asia, the Middle East and Europe if Erdogan is able to reign in the CIA-backed Fetullah Gülen influence inside Turkish politics and open Turkey to China and Russia, something which is looking more likely at this juncture since Erdogan’s recent election victories.
Putin and Xi agreed also during a two-day meeting in Shanghai, to a joint Russian-Chinese venture to produce commercial aircraft and heavy-duty helicopters, as well as joint development in petrochemicals, which indicate the elevation of Beijing-Moscow ties to a higher level and, more significantly, signify Russia’s “pivot to Asia.”
The Russia-China cooperation not only involves closer economic ties. Significantly, it also involves closer military cooperation. During Putin’s Shanghai visit, Putin and Xi both observed Joint Sea-2014 China-Russia naval drills in the East China Sea, and both sides announced that armed forces of the two countries will carry out more cooperation. The geography is similar in major respects to the days of Stalin and Mao, but today, given China’s enormous economic development since 1979, the terms are clearly far different. Each side has essential elements to bring to closer cooperation.
Putin’s Asian diplomacy
Putin’s new Asian pivot involves not only China. It also envisions potentially significant economic deals with both Japan and both Koreas that could considerably lessen Washington’s recent efforts to create deliberate tensions and frictions between China and both Japan and South Korea. Putin’s Russia has recently quietly settled outstanding debt disputes with North Korea (DPRK), forgiving some $10 billion of debts and giving very generous terms for a remaining $1 billion.
Moscow’s Gazprom and the DPRK’s Ministry of Energy have now reached an understanding to build a natural gas pipeline that would enter North Korea from Russia at the Khasan crossing of the Tumen River on the Russia-North Korea. The pipeline would then extend through the DPRK to the Republic of Korea (Korean Gas Co). Then, in what is shaping up to be a new case of Russian “gas diplomacy,” the pipeline would supply gas both to the Democratic Peoples’ Republic of Korea and the Republic of Korea.
The project has been discussed for more than a decade, but the new element is the recent decisive role of Moscow to actively push it, clearly also part of Putin’s “peaceful Asia Pivot.” And in September, Putin will go to Japan where the Abe government has been engaged in US-encouraged provocations with China over a group of uninhabited islands, which China calls the Diaoyu Islands in the South China Sea, believed to hold vast energy reserves.
More importantly, a related project of Russia includes building a modern train line from South Korea through North Korea into Russia where it would connect to the Trans-Siberian Railway. It would allow high-speed rail connections directly from South Korea to the markets of Europe for the first time, leaving the US Navy control of the high seas less threatening.
The brazen Washington coup and savage destabilization of Ukraine and Russia-Ukraine relations since last November has clearly accelerated closer ties between Russia and Russia’s eastern neighbors, above all, to China. President Obama may soon regret listening to his CIA and State Department warhawks, or to his NSC head and “Crusader-in-Chief,” Susan Rice, who seems to exercise an uncanny and clearly unhealthy influence over the President.
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