Wednesday, October 22, 2014

Russia and the Silk Road Approach

MADRID – The unraveling of Ukraine has brought to the fore three major foreign policy challenges for the West: the danger of isolating Russia, the conundrum of China’s aloofness, and the pervasive lack of fresh ideas. Surmounting them will require a concerted drive to enhance cooperation and build trust among countries with disparate political systems and national interests. Chinese President Xi Jinping’s Silk Road economic belt could contribute to such an effort.

Europe and the United States’ response to the crisis in Ukraine has failed in two respects. First and foremost, it has been anemic, projecting an image of weakness that undermines its ability to reverse Russia’s annexation of Crimea, which has been tacitly accepted, or counter its aggressive behavior toward eastern Ukraine. At the same time, the use of targeted sanctions and diplomatic snubs has contributed to Russia’s international isolation, undercutting the long-term goal of building a functional relationship.

While it is critical for the West to stand by its principles, including by imposing biting sanctions, pragmatism is equally important. After all, a weak, isolated Russia is far more dangerous than a strong, internationally integrated one. And yet there can be no denying that the relationship with Russia is now broken, with mutual trust having reached its lowest point since the collapse of the Soviet Union.

In this context, bringing Russia back into the international fold will require the involvement of China. But, for China, the Ukraine issue is complex, owing to its interest in fostering closer ties with Russia and, to some degree, the parallels with its own actions in places like Tibet. Given this – and China’s general reticence to assume a global leadership position – direct Chinese engagement is likely to come only through targeted initiatives with concrete goals.

That is precisely what the Silk Road economic belt offers, as I had the opportunity to witness during a recent trip to Beijing. The initiative, launched last September, aims to improve the linkages between the Asian and European markets, with concrete benefits for all 18 Central Asian and European countries along the route, including Russia.

The project – which aims to foster shared prosperity through people-to-people exchanges, improved trade flows, and increased currency circulation – is precisely what the world needs if it is to avoid a return to the Cold War divide or the Balkanization of Eastern Europe. After all, the best way to generate cooperation and trust is to ensure that it offers clear benefits to all parties involved.

Though Chinese officials have spoken broadly of enhancing exchanges of people, easing restrictions on the use of foreign currency, and reducing trade barriers, reviving and modernizing the ancient Silk Road also requires functioning infrastructure focused on interoperability and multimodal connectivity. Consolidating a strong transport network of road, inner waterways, air, and sea would produce a cascading effect while offering significant – and immediate – economic gains by helping to optimize supply chains. Rail is critical to this effort, as it can ease stress on overextended and uncertain sea-lanes and provide faster connections, with fewer environmental repercussions. Today, freight transport from China to Europe via rail takes less than half as long as shipping.

There is a danger, however, that China will pursue a bilateral approach, using the project to serve narrow foreign-policy interests. Though China may have the means to finance the large-scale infrastructure projects that the initiative demands, such a fragmented strategy would inhibit integration, while reinforcing the view that a rising China poses a threat to the international order. China’s leaders should recognize that, if the Silk Road economic belt is to reach its potential, it must be based on a broader vision that includes diversity of financing, multiplicity of ownership, and effective organization involving a range of actors.

The World Bank has recently endorsed just such a broad-based approach through its Global Infrastructure Facility, which will connect multilateral, regional, and national public actors, as well as the private sector, in financing infrastructure development. The G-20, the de facto international agenda-setter, has already expressed support for the project.

Applying this comprehensive model to the Silk Road project – particularly by incorporating Europe, China, Russia, and multilateral institutions – would reinforce existing initiatives. For example, it would strengthen the Central Asia Regional Economic Cooperation Program’s transport and trade facilitation strategy, which operates under the auspices of the Asian Development Bank with contributions from the European Bank of Reconstruction and Development.

But, beyond joint financing, effective coordination is crucial to such a project’s success. This is where Europe’s experience in compromise and harmonization is essential. To improve its fragmented transport system, the European Union designed a core corridors approach – corresponding to major trans-national traffic flows and addressing missing links and blockages – to form the basis for integration, interoperability, and coordinated infrastructure development and management. In doing so, it serves as a catalyst for dialogue among disparate stakeholders. The European Rail Traffic Management System, which has overcome divergent safety and security standards among member states to create a unified system, is but one of the many successes that this innovative strategy has facilitated.

Europe has demonstrated that a sense of common ownership, combined with concrete solutions, can encourage productive dialogue, opening the door to mutually beneficial cooperation. The Silk Road offers more than economic opportunity; it serves participants’ long-term security interests. At a time when so many connections have been broken, this is an opportunity that Europe cannot afford to pass up.

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  1. CommentedShoshon Tama-Sweet

    Ms. Palacio's grasping effort to link a long-standing major infrastructure project to current political concerns falls short on several fronts, including her vapid suggestion that the current European response is both too tepid and yet too antagonizing to Russia the same time. What she proposes is no solution to either critique.
    1. Greater economic integration does not necessarily lead to good behavior. In fact, Russia under Putin has used its economic influence to cripple Ukraine and undermine a unified or concerted effort from Europe, which is dependent on both gas supplies and an export market in Russia. The proposed rail linkages would give Russia increasing leverage over European exports to China as well. 2. By increasing Russian economic ties with China, it undermines the effectiveness of European sanctions against Russia; which is precisely why Russia hurried to sign a bi-lateral gas deal with China immediately after the Crimea crisis. In other words, the new plan again frees Russia to engage in bad behavior, released from global or western economic consequences. Even worse, by removing economic sanctions it leaves even fewer tools address Russian violence, except though military options, greatly increasing the likelihood that when the necessary response to aggression occurs, Western policy makers will have even fewer credible options.
    Lastly, it is unseemly for Ms Palacio to use the current crisis as platform to pump up an entirely unconnected economic scheme. If

    If her function is to propose dubious infrastructure schemes, she should have the common decency to refrain from presenting it as a solution to Russian military aggression in Europe. There will need to be a more credible response to the use of state violence in Europe than new bank fees for building railroads. The innocent dead deserve more than this hollow proposal.

  2. Commentedj. von Hettlingen

    Ms Palacio, it is true that Russia will suffer for the "unraveling of Ukraine". Western sanctions may force Russia to look east - to China. While Americans and their allies are determined to penalise Russia, the Germans are wary of antagonising Putin. No doubt they would try to bring "Russia back into the international fold", knowing an isolated Putin would pose a greater danger to Europe. Ms Palacio believes this "will require the involvement of China", if it includes Russia in President Xi Jinping's "Silk Road economic belt". It involves the construction of a railway track from Duisburg, Germany to the Chinese city of Chongqing. Xi rallied support for his project during his visit in Germany last March.
    Since mid 1990s, China has been behind a project - "The Great Silk Road", set to become one of the largest of the twenty-first century. The ancient Silk Road, immortalised by Marco Polo in the 14th century was the main trade route between Europe and China. It was rarely used since sea routes made the camel trains redundant.
    It makes sense to "improve the linkages between the Asian and European markets, with concrete benefits for all 18 Central Asian and European countries along the route, including Russia". The Central Asian "Stans" are home to the largest untapped energy reserves on the planet. India, Pakistan and Russia are said to be as enthused about the Silk Trade Route's revival as China itself.
    What I find a pity is that this project excludes Tajikistan and Kyrgyzstan - the two poorest countries of the former Soviet Union. Both China and Russia are keen to have stability in the region. Hence they have to tackle the problems there. About 90% of heroin in Europe comes from Afghanistan, and much of it is smuggled via Central Asia to Russia and the West. China is facing drug problems itself. An example shows that Tajikistan is on its way to become a failed "narco-state". Some 500 kg of captured heroin is worth nearly as much as its entire government budget. It fought a violent civil war between government forces and a coalition of rebels and Islamic militants resulting to approximately 200.000 deaths.
    Central Asia is larger than Western Europe and this beautifully bizarre region is the most obscure part of the world. As outsiders know little about the region, they care little about the problems there. Yet the woes matter both to China and Russia. It was a remote corner of the Soviet Union before it collapsed in 1991. The main consequence of the end of the Soviet Union was economic collapse in the region. Most elderly long for a return to the financial security of Communism, while many young Muslims become radicalised.
    Afflicted by poverty, corruption and despotic regimes, it is a hotspot. High unemployment and government repression are the norm, which makes the region a breeding ground for Islamic extremism. The militants support al-Qaeda and will one day launch devastating attacks on the outside world. Russian and Chinese repression of Muslims and American support for authoritarian regimes in Central Asia are further fuelling anger and hatred, driving more young men into the arms of these groups.
    Indeed those involved in the "Silk Road economic belt" should not forget the grievances in these countries, which could one day come back to haunt us.