Thread by @DimitriASimes

Since the US and the EU are significantly cutting back economic ties with Russia, urgently pivoting to Asia is probably a top economic priority for Moscow right now.

There are definitely big opportunities in pursuing that route, but also a lot of challenges. Thread 🧵

Let's start with some historical context, specifically the initial outbreak of the Ukraine crisis in 2014. Back then the West also imposed sanctions against Russia and Moscow vowed to pivot to Asia. Initially, however, Russia's trade fell with a lot of Asian countries.

For example, Russia's trade turnover with China fell by 27.6% in 2015.

This was largely a byproduct of Russia's overall economic downturn and an adjustment period to Western sanctions. I think it's fair to expect a similar initial downturn in 2022-23.
themoscowtimes.com/2016/01/13/rus…

Another thing is that, Russia can't just flip a switch a redirect all of its exports from Europe to Asia. One of the challenges for Russia is that even in regions bordering China, it lacks sufficient rail infrastructure to expand export volumes by a lot.

To be fair, the Kremlin is trying to fix that problem. It has built two new bridges on the Russian-Chinese border and allocated $10 billion last year to modernize the Trans-Siberian railway. But it will take some time to fully complete these projects and begin receiving dividends

Another issue is that US opposition will probably reduce Russia's list of potential partners in the region. Already, Japan, South Korea, Taiwan, and Singapore have joined the West in imposing new sanctions against Russia.

Even if other countries don't join, they may think twice about launching joint projects with Russia due to fears getting hit by Western sanctions. We already see this in the arms sales: In December, Indonesia backed away from plans to purchase Russian Su-35 fighters.

Russia's most reliable partners in the Asia-Pacific are probably India and China, which also the two most powerful countries in the region.

But expanding economic cooperation with both will take hard work.

As I wrote last year, Russia's economic cooperation with India significantly lags behind its political and military partnership with New Delhi.

India has expressed growing interest in the Russian Far East in recent years, so that's something to watch.

asia.nikkei.com/Politics/Inter…

Although trade with China has grown in recent years, Russia has been disappointed with level of Chinese investments. Particularly in the resource rich Russian Far East, which is literally on China's doorstep.

I wrote about this for @SCMP last summer. scmp.com/week-asia/poli…

Two main obstacles: 1) Getting natural resources from Russian Far East is actually more expensive option for China due to region's rough terrain + underdeveloped transport infrastructure, 2) Russia is not willing to make the sort of concessions a lot of developing countries are

The other thing is that breaking into the Chinese market is not all that easy for medium sized businesses due to demands for large supplies. Russian food suppliers have already run into this challenge. asia.nikkei.com/Politics/Inter…

Now this is not to say that any of these problems are insurmountable. I don't think they are.

But if Russia really wants to Pivot to Asia post-Ukraine, it will have to be far more proactive than it has been thus far. It will also probably have to make some difficult concessions.

These are just some initial thoughts. I will be definitely exploring this issue in future articles and will be offering more specific thoughts about what comes next for Russia. If that sounds interesting, follow me to stay updated.

End of thread.