Has Russia reinvented APEC as well as its Asia Pacific posture?

President Obama won’t be there when Russia hosts the twentieth APEC leaders’ summit in Vladivostok this week. But Russian President Vladimir Putin has swallowed the affront graciously.

He has pulled out all the stops to make this year’s APEC summit a blockbuster success for his country — marking a huge Russian push into Asia and the Pacific — and, perhaps, a turning point in how APEC carries the load on regional economic cooperation across the region.



When Russia took over the hosting of APEC this year, few put great store on Russia’s getting this year’s APEC agenda together. The Americans more or less gave up on Russia’s host year, and serious follow-through from their host year in Honolulu. Russia was always the changeling at the door of APEC. Their membership in APEC in 1993 was a second prize from the United States to keep Russia at bay in Europe and out of NATO. One might think it is strange to treat APEC as a bargaining chip in dealings over Europe. Maybe it was, but there are many strange ideas that drive international diplomacy.

Russia was at the edge of Asia and the Pacific, never in it. The Russian Far East was an underpopulated European outpost on the edge of the Russian empire, never a forward platform for Asian engagement.

When the Soviet Union was coming in from the cold in the late 1980s, I edited a book with Pavel Minaker and his colleagues from Khabarovsk and Moscow — that included a preface signed by Eduard Shevardnadze the day he resigned as Soviet Foreign Minister in 1991 — on the prospects for the Far East resource province as Asian industrialisation began to take off. For years, awkward political relations with Japan meant that economic relations with Asia developed in extremely slow motion. But little over two decades later, Russia is in the thick of it, a strategic supplier of oil and gas to the industrial powerhouses of Northeast Asia with Chinese, Korean and Japanese manufactures and investment now going in volume the other way.

How Russian engagement in Asia has changed.

China has now replaced Germany as Russia’s biggest trading partner. Trade with China already amounts to US$90 billion, forecast to reach US$200 billion by the end of this decade. Trade with Japan doubled in the five years to 2010, while that with Korea trebled.

The lead up to APEC has seen Russia pour over US$30 billion into infrastructure around Vladivostok, with its new airport, huge new bridges and new state-of-the-art university. The ambition is to expand the trans-continental rail link across Russia from Asia to Europe, reducing transport costs by billions of dollars and taking the pressure off the Indo-Pacific gateway to Europe. Russian dreams? Possibly, but now with Europe on its knees the links to Asia have a new and urgent priority in Moscow.

After a long time sitting on the sidelines, the Russians have thrown considerable diplomatic firepower into working up a strong APEC agenda, with a focus on food security, getting trade barriers on environmental goods down and expanding visa-free travel by business people within APEC.

More importantly, with the American president on electoral leave, the Russians have quietly transformed the way APEC operates. They have done what any big member of it is able to do, with half an eye for the main chance on the open stage it provides for strategic initiative: they have invited to the party some friends that they want to entertain seriously.

Kirill Muradov explains in this week’s lead that, besides showcasing Vladivostok as a flagship Far East development project, Russia will promote its own integration initiative of a Customs Union with Belarus and Kazakhstan, designed to evolve into a Eurasian Economic Union. The strategic goal is to create a ‘common economic and human space’ with the European Union, stretching from the Atlantic to the Pacific Ocean. The Customs Union is an important building block for this. The TPP deal that the United States re-launched last year in Honolulu looks like a private tea party compared with this Russian grand strategic vision, whatever either finally come to. Russia will also do some other FTA deals (with New Zealand and Vietnam) on the side.

But what is really important about the Eurasian initiative is that Viktor Khristenko, chairman of the Council of the Eurasian Economic Commission (the Customs Union’s governing body), will be invited to APEC ministerial and other meetings within the summit week to explain the vision. This is a perfectly sensible and very strategic move, totally consistent with the spirit of APEC’s open regionalism. And it helpfully opens up the way to doing things rather differently in APEC.

After the Honolulu meeting, some tunnel-visioned diplomats in Washington, Canberra and Tokyo were locking themselves into thinking we’d be making choices between APEC and the East Asia Summit (EAS) as the venue where leaders would in future strut their stuff. As a recent US Congressional Research Service Report observes: ‘The Obama Administration frequently has portrayed APEC as the premier economic and trade organization in the Asia-Pacific region, and views the EAS as the main geopolitical association in the region. This view is not shared by all of the other members of these two associations’.

But the Russians, without anyone noticing, have opened an entirely new play. APEC is being transformed into a platform on which anyone that has got anything to contribute on economic cooperation can be invited to play.

There’s no reason why Indonesia next year, for example, might not invite India to the APEC party to do important regional business. This way of thinking about the APEC process effectively is a potential game-changer for how to weld the APEC and EAS processes together rather than to try to downgrade one or the other regional arrangement.

With Indonesia hosting APEC in 2013 and China in 2014, the US president won’t want to stay away from the party. The precedent that is being set in Vladivostok suggests that he could be returning to a very different kind of party from that which APEC has commonly held over the past several years, fancy dress or not.

Peter Drysdale is Editor of the East Asia Forum.