Sunday

19th Nov 2017

Focus

China ignores EU, offers to help Russia

  • Beijing: Non-aligned states have declined to adopt EU-type sanctions on Russia (Photo: Trey Ratcliff)

China has joined India in helping the Russian economy, but closer to home Belarus and Kazakhstan are hedging their bets on future relations.

Chinese foreign minister Wang Yi said in China Daily, a state mouthpiece, on Monday (22 December): “Russia has the capability and the wisdom to overcome the existing hardship in the economic situation. If the Russian side needs, we will provide necessary assistance within our capacity”.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

China Daily noted that the Russian treasury has “hundreds of billions of [US] dollars” in a foreign reserve fund and is far from collapse.

It added that China is ready to offer loans and investments in infrastructure projects, with a new Russia-China gas pipeline, a deep-water port in Crimea, and railway schemes in Russia’s Far East under discussion.

The Chinese statement comes after India, earlier this month, bought 12 nuclear reactors from Russian firm Rosatom and launched joint production of military helicopters.

Going further back, China and India, as well as Brazil and South Africa, showed solidarity by abstaining in a UN vote on the non-recognition of Russia’s annexation of Crimea.

The actions of the non-aligned powers are a diplomatic defeat for the EU and US, which imposed economic sanctions on Russia over its war on Ukraine.

“There’s always diplomatic outreach to third countries … explaining what we’re doing, the logic. Part of the outreach is to push for a sustainable political solution to the crisis and, in this respect, to adopt measures that would support such a solution”, the EU foreign service's spokeswoman, Maja Kocijancic, told EUobserver on Monday.

The main cause of Russia’s financial problems is the slump in oil prices.

But EU sanctions on banks and energy firms are making matters worse by blocking blacklisted companies from buying debt on international markets.

For his part, former Russian finance minister Alexei Kudrin told press in Moscow also on Monday: “Today, I can say that we have entered or are entering a real, full-fledged economic crisis”.

He spoke after Russia announced the National Bank Trust, one of its largest lenders, needs a half-a-billion-dollar bailout.

Russia also imposed curbs on wheat exports, which have surged due to the low value of the rouble, prompting hikes in Russian bread prices.

The financial crisis is having a strategic impact in Europe.

The rouble crash prompted Russia to cancel the South Stream gas pipeline project.

It also poses questions on the viability of the Eurasian Union: Russia's plan to launch, on 1 January, an EU-type bloc with future joint institutions including Armenia, Belarus, Kazakhstan, and Kyrgyzstan.

Russia’s invasion of Ukraine had already unnerved Belarus and Kazakhstan.

“The Ukraine conflict has broader implications in the region. Countries like Kazakhstan fear, that when the time is right, Russia might also undermine their territorial integrity. So, to be on the safe side, they are trying to build better relations with the West rather than letting themselves be swallowed [in the Eurasian project]”, an EU diplomat said.

The two states have shown disloyalty.

They are profiting from the EU-Russia sanctions by illegally re-exporting EU food products banned by Russia to their giant neighbour.

Belarus leader Alexander Lukashenko this weekend ordered Belarus-Russia trade to be denominated in dollars instead of roubles.

Kazakhstan's Nursultan Nazarabyev, on the eve of a Eurasian Union summit in Moscow on Tuesday, also went to Kiev on Monday and signed an agreement on military-industrial co-operation. He spoke of an "organised civil war" in east Ukraine, alluding to Russian intervention, and of "violations of international law”.

Christmas headache

EU institutions have all-but packed up for the Christmas break.

But the European Commission on Monday noted that the EU, which has extensive trade with Russia despite the Ukraine rift, could, like Belarus, suffer knock-on effects from the rouble problem.

“It remains difficult at this stage to assess the spill-over effect of the Russian economic slowdown to the EU economy”, a spokeswoman, Annika Breidthardt, said.

She noted that the EU sanctions “were calibrated to have both a significant impact on the Russian economy and a limited impact on the EU economy”.

EU foreign ministers are to hold a review of Russia sanctions at their next meeting on 19 January.

Diplomats say it's too early to predict if the rouble crisis will serve doves, who say a Russian economic collapse would it make it more dangerous, or hawks, who say economic pain will stop Russian aggression.

Some states - such as Austria, Hungary, France, and Italy - are saying they want to rebuild Russia ties.

But Germany at last week’s EU summit said sanctions can be rolled back only if Russia gives up conquered territories in Ukraine.

Eurasian what?

Ministers will in January also hold their first debate on future EU-Eurasian Union relations.

Trade ties are to be complicated by the fact Belarus and Kazakhstan are not World Trade Organisation (WTO) members, while Russia is but doesn’t follow WTO rules.

“Some [EU] countries are saying we need to engage with it [the Eurasian Union] because it formally comes into being on 1 January. But others are saying we have to solve the Ukraine crisis first, then decide what to do with this new organisation”, the EU diplomat said.

Interview

'China is not like what you read in the media'

Europe and China need each other as business partners, but they also need to improve their understanding of each other, a Chinese business leader has told this website.

China's 'new era' means balance with EU

Under Xi Jinping's second term as leader, China wants more equality with the US and the EU, while waiting for Europeans to show their global clout.

Supported by

News in Brief

  1. Bonn climate talks extend into Friday evening
  2. UK needs to move on Brexit by early December, Tusk says
  3. Puigdemont extradition decision postponed to December
  4. Ireland wants written UK guarantees to avoid hard border
  5. US did not obstruct climate talks, says German minister
  6. EU signs social declaration
  7. Puigdemont to be heard by Belgian judges
  8. Steep fall in migrants reaching EU

Stakeholders' Highlights

  1. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  2. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure
  3. Nordic Council of MinistersNordic countries prioritise fossil fuel subsidy reform
  4. Mission of China to the EUNew era for China brings new opportunities to all
  5. ACCASmall and Medium Sized Practices Must 'Offer the Whole Package'
  6. UNICEFAhead of the African Union - EU Summit, Survey Highlights Impact of Conflict on Education
  7. Nordic Council of MinistersNordic Council Calls for Closer Co-Operation on Foreign Policy
  8. Swedish EnterprisesTrilogue Negotiations - Striking the Balance Between Transparency and Efficiency
  9. Access EuropeProspects for US-EU Relations Under the Trump Administration - 28 November 2017
  10. World Vision20 November: Exchange of Views at the EP on Children Affected by the Syria Crisis
  11. Nordic Council of MinistersSustainable Growth the Nordic Way: Climate Solutions for a Sustainable Future
  12. EU2017EEHow Data Fuels Estonia's Economy

Latest News

  1. EU keeps former Soviet states at arm's length
  2. EU leaders make pledge on social issues after populist backlash
  3. EU agencies and eastern neighbours This WEEK
  4. Germany slams Dutch call for more ambitious EU climate goal
  5. Mind the gap: inequality in our cities
  6. Climate activists 'disappointed' with EU at climate talks
  7. Davis outlines UK vision on Brexit in Berlin
  8. German coalition talks in near collapse

Stakeholders' Highlights

  1. Mission of China to the EUChina and EU Step Up Water Management Cooperation
  2. CECEMachinery Industry Calls for Joint EU Approach to Develop Digital Construction Sector
  3. Nordic Council of MinistersMale Business Leaders Gather in Copenhagen to Advance Gender Equality
  4. EnelNo ETS Deal Means It Can Still Be Strengthened
  5. EU2017EEEstonia Anticipates More Digital Cooperation With Sweden
  6. Mission of China to the EUChina Launches Campaign to Protect IPR of Foreign Companies
  7. European Jewish CongressEJC Condemns Attacks on Ruta Vanagaite and the Shredding of Her Books in Lithuania
  8. Bio-Based IndustriesDiscover the Future of the Bio-Based Economy. Register Now for the BBI Stakeholder Forum!
  9. European Free AllianceWelcome Catalonia!
  10. UNICEFGrowing Number of Unaccompanied Refugee Children in Greece in Need of Shelter
  11. Counter BalanceNature Destruction Cannot Be Compensated For, Say NGOs
  12. CES - Silicones EuropeSilicones - Enabling the Next Big Leap in Prosthetics and Health