"How The World Sees Russia" Issue #25: 09/15/2018 From the Publisher: This week’s Rossiya Scan is one where we delve on topics of foreign policy and commerce. Russia is still winning diplomatic battles around the world and finding creative ways to better their economic situation with new Asian partners. We begin this issue by looking at the latest Russian moves in Africa. Russia is solidifying its position in the Central African Republic (CAR), despite the fact that its moves grew immensely obvious after the death of 3 Russian journalists investigating the work of the Wagner Group. The latter is a controversial private military agency with alleged close ties to the Kremlin. However, Russia has now ventured elsewhere in Africa, and is obtaining obvious returns from their efforts. Early this month, Russia announced that it will be a building a logistics base in the horn of Africa, specifically in Eritrea. This is an area that already has the presence of several powerful foreign countries, both militarily and economically. Hence, the fight for influence in this African region is likely to heat up with Russia’s presence. China and Russia have a long history of collaboration, but also complications. With the Russian shift to the east, we look deeper into this relationship, and discuss what makes it work, and what doesn’t. We then move on to a joint Chinese venture by Alibaba, and three Russian entities. This collaboration is likely to create a worthwhile service for Russia, and also have non-market ramifications. The Sino-Russian alliance is likely to be further solidified from a commercial standpoint as a result of this collaboration. Finally, we visit the latest from the Skripal affair, and try to make further sense of this ongoing conflict between the UK and Russia. -Rossiya Scan Russia Consolidates in Africa It’s official. At least in name and intention. Russia will be building a logistics base in Eritrea, which would in turn provide it with access to the Red Sea. No timeline was provided for the project, but it’s another sign that Moscow is spreading its wings in Africa, and has now entered its competitive horn. Neighboring Djibouti for instance already hosts a series of foreign bases, including U.S, Chinese and European. In issue #10, #12 and #20 Rossiya Scan took an in depth look at Russia’s ongoing involvement in Africa. Specifically, the Central African Republic (CAR), a place where they have come to the aid of a battered regime that was abandoned by its former Western allies (France and the U.S). Faustin Archange-Touadera, President of CAR, asked Russia for help to secure the existence of his government, which still only controls 20 percent of the country. Russia delivered, and sent various military professionals plus advisors, which have helped consolidate the Touadera government. Last August, Russia’s quiet approach and successful expansion in the heart of Africa was for the first time all over the news. The death of three journalists working on a documentary about the Wagner Group, a Russian private military contractor, and their work in CAR put a spotlight on the Kremlin’s activities in this part of the world. This spotlight, we speculated, was perhaps likely to make things more difficult for Russia in the region, as it would place it at the center of global attention, and shatter its quiet and efficient expansive approach. Perhaps, it would even lead to an interest in the area again by both the U.S and France. A month into the death of the journalists, and Russia’s presence has apparently been further solidified in the CAR. “In January this year we got word the Russians were training the president’s security forces in Berengo in [the former CAR dictator Jean-Bédel] Bokassa’s old palace there,” said an unnamed international official who has been monitoring Russian activity in the CAR, according The Guardian. “It went from rumors on social media to a sizable Russian presence at an incredible speed” With CAR Russia seems to have found a niche, and a strategy that it is working as far as gaining influence in African states. Much like we mentioned in previous issues, Russia is gaining favor through their resolve to assist African governments with military support. Something that these governments see a safety net to their existence. In exchange, Russia attains rich mineral rights. “[Russia] can’t offer consumer goods like China but what it can offer is arms and occasional debt relief either in exchange for an arms deal or the rights to explore and drill for hydrocarbons or other extractables,” said Paul Stronski, of the Carnegie Endowment for International Peace in an interview with The Guardian. “[Russia] is trying to find a niche where they can be competitive. The niche they really own is arms.” The strategy is being carried out at the highest levels. Senior officials, such as Sergei Lavrov, Russia’s foreign minister, and Valentina Matviyenko, chairwoman of the Russian federation council, have both spearheaded military cooperation deals with many African states. Lavrov, for instance, has had several high-profile visits to various countries. Including, Namibia, Mozambique, Angola, Zimbabwe and Ethiopia. In these trips, Lavrov managed to obtain various agreements for Russia, in the realm of mineral exploration, preferred economic zones and military cooperation. With Eritrea, however, Russia has entered a new area that is deemed strategically important by many other non-African parties. The fight for influence in this part of Africa is thus on, and will likely be harder to obtain than in the central African area of the continent. That being said, Russia seems to have found a way of entering this competitive portion of Africa without much opposition. Of course, Russia’s decision to go through Eritrea, which has been gradually opening up after a decade of isolation, was certainly an approach we are familiar with. Russia is willing to talk to anyone, no matter their record or controversy, in order to obtain what it needs. A flexible approach that is a keystone to their successful realpoltik foreign policy strategy. We will keep a close watch on this outpost, to see if this presence leads to a worthwhile yield for Russia. Read more: "Russia's Scramble for Influence in Africa Catches Western Official's Off-Guard," by Peter Beaumont for The Guardian. "Russia is the Latest World Power Eyeing the Horn of Africa," by Abdi Latif Dahir for Quartz. "Russia's Pivoting to the Horn of Africa Via Eritrea and the UAE," by Andrew Korybko for the Oriental Review. The Sino-Russia Alliance: Can it Last? ​ China and Russia share 4.209 km of borders, a large stretch that inevitably leads to mutual apprehension. The Soviet Union at the height of its power supported both the Guomindang and the Chinese communist party, leading to “the treaty of friendship” in 1949 between the two communist nations. Nonetheless, Mao Zedong felt disregarded and undermined by Joseph Stalin. Following Stalin’s death, and with Nikita Khrushchev’s rise to power, ensuing a “peaceful coexistence” policy towards the West; created a feeling of animosity within China. In 1968, China and Russia were at the brink of war (concentrating 1.5MM troops on the borders, and with Soviet leadership even considering the use of nuclear weapons against its former ally) culminating in a series of Skirmishes in Xinjiang which led to 350 – 700 deaths (mostly Chinese), without any further a due. Today the roles have changed (China is considered to have a better overall position than Russia), and even though the Kremlin’s global foreign policy successes cannot be disregarded, Russia could potentially become the junior partner in all matters of the Sino – Russian alliance. The enemy of my enemy is my friend, says a proverb dating back to 4 th century BC, which reflects on how little human behavior has changed when working towards a common threat. Sino-Russia relations are following this rule to the dot, nonetheless Western sanctions on Russia and their alignment to hinder Chinese economic growth, are helping cement a very daring alliance to counterbalance Western influence. This relationship reaffirms itself, when on the 11 th and 12 th of September Chinese President Xi Jinping participated for the first time in the Eastern Economic Forum of Vladivostok. The two countries have long supported each other at the United Nations. For example, China has never said much on Russia’s takeover of Crimea, and they've both worked closely on the North Korea crisis. China has also not been critical of Russia's role in Syria; and recently it has remained mostly silent with the accusations of Russia in the alleged poisoning in the UK, of former Russian double agent Sergei Skripal. Due to all the sanctions imposed on Russia, and the trade war between China and the U.S., these countries geopolitical, and economic interests are aligning in various aspects. Trade between China and Russia in the first half of the year has soared 50% and is expected to reach $100 billion by the end of 2018. Most importantly, via China, Russia is capable of replacing Western lenders and finding other financial and technological resources to fulfill several Russian energy projects, indirectly helping China strategically secure a steady supply of liquified natural gas (LNG) for the future. In Rossiya Scan, we would like to highlight strategically how China wins, and Russia wins, but a bit less on the long run. Firstly, China is financing one of the most important LNG projects above the Artic circle carried out by Novatek (MCX:NVTK) in Yamal; positioning itself in the Artic for future resource supply, whilst simultaneously buying ports in the region, to benefit from shipping routes. Potentially undermining Russia’s influence, as it increasingly becomes a more competitive hotspot. Secondly, Russia is supplying many high-tech weapons to China. Moscow