"How The World Sees Russia" Issue #27: 09/29/2018 From the Publisher: This week we delve deeper into topics previously analyzed by Rossiya Scan. Several of these subjects have advanced in the past weeks, and closer inspection is required. We begin this issue by further deciphering the South China Sea conflict. In two past issues, we highlighted Russia’s successful overtures with 3 of the 6 countries involved in this sea-based quarrel. We also forecasted how Russia’s advances towards the remaining 3 countries could go. Signaling how Taiwan was likely to be the most difficult of the three remaining claimants. Taipei is one of Washington D. C’s strongest allies in Asia. However, U.S president Donald Trump’s recent alleged comments, which question the importance of protecting Taiwan from a Chinese military invasion, have planted the seeds for a potential rift. We then move on to the Vostok-18 War Games. These drills were the largest that Russia has carried out since the Cold War. Hence, speculation regarding their true purpose was a popular topic of conversation. Here we talk about a few them, but also about a less discussed one. Specifically, China’s role, and why Russia could have also used the games to re-assert their military prowess on their powerful eastern neighbor. We also visit the latest on the Iran deal, and how the EU, Russia and China are cooperating with one another to salvage it. The EU and Russia are among the creators of a new payment system that tries to circumvent U.S sanctions. However, the efficacy of such a channel remains questionable, and we analyze why. Finally, the Russian economy remains frail. However, the recent spike on the price of oil has given Moscow reasons to be upbeat. Despite sanctions, Wall Street is growing interested on the potential upside of Russian investments. Still, the threat of sanctions remains, and is likely to cause concern for investors. -Rossiya Scan Can Russia Become an Ally of Taiwan? In issues #18 and #21 we discussed Russia’s ongoing work towards becoming an influential player in the South China Sea conflict. Their strategy of aligning themselves individually with conflicting parties, and their attempt to become a "go-between" seems to be yielding positive results in this global hotspot. Russia has developed, or is consolidating, their ongoing relationships with China, Vietnam and the Philippines. These are 3 of the 6 nations with claims on the South China Sea. The latter area is wanted because of potential reserves of oil and gas. Plus, due to the strategic commercial importance of this busy waterway. The remaining parties in the conflict are Brunei, Malaysia and Taiwan. In Issue #18 we stated that Russia was likely to start by making overtures to Brunei and Malaysia, because Taiwan is a an important U.S ally. In fact, the U.S. is the key defense buffer for between Taipei and Beijing. Also, because China would disapprove immensely if Russia courted an island that they claim, and see as a renegade province. Could Russia develop a strong enough rapport with Taiwan despite its relationship the U.S? A relationship, that has essentially guaranteed its existence since Chiang Kai-Shek evacuated his forces to the island in late 1949? Although difficult, U.S President Donald Trump’s erratic foreign policy might facilitate this previously unlikely scenario. Questions about the dependability of the U.S coming to Taiwan’s defense should China attack have become more prevalent. “What do we get out of protecting Taiwan?” Trump is alleged to have asked his national security advisors, according to legendary Watergate reporter Bob Woodward in his book, “Fear: Trump in The Whitehouse.” Such a climate of uncertainty has led Taiwan to up its defense spending and development of domestic military technology. Taiwanese President Tsai Ing-wen has increased military drills and proposed to raise the 2019 defense budget to $11.3 billion. The Taiwanese government has also commissioned 66 advanced trainer aircraft from a homegrown government-backed defense company, as well as its first indigenous diesel-electric submarine. The latter is expected to be finished by 2024, and came about after a decade of wasted talks with the U.S. “We’re aiming to be as self-sufficient as we can in our defense capability,” said Anson Liao, chairman of Aerospace Industrial Development Corporation, the Taiwan defense-company given the trainer aircraft contract, according to Bloomberg. “Self-reliance shows we’re determined to defend ourselves.” Lack of U.S interest has caused it to lose allies before. As stated in previous issues, the U.S decision to leave the heart of Africa, and even start trade spats with small African countries like Rwanda, has led Russia to establish a stronger presence in the area. Decisions to not readily provide allies with desired military technology has also caused friction, plus potential openings for Russia to step in. As is the case of the Philippines, a U.S. ally, that is drifting apart from it. Partly, because the U.S has not facilitated them with defense purchases that they need for the South China Sea conflict. The latter includes submarines, which Manila has been having open talks with Moscow for a while now. Could a rift actually happen with Taiwan? So far it remains difficult. The U.S still providing substantial military aid to Taiwan, and maintains a strong commercial relationship with the island. The U.S is also in the midst of a trade-war with China, and benefits from having the Taiwan bargaining chip on the table. However, we are beginning to see a crack, that will grow if ignored. It should be noted that Taiwan and Russian trade has been growing consistently over time. Such a commercial relationship is making both more comfortable with one another, and by default strengthening their relationship. “The total volume of bilateral trade has grown steadily or maintained its level over the years,” said Anton Tang, a researcher on Taiwan-Russia relations, in article for the Taipei-based CommonWealth magazine. “This indicates that bilateral relations and trade between Taiwan and Russia have been deepening with time.” Also, let us not forget, that China and Russia are still concerned over the individual ambitions of each despite their positive relationship. By developing a good relationship with Taiwan, Russia could have a better bargaining chip with China. Taiwan, a for the most past un-recognized nation, has developed a highly pragmatic approach to foreign policy. It could easily see the benefits of having Russia as a "go-between" with China for specific matters, if the U.S fails to meet its concerns as an ally. Read more: "Stuck Between Trump and China, Taiwan Bets on Homegrown Defense," by John Follain, Adela Lin, and Samson Ellis for Bloomberg. "Chinese Anger Grows as U.S Agrees Fresh Arms Sale to Taiwan," by David Reid for CNBC. "Are Taiwan-Russia Relations Possible? How?" by Anton Tang for CommonWealth. Bears & Dragons: War Games and Ulterior Motives Today, only a handful of nations have experience in modern warfare. Russia has fought in Chechenia, Georgia, Ukraine and Syria; obtaining valuable military experience that most countries do not have. Knowledge that has been showcased in the recent Russian Vostok-18 war games. The largest military drills since the Cold War era, that included 300,000 Russian troops (out of 1 million strong military), 1,000 aircraft, 36,000 tanks, 80 warships, as well as additional sources from other participating nations. The Vostok-18 war games had several intentions. These included military posturing, the display of weapons that Russia has to offer (e.g. Vietnam recently placed an order of Russian Weapons worth over $1 billion), the testing of new weapons and even the dispatching military equipment to pro-Russia militias fighting in the Ukraine (e.g. war games allow Moscow to move weaponry without much attention). However, considering the participation of nations like China and Mongolia, one message was also, “we are ready”. This was not only a warning to the West that Russia is building strong bridges with the East, but also a message to China, who is persistently expanding its military prowess. As we highlighted in issue #25, Russia and China haven’t always been friends and do share an extensive border. The military exercises happened to be performed in the east of Russia (bordering China). An area that could be seen as just the place for a potential conflict with Beijing. Hence, the games were also a cautionary message to their neighbors, who were tactfully invited to the party. Why would Russia incur such a high cost given its precarious economic situation to perpetrate such a display of force? Why would they invite their inexperienced neighbor to learn and observe from Russian military tactics? China has not engaged in combat since the Vietnam war in the 1970’s. Despite its resourceful army, China has no combat experience. An obvious advantage for Russia. Given the current state of affairs, it would make more sense for these drills to be carried out in the Western part of Russia. Sending a robust message to NATO, but no. Different sources highlight, that certain areas during the Vostok-18 games were restricted to the Chinese army, and that Russia was simultaneously rehearsing for a potential conflict with their neighboring guests of honor. In Rossiya Scan, we consistently highlight how Russia is always a step ahead of its peers. In this situation, they are being careful. They are taking their ill-experienced neighbor “hunting” and making sure it realizes who is the veteran. Read more: “Russia Rolls Out Advanced Weapons During Vostok 2018 Military Drills with China,” by Liu Zhen for the South China Morning Post. “Analysts: Russia's Vostok '18 Troop Numbers, 'China Alliance' Claims Questionable,” by Danila Garperovich for VOA news. “300,000 Troops, 1,000 Aircraft