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Russia and Southeast Asia: a new relationship.

Introduction: The Immediate Post-Soviet Period

ASEAN leaders conceived of a post-Cold War regional order that would engage an emerging China while preventing Sino-Japanese conflict and locking in the United States. In this security structure Russia appeared as an obvious balancer and necessary component of a great power regional equilibrium which ASEAN intended to foster. To ASEAN leaders at that time, post--Soviet Russia appeared as an appealing candidate for such a role. It had denounced its previous expansionist ambitions and could, it was assumed, contribute significantly to regional stability. Under Gorbachev the Soviet Union had promoted multilateralism within the Asia-Pacific region and had supported ASEAN efforts to construct a common security framework for Southeast Asia. It had participated in the termination of the Cambodia conflict over 1990-91, which justified its inclusion in ASEAN discussions on regional security (Sumsky 1999, p. 416). ASEAN invited Russian Foreign Minister Andrei Kozyrev as a guest to its Annual Ministerial Meeting (AMM) in Manila in July 1992 in the expectation that Russia would continue with Gorbachev's policy.

Kozyrev had risen from the international organization department of the Soviet Foreign Ministry and had spent time in the United Nations. As Russia's Foreign Minister he was renowned for his pro-Western orientation in foreign policy and was unfamiliar with Asian issues and ill at ease in Asia. His pro-Western orientation and lack of interest in Asia stimulated considerable tension within his own ministry with diplomats who recognized the importance of the Asia-Pacific region and who had formulated Gorbachev's multilateral policies. Kozyrev's speech at the meeting was an expression of good intentions: he stressed that Russia would maintain a constructive presence in the Asia-Pacific region and would conduct a comprehensive dialogue with ASEAN. Kozyrev called for regular ASEAN-Russia meetings, and proposed a series of confidence building measures (CBMs) to strengthen regional security including multilateral dialogue and crisis management, limitations on the scale of naval exercises, a programme of exchanges between militaries, and so on. Kozyrev also mentioned that Russia was prepared to cooperate with the ASEAN countries in the development of military technology to maintain security at reasonable sufficiency. (1) Kozyrev simply reached for a package of proposals that had been formulated by the Soviet Foreign Ministry, when Soviet military and naval power merited their consideration. Their presentation in the Manila ASEAN AMM after the Soviet collapse confirmed the disorientation that had gripped the Russian foreign policy establishment and the difficulty it faced in devising an Asia policy appropriate for post--Soviet Russia. While the Yeltsin leadership was disinterested in the region, Russia remained peripheral to the region.

Within ASEAN, however, the extent of Russia's post-Soviet economic collapse and political disorientation was not understood at that time and its subsequent inability to meet expectations gave rise to considerable disappointment. ASEAN's efforts to forge a post--Cold War regional security structure culminated in the establishment of the ASEAN Regional Forum (ARF) in 1993, which included Russia as one of the 18 founding members. Nonetheless, Russia's leadership had devised a pro-Western policy and for President Yeltsin the major priority was maintaining American support and Western recognition of Russia's great power status in the face of the humiliations of the Soviet collapse. Russian Foreign Ministry representatives repeatedly declared their interest in regional affairs and they participated regularly in regional forums, but they had difficulty giving those declarations any substance while Yeltsin's pro-Western leadership looked elsewhere. Their asseverations of interest in East Asian regional affairs sounded hollow, a matter of institutionalized habit that had been formed in the Soviet years. Without direction from the top they continued to announce proposals that related to a Soviet past, and could never overcome the perceived discrepancy between Russia's intentions and current capabilities.

Russia's Disconnection from Southeast Asia

Russian commentators lamented Russia's loss of interest in Asian affairs in an outpouring of grief that was accompanied by vigorous criticism of Kozyrev's foreign policy. Viktor Zabrilov thought that Russia had dropped to the level of Australia, Taiwan, or South Korea as a result of the Soviet collapse and the incompetence of the Foreign Ministry (Zabrilov 1994). Sergei Agafonov saw Russia as an "outsider" in Asia, and criticized the leadership for having no concept of foreign policy for Asia, and for issuing declarations that had no relationship with reality (Agafonov 1994). Valerii Denisov claimed that Russia was excluded from the Asia-Pacific region by the Americans, who had insisted that there was no place for Russia in regional economic integration. He argued that the United States could not regard Russia as an equal partner and had prevailed upon Asian countries to ensure Russia's exclusion from the Asia-Pacific Economic Cooperation (APEC) (Denisov 1994). Commentators varied in terms of their prescriptions as well: some argued that Russia should cultivate Asian great powers while others stressed ASEAN and regional institutions. Sergei Vostrikov wrote that Russia was at one of its most difficult stages in its history and that its first priority in Asia should be China, which was expected to emerge as a superpower in the next century. Vostrikov referred to the Soviet concept of the correlation of forces which was changing in favour of regional Asian powers, China and India. It was important for Russia to focus its diplomacy upon these emerging great powers (Vostrikov 1994). This approach, which stressed Asian great powers in multipolarity, was a familiar foreign policy theme which had roots in the Soviet era; it was later advocated by Yeltsin's Foreign Minister Yevgennii Primakov and Putin as well. Sergei Denisov wrote that all was not lost as without Russia's active participation regional security could not be assured. He argued that Russia had a role to assume in the region as the ASEAN countries were troubled by the rise of China, and in this situation Russia could become their partner (Denisov 1994). Only under Putin was some order imposed upon Russian policy in which case the Asian great power approach was combined with an emphasis on ASEAN and regional institutions.

Despite the aspirations that Russia could somehow reclaim a respected position in the Asia-Pacific, Russia's modest situation failed to offer a supporting basis for their realization. After the Soviet collapse Russia's leadership had prepared for a tidy exit from Southeast Asia while preserving certain residual and profitable interests. The Soviet air, naval, and SIGINT (Signals Intelligence) facility at Cam Ranh Bay in southern Vietnam which had generated considerable concern in the United States lost its significance in a new era and was quickly downsized. During the Soviet era there was the view, particularly in Indonesian and Malaysian military circles, that the Soviet facility played a useful role in balancing Chinese hegemonic ambitions. American protestations in relation to the danger of complacency before the Soviet threat were treated indifferently. Cam Ranh Bay had given the Soviet Union a much debated and contested status within ASEAN which could not be ignored. At the 1992 ASEAN AMM Kozyrev attempted to reclaim that status for Russia by declaring that Cam Ranh Bay would contribute to regional stability, and that Russia would retain a presence there if Vietnam agreed (Nikkei, 27 July 1992). Times had changed, however. China had improved its relationship with ASEAN since it terminated its support for the communist parties of the region as a result of the Haadyai agreement of December 1989. Moreover, the skeleton Russian presence in Cam Ranh Bay failed to support Russia's desire for status. Paul Wolfowitz, who was then Under-secretary of Defence for Policy, remarked that in "practical military terms" Russia had withdrawn from the facility (United Sates Information Service, 3 August 1992).

For the Yeltsin leadership, border security with China was a paramount interest and it had no intention of damaging relations with Beijing by holding on to the facility. The lease on Cam Ranh Bay was signed on 2 May 1979 for 25 years but the Russian withdrawal began when the Soviet naval vessel, the Admiral Spirodonov, returned to Vladivostock in December 1991. Thereafter only some small vessels remained. The airfield which had during the Soviet era hosted reconnaissance TU-95 flights from the Far East was no longer in use.

In 1992 there were some 20 to 30 Russian military advisers there; 500 military personnel were withdrawn by May 1992; and some 200 personnel manned the facility (Straits Times, 23 July 1992). In August 1992 Russian-Vietnamese negotiations began in relation to the future of the facility. Russia's navy continued to demand it as a repair and re-supply stop for its vessels but the Vietnamese had other ideas including its conversion into a combined military civilian facility (Reuters, 27 August 1992). The Vietnamese at that stage were unwilling to remove the Russians entirely as they remained concerned about China but they wanted the Russians to pay more for the privilege, however (Bekaert 1992). The Vietnamese demanded US$360 million in annual rent while Russia was only prepared to pay US$60 million. Negotiations over the facility were suspended when Yeltsin visited Beijing in December 1992, which demonstrated Vietnam's sensitivity to Russia's new relationship with China (Karniol 1993). Vietnamese Prime Minister Vo Van Kiet visited Moscow in June 1994 to renew relations with Russia and signed a Treaty on Fundamental Principles on 14 June, an innocuous replacement for the treaty of alliance which was signed with the Soviet Union on 2 December 1978 (Chanda 1995). In characteristic fashion Yeltsin cancelled a meeting with Vo, claiming that he was busy, demonstrating his lack of interest in Vietnam. Nonetheless, the Vietnamese agreed that Russia could continue to lease Cam Ranh Bay. Vo had proposed that Russia's use of the facility be offset against Vietnam's Soviet debt, which was estimated to be US$9 billion (Moscow News, no. 24, 23 June 1994). For the Vietnamese, Russia could offer some safeguards against possible Chinese moves in the South China Sea at a time its interest there had been stimulated by oil exploration. Russian SIGINT at Cam Ranh Bay provided the Vietnamese with data on Chinese shipping movements in the South China Sea. Vietnam also leased Russian oceanographic vessels for surveys in this area (Jane's Defence Weekly, 6 May 1995). The Vietnamese were mindful of the need to protect their interest in the joint Vietnamese-Russian oil concern Vietsovpetro, which was established with the Soviet Union in 1981. Vietsovpetro operated from three fields in the South China Sea off the coast of Vietnam and by 1993 had produced an annual output of 5 million tons of oil (Vinogradov 1993). Closer to the expiry of the lease, however, the situation of the South China Sea stabilized and there was less concern about Chinese motives. The Vietnamese made known their intention not to renew it despite the Russian desire to maintain the facility as an expression of interest in the region (Kosyrev 2001). When Russian Prime Minister Mikhail Kasyanov visited Hanoi in April 2002 he announced that Russia would evacuate Cam Ranh Bay by 1 July 2002. Vietnam's intention was to construct an international airport there which would put the two 4,000-metre runways to better use.

Arms sales quickly became an important Russian interest in Southeast Asia. The conversion of the oversized Soviet defence industries to civilian production was proposed by economists but this required massive new investment, which was impractical. The only alternative for the Russians was to turn those industries into profitable ventures by boosting exports to regions such as Southeast Asia and by offering significant price reductions. Russia renewed arms relationships with former Soviet allies, India, Syria, Iraq, as well as Vietnam, all which were familiar with Russian weapons and had need of spare parts and new equipment. After China's purchase of 24 export version SU-27SKs and two export trainer version SU-27UBKs in 1991, Vietnam followed suit in 1993 with an order of five SU-27SKs and one SU-27UBK (Karniol 1995). The terms of the deal were not disclosed but the cost was a reported US$150 million and may have involved a counter-trade deal including part payment in Vietnamese rice. The first order was delivered in May 1995 and in December 1996 Vietnam followed up with purchases of an additional two SU-27SKs and four SU-27UBKs. (2) In 1999 Vietnam purchased two Molniya missile boats with Moskit-E or SS-N-22 "Sunburn" anti--ship missile systems. Beyond these former Soviet allies, however, another market beckoned in the developing world from which the Soviet Union had been excluded by Cold War suspicions. In the post--Cold War era the Russians had greater confidence to market their arms to the ASEAN countries once they were freed of the stigma of association with the Soviet Union.

Over 1991-93 Russia's arms salesmen approached Myanmar, Thailand, Philippines, and Indonesia seeking opportunities to sell weapons. They offered Indonesia an updated version of the MiG-21, hoping to exploit the embargo on arms sales to that country imposed by the United States after the Santa Cruz massacre in East Timor in November 1991. The Indonesian military had been weaned off its previous dependence upon Soviet weapons during the Soekarno era and had been heavily indoctrinated in the spirit of anti-communism. There was little interest in Russian weapons at that stage, Indonesia's Air Force was US-trained, and Planning Chief Suwarno balked at the idea of Russian weapons with their different operating systems. Armed Forces Chief, Feisel Tanjung, however, declared that the US arms embargo compelled Indonesia to look elsewhere--to France, the United Kingdom, as well as Russia (Straits Times, 14 August 1993). Indonesia in 1997 had planned to purchase 19 SU-30Ks instead of American F-16s, which were subject to the embargo; eight MI-17 helicopters were included as well, and then the financial crisis struck and the plans were suspended. The Russians offered MiG-29s to Thailand to pay off a debt to Thailand for the purchase of 500,000 tons of rice. The Thai military was comfortable with American weapons and expressed little interest despite the low price. Thai Air Force Commander Gun Pimarntip said that the MiG-29 was not suitable for Thailand, which was used to US systems (Bangkok Post, 27 February 1993). Deputy Foreign Minister Surin Pitsuwan also rejected the Russian offer of MiG-29s, declaring that they were not compatible with existing Thai weapons (Bangkok Post, 25 February 1993). Russia also offered MI-17 helicopters with the incentive of a 50 per cent barter deal but the Thai military decided on 20 Bell 212 Huey helicopters instead (Bangkok Post, 6 July 1993).

Russian Vice-President Alexander Rutskoi visited Singapore in March 1993 in an effort to develop commercial relations but the possibilities were limited. The Singaporeans examined the prospects of joint ventures in military industries but had no interest in Russian weapons (Straits Times, 8 March 1993; Reuters, 7 March 1993). Russia was also interested in selling arms to Myanmar and when the No. 2 in the State Law and Order Restoration Council (SLORC) and Army Chief of Staff General Tin Oo visited Moscow in November 1995, speculation was rife that the sale of ten MiG-29s and two MiG-29UB trainers was being negotiated for US$130 million. Despite the speculation SLORC leader Than Shwe declared that Myanmar could not afford them, no matter how cheap they were (BurmaNet News, 24 July 2001). There were Russian plans to construct a 10-MW capacity nuclear reactor in Myanmar near Magwe for a total cost of US$5 billion. On 15 September 2000 Myanmar informed the International Atomic Energy Agency (IAEA) of its intentions to build a nuclear reactor. In December 2000 Myanmar Minister of Science and Technology U Taung visited Russia and called for Russian assistance in building the reactor, and for Russian training of Myanmar nuclear specialists. The Russians agreed to supply a light-water nuclear reactor in a counter-trade deal with part payment in rice, teak, and rubber, and in June 2001 a contract was drafted (Luchin 2002; Lintner 2002). Negotiations broke down over the downpayment as Russia reportedly demanded a 25 per cent advance in hard currency, prompting Myanmar to turn to North Korea for assistance (NEWSinsight, 6 May 2004).

During the Yeltsin period Russia's most spectacular arms sale within ASEAN was to Malaysia, a result of the ideological orientation of the then Prime Minister Mahathir. Mahathir's vitriolic criticisms of the United States for its efforts, as he saw it, to dominate Asia stimulated him to seek alternative arms suppliers. In the early 1990s Malaysia was considering the purchase of a frontline fighter and the Defence Ministry's preferences were the American FA-18 or the F-16. The Ministry pointed to the logistical nightmare that would be created by servicing both Western and Russian weapons if the MiG-29 were purchased. It identified the problems relating to technical services and spare parts, the short engine life of the Russian fighter, and its primitive avionics. One objection was met when Malaysia in February 1993 concluded a technical servicing agreement with India for the maintenance and support of Russian weapons. In March 1993 Rutskoi visited Kuala Lumpur and offered better terms to fend off the American competition. He agreed to a counter-trade deal in palm oil and an offset programme which would allow local manufacturers to provide spare parts for the MiG-29. He also offered submarines, naval vessels, laser-guided missiles, and virtually the full range of Russian weapons to the Malaysians (Straits Times, 4 March 1993). Malaysia's Defence Ministry remained strongly opposed to the purchase of Russian weapons and Defence Minister Najib Tun Razak publicly stated that Malaysia could not accept the logistical problems of combining Western and Russian equipment (Reuters, 23 March 1993). In any case Mahathir brushed aside the opposition within the Defence Ministry and the deal was signed on 7 June 1994. The initial contract price was US$615 million but the final cost of 16 MiG-29Ms and two MiG-29UM trainers was a reported US$550 million, a considerable price reduction. Western avionics supplied by local companies were included. The deal was held up by negotiations over the counter-trade part of the contract as Malaysia bargained for a 50 per cent counter-trade in palm oil deliveries while Russia wanted only 20 per cent; the final agreement was 35 per cent counter-trade: US$450 million was to be paid in cash with payments spread over five years and US$95 million to be paid in palm oil (Vatikiotis 1994). On the Russian side the deal was negotiated by Deputy Prime Minister Oleg Soskovets, whose main problem was to decide what to do with the palm oil that Russia was required to purchase.

Despite some success in selling weapons to the region, Russia could not overcome an essentially peripheral relationship with Southeast Asia. Trade with ASEAN was negligible and reached a modest US$1.2 billion in 1998 which was conducted mainly with Vietnam and Singapore; with the Philippines there was virtually no trading relationship. In terms of arms sales, Russia's success with Malaysia was promising but in comparison with the long-term deals Russia had negotiated with China and India it was less rewarding than expected, considering the highly unpopular counter-trade agreement that was required. Yeltsin resiled from the pro-Western policies he had encouraged and removed the highly unpopular Andrei Kozyrev from the Foreign Ministry on 5 January 1996. Kozyrev was severely attacked domestically for slavishly following the West and his removal was roundly applauded within the Russian Duma. Yeltsin's appointment of Yevgenii Primakov as Kozyrev's successor signalled an intention to move to a more balanced position in foreign policy and to defend Russia's interests before the West. As a proponent of multipolarity and a noted realist, Primakov was well-suited to bring about this adjustment. He was a Middle Eastern expert, head of IMEMO (Institute of World Economy and International Relations) over 1985-89, briefly head of the KGB (former Soviet intelligence agency) in 1991, and director of Russia's Foreign Intelligence Service over 1991-96: he was deeply experienced in Soviet policy and practice. Primakov revived interest in the Asia-Pacific region in an effort to encourage Asian centres of power to counterbalance the United States, which represented the restoration of continuity with the Soviet era after the Kozyrev interregnum (Chufrin 1999, p. 476; Amirov 1999, p. 276). This effort to maintain balance in foreign policy was seen in Yeltsin's visit to Beijing in April 1996 when a "strategic partnership" was declared with China, in Primakov's visits to India in an attempt to link Russia with China and India in an "Asian Triangle", and in an effort to revive a presence in the Korean peninsula. Primakov also restored interest in ASEAN and visited Jakarta in July 1996 to participate in the 3rd ARF when he described ASEAN as an influential centre in a multipolar world (Itar-Tass, 22 July 1996). With Indonesian support Russia was accepted as a Dialogue Member of ASEAN as from July 1997. ASEAN's subsequent expansion to embrace Vietnam in 1995 and Myanmar and Laos in 1997, and its hosting of the ASEAN+3 meetings with China, Japan, and Korea beginning in December 1997 elevated its significance for Russian proponents of multipolarity.

The Putin Era

Yeltsin regretted the disorder and chaos of the immediate post-Soviet period and designated the previously little known Vladimir Putin as his successor in December 1999, and then departed from the political stage. Putin's appeal to Yeltsin was his undoubted administrative skill and patriotism. He was elected Russia's President on 5 April 2000 and subsequently defined foreign policy priorities which placed national interest above any particular policy orientation, a direct repudiation of the Kozyrev pro-Western policy. Putin's foreign policy has been described as a "new realism" in which Russia would act as a normal great power with its own clear interests to promote (Sakwa 2004, pp. 207-33). Putin made multipolarity the centre of his foreign policy and stressed the importance of the Asia-Pacific region and Russia's participation in Asian regionalism. Over the period 2000-2001 Putin conducted a number of high-profile visits to China, Japan, India, and North Korea to demonstrate the importance of the Asia-Pacific region for Russia (Alekseev 2000). Within the context of Putin's Asia policy, relations with ASEAN were important--hence the need for a systematic effort to overcome the indifference of the early Yeltsin era to take ASEAN more seriously. One reason was that ASEAN had placed itself in "the driver's seat" in Asia-Pacific regionalism, in APEC, as well as the ARF; and to assure itself of a place in Asia-Pacific regionalism Russia required ASEAN's endorsement. A second reason was that ASEAN represented new possibilities for Russian arms sales, which Putin quickly seized upon. Putin became Russia's premier arms salesman exploiting price advantages and the incentive of counter-trade deals to exploit new markets in ASEAN.

Putin's first visit to an ASEAN capital was to Hanoi in February 2001 where the interest was trade and arms sales. Putin then declared a "strategic partnership" with Vietnam and gave particular attention to that country which Yeltsin had ignored. Vietnam was regarded by the Putin leadership as a "traditional" trading partner in Southeast Asia and one where the trade prospects were most encouraging. By 2004 Russia's trade with Vietnam reached US$800 million, which was 27 per cent of Russia's total trade with ASEAN. Russia was one of the major investors in Vietnam with accumulated investments of US$1.7 billion arising from 300 projects, including the Hoabin hydroelectric plant (Kazakov 2004). Other projects being examined include the Son La hydroelectric plant, automobile and components manufacturing, as well as the construction of a subway in Hanoi and Ho Chi Minh City. When Vietnamese President Tran Duc Luong visited Moscow in May 2004 a Russian-Vietnamese Business Forum was established, which indicated a developing trading interest on both sides. Vietnam was a market for Russian metals and metal products which constituted around 60 per cent of Russia's exports.

Other exports were fertilizers, chemicals, vehicles, and some electrical equipment. Vietnam exported rice, rubber, tea, pepper, fruits, and handicrafts to Russia. Vietnam was also interested in seafood exports to Russia and in sending students to Russian technical and vocational schools (Thanhnien News, 8 December 2005). Most important for both was the joint venture Vietsovpetro, which over 1986-2003 had extracted 127 million tons of oil, and 12.2 million tons alone in 2004; Vietsovpetro in 2004 accounted for 74 per cent of Vietnam's oil revenue, and 60 per cent of Vietnam's oil production (Ministry of Economic Development and Trade, 2003). In December 2003 Vietnam purchased four SU-30MKs for a total of US$150 million, of which 30 per cent was counter-trade. In terms of arms sales Vietnam had purchased the same Sukhoi version as China and planned to purchase a total of 12 to reach a full squadron. The Vietnamese also signed a contract to produce under licence ten missile patrol craft for US$120 million and to purchase two batteries of S-300 PMU air defence missiles for US$250 million (Pravda 2003; Ehrlich 2003). They were also interested in a Russian role in modernizing the Da Lat research nuclear reactor, which was built with Soviet assistance in Hanoi in 1984. The Vietnamese sought Russian assistance in the construction of a new nuclear reactor and in the development of a nuclear energy in general (Thanh Nien News, 18 May 2005).

Despite the importance attributed to Vietnam, Malaysia became a more significant partner for Russia. Putin's campaign for an Asian counterbalance against American hegemony resonated with Mahathir, who as a bilious critic of the West sought to include Russia in Asia-Pacific forums whenever possible. Mahathir responded vigorously to the American invasion of Iraq and America's perceived indifference to the grievances of the Islamic world by forging his own counterbalance to the West: his views converged with those of Putin. Mahathir visited Moscow in March 2002 where he stressed his intention of widening relations with Russia, and declared that Malaysia could be Russia's "gateway" to Southeast Asia. Mahathir also discussed plans for cooperation in aviation with Moscow including the joint launching of communications satellites, the construction a ground control station, and also a new purchase of Sukhoi fighter bombers (Slyusarenko 2002). The contract for the purchase of 18 SU-30MKMs was agreed on 19 May 2003, when Russian Defence Minister Sergei Ivanov visited Kuala Lumpur. The price was a reported US$900 million, 30 per cent was counter-trade payable in palm oil. Malaysia had requested modifications including French avionics that distinguished the M-Malaysia version from the Chinese K and the Indian I versions of the SU-30MK. Malaysia insisted on maximum production of parts by local companies and a local service centre that could service other

Russian aircraft as well (Ivanov 2005). On the Malaysian side the deal attracted less controversy than the earlier MiG-29 sale. One reason was that the fighter-bomber SU-30MKM's range at over 3,000 km was superior to the fighter MiG-29's range at 2,000 km, and was more suitable for maritime defence, which was Malaysia's main concern. A second reason was that the Defence Ministry had become used to handling different equipment and the logistics problems of supplying Russian as well as Western aircraft intimidated it less. A third reason was that the danger of relying solely on Western suppliers was better understood in Malaysian defence circles after Indonesia's intended purchases from the United States were blocked by the American arms embargo. Mahathir had as a consequence insisted that Malaysia diversify arms purchases to ensure that it would reduce its vulnerability to a similar American arms embargo, if one were imposed for whatever reason. The deal, however, was criticized on the Russian side as counter-trade was unpopular with the Russian aviation industry, which wanted payments in hard currency to recoup investment and R&D (research and development) costs. The bartered goods had to be remarketed to third parties, which entailed additional costs amounting to 10 to 50 per cent of the contract (Khodarenok 2003). As Russian defence manufacturers were not in the business of marketing palm oil, a separate organization had to be created by the government for that purpose, and considerable delays and losses would result for the manufacturers. Russia's political leaders sacrificed some of the commercial benefits of the deal for diplomatic reasons and to obtain a stake in the ASEAN arms market. Putin's diplomatic objectives in cultivating the relationship with Mahathir were revealed when the Russian President visited Kuala Lumpur in August 2003 (Verlin 2003). Mahathir then invited Putin as a special guest to the Organization of Islamic Congress (OIC) summit which was held in Malaysia's new administrative capital in Putrajaya in October 2003. Putin attended the OIC Summit as a guest but his effort to obtain membership on the basis of Russia's 20 per cent Muslim population was unpersuasive. The Russians lavished much attention on Malaysia in various ways to strengthen the relationship; Russia agreed to launch Malaysian satellites and to train Malaysian cosmonauts who would be launched on Russian rockets (Ministry of Economic Development and Trade, 2003).

Russia attempted to expand arms sales to Indonesia to exploit the frustrations experienced by the US arms embargo, which remained in place until November 2005. Indonesia purchased eight MI-2 and two MI-17 helicopters in June 2002, and it was interested in Russian air defence S-300 missiles and shoulder-held Igla missiles to protect its oil fields from air attack (Lekic 2003). Indonesia had shelved but not cancelled its plans to purchase SU-27s, and its Defence Attache in Moscow Hari Muleno declared that the intention was to create two squadrons, a total of 24 or 32 fighters (Lunina 2003). When President Megawati visited Moscow in April 2003 she stressed the need for Russian participation in the modernization of the Indonesian Armed Forces. She called for joint ventures in military industries to alleviate the financial burden for Indonesia (Jakarta Post, 22 April 2003). Megawati on 28 April signed a contract for the purchase of two SU-27SKs, two SU-30MKs, and two MI-35 helicopters, for US$192.9 million, of which US$166 million was to be paid for in bartered goods, mainly palm oil (Itar-Tass, 21 November 2004). The counter-trade deal was again unpopular with the Russian arms company Rosvooruzhenie, especially since this time the counter-trade was 86 per cent of the contract price, and the company director protested. The aircraft were sold without missiles or operating systems (which required additional payments), and they were unusable without them. Originally the Indonesians intended to purchase 12 Sukhois but after the company objected to the counter-trade deal the order was reportedly reduced to four units (Litovkin 2003). On the Indonesian side a scandal erupted in relation to the decision-making behind the deal. The House of Representatives established a commission of enquiry to investigate as funds were not included in the 2003 budget, nor had the Air Force included the purchase in its procurement plans for 2004. Defence Minister Matori Abdul Djalil and Armed Forces Chief Endriartono Sutarto claimed that they had not been involved and the Air Force denied any interest (Hari 2003). The deal was arranged by the Minister of Industry and Trade Rini Suwandi and the National Logistics Agency or BULOG in a murky operation to provide kickbacks for the ruling party. It revealed how easily budgetary controls could be circumvented in Indonesia. After the enquiry concluded, the House of Representatives Commission basically agreed to tolerate the purchase of the Sukhois and attempted to cancel the helicopter purchase because the prices were inflated, but without success. (3) The Air Force benefited from the deal by obtaining part of what it wanted, allowing it to press for the full squadron it had always demanded. After the delivery of the four Sukhois in August 2003, Endriartono Sutarto then declared that a full squadron of 12 or 15 aircraft was required and that the government should allocate funds for this purpose. (4) When Indonesian President Bambang Yudhoyono met Putin at the APEC Summit at Busan in November 2005 he too requested Russia's assistance in modernizing Indonesia's military, which had fallen into a decrepit condition. Indonesia's shopping list included three new warships, a corvette, a destroyer, and a frigate, as well as 12 submarines to strengthen its sea defence capability. (5) Whether Indonesia would be able to afford these purchases in view of stringent budgetary constraints is another matter.

Russia had placed itself in the position of major arms supplier to three ASEAN countries by exploiting regional frustrations with the United States and offering price advantages and counter-trade deals. Malaysia in particular has become the third purchaser of Russian weapons, after China and India. Counter-trade may be resented by Russian defence industries but once the relationship is established Russia may expect to benefit from further orders which would compensate for the initial sacrifices. Putin also approached Thai Prime Minister Thaksin Shinawatra at the APEC Summit in Busan and offered to sell 12 SU-30MKMs and helicopters for a contract price of US$500 million (Bangkok Post, 22 December 2005). Thailand's Air Force had previously objected to any suggestion of purchasing Russian aircraft specifically to replace the American F-5E/Fs and AV-10s. Air Force Chief Chalit Pukpasuk, after hearing rumours that he might be replaced, declared that he was in favour of the Sukhois claiming that the Russians had offered a special deal for eight MI-17 helicopters as an incentive (Bangkok Post, 21 January 2006). Nonetheless, the deal may not outlast Thaksin if he leaves the political arena. If successful, Russia would become a weapons supplier to four ASEAN countries which would give it significant diplomatic leverage in the region and a basis for an expansion of sales to other ASEAN markets.

Asia-Pacific Regionalism

Inclusion in Asia-Pacific regionalism has been Putin's unwavering objective and not just as a guest but as a full participant. Soon after he became President in July 2000 a new foreign policy concept was articulated by Foreign Minister Igor Ivanov, who stressed that closer integration into the Asia-Pacific region was necessary for the economic improvement of Siberia and the Far East. In this context it was stated that Russia would actively participate in APEC and ASEAN (Nezavisimaya Gazeta, 11 July 2000). Russia's participation had been anticipated by ASEAN and particular institutions were created for this purpose. Though Russia at that stage had little to contribute and the institutions remained unfulfilled, ASEAN was preparing for the time when Russia's contribution would become effective. In June 1997 an ASEAN-Russia Joint Cooperation Committee was created whose function was to coordinate activities and projects, but there was little to coordinate then. Russian representatives attended the ASEAN Business Council in March 1997, and in November 1998 Russia officially joined APEC together with Peru and Vietnam, a belated act of recognition for Russia. The First ASEAN-Russia Business Forum was established in Kuala Lumpur in April 2000 and the Malaysia-Russia Business Forum first met on 25 February 2003. A significant step was taken when Foreign Minister Sergei Lavrov during the 10th ASEAN Summit in Vientiane signed the Treaty of Amity and Cooperation (TAC) on 29 November 2004. This allowed ASEAN to propose the first ASEAN-Russian Summit in 2005 to which Putin was invited.

Putin's persistence in winning recognition of Russia's regional claims bore fruit with the convening of the first ASEAN-Russian Summit in Kuala Lumpur on 13 December 2005. This success vindicated the attention given to Malaysia as Russia's regional sponsor which had consistently promoted Russia's inclusion in regional bodies. Presidential Assistant Sergei Prikhod'ko announced that Russia expected much from this summit in terms of forging closer economic relations with the ASEAN countries (RIA Novosti, 12 December 2005). During the meeting Malaysian Prime Minister Ahmed Badawi stressed Russia's role in promoting peace and stability in East Asia, and in maintaining ASEAN's energy security at a time of rising oil prices. The summit agreed upon a programme of collaboration over 2005-15, including the exchange of information on terrorism and potential weapons of mass destruction (WMD) attacks, and the curbing of funding for terrorism (, 13 December 2005). Within Russia the reaction was positive. Mikhail Margelov, Chair of the Committee on International Affairs of the Soviet of the Federation or the Upper House, claimed that the summit was a success as Russia had strengthening relations with ASEAN through intermediaries. Margelov speculated that Russia's regional influence would expand through involvement in ASEAN and opined that Russia could act as a bridge between East and West (Timofeeva and Magelov 2005). Despite such hopes, however, Russia failed to obtain ASEAN agreement to regularize these meetings. Singapore was the coordinator for the ASEAN dialogue with Russia and Prime Minister Lee Hsien Loong rejected the idea of regular meetings until Russian relations with ASEAN become more substantial (, 13 December 2005).

Putin was also invited by Malaysia as an observer to the first East Asian Summit (EAS) which was held in Kuala Lumpur on 14 December 2006, without the United States. A special 15-minute session was created for Putin to address the group after the public plenary session and before the closed session when the participants met for three hours. Putin, nonetheless, requested full membership of the EAS, which was to be discussed by the participants before the second EAS scheduled for Cebu in December 2006. The group was divided over Russia's participation, Malaysia argued that if Australia, New Zealand, and India were included then so should Russia. Malaysia's enthusiastic endorsement of Russia was supported by Gloria Macapagal Arroyo of the Philippines and Chinese Premier Wen Jiabao. Badawi, however, was compelled to backtrack over the issue when Singapore and Indonesia both opposed the inclusion of Russia. Lee Hsien Loong and Indonesia's Susilo Bambang Yudhoyono issued a joint statement at the summit objecting to Malaysia's language which was supportive of Russia's inclusion (Nikkei, 15 December 2005). ASEAN had imposed three conditions for participating in the EAS, adherence to the TAC, dialogue partner status with ASEAN, and evidence of "substantial" relations with ASEAN (Gapeev 2005). While Russia had signed the TAC and had dialogue partner status with ASEAN since July 1997, Singapore insisted that Russia's weak economic links with the region did not merit its participation. Indonesia was concerned that a further expansion of the EAS membership would reduce ASEAN's importance and it resisted Malaysian moves to influence its direction. Australia's Prime Minister John Howard had also opposed Russia's entry for Cold War reasons but his influence over the others was negligible. The Japanese were also very resistant to the inclusion of Russia because of their own territorial dispute with that country. Mahathir, who had originally conceived the idea of an East Asian grouping, was disappointed by developments since the inclusion of Australia and New Zealand in the new grouping would allow the United States to influence it. For this reason he had supported Russian membership in the EAS which, in his view, was no longer an Eastern summit but an Eastern-Australasian summit, an unwelcome deviation from his intentions (Tsyganov 2005).

It is difficult to visualize Russia's indefinite exclusion from the EAS, which would be an unnecessary diplomatic affront that ASEAN would ultimately avoid. Russians hope that a role as major arms supplier to several key ASEAN countries would ensure it of consideration though this may be a dubious honour for countries such as Singapore which are closely tied to the United States. The expectation that Russia would emerge as a major energy supplier to the region might assure it of an important position in East Asian regionalism, sufficient to meet the condition of "substantial" relations. In his speech at the EAS, Putin stressed Russia's intention of becoming a major supplier of oil and gas to Asia (, 16 December 2005). Foreign Minister Sergei Lavrov had declared that Russia could be an energy supplier to ASEAN, assisting individual countries to overcome the problems posed by rising oil prices (RIA Novosti, 28 July 2005). Already, Philippine leaders were prompted by the hike in oil prices to diversify supplies away from the volatile Middle East. The Philippines declared that it would increase imports of oil from Russia to build up a reserve stockpile and to reduce the possibility of a disruption in supplies caused by the Iraq war. (6) Philippine Foreign Affairs Secretary Alberto Romulo said that the Philippines should become the regional oil distribution hub for Russia and travelled to Moscow in October 2005 to negotiate the issue (Financial Express, 10 October 2005). Nonetheless Russia's ability to serve as energy supplier to ASEAN will depend on the outcome of the domestic conflict within Russian decision-making circles over the construction of a oil pipeline from the West Siberian oil fields. Putin and his group would prefer the 4,000-km Angarsk-Nakhodka route with a branch line to China, which would allow oil deliveries to Japan and other markets including ASEAN. Russia's energy ministry has defended the 2,400-km Angarsk-Daqing China route as a less expensive option to an assured market in China. Russia's Industry and Energy Minister Viktor Khristenko has declared that Russian oil would flow to China, Japan, and India, but not to distant Southeast Asia (, 16 December 2005). Russia would not be in a position to serve as a major energy supplier to ASEAN unless the Nakhodka pipeline route was constructed; this is yet to be decided. Commercial deliveries from existing fields in Sakhalin may increase to meet ASEAN's needs but not to the extent that Russia's assumed role as a major energy supplier would be justified.

In any case, Russia's membership of the EAS is a matter of time. Two forms of Asian regionalism are struggling for recognition--one is the EAS and the other is a purely East Asian grouping or the East Asian Community (EAC). This was outlined in the East Asian Vision Report which was commissioned by the ASEAN+3 group (the ten ASEAN countries plus China, Japan, and Korea) which first met in December 1997. The idea of an East Asian group has strong ideological appeal within Malaysia and Korea while for China it would be a desirable vehicle to limit American influence in the Asia-Pacific region. Nonetheless, the attempt to realize this idea would confront the same problem that resulted in the expansion of the EAS to include non-East Asian members. The concern is that a purely East Asian grouping would allow China to dominate the region both politically and economically, in which case Japan would again demand the inclusion of outsiders as a balance. Already Japan has proposed that the United States be given observer status in the EAS. The end result may be the abortion of the EAC and its displacement by the EAS, which can correct the imbalances of the former. The pressure for outside involvement in East Asian regionalism would sweep Russia in as a member in due course.


Russia's relationship with Southeast Asia has improved considerably over the past five years since Putin came to office. Under Gorbachev serious attempts were made to engage the Asia-Pacific region and to promote an appropriate regional security structure. However, when the Soviet Union collapsed, there was little that could connect Russia with Southeast Asia. While the Yeltsin leadership turned towards the West, Russia's diplomats struggled with an essential irrelevance to the East even as they made statements of serious interest in the region. Under strong domestic pressure Yeltsin eventually reassessed foreign policy priorities and appointed the Soviet era realist Primakov as Foreign Minister, and subsequently as Prime Minister. Primakov introduced balance in Russian policy by renewing relations with Asia-Pacific actors, ASEAN included, according to notions of multipolarity. Putin's stress on Asian multipolarity was not original as it represented a continuous theme in Russian thinking that had its roots in the Soviet era, and from this perspective the pro-Western policy of the early Yeltsin period was an unsustainable aberration. Putin presided over a return to Soviet era priorities in Russia's foreign policy, those of the Gorbachev era in particular, ensuring greater coherence and central direction than was possible in the Yeltsin era. One priority for Russia was arms sales and Russia's first arms salesman Putin targeted former Soviet allies, such as Vietnam, which were familiar with Russian weapons, as well as Malaysia, Indonesia, and Thailand. A second priority was participation in Asia-Pacific regionalism, which required a strengthened relationship with ASEAN. While ASEAN assumed a central role in Asia-Pacific regionalism, Russian entry into regional bodies such as APEC, the ARF, and now the EAS demanded ASEAN affirmation. Under Putin, Russia has at least positioned itself to take advantage of Asia-Pacific regional developments to the extent that its membership is being seriously debated. That in itself is a considerable change over the past and an interim Russian success.

Within ASEAN the discussion and debate over regional trends tends to exclude Russia. For those familiar with the past, there is the difficulty in separating Russia from the Soviet Union, which before Gorbachev was regarded as an unwelcome and perilous intruder. For others who have little familiarity with the Soviet era or with history, Russia is a distant and European power and Russians are regarded as Western and therefore extraneous to the region. To them, Russia's actions are puzzling since they deviate from the expected pattern of behaviour that ASEAN has created for its dialogue partners. Russians claim a great power status within the region yet their trade ties are insignificant, their investment miniscule, and their ability to contribute to the economic growth and modernization of the ASEAN economies remains limited. Russia's ambition to be treated like a great power is belied by its many economic weaknesses, its excessive reliance upon energy to sustain economic growth, and its weak manufacturing sector which has been long surpassed by most of the ASEAN countries it deals with. Russia's relationship with ASEAN has been strongly promoted by Malaysia because of the diplomatic influence it wields as a balance to the United States rather than its economic presence. Diplomatic influence without the underlying economic basis, however, is a contentious justification for Russia's participation in Asia-Pacific regionalism. In time, Russia may broaden its diplomatic relationship with the region if it expands arms sales to other countries and if it manages to increase oil supplies to the ASEAN countries. Nonetheless, it would be unlikely to escape the controversy accompanying its presence.


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(1) Address by A.V. Kozyrev, Minister of Foreign Affairs of Russia at the Consultative Meeting with the ASEAN Ministers of Foreign Affairs, 25 July 1992.

(2) Milavia SU-27 "Flanker", Military Aviation website: aircraft/su-27/su-27_ops.htm.

(3) The House of Representatives Commission for Defence Affairs allowed the purchase of MI helicopters, but demanded that those involved should be punished. Nonetheless, after receiving a letter from the Defence Minister Juwono Sudarsono supporting the purchases the Commission agreed (Hari 2005).

(4) "TNI Wants a Squadron of Sukhoi Jets Next Year". Jakarta Post, 29 August 2003, Air Force Chief Djoko Suyanto declared the intention to purchase a full squadron of SU fighters, in addition to those already purchased in a US$700 million deal. "Indoneziya planiruet zakupit' u Rossii eshche 12 istrebitelei Su",, 24 June 2005.

(5) Rendi Akhmad Witular, "RI to Buy Warships, Subs from Russia, Germany", Jakarta Post, 5 January 2006; and "Indonesia to Buy 12 Russian Submarines", MOSNEWS. com, 23 January 2006. shtmal.

(6) Philippine Energy Secretary Vincent Perez, Jr. stressed the importance of a diversification of oil supplies and for agreements with Russian oil companies. "Russian Crude to Help Philippines to Cut Dependence on Middle East Oil", Alexander's Oil and Gas Connections, 2 October 2003.

LESZEK BUSZYNSKI is currently Professor in the Graduate School of International Relations, International University of Japan in Niigata, Japan.
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Author:Buszynski, Leszek
Publication:Contemporary Southeast Asia
Geographic Code:4EXRU
Date:Aug 1, 2006
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