Moscow's Courting of ASEAN Following Ukraine

Background

In the age of globalization Southeast Asia’s share of the global production is rapidly growing, while China is slowly losing its crown as the world’s factory. Forming the world’s sixth largest economic entity, ASEAN functions as the major political and economical organization in the Southeast Asian region. However, its member states Vietnam, Thailand, Indonesia, Brunei, Cambodia, Laos, Myanmar, Malaysia, Singapore and the Philippines have diverse and often contradicting interests.

Although Eastern Europe is a far cry away from Southeast Asia, the standoff in Ukraine impacts the region beyond the downing of the Malaysian airplane. Moreover, Southeast Asia may be affected by the economic warfare between the West and Russia. ASEAN offers growing markets and promising investments for Russian producers while the city-state Singapore is among the world’s largest business and finance hubs. Due to political instability in the region facing an emerging China and territorial disputes in the South China Sea, Southeast Asia is a potential market for Russia’s defense industry.

If the West is really interested in cutting off Russia from global markets and financial hubs, neglecting the impact of ASEAN member states would be a strategic misstep. Therefore, it is important to review Southeast Asian relations with Russia since Crimea’s annexation and conflict in eastern Ukraine.

 

ASEAN-Russian Cooperation Prior to the Ukraine Crisis

Russian interest in ASEAN developed out of the membership of Vietnam, a longtime ally, in 1997.  Since then, several treaties were signed between ASEAN and Russia such as the Treaty of Amity and Cooperation in 2004 followed by numerous joint declarations. Although the trade volume between Russia and ASEAN has increased, their respective trade share remains low. However, there are two areas of cooperation between the ASEAN and Russia worth mentioning: cooperation in the energy market and a Russia-ASEAN free trade agreement.

Cooperation in the energy market: Southeast Asia´s energy sector is booming and increasingly important to the global energy market. Malaysia strives to become one of the world’s largest producers, while Vietnam is expanding exploration for crude. Large gas production sites are located in Brunei, Indonesia and Malaysia to meet the demand of East Asian economies. Therefore, Russia and the ASEAN have common interest in cooperating in the areas of LNG. ASEAN is interested in decreasing its dependency on oil from the Middle East, exploiting domestic resources, and building LNG facilities.  

ASEAN-Russia FTA: Although most treaties between Russia and ASEAN states have been concluded bilaterally, both sides are interesting in establishing a common Free Trade Area. Unlike other Asia-Pacific states, Russia still lacks FTA with important regional economies. A FTA between the newly founded Customs Union and ASEAN would be economically beneficial. Politically, a FTA with ASEAN undermines efforts to isolate Russia after Ukraine.

 

Cooperation After the Ukraine Crisis

The member countries of the ASEAN reacted quite differently to the Ukraine Crisis, which revealed the wide rift among the Southeast Asian states. Traditionally close allies of Russia such as Vietnam, Laos and Myanmar refrained from condemning Russia’s annexation of Crimea, while others fiercely criticized the military intervention, particularly Malaysia, Singapore, Indonesia, and Thailand.

Despite the wide rift in political reactions to the Ukraine Crisis, ASEAN and Russia have discussed new trade agreements and intensified economic links. The Vietnamese General Secretary of the ASEAN Le Luong Minh reiterated support for a closer cooperation between Russia and ASEAN and pointed out the wide array of business opportunities for both sides. ASEAN´s stance on Russia can be attributed to the Vietnamese presidency over the ASEAN and that country showed increased interest in fostering the organization’s relations with Russia.

 

Detail Analysis: Vietnam

Vietnam belongs together with Laos to the classical Russian allies in Southeast Asia, a relationship dating back to the Vietnam War. Even after the fall of the Soviet Union, Vietnam and Russia maintained close ties and Russia operated a naval base in Camh Ranh till 2005. Russian investment has increased over the past decade and Vietnam voiced interest in signing a free trade agreement with the Customs Union. Further, the Vietnamese government has negotiated future membership in the Customs Union.

Even after the Ukraine Crisis, the relationship between Moscow and Hanoi has improved. Russia’s shifting pivot to Asia fosters the ties to Hanoi and breaks Vietnamese diplomatic isolation over the last two decades. Although the United States seeks to similarly strengthen ties with Vietnam, it has not achieved concrete results.

Considering the current geopolitical environment, the partnership between Hanoi and Moscow appears stable. Russia is interested in securing a long-term partner in Southeast Asia acting to open the door for future expansion into the ASEAN market in both military hardware and energy sectors. Moreover, Camh Ranh could serve again as a Russian military base to project the Russian fleet’s presence in the South Pacific. For Hanoi, Russian presence provides revenue for the government and acts as a strategic buffer against Chinese aspirations in the region.

 

Detail Analysis: Indonesia, Malaysia, Thailand and Singapore

Indonesia, Malaysia, Thailand and Singapore are the region's traditionally Western-aligned states and were allies of the US during the Cold War. Their strong criticism of Russia’s intervention in Crimea and the downing of MH17 followed historic lines. The Singaporean government stated that “Singapore opposes the annexation of any country or territory as it contravenes international law,” while the Malaysian minister of foreign affairs called the downing of MH17 an outrage. However the Malaysian government refrained from directly blaming Moscow. Indonesia and Thailand also declared their opposition to the Crimea annexation.

Domestic demographic issues further inform these states reactions to Crimea’s annexation.  All of these countries have substantial Chinese minorities and may be subject to similar justifications for intervention in the future. In particular, Singapore and Malaysia fear social unrest and ethnic clashes may justify Chinese interference in the region. Chinese military buildup and increasingly vocal territorial claims legitimize policy makers’ concern in the region.

Despite their common opposition to Russian actions in Ukraine, Indonesia, Malaysia, Thailand and Singapore refrained from issuing sanctions on Russia despite their common opposition to Moscow’s actions in Ukraine. The economic ties to Russia have grown and Indonesia has expressed interest in continuing to use Russia as a key supplier of military equipment. Malaysia and Singapore could profit from cooperation in the gas sector, while Thailand has sought to expand investment from and agricultural exports to Russia.

 

Going Forward

Considering Russia’s shifting pivot to the East and ASEAN’s reaction to the Crimea Crisis, Russia is likely to succeed in expanding its influence in Southeast Asia to circumvent Western sanctions and avoid economic isolation. Enjoying long standing partnerships with countries such as Vietnam and Laos, Russia is also fostering ties to the newly emerging economies such as Indonesia and Malaysia. Although several ASEAN members have opposed the annexation of Crimea, it does not seem to affect the practical economic and military ties with Russia. Sanctions against Russia are unlikely and would be subject to a possible veto by Hanoi. Instead, the implementation of a Russia-ASEAN FTA is likely if seriously pursued by Moscow.

However, Russia must pay heed to Beijing’s interests and China’s growing role in the region. A serious shift in investment and power projection in the region will surely concern Beijing and is particularly applicable with regards to Myanmar and Vietnam. Concurrently, Russian efforts to strengthen relations with China may lead Southeast Asian states to question Moscow’s strategic vision for the region. Taking these two constraints into account, Russia must walk on a tightrope between the competing interests of Beijing and ASEAN members.