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Russia and Southeast Asia: A New Relationship

Author(s): LESZEK BUSZYNSKI


Source: Contemporary Southeast Asia, Vol. 28, No. 2 (August 2006), pp. 276-296
Published by: ISEAS - Yusof Ishak Institute
Stable URL: http://www.jstor.org/stable/25798785
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Contemporary Southeast Asia

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Contemporary Southeast Asia Vol. 28, No. 2 (2006), pp. 276-96 DOI: 10.1355/cs28-2e
? 2006 ISEAS ISSN 0219-797X print / ISSN 1793-284X electronic

Russia and Southeast Asia:


A New Relationship
LESZEK BUSZYNSKI

Russia has been struggling to develop a relationship with the Association


of Southeast Asian Nations (ASEAN) and to be included in Asia-Pacific
regionalism. The rebirth of Russia after the demise of the Soviet Union
in December 1991 brought with it a repudiation of superpower ambitions
and outlying areas such as Southeast Asia dropped in terms of priorities.
It was only after Putin emerged as president in April 2000 that Russia's
interest in Southeast Asia rekindled, and there were two reasons for
this. The first was the recognition of the importance of Asia-Pacific
regionalism for Russia's development and that the economic development
of Siberia and the Russian Far East required closer integration with
Asian regional institutions. Under Putin, Russia moved to forge closer
ties with ASEAN and to stake a claim in an emerging East Asian
regionalism, a claim that was supported by Malaysia. Moreover, Putin
became Russia's major arms salesman and sought to expand arms sales
with ASEAN actors: Vietnam, Malaysia, Indonesia, and Thailand. When
the East Asian Summit (EAS) was held in Kuala Lumpur in December
2005 Russia was poised to assume a new role in Southeast Asia.

Keywords: Asia-Pacific regionalism, President Vladimir Putin, arms sales, East


Asian Summit, Russia, ASEAN, Vietnam, Malaysia, Mahathir.

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

276
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Russia and Southeast Asia: A New Relationship 277

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

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278 Leszek Buszynski

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 die 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

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Russia and Southeast Asia: A New Relationship 279

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.

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280 Leszek Buszynski

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 Ireaty 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 [fane'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

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Russia and Southeast Asia: A New Relationship 281

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

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282 Leszek Buszynski

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).

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Russia and Southeast Asia: A New Relationship 283

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

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284 Leszek Buszynski

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

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Russia and Southeast Asia: A New Relationship 285

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 Due 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.

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286 Leszek Buszynski

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

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Russia and Southeast Asia: A New Relationship 287

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 re
marketed 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

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288 Leszek Buszynski

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 tw
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, tw
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 Mator
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

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Russia and Southeast Asia: A New Relationship 289

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-lOs. 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

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290 Leszek Buszynski

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 Surnmit 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 (BIA NovostU 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
(NEWSru.com, 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
(http://www.Channelnewsasia.com, 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

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Russia and Southeast Asia: A New Relationship 291

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.

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292 Leszek Buszynski

In his speech at the EAS, Putin stressed Russia's intention of becoming


a major supplier of oil and gas to Asia (NEWSru.com, 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 (NEWSru.com,
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

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Russia and Southeast Asia: A New Relationship 293

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.

Conclusions
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.

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294 Leszek Buszynski

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 litde 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.

NOTES
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.
Milavia SU-27 "Flanker", Military Aviation website: http://www.milavia.net/
aircraft/su-27/su-27_ops.htm.
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).
"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", NEWSru.com,
24 June 2005.

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Russia and Southeast Asia: A New Relationship 295

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. http://www.mosnews.com/news/2006/01/23/indonsub.
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.

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Leszek Buszynski is currently Professor in the Graduate School of


International Relations, International University of Japan in Niigata,
Japan.

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