At a critical moment in global power relationships, President Vladimir Putin will become the first Russian head of state to visit Australia, for APEC in September 2007. Twenty other national leaders will accompany Putin, participating in the Heads of Government Meeting in Sydney.
With Australian allies, the United States and the United Kingdom, addressing military and economic troubles and showing signs of reviving Cold War hostilities, Putin could prove a challenging guest. He is engaged in a public, but mock friendly, battle of wits with the President of the United States, who is frequently left wrong-footed. Moscow has seized the upper hand in Central Asia, where the United States clearly had other intentions, and sought to build alternative routes for oil and gas to Europe. Putin has also helped create a new international organisation - the Shanghai Cooperation Organisation - with conspicuous deference to China.
Increasingly, writers are pointing out that American pre-eminence has depended substantially on the ability to control the global economy, requiring that the dollar continue to be linked to oil reserves. But the plan to control two-thirds of the world’s remaining petroleum - which is in the Caspian Basin - and demand payment in dollars is in trouble. Some predict that oil will soon no longer be traded in petrodollars, the USD will lose its place as the world’s “reserve currency”, and America will slide into economic decline.
America’s problems are complex, and the Russian bear is a reassuring, but wily, scapegoat. Putin has recently withdrawn Russia from the post-Cold War treaty restricting the deployment of forces in Europe, in a robust response to a proposed American missile defence system in Poland and the Czech Republic. Moreover, he has struck at a major pillar of post-1945 global order by questioning the continued viability of global institutional and power structures like the IMF, World Bank and World Trade Organisation that are perceived to serve American interests.
This environment will pose unfamiliar challenges for the APEC host nation, Australia. With the end of the Soviet Union, it has been inclined to see Russia as a distant nation, with limited relevance to Australia, requiring only basic diplomatic attention.
Apart from leverage as a critical energy supplier to Europe and Asia, Moscow has emerged as a formidable producer of advanced military technology. These successes have helped it amass the world’s third largest foreign exchange surplus, and equipped it to pressure a weakening American dollar. In addition, Russia’s vast territory, its high quality technical expertise and its inexpensive labour make it likely to emerge in the future as a serious competitor to Australia in global commodity markets.
Australian media has reported little of the above. It has ignored the potential of the Shanghai Cooperation Organisation, which with Russia, China and four Central Asian states as members, and India, Pakistan, Iran and Mongolia as observers, could emerge as a strategic grouping overshadowing APEC.
Putin has steadily recaptured initiative from the United States that was lost due to the weak and ineffectual leadership of Boris Yelstin. Russia has regained its economic footing, its regional influence and its international prestige, posing a real challenge to America in critical and sensitive areas.
Putin is a polished diplomatic operator and is likely to respect the measured proceedings of an APEC Summit; however, this will not prevent him using the occasion to advance Russian interests. There will be opportunities to use Russia’s standing with China and Japan to remind the United States and its allies that the oil wealth, strategic Eurasian position, advanced military technology and mature strategic leadership of Putin’s Russia make it not just a force in European energy politics, but also in Asian regional groupings.
The Sydney meeting will highlight the fact that, since its establishment by the Hawke Labour Government with twelve members in 1989, APEC has been transformed. It was founded at a time when the American and Japanese economies dominated the new organisation. Due largely to the addition of China and Russia, APEC’s membership is beginning to dwarf the significance of both G8 and European groupings.
The combined landmass, population, resources and economic dynamism of China, Japan, India and Russia is beginning to make traditional Western groupings look puny in contrast. Should India succeed in lobbying for APEC membership, existing developed world groupings would diminish in influence. It is probable that the positions adopted towards Indian membership by the United States, China and Russia respectively will highlight the growing fluidity of important global alignments. All major players - America, Russia and China - are eagerly wooing India as an ally.
No other leader is as skilled as Putin in making the dramatic move or statement nor has a comparable record of playing a weak hand with such conspicuous dexterity. He has resurrected a nation and its people from imminent decline, marginalisation and subordination. With a domestic approval rating about 85 per cent, he casts a troubling shadow over the leader of the democratic West, who is struggling to retain support above 25 per cent. The timing of September 15 for a report from General Petraeus and Ambassador Crocker on the Iraq situation will also distract the American leadership, accentuating its problems.
The presence of President Putin at the 2007 APEC Summit is likely to focus attention on some difficult future choices for Australian leaders. If economic, political and military misjudgments continue to compromise American power, how must Australia position itself? Can Australia ensure that the major players of its region continue to organise internationally within a potentially benign organisation, like APEC? Or will Australia be confronted with alien organisations, like the SCO, redefining the world around it?
These issues will grow in importance after September 2007, but the APEC 2007 Summit may mark a critical moment when Australia’s future is at the mercy of interaction between an astute Russian President and a distracted American President. Asian and Latin American leaders seem to have less at stake and may remain seemingly impassive, if carefully observing, on the margins.