The Asian front of the war in Ukraine

Many Asia-Pacific actors found themselves in the midst of a diplomatic tug-of-war between the West and Russia; one which is likely to reshape the international order and influence their future. Photo: vovidzha / Shutterstock

As a result of the war in Europe, many Asia-Pacific actors found themselves in the midst of a diplomatic tug-of-war between the West and Russia; one which is likely to reshape the international order and influence their future. In this context, Beijing’s choice to support the Russian narrative on the conflict in Ukraine and its refusal to implement sanctions proposed by the West has forced many countries in the region to carefully weigh up their international position. Indeed, the risk for many small and medium-sized countries is to remain isolated from Beijing, a key trading partner and the main source of investment in the region, should they decide to cut ties with Moscow. For this reason, the West’s call for unconditional support in the fight against Russia has often gone unheard in the Asia-Pacific. Noble as they may be, western motives are in fact unacceptable to many Asian actors in the absence of an alternative in terms of security and financial backing.

The war’s impact on the Asian economy

The war in Ukraine is having a dramatic impact on the economies of the Asia-Pacific region, albeit differentiated according to specific areas and countries. Given the economic structure of the countries in the region, which are generally net importers of oil, gas and food, South Asia in particular is paying the highest price. The uncontrolled rise in commodity prices has rendered some states, already struggling with a shortage of foreign exchange reserves due to the blockade of tourism and remittances caused by the pandemic, unable to pay for the necessary imports.

The most striking case of crisis in South Asia was seen in Sri Lanka, which declared a default on its foreign debt in May and is still unable to secure energy and food for its population. The effects of the war in Europe, combined with the damage caused by COVID-19, also weakened the economies of Pakistan, Bangladesh, Nepal and the Maldives, which had to resort to preliminary talks or even direct support from the International Monetary Fund to avoid a default.

Equally dramatic is the situation in Southeast Asia, where rising inflation, a slowdown in supply chains and uncertainty in financial markets are having a strong impact on regional economies. In this area, the impact of the war was high, as Russia and Ukraine are important partners for the member states of the Association of Southeast Asian Nations (ASEAN). Notably, Moscow has been the main supplier of major arms to Southeast Asia, accounting for more than 25 per cent of all deliveries over the past two decades. It has also established important partnerships with the defence sectors of Vietnam, Myanmar, Malaysia and Indonesia. Moreover, Russia is one of the world’s leading producers of fertiliser, which is exported to much of Asia. Kyiv is also a major exporter of raw materials to ASEAN countries, with Indonesia the world’s second largest importer of Ukrainian wheat in 2020. The Philippines, Thailand and Malaysia also appear on the list of the top 15 importers in recent years. In this context of economic interdependence and the export blockade of Russia and Ukraine, the sanctions regime imposed by the West has had a significant impact on ASEAN countries, with serious risks also for food security.

The magnitude of the current economic shock was such that it also had negative effects on the economies of regional powers, such as China and India. The recent economic slowdown in Beijing, due to its zero-COVID policy, has been exacerbated by the effects of the conflict in Europe. Figures show a growth of 2.5 per cent in the first half of the year, far below the annual target of 5.5 per cent set by the government. Meanwhile, driven by the cost of commodities, inflation has reached its highest level since July 2020 and the outlook is not rosy. The conflict and trade blockades are also creating enormous problems for Chinese business, and more precisely, for the transfer of products to Europe via the New Eurasian Land Bridge, one of the six corridors of China’s Belt and Road Initiative. This trade route, which passes through Kazakhstan and Russia, risks being blocked by increasing security problems and the sanctions regime. In this context, China has to consider shipping goods by sea with much longer delivery times and an ever-increasing dependence on the Strait of Malacca, a vulnerability that has worried the Chinese leadership since the early 2000s.

The war in Ukraine has also created serious problems for India, which is trying to maintain a neutral posture to alleviate the economic effects of the crisis. With inflation around seven per cent and an almost total dependence on Russian military supplies, New Delhi has greatly increased its import of Russian oil that is offered at a discounted price. Notably, in July, more than 40 per cent of Russian oil exports were bought by China and India, exactly twice as much as in July 2021. Should these trends intensify, the risk is that sanctions will have little effect on the course of the war and the management of the post-conflict situation. It is precisely from the Asia-Pacific region, therefore, that western strategy could suffer a severe blow.

Tug-of-war spills over into the Asia-Pacific

The war in Ukraine has created deep division between the West and Russia, which are putting increasing pressure on third countries to pick a side. While the major players in the Asia-Pacific can leverage their political and economic power to decide which side they are on, as in the case of China or Japan, or even opt for opportunistic neutrality, as in the case of India and Indonesia, many small and medium-sized states find themselves unable to determine their own future. What prevails in this context of extreme economic fragility and political instability are very often opportunistic assessments or short-term national interests, rather than long-term strategic visions. This may explain, at least in part, the diplomatic positions taken, and turnabouts made, by many Asia-Pacific actors towards Russia and Ukraine.

In the case of Southeast Asia, we can observe a shift in behaviour regarding the conflict over the months. On March 2nd, less than ten days after the invasion of Ukraine, eight out of ten members of the ASEAN voted in favour of the resolution condemning Russia at the UN Assembly. In that case, only Laos and Vietnam abstained. However, as the war prolonged and the economic consequences of the conflict worsened, this bloc of countries changed its attitude and dusted off its long tradition of non-interference and opted for neutrality. As a result, in the April 7th vote on the “Suspension of the Russian Federation’s Participation in the Human Rights Council”, most Southeast Asian countries abstained. Only the Philippines voted in favour.

China and India have instead followed their own well-established national strategies. Beijing has opted for a type of alignment with Moscow probably driven more by a desire to oppose NATO than by any real sharing of the Kremlin’s plans. Meanwhile, New Delhi has maintained its usual “pragmatic neutrality” which, in India’s plans, should lead, on the one hand, to the consolidation of relations with Moscow and, on the other, to the revival of those with the West eager to have the country on its side.

In contrast, the neutrality stance adopted by other South Asian countries has been driven more by the absence of real diplomatic and economic leverage than by free choice. Besides, many regional players have historically enjoyed good relations with Russia, such as Pakistan, whose former Prime Minister Imran Khan was visiting Vladimir Putin when the Russian armed forces entered Ukraine.

Why Russia’s isolation depends on the Asia-Pacific

The strategy adopted by the West to counter Russia has two dimensions. The first concerns warfare on the ground, which involves the direct supply of intelligence and weapons, while the second concerns economic pressure aimed at weakening the Russian Federation led by Putin. In order to succeed, such an ambitious plan requires a strong diplomatic effort that must also include the Asia-Pacific region. Only by “looking East”, in fact, could Russia avoid being cut off from the international system and find new partners. For now, Moscow has found many interlocutors willing to listen – thanks in part to the oil and gas discount policy it is adopting, which allows buyers to keep inflation low and the Kremlin to fuel the conflict and avoid default. In light of this, the West must try to change this dynamic if it really wants to succeed in pressuring Moscow and forcing it to accept a truce in Ukraine.

However, in the Asia-Pacific region, political and diplomatic action by the West is complicated, not least because it is unclear what the United States and the European Union can offer to the many troubled countries in search of cheap raw materials, foreign investments and technology. Even more difficult is taking political and economic initiatives in a region where China, which has no interest in supporting western demands, dominates and exerts influence. However, Washington and Brussels, together with their allies in the Asia-Pacific, should realise that the Ukrainian game is played on a global level and requires a much greater effort. Should military operations on the ground be prolonged, as is predicted in the absence of structural intervention in the region, the number of troubled nations ready to expand relations with Moscow to mitigate the devastating effects of ongoing economic crises may increase. Against this background, even if western actions in the Asia-Pacific do not seem relevant to winning the war, it should not be forgotten that this vast and dynamic region, through its choices, could determine who will win the peace.

Tiziano Marino is the head of the Asia and Pacific Desk at CeSI – the Center for International Studies, in Rome.

Asia-Pacific, Russia, Russia-Ukraine war, Ukraine