News Analysis
Ukrainians awoke to the sound of shelling on Feb. 24, as the long-dreaded moment had arrived. Russia had invaded Ukraine.
Russian President Vladimir Putin’s recognition of two breakaway Ukrainian republics and subsequent invasion of Ukraine has prompted the United States and Europe to bring sanctions, including shutting down the Nord Stream 2 gas pipeline, which will result in a huge financial and global power win for China.
“We will limit Russia’s ability to do business in dollars, euros, pounds, and yen. ... We’re going to stunt the ability to finance and grow the Russian military,“ said President Joe Biden in a speech on Thursday, in reaction to Russia’s invasion of Ukraine.
Refugees are now fleeing over the border into neighboring Poland. Shortages have started in Ukraine, and many businesses are closed. Global commodities prices are spiking, while stock markets are tanking, with the Dow Jones Industrial Average falling 700 points. Global wheat supplies are threatened. Thousands of miles away, Americans will be feeling the effects of the Ukraine crisis, in the form of rising gas prices.
And soon, China will have access to the cheapest gas on the planet, putting it in a position to undercut manufacturers around the globe. Furthermore, China will move closer to having Russia in its pocket.
On Feb. 21, Putin delivered an impassioned speech, demanding Ukraine to accept that Crimea is part of Russia and that Ukraine should refrain from joining NATO. At the same time, parts of two Ukrainian regions—Luhansk and Donetsk Oblast—petitioned Putin to recognize their autonomy. The two Russia-backed regions have always been pro-Russia. Consequently, he granted the request, establishing the Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR). The remainder of Luhansk and Donetsk Oblast remain under Ukrainian control.
In the early part of the week, the upper house of the Russian Parliament granted Putin the authority to use military force outside of the country. By midweek, he sent “peacekeeping” troops to the two breakaway republics, while over 150,000 Russian troops waited on the Ukrainian border. At that point, Putin was still claiming that he was not planning a full-scale invasion. On Thursday morning, however, Russian forces hit multiple targets inside of Ukraine with missile and artillery barrages. Russian paratroopers dropped into the Hostomel airport in the Kyiv region, while troops seized Chernobyl’s former nuclear power plant.
For many years, Ukraine has been the sight of an ongoing conflict between ethnic Ukrainians and ethnic Russians, as well as Russian speakers who are pro-Russian. Since 2014, roughly 14,000 people have been killed in fighting between the Russian-backed separatists and the armed forces of the Kyiv government. During this time, as many as 2 million are believed to have fled the region. This week, shelling resumed, claiming the lives of both military and civilians.
Global Response
The recognition of the separatist states, as well as the movement of Russian troops earlier in the week, elicited differing responses from the world’s most powerful nations.Hu Xijin, former editor of China’s state-run tabloid Global Times, said that Putin’s recognition of the breakaway regions was meant to “break the deadlock” of the crisis, by demonstrating “Russia’s strategic determination.”
The United States and the United Kingdom said they would move forward with sanctions.
Germany Chancellor Olaf Scholz said that he would halt authorization of the Nord Stream 2 pipeline, a move which was applauded by both the United Nations and NATO. Germany’s agreement to shut down the Nord Stream 2 pipeline is one of the most important sanctions, but one that Germany did not take lightly. Russia is Europe’s number one supplier of natural gas, therefore, a decertification of the pipeline would be a major financial setback.
Since the invasion of Ukraine, more and more countries have stepped forward with calls for sanctions, including Japan, Australia, Canada, and others.
European Commission President Ursula von der Leyen said that the European Union was preparing a strong set of sanctions designed to weaken Russia’s economy and its ability to modernize. She also said that the EU would freeze Russian assets and prevent Russian banks from accessing European financial markets.
The most damaging sanction the United States has in its arsenal is to remove Russia from the SWIFT system. This would basically make it impossible for Russia to sell its exports, ostensibly tanking the Russian economy. Originally, Biden said that this sanction would only be applied if Russia engages in a full-scale invasion of Ukraine. Russia has previously threatened the United States that removing Russia from the SWIFT would be tantamount to a declaration of war. Now that an invasion has occurred, Biden announced an increase in sanctions, but specifically said that he will not remove Russia from the SWIFT.
In addition to sanctions, Biden has authorized the movement of U.S. equipment and troops, already in Europe, to support Baltic allies, Estonia, Latvia, and Lithuania. Additionally, the president passed an executive order prohibiting U.S. trade and investment in the breakaway republics. Prime Minister Boris Johnson said the UK would freeze the assets of banks and individuals financing the region.
However, Beijing’s reaction was to refrain from calling Russia’s attack on Ukraine as an invasion, laying blame on the United States rather than Russia.
China Benefits From Russia-Ukraine Conflict, New Gas Deal
At the end of the day, the Chinese Communist Party (CCP) will be the big winner of Western sanctions on Russia.First, China needs Russia’s support on the Taiwan issue, and this Ukraine crisis ensures that they will have it.
Second, China is looking at a huge strategic gain, in terms of energy security. Russia’s Gazprom provides liquefied natural gas (LNG) to China, and Beijing has offered to soften the blow to Russia’s economy by increasing its purchase of Russian gas.
The two countries are ironing out a deal for a new pipeline, which was announced on Feb. 4 and reported to be worth $117.5 billion. The Power of Siberia-2 is expected to dramatically increase gas shipments from Russia to China. The deal will be settled in euros, as both China and Russia are trying to eliminate the use of the U.S. dollar.
This pipeline will make the CCP less susceptible to a U.S. maritime blockade of shipments from the Middle East. Currently, more than 70 percent of China’s petroleum and LNG passes through the Strait of Malacca, an area patrolled by the U.S. Seventh Fleet.
The increased sale of gas to China will not completely make up for the loss of Russian exports to Europe, but it will decrease Russia’s dependence on the European market. As an additional economic aid to Russia, Beijing lifted restrictions on imports of Russian wheat and barley. And while both countries will benefit from this transaction, it is important to remember that the two are only “allies of convenience.”
A Sino-Soviet split drove the two countries apart in 1960, and they even fought a border clash in 1969 in Heilongjiang. One reason why former U.S. President Richard Nixon went to China in 1972, during the height of the Cold War, was to establish relations with China, to balance against the USSR.
Today, the difference in economic power, and the unwillingness of Putin to play second-fiddle in a China-led world, sometimes puts the countries’ interests at odds. China will be financing the Power of Siberia-2, which has a payback period lasting until 2050. Consequently, the financing, as well as the pipeline itself, would make Russia more dependent on China—a condition that Beijing would most likely welcome, but which Putin would prefer to avoid.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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