The Sino-Russian Rapprochement: Energy Relations in a New Era

Rawi  Abdelal; Morena  Skalamera; Sogomon  Tarontsi

Case | HBS Case Collection | March 2015

The Sino-Russian Rapprochement: Energy Relations in a New Era

by Rawi Abdelal, Morena Skalamera and Sogomon Tarontsi

Abstract

The United States could enhance or threaten China's energy security but China was unsure of the U.S. intentions. China and the United States were both friends and potential foes. In the meantime, Russia's own ambivalent relationship with the United States and its Western allies has worsened. In this context, China and Russia have grown closer. Bilateral ties in the energy trade quickly improved: Russian oil exports expanded, while disagreements on the terms of natural gas supplies have been resolved. The case describes the impact of the interplay of great power politics, domestic political considerations, and economic factors on the efforts of the Chinese and Russian energy companies to expand business ties.

Keywords: International Relations; Energy; Trade; Conflict and Resolution; Business and Government Relations; Energy Industry; China; United States; Russia;

Language: English

Format: Print

30 pages

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Citation:

Abdelal, Rawi, Morena Skalamera, and Sogomon Tarontsi. "The Sino-Russian Rapprochement: Energy Relations in a New Era." Harvard Business School Case 715-016, March 2015.

The collapse of central authority in the Soviet Union in 1991 ushered in a period of revolutionary transformations for the states that emerged in its wake. The leaders of Russia, the USSR's successor, struggled to reestablish central authority while also seeking to avoid further disintegration, establish a democratic polity, and institute a market economy across the next several years. Russia would navigate further economic crisis and a swiftly evolving geopolitical order as it returned to the world stage. The case examines the different governance approaches adopted by Presidents Boris Yeltsin, Dmitry Medvedev and Vladimir Putin, and concludes with a discussion of Russia’s strategic challenges and opportunities in 2020. The case focuses on problems of state authority; fiscal capacity; institutionalization of political parties; relations between the federal center and provincial governments; relations between the state and big business; economic policy; international relations; and models of economic development.

Article | Notes de l'Ifri | January 23, 2020

Sanctions and the End of Trans-Atlanticism: Iran, Russia, and the Unintended Division of the West

Rawi Abdelal and Aurélie Bros

Sanctions have become the dominant tool of statecraft in the United States and other Western states, especially the European Union, since the end of the Cold War. But the systematic use of this instrument may produce unintended and somewhat paradoxical geopolitical consequences. The sanctions imposed on the Islamic Republic of Iran and the Russian Federation in the field of energy are particularly illustrative of this phenomenon.
Firstly, Iran and Russia demonstrated their resilience and a real ability to adapt, thus transforming the perspective to European companies. One of Tehran's responses to sanctions was to establish the so-called "resistance economy" in order to make Iran resistant to all kinds of economic shocks and reduce the reliance on a single commodity. For its part, Russia has adapted and offered new perspective to European and Asian businesses by creating a precedent with the case of Total. Some European companies are not ready to operate according to these rules—at least in the gas sector, as oil is too risky relative to U.S. policy and law.
Secondly, differences in the approach of the United States and Europe over the type and intensity of economic statecraft against both Iran and Russia have increasingly undermined trans-Atlanticism. The so-called secondary sanctions imposed on both Iran and Russia have become the primary vehicle for signaling and even implementing a decoupling of U.S. and European political objectives. On the one hand, the costs of complying with U.S. secondary sanctions is perceived as too high for European companies. On the other, Europeans are not ready to bear the consequences of internal U.S. divisions.
All of this might even have reinvigorated the European project, by triggering a debate on the need for European countries to protect their economic sovereignty. The European Green Deal might become the emerging unifying theme that might relaunch the European project and make Europe a fully-fledged geopolitical actor.

Keywords: geopolitics; economic sanctions; International Relations; United States; Russia; Iran; Europe;

Citation:

Abdelal, Rawi, and Aurélie Bros. "Sanctions and the End of Trans-Atlanticism: Iran, Russia, and the Unintended Division of the West." Notes de l'Ifri (January 23, 2020). View Details

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The Sino-Russian Rapprochement: Energy Relations in a New Era

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