A Strange Way of Doing Business

It is a mistake to assume that everyone is the same. People can be as different as night and day. In terms of doing business, consider the economic relationship between Russia and China. It is not like the relationship between other countries. As an example, consider the case of a Sierra Leone flagged Hong Kong cargo ship, New Star. It was fired upon by Russian warships and sank in icy waters after leaving a Russian port in February 2009. Eight sailors from the New Star’s crew were lost in the incident. Why did the Russians open fire on an unarmed ship? The cargo ship had left the Russian pacific coast port of Nakhodka without permission, and subsequently failed to stop. The Russian warships fired over 500 rounds at the unarmed Chinese ship.

The Chinese government demanded an investigation into the incident. The captain of the cargo ship said he was attempting to obey the Russian directive to return to port, but his main engine was shot out and his rudder busted. The Russian government refused to take responsibility, and blamed the ship’s captain. A Chinese foreign ministry official reacted by saying that the Russian attitude was “hard to understand and unacceptable.” Deputy Foreign Minister Li Hui summoned the Russian ambassador to China, reportedly saying that Beijing was shocked that Russian warships would open fire on an unarmed civilian vessel.

More recently, the head of a Russian bathroom fixture company was taken hostage (along with his translator) by Chinese workers after he failed to pay more than $500,000 owed to the Chinese. When the Russian consulate in Shanghai sent a diplomat to negotiate the release of the executive, the angry workers took the diplomat hostage as well. The three Russians (executive, translator and diplomat) were held in a small room, doused with water, and denied food. Meanwhile, the local Chinese police refused to intervene. After some financial haggling, the three Russians were released.

Such incidents (as above) are suggestive, and perhaps characteristic. Many observers have commented on the gangster element in Russian capitalism. Historians have long noted the gangster element in Russian politics. However we evaluate the state of Russian-Chinese commercial relations, we can hardly begin to understand the reality of these two powers. Moscow and Beijing are highly secretive. Their objectives are never spoken out loud. In terms of the largest project between them, the two countries have been negotiating intensively over a gas deal. Of course, they have not been able to agree on price, and may not agree for a long while. According to news reports, Russia has promised to supply China with 68 billion cubic meters of natural gas per year for 30 years via a pipeline. Chinese President Hu Jintao has stated that China intends to boost its bilateral trade with Russia to $100 billion per year by 2015 and then double that figure by 2020. But is this realistic, and is this motivated by political and military factors rather than economic factors?

On 26 July the Washington Times made mention of a classified U.S. intelligence report which concluded that Russian military intelligence (GRU) was behind the bombing of the U.S. Embassy in Tbilisi, Georgia, last September. American diplomats have pressed the Russian Foreign Ministry for an explanation as to why the Russians bombed a U.S. Embassy. The Russians officially deny involvement in the bombing. Like the Chinese after the sinking of their cargo ship, the Americans are “seriously concerned.” The Washington Times ran another story about Russia on 4 August which described how the Russian intelligence services “have stepped up a campaign of intimidation and dirty tricks against U.S. officials and diplomats in Russia and the countries that used to form the Soviet Union.” Breaking into the homes of American diplomats, sending anonymous threats, leaking scandalous pictures are among the dirty tricks. President Obama’s “reset” of Russian relations has been a failure. Some officials argue that the top leadership in Russia are sincere in wanting better relations, but hardline KGB officers are determined to undermine these efforts.

Perhaps the spirit of Russia’s overall policy, which is mirrored in the actions of lower-level officials, is always giving the game away. With Prime Minister Putin referring to America as a “parasite” on the world economy, and given Russia’s 2008 military aggression against Georgia, it is hard to see a real difference between the behavior of top officials and lower-level officials. Always blaming foreigners, always pushing the least advantage even when it makes no sense, the Russian leadership follows the Josef Stalin School of interaction. This school relies on thuggish methods, outrageous lies, constant complaints, and cheating.

We know that the KGB/FSB dominates the Russian elite. The only question is: why do the Chinese want to increase their level of trade with Moscow?

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jrnyquist [at] aol [dot] com ()
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