Russian President Vladimir Putin was greeted as the guest of honour at the G20 summit in Hangzhou, China, on September 4, the international forum where the BRIC countries and their emerging market peers have started to assert themselves on the international stage.
While focussed on clinching deals on the Ukraine and Syria conflicts, Putin arrived with a long list of issues to tackle and would have been pleased by the support the Chinese have shown ahead of the trip, with Beijing sharing Moscow's his desire to rebuild international relations along multipolar lines. Making progress in securing the removal of Western sanctions was another key goal of Putin's attendance.
"President Putin will be the most important guest in Hangzhou which he will visit at the invitation of (Chinese president) Xi Jinping," the Director-General of the Department of European-Central Asian Affairs of the Foreign Ministry Gui Congyou told journalists two days before the summit.
US President Barack Obama, by contrast, awkwardly exited through the rear of Airforce One for reasons that are still unclear. Chinese airport staff failed to roll a staircase up to the plane, in what the Western press argued was a deliberate snub, though US officials later explained that the driver of the staircase didn't speak English and couldn't understand the security arrangements, so the president’s security detail decided it would be safer to exit the plane in a way that is usually reserved for high-risk places like Afghanistan.
Putin met Obama “informally”, the last time the two men will meet before the US president leaves office in January. It appears that the Russian president was keen to use the meeting before either Donald Trump or Hillary Clinton replaces Obama.
Putin also was scheduled to meet one-on-one with Germany’s Angela Merkel and France’s François Hollande, who have led Europe’s efforts to end the Ukrainian conflict.
He also met UK Prime Minister Theresa May, who is on her first foreign trip, and expressed hope that bilateral relations could be brought to a higher level both in the political and economic spheres.
Putin spent time with his Chinese counterpart discussing more economic cooperation, but the centrepiece of his visit to the summit was an attempt to reduce sanctions on Russia by the West. All sides were rattling their sabres noisily ahead of the meeting in China.
Violence in the eastern regions of Ukraine flared in the last two months and the Russians accused Ukrainian special forces of attempting to mount a sabotage raid in Crimea, killing two Ukrainians in a gun battle on the border and arresting several more. Putin ratcheted up tensions further by ordered combat readiness checks across three of Russia’s major military districts, and even ordered the ministries and Central Bank of Russia (CBR) to run stress tests to see what would happen to the economy if Russia went to war.
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) countered by amending its sanctions list on September 1, adding new names to signal that the sanctions were still a tool it could use, but playing down the change, calling it a “fine-tuning” to the existing list.
“Russia continues to provoke instability in eastern Ukraine despite its Minsk commitments,” said Acting OFAC Director John E. Smith. “Treasury stands with our partners in condemning Russia’s violation of international law, and we will continue to sanction those who threaten Ukraine’s peace, security, and sovereignty.”
The most painful changes to the list related to Russian natural gas giant Gazprom, which had a number of new subsidiaries added to the list, including Gazprom Capital, the energy company’s vehicle for raising domestic debt.
The EU is also due to decide by September 15 on another six-month extension of sanctions on 146 individuals and 37 companies. The OFAC decision was also designed to make it more difficult for EU member states to go against the US position and break ranks, suggests Tim Ash, head of CEEMEA strategy at Nomura.
The increasing unrest has been seen by some as an attempt by Putin to increase pressure ahead of his G20 meetings – and both he and Ukrainian President Petro Poroshenko have routinely pumped up military violence ahead of any major international summit as a way of forcing the other international leaders to focus on the issue.
This time Putin managed to successfully kill off a planned Normandy format meeting by leaders on the Ukraine issue, which Poroshenko would have attended, and instead browbeat Obama, Merkel and Hollande into meeting him to discuss scenarios of ending the conflict without Poroshenko’s participation. The face-saving formula is that Obama will meet Putin separately from Merkel and Hollande.
Given that Russia has taken the initiative in Syria following a short, successful military campaign there at the end of last year and it retains influence in both the Middle East and with China, Putin is gambling on the US need for Russian support elsewhere to tone down its opposition to Russia over the Ukraine.
Moreover, Putin has managed to turn the screws further recently following the rapprochement with Turkey, ending a year-long diplomatic spat that followed Ankara’s decision to shoot down a Russian bomber that had strayed into Turkish airspace. In what could have been a message to the G20 leaders, the first Russian charter flight full of Russian tourists arrived in Turkey on September 2, the day before the G20 summit began. And Putin and Turkish President Recep Tayyip Erdogan chatted happily on the podium for the G20 leaders photo.
Whatever the outcome of his talks, Putin is in a win-win situation. Even if he is unable to secure a deal with the West over Ukraine, he will score major political points with his domestic audience as the camera time shows him being tough in the international arena, fighting for Russia’s rights only two weeks before Russia goes to the polls in a general election.
The G20 meetings are important, as the Ukrainian talks are stuck in an impasse. The West, and Merkel in particular, insist that sanctions on Russia cannot be lifted until the Minsk II accord is implemented.
However, Putin has blamed Ukraine for failing to deliver on several key points in the agreement: changing the constitution, implementing an amnesty law and holding regional elections among others. Kyiv counters that Russia has not withdrawn its troops or support from the breakaway region. Indeed, this week the Bellingcat blog produced evidence that suggests as many as 10,000 Russian troops have served in Ukraine, based on photos of Russian medals awarded in 2014-2015 posted on social media. Previously there was evidence to show only a few hundred Russian troops were “holidaying” in Donbas.
But the West is suffering from Ukraine fatigue, as the Poroshenko administration has made little or no progress in its anti-corruption drive. The IMF has suspended its standby agreement and Kyiv has not received a cent for more than a year now. The IMF board said that it may meet in September and release a new tranche, but it is now talking about $700mn, which is less than the $1.7bn tranche that was due at the start of this year. All in all Kyiv is “owed” about $10bn from the $17.5bn IMF programme signed in March 2015, but it is unlikely to receive much, if any, of this amount without a change in attitude to reforms.
To highlight the issue, Ukraine in August introduced a new e-declaration system where all public employees have to list their income and assets. It was hailed by Ukraine supporters as a big step forward in the anti-corruption campaign. However, as no technical certificates were released, the site didn't work. Under pressure from international donors, Poroshenko ordered the certificates released by September 3, and, after some further software glitches, the site finally seems to be operational.
Poroshenko is in a bind; even if he wanted to change the constitution as the Minsk II peace accords on the Donbas conflict demand, he is unable to muster the two-thirds parliamentary majority that would be needed.
This makes the Putin-Obama meeting more important as a new deal that bypasses the strictures of Minsk II may be necessary to break the logjam. But because everyone has nailed their flags to their masts, it will be extremely difficult to find a new solution.
“I think what is apparent is that both sides, the Putin and Obama administrations, would like some deal done over Ukraine sooner now rather than later,” said Nomura’s Ash in an emailed note. “Russia and the US seem likely to both want to talk Ukraine at G20 and be eager to find solutions, but it remains difficult to see how any deal can be done when set against the constraints of the different agendas.”
The basis of any deal between Obama and Putin will be the importance of Russia’s influence in the Middle East. Washington has thrown its support behind Kyiv in its confrontation with Russia, but Ukraine remains a side issue to the US’ policy goals in Syria.
Russia’s importance to the US is real and necessary. Progress has apparently been made in the last months as Putin announced that Russia and the US were close to a breakthrough at his last meeting with Kerry two days before the G20 in another obvious olive branch.
“We’re gradually, gradually heading in the right direction,” the Russian president said in an interview during a visit to Vladivostok on September 2. “I don’t rule out that we’ll be able to agree on something in the near future and present our agreements to the international community.”
“The talks are very difficult,” Putin said. “One of the key problems is that we insist, and our US partners are not opposed to this, that the so-called healthy part of the opposition should be separated from the radical groups and terrorist organisations.”
Turkey has also been playing both sides and launched large-scale military operation in Syria a few weeks ago with US support, aimed at hitting Islamic State as well as Kurds allied with Turkish separatists close to the Turkish border. Putin said Ankara and Moscow “have a mutual desire to come to an agreement about the region’s problems, including the Syrian one", suggesting Putin believes he can help coordinate a tripartite alliance in the fight against IS in Syria.
BRICS at G20
In addition to the specific issues that are being discussed at the summit, the BRIC nations are keen to promote the G20 as the most important international forum for discussing global affairs. China supports Russia in its desire to switch from a unipolar to multipolar worldview and once again came out strongly in Russia’s defence.
In some goodwill frills around the event, Putin gave Chinese President Xi Jinping some Russian ice cream to honour an earlier promise. “I have brought for you a box of it as a gift,” Putin told his counterpart, who thanked him profusely.
“On every trip I make to Russia I always ask for Russian ice-cream, and then, at home, we eat it. You have the best cream,” Xi said.
More seriously, Beijing has openly and directly criticised the US-led imposition of sanctions on Russia and thrown its full support behind the Kremlin.
“Russia plays an important role in promoting the healthy and stable development of the global economy. I am confident that your participation in the G20 summit will contribute to achieving positive results at this forum,” Xi said.
Relations with the US, however, have frayed due to a border dispute between China and Japan over a group of islands in the East China Sea, but recently Beijing has told Washington to “stop playing chicken” by sending US naval vessels to patrol the area. Meanwhile, cooperation between Russia and China has gone from economic to increasingly political, and last month the two countries held their first large-scale joint military exercises in the South China Sea in a move directly pointed at Nato and the US.
For the leading BRIC countries, the G20 has become the key international forum for them to express their desires and interests in the international forum.
The G20 first took on its leading global role following the 2008 financial crisis when then US President George Bush brought the G20 together to agree a global response to the chaos on financial markets. And since then the summit has only risen in importance. A G7 summit earlier this year passed off barely without comment in the press.
In the run-up to the meeting Putin belittled the G8, from which Russia was expelled following its annexation of Crimea in 2014. Putin's spokesman Dmitry Peskov said that the G7 and G8 formats do not allow the effective discussion of the world's problems, and the president of Russia prefers to work in a “more effective international formats than the group of seven”.