China-Russia is a match made in heaven

As Russian President Vladimir Putin signed Russia's historic $400 billion gas-supply agreement with China, he must have felt the satisfaction of a chess grandmaster revealing the inexorable outcome of a complicated endgame.

In theory, the next phase of the chess match between Russia and the West in Ukraine will only begin with the Ukrainian presidential election on Sunday. But Putin's positioning of the pieces means the outcome is pre-ordained, no matter who emerges as the next president in Kiev.

No wonder the Russian stock market and ruble have both rebounded - with the MSCI Russia index gaining 20 per cent in dollar terms since its low point on March 14.

Having secured the territorial windfall of Crimea in March, Putin went on to achieve his main tactical objective in April. This was to destabilise Ukraine to the point where nobody could seriously contemplate the country joining the European Union (EU), much less the North Atlantic Treaty Organisation (NATO).

Just as important, from Putin's standpoint, the combination of internal chaos and improvised plebiscites and Russian military exercises being conducted on the Ukrainian border, distracted Western attention from the Crimean issue. He deflected the threat of additional sanctions from the legality of Russia's annexation to the feasibility of Ukraine's presidential election.

Now that analysts are predicting no major violence at Sunday's election, it is hard to see what arguments the West could offer for tightening sanctions - or how they would find the unity to do it if they tried. The incorporation of Crimea into Russian national territory has, in effect, been accepted by the world as irreversible.

Given Sevastopol's priceless strategic significance as a naval base, not to mention the Russian people's affection for Crimea as a vacation, retirement and cultural destination, the restoration of Crimea would, on its own, likely guarantee Putin's political popularity for many years to come. But last week the news for Putin got even better.

Russia's strategic gains in Crimea and Ukraine were already apparent by early May, when the Moscow stock market and the ruble started rapidly rising. But now the United States and Europe have delivered Putin another - even bigger - economic and geopolitical windfall: the prospect of a Sino-Russian partnership to balance NATO and the U.S. alliances in Asia.

A few months ago, neither Moscow nor Beijing would have imagined a Eurasian partnership possible - or even desirable. Against a different diplomatic background, Wednesday's (May 21) Sino-Russian gas agreement might have been just another trade deal. It would seemingly have had no great geopolitical significance apart from its impact on energy prices in different parts of the world.

But things look very different in the light of recent global confrontations, not only between the West and Russia over Ukraine, but also between the United States and China - over Japan, Vietnam, the Philippines and, most recently, cyber-espionage.

When we consider the Western diplomatic ineptitude responsible for these events, culminating in Washington's decision to issue arrest warrants for leading Chinese military figures the very day that Putin arrived in Shanghai (on May 19), the 30-year energy deal between Russia and China becomes key.

Perhaps Putin's trip to Shanghai could even mark the start of a strategic realignment between nuclear superpowers comparable to the tectonic shifts that began with President Richard M. Nixon's visit to China in 1972. This suggestion may seem far-fetched and grandiose, but there are five reasons why Western leaders are over-optimistic and short-sighted simply to dismiss this idea - as they have done in the past.

1.  RISE AND DECLINE: China is obviously a rising superpower while Russia is a declining one. This means that both will inevitably experience frictions with the United States and Europe, the hegemonic powers that now dominate global politics and economics. Since Russia is declining, its frictions will mainly involve encroachments on what Russia sees as its economic or territorial prerogatives by U.S. allies in Europe. That is how Russians see the current confrontation over Ukraine. Since China is rising, it will create frictions by encroaching on U.S. allies in the Pacific. In both cases, Moscow and Beijing will be opposed by the United States.

2. PROJECTION OF FORCE: U.S. dominance is on the decline - not because the United States is becoming economically or technologically weaker but because the American public is disillusioned with foreign adventures. They are no longer willing to act as global policemen. This means that U.S. allies can no longer realistically rely on Washington to deter Russia and China, especially in minor territorial disputes. Even if U.S. protection is theoretically "guaranteed" by treaties on mutual defence.

3. A PERFECT MATCHL: A Sino-Russian axis is a natural fit. The two countries' economies, military capabilities and even demographics complement each other. Russia has excess resources but a shortage of manpower. China faces the opposite problems. Russia is strong in advanced military technologies, aeronautics and software - but weak in mass production of consumer goods and electronic hardware. China has the converse strengths and weaknesses.

4. A BIGGER POTENTIAL COALITION: A strategic partnership between the world's second largest and sixth largest economies (by purchasing power parity exchange rates) could attract other countries, especially in Asia, that were unable or unwilling to commit themselves to Western standards of political democracy, corporate governance, trade and financial openness or quality and safety of consumer products.

5. A COMMON ENEMY: Perhaps most important, a new element has suddenly been injected into super-power relationships by the events in Ukraine, combined with U.S. President Barack Obama's unexpected belligerence to China during his trip to Asia last month. While Chinese and Russian leaders have historically distrusted, and even disliked, one another, they are starting to dislike the United States even more.

Russia's reasons are obvious. In the case of China, there was less distrust until Washington suddenly turned up the heat on cyber-espionage and territorial disputes in the China Seas.

Perhaps this confrontational behaviour is just a brief aberration. But if Obama continues to needle and provoke China, he will not just be making an historic blunder - he will be playing straight into Putin's strategy.