The ties that (don’t) bind: Australia-Russia relations

In late March, Australia expelled two diplomats from the Russian Embassy in Canberra after accusing Russia of perpetrating the March poisoning of ex-Russian spy Sergei Skripal and his daughter Yulia. The Kremlin responded in kind, expelling two Australian diplomats as well as foreign staff from US and European missions whose nations also expelled diplomats from Russian embassies.

This incident is just the latest black mark against the Australian-Russian relationship. Since relations were formally established in the 1800s, the relationship has remained complex, yet distant and often hostile with numerous periods of tension and limited bilateral engagement.

A RELATIONSHIP OF MUTUAL DISTRUST

Canberra’s ideological alignment with Washington during the Cold War meant the Australia-Russia relationship was viewed with significant suspicion and was often marred by espionage scandals such as the now-infamous Petrov Affair. Despite sporadic visits by Australian prime ministers to the Soviet Union, there was continued distrust of Russian embassy staff in Canberra. After the collapse of the Soviet Union, Australia and Russia have continued to interact with one another mainly through international forums, a large Russian diaspora in Australia, and through a modest trading relationship. Total two-way merchandise trade in 2014 reached just over US$1.4 billion, putting it well outside Australia’s twenty largest trading partners.

Canberra joined international condemnation against Russia’s annexation of Crimea in early 2014, and in line with other Western nations, placed a raft of sanctions against Russian goods and individuals. Moscow responded in turn by sanctioning Australian agricultural goods in August of the same year. Prior to Russia’s trade retaliation, the downing of civilian airliner MH17 — allegedly by Russian separatists — over Ukraine in July 2014 increased tensions significantly. The downing, in which 38 Australians died, led to discussion of excluding Russian President Vladimir Putin from the G20 summit in Brisbane in November that year, and threats by Prime Minister Tony Abbott to ‘shirtfront’ Putin over the incident. While Putin was ostracised by many Western leaders at the summit, a sizeable Russian naval fleet in international waters off the northern Australian coast led to fears of muscle-flexing and forced Australia to send frigates and a surveillance plane to monitor the group.

POLAR OPPOSITES

Australia-Russia relations have not recovered from the whirlwind of events in 2014. Even prior to this, the relationship was not viewed as especially significant. Prime Minister Kevin Rudd is alleged to have told Putin that “the reason Australia and Russia have gotten along so well and have no fundamental contradictions is that we’ve hardly had anything to do with each other for the last 70 years.” The absence of any substantive relationship stems from the geopolitical realities, with Russia and Australia occupying two vastly different areas of the world and having diverging interests, priorities and political allegiances.

Russia’s economy suffers from mismanagement, consistent capital flight and corruption. It is also highly centralised and protectionist and relies heavily on resources and manufacturing. This means that Russia’s economy is more at risk to market changes than more diversified economies, evident in the domestic impact of the 1998 Russian financial crisis, the Global Financial Crisis and the sliding price of oil. As a result, Australian businesses have largely avoided investing in Russia, notwithstanding the implications of Western sanctions placed on it in recent years. Russia’s large mineral and agricultural wealth also means that key Australian exports do not enjoy a significant Russian market.

Until recently, Australia’s geographic location has also had limited strategic value for Moscow. While Japan, the US, the UK, France and Australia have military and economic dominance in the Pacific region, Moscow has used limited chequebook diplomacy in Pacific Island nations, offering significant sums of money for recognition of the breakaway regions of Georgia, Abkhazia and South Ossetia. Today, Nauru remains one of only four nations that recognise the independence of these regions. Russia has also become more active in regional forums such as ASEAN and the East Asia Summit, and has held several high-level talks with Pacific nations including a visit by Foreign Minister Sergei Lavrov to Fiji in 2012. While the level of Russian engagement in the region is limited in comparison to others like China, there is no doubt it is of strategic concern to Canberra.

IS THERE A GLIMMER OF HOPE?

Russia’s increasing belligerence, stemming from the Skripal incident, its growing friction with NATO and its continued occupation of Crimea and support for separatists in Eastern Ukraine, may reflect an emboldened Kremlin. This in turn may put Australian interests in the Asia-Pacific at risk. Russia has been increasing its participation in regional fora and expanding its relationships with key Australian partners, particularly in trade and investment as well as military sales. This comes at a time when Canberra is concerned about Chinese expansion in the region, as well as Russian cyber capabilities and visits of Russian long-range bombers and naval fleets to Indonesia.

However, it is important not to overestimate the Kremlin’s abilities in the region. While Russia’s Pacific Fleet is being modernised and expanded, a military and diplomatic expansion can only succeed where there is economic strength sufficient to absorb increases in military spending. Tellingly, Russia’s military budget has been slashed since 2016 to US$42.3 billion. As a result, the Kremlin’s more pressing concerns in Ukraine and Syria will no doubt take priority.

The direct military threat posed to Australian interests in the region will only occupy the margins of Australian strategic concern. However, this complacency is a risk to Canberra especially with allegations of Russian interference in the US election and reports suggesting hundreds of Australian businesses have fallen victim to Russian cyberattacks. While Russian military expansion is not an immediate concern for Canberra, its increasing offensive cyber capabilities pose an immediate threat to Australian industry and critical infrastructure especially as tensions remain high after the 2014 diplomatic spat between the two nations.

Further, the slowly growing trade relationship with Russia risks being irreparably damaged by Australia’s firm response to the Skripal incident. This has already been felt in the suspension of Australian uranium exports to Russia, and Russian bans on Australian agricultural exports which primarily affected the beef and butter industry. Nonetheless, the Russian export market remains small for Australian goods and sanctions on the Russian economy will make it considerably less desirable as an investment destination going forward.

Canberra’s firm response to the Skripal incident could put any hopes for a positive relationship with Moscow in jeopardy. However, Australia-Russia relations have always been fractured and fraught with opposing interests and limited interaction. For the time being, suspicion between the two nations appears set to continue, especially as Russia remains an aggressive power in Europe.