Russia cannot rely on Europe for energy markets completely, as has been pointed out by the world economic crisis. European consumers are frugal when it comes to energy and have more alternative ways of saving on energy consumption. Also, Europe is not really happy with the way Russia cut off the gas supply through Ukraine last winter. From the European side – they don’t care why it had to be done. This action led to an energy deficit in Europe, and Russia is responsible for the gas deliveries. This has led to Europe looking for alternative sources and diversification – mainly through Georgia and Turkey. Of course, this does not sit well with Russia, but regardless of opinion of the respective sides involved in these dealings, Russia needs money for its state budget. Europe’s intentions on building the Nabucco pipeline are not promising to Russia and, with the current economic situation, Russia needs investments or bigger revenue from energy sales to finance the South Stream project.

Central Asian republics have been hit hard by the world economic crisis and most have large debts to Russia for its energy consumption. In addition, more and more of the republics in the post-Soviet space are looking for alternate ways and more political independence from Moscow. This means that the consumption of Russian energy in these republics will be less over time and Russian officials know that this will take a toll on the state budget. Also, some Central Asian states are truly considering the Nabucco project as a better alternative to Russia’s South Stream, and this presents a danger to the planning of the Russian budget for years to come and for aspirations in the near future regarding government spending. Moscow officials know this and are looking for ways to assure their budget allowance will grow in the near future. Focusing on just one project such as South Stream may yield a terrible blow to the Russian economy, as it is not guaranteed that the project will be completed.

Taking these things into consideration, Russia has turned to China – a country that has seen growth even in the worst times of the world economic crisis and is extremely independent in their policy building from the West and the United States. China, if the old distrust between Beijing and Moscow can be dispersed, can prove to be a very stable partner and can bring in large amount of money into the Russian economy. Everyone knows that when China is invested in an economy, they take their profits and invest it back into that country’s economy, thus assuring their investments and return will grow and their projects will prosper.

The deals signed recently with China are a step closer to diversification of Russian energy exports, which can yield outstanding results to the Russian economy. This will create a stable income into the state budget even when Europe is consuming less and if, all of a sudden, the Central Asian republics decide to go through with developing their own energy markets and exports. Beijing knows that Russia needs them more than they need Russia. There will definitely be strings attached to the deals signed that will benefit China. Currently, it is important for Russia to secure China’s interests and investment, and the rest can be left to diplomacy and leverage. So far, Russia has been good at leveraging to push through their interest. Moscow usually gives up some ground in the beginning, but gains it back within the next five or so years. The key now is not to let China secure its position and end up creating a glass ceiling for Russian policy makers.