Russia and Southeast Asia: Fading Hope for Energy Cooperation

By Dana Kozhakhmetova | May 2, 2017

While officially declaring a new political course with a focus on Asia, Russia’s presence in the region is limited to fragmented and not very consistent participation in ASEAN as a dialog partner. One of the most promising projects in the region was a  nuclear energy partnership, but this was shut down due to a variety of political and economic reasons. It does not seem like Russia can actually commit to other nuclear energy projects at this time.

Apart from political rhetoric and arms trade, Russia is far from South East Asian region both in terms of politics and business, let alone geography. The only relatively strong link was Vietnam which had strong ties with USSR and where Russia is considered a strategic partner. Building a nuclear energy plant with a full service package, which includes post construction service and training, was the biggest project for Russian state-owned Rosatom. The project was supposed to serve as a takeoff platform to expand nuclear energy projects further in Southeast Asia, but so far that has mostly failed to materialize.

Russia also has already signed agreements on expanding cooperation in this sector with Myanmar, Cambodia, Thailand, and Laos. However, realistically speaking, none of these nuclear projects are going to happen in the observable future. So far there is no single operating nuclear reactor in Southeast Asia for commercial purposes. One planned reactor in Vietnam “Ninh Thuan 1” was supposed to open up an era of nuclear energy in the region. Prospects were very optimistic when Vietnam first announced its plans in 2006 to commission 2 gigawatts of nuclear power by 2020. By 2030, the government was planning to have 14 nuclear reactors in operation. However, since 2006 the political and economic conjuncture and public opinion changed radically to the point where the whole plan is put to a halt, and “Ninh Thuan 1” is postponed indefinitely.

One main reason is that the project is no longer economically viable and politically feasible. Apart from the increased cost of the project, it also might be the current anti-corruption campaign in Vietnam that is contributing to the halt of the nuclear project. Additionally, the controversial project was announced at the time when public attention to environmental issues has been on the rise.

Despite long negotiations revolving around this nuclear energy deal, it seems that Russia did not assess the political risk and take into account the energy dynamics in the region. It tried to leverage political relations and extrapolate it to business. However, there was a failure to re-adjust the question “What do Vietnam political elites want and what do regional business interests want?” leading to the result we are observing now – Russia lost its main major hope to establish stronger presence in the region.

Instead of wasting resources and time, Moscow should re-assess its understanding of the Southeast Asia region and be pragmatic about its needs and internal dynamics. There is certainly a big demand for energy, but this demand could be satisfied with other means rather than unpopular nuclear energy. One of the most underestimated areas for cooperation, in my opinion, is hydropower. Russia is considered to be the fifth largest producer of hydropower in the world. Southeast Asian countries are also expanding their plans on building hydropower plant. According to International Hydropower Association, 15.2 GW of hydropower is already installed in Vietnam, and further advances of this renewable resource are anticipated. Therefore, Russia should really change a focus of its policy and divert it from unpopular nuclear to the renewable resource hydropower.

Dana studies Environmental Policy and International Economics with regional focus on China. With her background in telecom, she is interested in technology sector and problems of innovation in China, as well as clean energy and Chinese corporations.