Alan Kohler: Why the Ukraine war poses a grave and growing danger to Australia

China's 'no-limits' partnership with Russia is bad news for Australia, writes Alan Kohler.

China's 'no-limits' partnership with Russia is bad news for Australia, writes Alan Kohler.

A year ago I wrote: “Kyiv will fall quickly.” I was in good company and completely wrong, but oh, so glad to be wrong.

Along with just about everybody else, including Vladimir Putin, I underestimated Volodymyr Zelensky, the TV comedian who became Winston Churchill.

On February 23, just hours before Russian tanks crossed into Ukraine at Luhansk at 3.40am, Zelensky set the tone for what was to come with a video appeal direct to the Russian people, in Russian, imploring them to stop the invasion.

It didn’t work, of course, but when the Russian army tried to take Kyiv they were shocked to be repulsed in the suburbs by fierce Ukrainian resistance. Several attempts to assassinate Zelensky were thwarted as well.

Most important of all, Zelensky stayed in Kyiv, rejecting the US offer of a free ride to safety with his family. Since then he has become a sort of modern social media version of Churchillian defiance, inventing a whole new form of digital wartime statesmanship.

His videos are short and informal, designed to go viral, and to support his impassioned speeches to many parliaments, including the US, UK, EU and Australia, pleading for weapons.

Those speeches worked. Billions of dollars’ worth of military aid have poured into Ukraine, turning the invasion into a disaster for Putin.

Not only did Kyiv not fall, Russia controls only 17 per cent of Ukraine. NATO has been strengthened and Western democracies have united behind Ukraine, and will no doubt pay for the trillion-dollar rebuild when the war is eventually over.

Meanwhile, after holding up quite well last year because of selling oil and gas to India and China, Russia’s economy is falling into ruins and likely to get worse.

Three big questions

Three fundamental questions remain: First, why is Russia – a terrorist state – still a permanent member of the UN Security Council? Second, will Vladimir Putin use nuclear weapons if cornered? Third, will China escalate the conflict into a full-scale Cold War with the United States?

The answer to the first is circular: The five permanent members would have to unanimously vote one of them off, and they can each veto it so no point trying. As one expert told me: “It’s not a bug, it’s a feature” – that is, the system is meant to be dysfunctional.

That’s a joke, not ‘a feature’. The Security Council was set up with the explicit aim of preventing wars, so the fact that Russia is still sitting on it having started one is ridiculous, making a mockery of the notion we live in a rules-based global order.

China Russia G20

As Russia’s economy tanks, Vladimir Putin will be more reliant on Xi Jinping’s support. Photo: Getty

With the United Nations’ fundamental design flaw and impotence exposed, it is imperative that Russia be kicked out of the Financial Action Task Force (FATF), which was created by the G7 to limit money laundering, financing of terrorism and the proliferation of weapons of mass destruction.

There are 37 member states, including Russia, which has never even tried to obey the rules, especially about money laundering.

Russia should be expelled from FATF and the global financial system generally. As Bill Browder, CEO of hedge fund Hermitage Capital, wrote the other day: “We need to fight Russia with banks as well as tanks”.

As for Putin’s state of mind, and whether he would use a nuclear weapon, those are what former US defence secretary Donald Rumsfeld would call “known unknowns”.

On that score, there was a telling quote in the Financial Times on Friday. Russian foreign minister Sergey Lavrov was asked by an oligarch how Putin could have planned such an enormous invasion with such a tiny circle of advisers.

“He has three advisers,” Lavrov replied, according to the oligarch. “Ivan the Terrible. Peter the Great. And Catherine the Great.”

Those three advisers would probably tell him to drop an atom bomb on Kyiv, but that decision has more to do with Xi Jinping the Terrible than Ivan, Peter and Catherine.

Without China’s support even mad RasPutin would be unlikely to obliterate a Ukrainian city.

China’s empty words

There was some half-encouraging news on Friday, when China called for dialogue, de-escalation and ceasefire, and then abstained from the UN vote calling on Russia to withdraw, rather than voting against it. It’s only half-good because only Russia’s complete withdrawal from Ukraine territory will satisfy Kyiv, and Putin won’t do that. So China’s words are meaningless.

Also, China is far from neutral in this fight, and its strategic reasons for declaring a “no limits” partnership with Russia a year ago haven’t changed – that is, using Russia to push back against US hegemony and to legitimise authoritarian regimes.

There was a big leak three weeks ago that revealed China (including Hong Kong) is now by far Russia’s most important trade partner, accounting for over 20 per cent of Russian exports and 40 per cent of imports. China’s share of Russia’s imports is double the pre-war figure.

Russian semiconductor imports rose by one-third in 2022. China and Hong Kong were the main suppliers, with Turkey, Cyprus and Estonia providing grey-market conduits.

China and Hong Kong accounted for about two-thirds of reported drone and drone-component import transactions by Russia in the first nine months of 2022. These are commercial goods which Russia is repurposing for military use.

Where Australia is vulnerable

And China’s importance to Russia will only grow as Russia’s revenue declines as a result of sanctions. Its oil and gas revenues surged in 2022, but fell 40 per cent year on year in January. If that continues, China’s importance as a customer financing Russia’s war effort will only grow.

Needless to say, this is the most important issue for Australia as the Ukraine war enters its second year.

At the moment the situation is in precarious balance, with our most important trading partner walking a narrow path between supporting its “floundering ally”, as Ambrose Evans-Pritchard put it in the UK Telegraph, and being ostracised by the world along with Russia.

Steak and a flag

China’s trade bans will seem trivial if Beijing goes all-in with Russia. Photo: TND

But that balance would be upended if China gave military equipment to Russia, or went even further and did something like Roosevelt’s Lend-Lease for Britain and other allies between 1941 and 1945, in which $US720 billion in aid in today’s money was given to them for free.

That would set off a full confrontation between the democracies, led by the US, against China and the other autocracies. And that would put an end to Australia’s exports to China.

The problem for China – and therefore Australia – is that Xi Jinping has allowed himself to be fully invested in this “no limits” partnership with Putin, so that defeat in Ukraine or regime change in Russia may be regarded in Beijing as unthinkable.

If either or both were to happen and China went all-in, then even the diplomatic brilliance of Penny Wong wouldn’t be enough to save Australia’s economy from the loss of 40 per cent of our exports.

We’d be the ones in need of Lend-Lease.

Alan Kohler is founder of Eureka Report and finance presenter on ABC news. He writes twice a week for The New Daily

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