Prospects for EU-Russia relations

When EU and Russian leaders met in Khabarovsk, Siberia, on 22 May for their six-monthly summit, there was little attempt to hide the differences between the two sides. Even the presence of the Russophile Vaclav Klaus did not lead to any breakthrough. There was no meeting of minds on European security, energy or the common neighbourhood. Moscow seems to be waiting for the Spanish and Belgian presidencies next year as Sweden, which takes over on 1 July, is regarded as rather too hostile to Russia.

Since the last summit under the French presidency in Nice in November 2008 there have been a number of major developments affecting the relationship. Russia has come to recognise that it is not immune from the global economic crisis. Indeed its economy has been severely affected by reduced growth, high inflation, rising unemployment and capital flight. Second, there is a new occupant in the White House keen to see some progress in US-Russia relations. Presidents Obama and Medvedev enjoyed a good first meeting in the margins of the G20 summit in London and agreed to launch a new round of arms control negotiations. This should have a positive spin off for EU-Russia relations as well. Third, the EU has launched its Eastern Partnership designed to align several former Soviet states closer to the EU. Russia has criticised the new policy at once for being under-funded and an attempt by the EU to expand its sphere of influence in central Europe. Fourth, Russia has still not complied with all elements of the Sarkozy-Medvedev ceasefire agreement on Georgia. Indeed Russian troops are now guarding the borders of South Ossetia and Abkhazia.

The Siberian summit took place just before the fifth round of negotiations on a new agreement. So far there has been little progress in any of the four main areas: political dialogue and external security; freedom, security and justice; economic cooperation; research, education and culture. Nor has there been a meeting of minds on the type of agreement. The Russians are pushing for a framework agreement to be supplemented by sectoral agreements. The EU prefers a comprehensive agreement where nothing is agreed until everything is agreed. But both sides are beginning to understand each other better which is essential if progress is to be made.

The difficult areas of the negotiations are not surprising with energy and human rights at the top of the list. Russia was annoyed that the EU and Ukraine discussed a deal to modernise the pipelines running through Ukraine without involving Russia. Russia has sought more explicit EU support for both the Nord Stream and South Stream pipelines. President Medvedev has announced Russian proposals for a revised energy treaty that would replace the Energy Charta which Russia has signed but not ratified. President Barroso and Commissioner Piebalgs, however, have rejected this new proposal. They still insist on the validity of the Energy Charter which has been signed by over fifty states. On human rights there is concern that Russia is seeking to minimise commitments already undertaken at the OSCE and Council of Europe.

The European Parliament is pressing the Commission to be tough on Russia stressing that the violation of Georgia's territorial integrity and the January gas dispute has seriously endangered EU-Russia relations. They also want a stronger EU line on human rights and support for civil society. There are a limited number of areas of agreement between the two sides, eg. some areas of international affairs, terrorism, trafficking, science and culture. The Russians are showing renewed interest in ESDP and justice and home affairs. No one knows how long the negotiations will last. An educated guess would suggest a minimum of 18 months to two years. And then a similar time will be required for ratification.

Where does this leave EU-Russia relations? The short answer is a state of uncertainty both as regards the negotiations and in terms of wider cooperation. The recent spat between Russia and NATO over exercises in Georgia and tit-for-tat spy expulsions will also affect EU-Russia relations. Moscow seems split between those who think Russia can still go it alone in world affairs and those who would like to bring Russian fully into the international community. The debate on WTO accession is one such struggle in Moscow. Relations with the EU are another. Many in the business community and the more forward-looking politicians would prefer to continue working towards a strategic partnership with the EU. Most economists understand that Russia can only modernise its economy with the support of the EU. The crash in the Moscow stock market and the large loss of foreign capital since last August has given pause for thought. Despite the rhetoric about not fearing another Cold War, both Putin and Medvedev know that Russia could not sustain another arms race and with a falling population, there must now be worry in Moscow that they have the resources even to provide adequate defence of their own territory. Russia not only faces economic and demographic problems it also lacks friends. The only country that followed Russia into recognising the independence of South Ossetia and Abkhazia was Nicaragua.

How should the EU react to inevitable Russian pressure and attempts to divide it? The first step is for the Member States to recognise that the EU has a number of strong cards to play in negotiating with Russia. The EU has almost 500 million citizens compared to Russia's 140 million. The EU is more than ten times richer than Russia. The EU has the largest and most attractive internal market in the world and Russian companies want a slice of this cake. Europe pays top rates for Russian energy and Gazprom gets 70% of its profits from sales to the EU. The EU takes nearly 60% of total Russian exports. Moscow wants to join the WTO and the EU can help facilitate this process. Russia also wants access to EU programmes on education, research and science and it wants to facilitate travel to the EU.

Although the EU has no single big carrot on offer like enlargement it has many things that the Russians would like. EU policy, therefore, must be based on a firm understanding of its common interests and then pursuing these interests with a single voice. Difficult – yes. Impossible – no.

Fraser Cameron
Director of the EU-Russia Centre

№5(33), 2009