#14
Worldlink
The magazine of the World Economic Forum January-February 2002
GOING WEST
Russia’s perception of the world is changing. As Charles Grant explains, president Vladimir Putin has come to realise the importance of international political and economic cooperation Grant is director of the London-based Centre for European Reform. This article is based on an essay in "Europe After September 11", published by CER in December 2001
During the final months of 2001, Russia’s dalliance with Nato caused much interest in western Europe and the US, and some concern in the eastern European states that escaped Moscow’s domination only a decade ago. In December, Nato foreign ministers agreed to pursue the idea of a Russia-Nato Council that would discuss matters of joint concern, and in which Russia might have the right to veto certain decisions. Much less attention has focused on Russia’s increasingly close relationship with the EU, though this may have more significance in the long term.
Since September 11, president Vladimir Putin has moved deftly to position Russia as a key ally of the west in the struggle against al-Qaeda and the Taliban. Putin has moved ahead of his own defence establishment and important strands of public opinion by supporting the bombing of Afghanistan and by calmly accepting the presence of US forces on former Soviet territory. His softening of Russia’s previous hostility to Nato enlargement has upset plenty of senior figures in Moscow.
But Putin has also made it clear that he wants Russia to deepen its ties with the structures of global and European economic governance. Until recently, the Russian elite had little interest in, or knowledge of, the EU. They assumed that the bloc was a body for trade negotiations and that important power lay in the member states. In the two years since Putin became president, however, many Russians have begun to take a keen interest in the EU. They have begun to understand that it counts as an entity in itself. Russia’s liberals are keen to promote closer relations with the EU as a way of modernising their country.
Before September 11, Putin’s entourage argued that his strategy of strengthening the Russian economy depended on integration with Europe. The Kremlin was looking to the EU for a closer, high-level partnership, but felt frustrated that it did not respond. Those responsible for EU foreign policy acknowledged that its links with Russia left something to be desired. The Partnership and Cooperation Agreement, which covers trade issues, the Tacis programme of technical assistance and the twice-yearly EU-Russia summits tended to follow a bureaucrats’ agenda and to underplay the political dimension for which the Russians were looking.
The Russian side, however, often put too much emphasis on the creation of grand political structures and not enough on the nitty-gritty of the domestic reforms that would facilitate closer economic ties. The EU told the Russians that if they entered the World Trade Organisation (WTO), it would be happy to negotiate a free-trade area with them. WTO membership would require Russia to make some painful economic and legal changes, which is one reason why the talks on Russia’s joining moved slowly. Russian negotiators sometimes appeared to think that, because theirs was a large and important country, it should not have to jump through as many hoops as some others that seek WTO membership.
The Russians will not like Brussels or Geneva telling them what to do. But if they want to attract investment and strengthen their economy, they must move closer to the WTO and the EU However, the prospects of a genuine EU-Russia partnership have looked much stronger since September 11. Putin seems to have decided that Russia needs closer ties with the EU and that it must therefore implement the necessary political and economic reforms. Speaking before the Bundestag on September 25, Putin declared: "Nobody doubts the great value of Europe’s relations with the US. However, I simply think that, certainly in the long term, Europe will better consolidate its reputation as a powerful and really independent centre of international politics if it combines its own possibilities with Russia’s human, territorial and natural resources, and with Russia’s economic, cultural and defence potential."
In October, when Putin went to Brussels for a regular Russia-EU summit, he spoke of Russia’s joining the WTO and the EU. Putin and EU leaders agreed on a more substantive set of measures than are usually covered in their meetings. The Russian ambassador to the EU will have monthly meetings with the Political and Security Committee, the EU body responsible for coordinating foreign and defence policy. There will also be monthly consultations to share intelligence on criminals and terrorists, on financial transactions that could aid terrorists and on monitoring movements of materials that could be used in nuclear, biological and chemical weapons.
The EU promised to help Russia with the reforms that will be needed to facilitate its joining the WTO. For his part, Putin declared that Russia was prepared to cut farm subsidies and tariff barriers, that it would comply with WTO rules on intellectual-property rights and that it would adjust its foreign-trade laws to meet WTO requirements.
The Russian government and the EU also reaffirmed their commitment to the existing consultation on energy cooperation. The point of this dialogue is to encourage investment in Russia’s gas and oil industries, so that Russia boosts its exports and the EU gains more secure supplies. The EU, of course, is only too keen to diversify its supplies of energy away from the Gulf; with enough foreign investment, Russia could probably produce as much oil as Saudi Arabia. The EU also wants to use this dialogue to ensure, among other things, better safeguards for foreign investors, the right to inspect pipelines of mutual interest and the restructuring of gas giant Gazprom.
There is still much Russian resistance to foreign investment in natural resources. An earlier EU-Russia energy charter remains unratified by the Duma. Some influential Russians still claim that western capitalists want Russia in the WTO only to exploit the country’s mineral wealth and enrich themselves at Russia’s expense. (The mundane truth is that Russia could use WTO mechanisms to defeat protectionism by the EU or the US.) Some Russian industries might well suffer from WTO membership. But if Russia were seen as willing and able to enforce WTO rules, it would improve its miserable record of attracting foreign direct investment ($2.7 billion in 2000, compared with Poland’s $10 billion and China’s $41 billion).
If Russia made an effort it could perhaps join the WTO in 2004. Then, not only a free-trade area but even the "common European economic space", proposed in May 2001 by European Commission president Romano Prodi, would become feasible. The idea would be to extend the EU’s single market to Russia, removing non-tariff barriers to trade and investment. Russia would have to adjust much of its legislation to comply with EU norms. Both sides would have to accept the principle of mutual recognition and have confidence in each other’s inspection systems.
Closer ties between the EU and Russia must include a frank dialogue on human rights. Russia’s progress over the past decade has been impressive, but the war in Chechnya remains an ugly scar on its reputation. Encouragingly, Russia seems to have recently become more interested in talking to Chechen rebels. Its keenness to show that it is a western country – plus the evident failure of its existing policies – may be having a positive effect. On November 18, negotiators representing Putin and Chechen president Aslan Maskhadov had their first acknowledged meeting, at Moscow’s main international airport.
Russia’s participation in the anti-terrorist alliance has led EU countries – much like the US – to soften their criticism of Russian actions in Chechnya. But they have not ceased to raise human-rights issues with the Russians; nor have they forgotten their concerns about press freedom. The joint statement issued after the October EU-Russia summit declared that "media pluralism is a basic ingredient in a modern democratic society."
The best way for the EU to anchor Russia in a westward-leaning direction would be to offer the prospect of a joint EU-Russia political structure. Instead of the existing summits, a special council of EU and Russian ministers could meet regularly to discuss issues of common concern such as the Balkans, organised crime, the environment or Prodi’s proposal of a common economic space. Decisions of the council would require the consent of both partners and then be binding.
That kind of partnership will not become viable until Russia’s view of the world has evolved. Britain and France have had 40 years to adjust to the loss of empire and to understand that mid-sized countries can achieve more through integrating with neighbours than by standing alone. The Russians lost their empire only 10 years ago and some still view their country as a superpower. But as Russia gets closer to the EU and other international clubs, it will learn that integration sometimes requires giving up specific national interests in return for broader benefits. The Russians will not like the bureaucrats of Brussels or Geneva telling them what to do. But if they want to attract investment and strengthen their economy, they have no choice but to move closer to the WTO and the EU.
Putin seems to understand this. In his Bundestag speech he said: "Yes, the implementation of democratic principles in international relations, the ability to find the right resolutions and the readiness for compromise, these are difficult things. Yes, it was the Europeans themselves who first understood the importance of seeking joint resolutions and rising above national egotism. We agree, these are good ideas."
The Russians will therefore need to think hard about how their state can evolve. In the terminology of Robert Cooper, the British diplomat who wrote the essay The Post-Modern State and the New Order, states are either pre-modern (Afghanistan), modern (the classic nation state) or post-modern. Those in the EU are the most post-modern because they have learned the benefits of devolving some powers to a regional level while pushing others up to supranational institutions. Russia is a modern state with a few pre-modern zones within, notably in the Caucasus. The EU should help make Russia a post-modern state, one that, in Cooper’s words, "accepts either the necessity and desirability of interdependence, or its corollaries of openness, mutual surveillance and mutual interference". Since September 11, that task is easier.
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