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Olga Potyomkina

Doctor of Political Science, Head of the Regional Research Department of Institute of Europe, Russian Academy of Sciences

Numerous Russian and European declarations on the desire to strengthen trade and economic interdependence by and large turn into attempts to overcome persistent differences between the two sides, while the outcomes of Russia-EU summits are becoming increasingly difficult to analyse, since the parties discuss the same, seemingly insoluble, controversial issues, find no solutions, and fail to outline a clear-cut positive agenda.

Numerous Russian and European declarations on the desire to strengthen trade and economic interdependence by and large turn into attempts to overcome persistent differences between the two sides, while the outcomes of Russia-EU summits are becoming increasingly difficult to analyse, since the parties discuss the same, seemingly insoluble, controversial issues, find no solutions, and fail to outline a clear-cut positive agenda. The talks on the New Basic Agreement (NBA) are still suspended, while sectoral agreements, although ready for approval, are, barring rare exceptions, on hold “until the next summit” in six months’ time. However, life cannot be suspended for half a year. Russia and the European Union remain neighbors and trading partners who face the same security threats. Particular cooperation problems are dealt with by the relevant ministries and experts at Permanent Partnership Council (PPC) sessions, while the summits are designed to develop the partnership’s strategic vision, as was proclaimed by the top level Russia-EU gathering in January 2014.

This summit format differed from that of previous occasions, as EU leaders suggested cutting the discussion time and number of participants, likely in an expression of their discontent with Russia's policy toward the former Soviet Union, albeit under the official pretext of the need to concentrate on the key issues facing the relationship. The content was also meaningful, its keynote being the words uttered by European Commission President José Manuel Barroso during the final press conference: "We cannot pretend everything is all right when everything is not all right." Although still seen as strategic partners, Russia and the EU are opponents in the post-Soviet space. The controversy emerged about 10 years ago, aggravated by the launch of the Customs Union incorporating Russia, Kazakhstan and Belarus, and peaked in fall 2013 before the EU Vilnius summit that had been meant as the Eastern Partnership’s decisive step toward the European Union. And the dramatic events in Ukraine have in fact drawn a lackluster line under Russia-EU strategic cooperation.

Although still seen as strategic partners, Russia and the EU are opponents in the post-Soviet space.


Photo: RIA Novosti
South Stream Pipeline project

European and Eurasian Integration: Matching Vectors?

Importantly, the brief session in Brussels produced a belated official EU recognition of the problem, formulated by European Council President Hermann van Rompuy at the press conference: "One such issue is how the Eastern Partnership and the Customs Union initiative could relate to each other." This issue is important both for the future Russia-EU relationship and for the future functioning and interaction of the two integration groups. The Eurasian Economic Community (EAEC) and the Customs Union (CU) have learned from the EU’s experience and applied WTO norms and principles. Hence, in theory, Moscow and Brussels are poised to enter an exciting phase of interaction that could offer innovative and creative solutions. But it was the extreme politicization of the bilateral partnership on the post-Soviet space that undermined every opportunity for constructive interaction. Supporting any regional integration project at the official level, the EU has never been enthusiastic about building a relationship with the EAEC or the CU. Russia has been considering possible cooperation with the European Union within individual Eastern Partnership projects, but these have never materialized.

Today, the controversy focuses on post-Soviet states’ right to choose their own regional integration model, as it is becoming clear that one cannot both associate with the European Union and also preserve the existing level of economic relations with the Customs Union.

Russia raised the issue of the European and Eurasian integration vectors’ compatability within NBA preparations when the Eurasian Economic Commission (EEC) surfaced as a new, dynamic international actor. Despite the pause in NBA talks, in 2012 the European Commission and the EEC launched consultations covering both wide-ranging and specific issues such as information exchanges on tariff quotas for coniferous lumber exported from CU countries. While this is a Russia-EU issue, the next round may include EEC experts’ discussion on "the aspects of a future agreement that affect the supranational competence of the EEC." All parties could agree that CU experts’ participation in the talks is a constructive step toward cooperation.

And the dramatic events in Ukraine have in fact drawn a lackluster line under Russia-EU strategic cooperation.

However, while conceding that compatibility of the integration processes across the former USSR is critically important, EU leaders continue to view the EAEC as a challenge rather than as an expanded opportunity for constructive interplay, and have been quite unresponsive to President Putin's proposed future Free Trade Area (FTA) between the EU and EAEC. "We had been sure about the response: there still are many problems to be discussed… at the expert and technical level," Putin said. A different kind of response was less than likely, since the EU will set up an FTA with the United States, and it is not the Europeans who call the shots.

For the time being, Brussels is suggesting a discussion of the critical issues in Ukraine's and other association candidates' future within a bilateral working group involving Russian experts. On the one hand, the approach seems encouraging because preparations for the Ukraine-EU agreement had been hush-hush. But on the other, the EU rejects the Russian-Ukrainian proposal to discuss the situation in a trilateral format, choosing instead to preserve the bilateral red tape applied to the Eastern Partnership countries. The emerging group is not likely to dwell on future cooperation between the EU and the EAEC, but should rather serve to convince Russia about how it stands to benefit from former-Soviet states’ entering into EU association agreements.

Trade and Energy: Deeper Differences or Opportunities for Civilized Solutions?

Фото: REUTERS/Mikhail Klimentyev/RIA Novosti
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Ukraine was not the only subject on the agenda. It also contained other issues, which have become more controversial over the past year. After Russia joined the WTO, its trade relations with the European Union did not ease. The European Commission is unhappy about the protectionist measures allegedly practiced by Russia, i.e. the disposal fee on imported cars, the animal import ban, and import fees on certain products above the WTO-agreed maximum levels. The European Commission also demands a simpler procedure for export sales of lumber within the WTO. Having accepted some EU claims, Russia has amended its national law to deal with the car disposal fee situation but the issue remains unresolved.

Significantly, as a WTO member, Russia can respond to claims through arbitration as set out in the applicable regulations. Moreover, Moscow has lodged its own request for consultations on 17 antidumping measures against certain articles of Russian imports, including chemical and metallurgical products. This action was taken by member states on the basis of energy adjustments, i.e. calculated competitive advantages of Russian imports through low domestic energy prices. Moscow opposed these calculations after opportunities within EU consultations had been exhausted. Notably, possible counteraction to EU antidumping investigations into Russian exporters was a key driver for Russian accession to the WTO. The resolution of trade disputes is an established procedure within the World Trade Organization but trade differences are politicized, becoming just one more irritant in the Russia-EU relationship. On the eve of the Brussels summit, EU Trade Commissioner Karel de Gucht reiterated his disappointment about "disproportionate and discriminatory" steps Russia took within the WTO [1].

The European Commission is unhappy about the protectionist measures allegedly practiced by Russia, i.e. the disposal fee on imported cars, the animal import ban, and import fees on certain products above the WTO-agreed maximum levels. The European Commission also demands a simpler procedure for export sales of lumber within the WTO.

It has also become possible to re-classify Russia's complaints regarding the EU Third Energy Package as a trade dispute, since the demands to separate natural gas production and distribution contradict both agreements between Russia and the European Union, primarily the effective Partnership and Cooperation Agreement (PCA) and the WTO principles specifying that new accords should not impair the trading conditions stipulated by previous agreements. Meanwhile, the Third Energy Package directly affects Gazprom's interests in the construction and operation of the Nord Stream and South Stream pipelines. Hence, the Russian initiative emerged from the looming fall in incoming investments in Gazprom projects if energy package measures are applied.

Notably, commercial disputes arise against a backdrop of rising Russian gas deliveries to Europe (30 percent more year-on-year in October 2013) [2] and Gazprom's Commission-approved purchase of Dutch (WINZ and Wintershell) and German (Wingas and WIEH) companies dealing in gas storage and sales. This has bolstered Gazprom's position as an energy supplier.

The establishment of the Russia-EU working group on South Stream to analyze technical and legal aspects of the pipeline already under construction across a number of EU countries, i.e. in the south of Greece and Italy and in the north of Austria, Bulgaria, Croatia, Hungary and Slovenia, also seems a broadly constructive development. The group plans to find a solution that will de-fuse differences between the European Commission and Gazprom, quite a complicated task since the conflict of interests arises from the Third Energy Package which is used by the Commission to make project member states revise existing intergovernmental agreements on Russian gas supplies.

Nonstop Dialogue on Visa-Free Regime

Photo: euobserver.com

By the end of 2013, Moscow and Brussels completed their verification mission exchanges on the four blocs of "Common Steps Toward Visa-Free Short-Term Travel of Russian and EU Citizens": document security, including biometrics; Illegal migration, including readmission; public order, security and judicial cooperation; and external relations. The missions have presented detailed reports on the status of affairs and practical actions by the sides, as well as recommendations on all areas of the Common Steps. Russia has repeatedly expressed the hope that, as soon as the common steps are completed, the partners will launch negotiations on an agreement revoking visa requirements.

The European Commission's "First Progress Report on Implementation of Common Steps Toward Visa-Free Short-Term Travel of Russian and EU Citizens" published in December 2013 indicates that Brussels remains reluctant to move to the negotiations stage. The document does, however, indicate the significant progress made in all areas of the Common Steps, including providing Russian citizens with internationally recognized passports, implementing effective agreements on readmission and simplified visa procedure, improved asylum process, and building centers for asylum seekers and persons awaiting deportation and readmission. The report explicitly analyses new trends in Russia's policies to regulate legal and labor migration, although these issues have no direct association with the cancellation of the Schengen visas. The report also indicates that Russian law enforcers have been cooperating closely and effectively with their EU counterparts.

The European Commission's "First Progress Report on Implementation of Common Steps Toward Visa-Free Short-Term Travel of Russian and EU Citizens" published in December 2013 indicates that Brussels remains reluctant to move to the negotiations stage.

However, the final conclusions have frustrated Russian expectations of seeing the need for visas revoked anytime soon, as the Commission found that, despite Russia's progress in implementing the common steps, more needs to be done to finalize the areas outlined in the document.

The Commission has repeatedly highlighted the need to study the special reports on the potential impact of a visa-free regime on the regulation of migration flows and border security, as well as the risks of drug trafficking and illegal arms trade in a visa-free environment. Each bloc of Common Steps is covered by complaints and recommendations on eliminating shortcomings, including those of technical nature. For example, the Commission is unhappy about the absence of a Russian centralized database of registered citizens and excessively liberal rules regarding changing first and family names, which, as they see it, is fraught with abuse. Defects were also found in programs and practices for training law enforcement officers and civilian officials, as well as in the supervision of information security.

Apart from the practical recommendations, there were the political demands associated with guaranteed security of free movement. According to the Commission, Russia lacks an anti-discrimination law, which threatens travel security for members of the LGBT community. The foreign agent law is also viewed as a barrier to a visa-free regime and travel by NGO representatives. The rubber apartment law restricting the registration of numerous migrants at one location is regarded as a return to Soviet-style restrictive registration laws that violate freedom of movement. The complete elimination of the Commission’s complaints and improvement of the law and its implementation seem a never-ending prospect, while certain recommendations, especially those of a political nature, are fundamentally unacceptable, for instance dedicated anti-discrimination legislation, because all relevant matters are covered by the Constitution of the Russian Federation.

States and EU Institutions: Whom to Deal With?

It is Time to Pursue a Cooperative Greater Europe
Task Force Position Paper

Values and human rights are subjects currently under consideration by Russia and EU members alongside trade, economic and humanitarian issues. Political conditionality is not too inhibitive for broad cooperation, but EU foreign policy principles oblige its institutions – the European Commission, European External Action Service and, to the greatest extent, the European Parliament – to focus on the differences in values when dealing with Russia. In his address to the European Parliament in November 2012 Russia's Permanent Representative to the EU Vladimir Chizhov made an attempt to bring home Moscow's stance: "…understanding and respect for traditional values, which are beyond time and geographical boundaries, do help the promotion and protection of human rights and basic liberties." This position is reflected by the resolution “Promoting Human Rights and Fundamental Freedoms through a Better Understanding of Traditional Values of Humankind” of the UN Human Rights Council of September 27, 2012. The draft was put forward by Russia but received no EU support, while the European Parliament chose to refrain from the discussion. "Russia should not to use the concept of ‘traditional values’ to legitimize discrimination against minority groups, silence dissent, or violate people’s human rights," the European Parliament responded in its resolution on talks about the New Basic Agreement.

Although heads of member states are also bound by ideological tenets, they are still capable of more flexible and pragmatic policies than EU institutions.

Although heads of member states are also bound by ideological tenets, they are still capable of more flexible and pragmatic policies than EU institutions. While the German government remains unforgiving about human rights violations in Russia, a great many expectations rest on its new appointments on Russia relations as they offer prospects for constructive interaction. Does this mean that Moscow should focus on bilateral relations with member countries or, at least, on intergovernmental relations within the EU that hinge on the balance of forces on certain issues in the Council of the European Union, the key legislative body?

Actually, the latest research on Russia-EU cooperation prioritizes the intergovernmental component, while the European Parliament is seen as a minor entity unable to influence the interaction process. Russian politicians often stick to the same line, effectively ignoring European parliamentarians. European Parliament resolutions are in fact advisories that can be taken into consideration but neglected in practical matters. For example, the Council has been deaf to the Parliament's appeals about the need for a European Magnitsky List.

Bilateral ties with member states, no matter how important, should be augmented by relations with the EU institutions at different levels, including contacts between the Russian Government and the European Commission, as well as inter-parliamentary cooperation.

However, institutional changes under the Treaty of Lisbon should not be underestimated, as it has expanded the European Parliament’s functions to a greater extent against other institutions, making it increasingly important in foreign policy. Remaining beyond negotiations, the parliamentarians tend to disregard practical agreements and diplomatic compromises, concentrating instead on advancing values-oriented foreign policies even in trade and economic matters, which frequently materializes as harsh and biased criticism of Russian actions. As a result, cooperation with the European Parliament becomes burdensome, tempting one to disregard it. At the same time, the European Union’s institutional structure makes it virtually impossible to ignore it, since the European Parliament is a full-fledged participant of the legislative process and can block the approval of international agreements. For example, a final decision on the procedure for simplifying or revoking the need for visas is impossible if not passed by parliamentarians. The PCA was signed in 1994 but was approved by the European Parliament three years later.

As far as relations with EU countries are concerned, Russia should watch the differentiation processes within the Union closely as they may produce a nucleus of states willing to deepen integration. Russia has yet to develop a mechanism for engaging this group, but it may soon become an imperative.

Bilateral ties with member states, no matter how important, should be augmented by relations with the EU institutions at different levels, including contacts between the Russian Government and the European Commission, as well as inter-parliamentary cooperation. There has been no breakthrough in the Russia-EU dialogue, due both to practical differences and the personality factor. Until November 2015, Russia will have to deal with the EU’s lame ducks, that are not thinking about concrete decisions and fresh creative proposals. The anticipated shift to the right of the European Parliament may also generate a more pragmatic EU mainstream position. Hopefully the new EU leaders will focus on providing palpable content for the project on the common Lisbon-to-Vladivostok space and realize that confrontation with Russia under zero-sum game rules merely risks further destabilizing the Eurasian continent. In the long run, the painstaking cultivation of politicians keen on cooperation with Russia will bear fruit, although problems and differences will remain. The May 2014 elections to the European Parliament and the approaching EU leadership change could well become of vital significance both for the European Union and its relationship with Russia.

1. Bulletin Quotidien Europe, 10.10.2013, № 10939; 22.10.2013, № 10947; 24.01.2014, № 11003.

2. Bulletin Quotidien Europe, 17.10.2013, № 10944.

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