Russia And The European Union (II)

Part I

The energy relationship  

The pragmatic dimension of the relationship between the EU and the Russian Federation is within the framework of the energy relations which includes three focal issues. Nevertheless, both partners lack legally binding instruments to direct their pragmatic energy relationship. Negotiations between these partners appeared to be extremely difficult taking into consideration a deteriorated global geopolitical climate which is lacking constructive both ideas and tools for organizing the Post-Cold War global arena.

The three focal issues in the EU-Russia energy relationship are:

  1. The Partnership and Cooperation Agreement (the PCA) of 1994.
  2. The Energy Charter Treaty (the EChT).
  3. The Energy Dialogue (the ED).

In recent years, Russia became the third trade partner of the EU after the US and China. The energy relationship between Russia and the EU is very much trade relationship in regard to oil, but particularly gas. More than half of Russian foreign trade turnover and two-thirds of cumulative foreign investments in the Russian economy fall to the EU’s share. The EU is the main importer of Russian energy resources, and Russia firmly holds the position of the biggest supplier of natural gas to the EU, satisfying the overall demand for it in the EU Member States by a quarter, and remains the second most important exporter of crude oil and oil products to the EU.[1] There are many debates in the mass media as well as academic circles is Russia as an energy power misuses or might use in the future its energy weapon against the EU? As a matter of fact, both the 2004 and 2007 EU accessions of the countries coming from the ex-Soviet bloc increased sensitivity on the EU’s existing overdependence on Russian energy sources. Political conflicts between Russia and other ex-Soviet republics (especially Lithuania) are continuing, with energy being an important card in the Russian hands taking into consideration the fact that gas trade ties together Russia, Turkmenistan, Ukraine, and the EU.[2] However, the crux of the matter is that up to now there is no satisfying answer given to the question of how infrastructures created in the Soviet time can be reconstructed and adapted to a totally changed geopolitical arena after the Cold War.

Reciprocal investments in the energy sector are up to now limited for the very reason of the regulatory issue, but as well as due to preventive measures like the “third country clause” which Brussels included in its legal position. This clause clearly is targeting Russian biggest gas-supplier and exporter Gazprom and, therefore, it is unofficially called “Gazprom Clause”. In addition, electricity interconnection, although being under discussion, is so far nonexistent, for two reasons: technical and political. The EU’s external energy policy is only at an early stage of development and it gains importance usually at the time of energy crisis. It is put under the competence of the Member States and naturally the gigger Member State, the more it will try to organize relations with Russia on bilateral basis (like Italy, France or Germany); the smaller a state is, it will try to rely on the EU’s instruments, and force the others to act as a group as the example of newly accepted Member States from the East (since 2004) it shows clearly.

nordstream-2Cooperation between Russia and the EU progressively strengthens in foreign policy and security issues, in combating illegal migration, organized crime, and international terrorism. The full potential of Russia-EU interaction in these and other spheres is still to be realized, but the main achievement of recent years, which can be hardly overestimated, is the understanding increasingly gaining ground that partnership between Russia and the EU is one of the cornerstones of maintaining stability and prosperity not only in Europe but worldwide as well. Joint responsibility for finding responses to present-day challenges as well as solid and mainly positive foundations of traditional, sometimes centuries-old relations with individual EU’ Member States, common principles and ideals of European civilization, the similarity of their historical destinies – all this is shaping a genuinely strategic character of the EU-Russia’s relationship.

The Partnership and Cooperation Agreement (the PCA) was ratified in 1997 with entering into force in 1999. It was originally set up to enhance the political dialogue between the EU and Russia, and soon it was followed by similar agreements with eleven other ex-Soviet Union Republics.[3] Nevertheless, the primary task of this agreement was to promote democracy, trade, and convergence: the energy issue is delt only with Article 65, and indirectly in Article 12 refers to the freedom of transit. New negotiations occurred in July 2008 but have been soon suspended by Brussels next month due to the Georgia-Russia War for several months (resumed in 2009). The main issues of the negotiations were: the amount of and terms of buying, shipping,, and marketing of natural gas, oil, and electricity. However, in reality, deteriorated diplomatic and political relations followed by the bilateral lack of trust and opposing concepts of such arrangements like the Energy Charter, continue up today to handicap the negotiations.

The Energy Charter Treaty (the EChT) is transferring energy-related questions between the EU and Russia to the legal framework of the PCA. During the last 15 years, several attempts were made in order to find a solution to the lack of the EU-Russia legal framework. The EChT was imagined as an umbrella for dialogue and cooperation on energy between the EU and Russia. It is schemed to improve investment security for the producers and supply security for the consumers. However, its weakness is in the very fact that producers countries Russia and Norway never ratified it, while the countries that ratified the Charter, like Ukraine for example, did not respect the rules of the agreement.[4] Therefore, the EChT never was functioning properly due to the fact that it was not ratified by two focal energy producers and suppliers – Russia and Norway. In essence, defining the rules of the energy game of interdependence is the crucial requirement in the EU-Russia energy relations.[5]

The EU-Russia Energy Dialogue (the ED) was adopted in the year of 2000 and it was set up to compensate for the absence of cooperation within the EChT. The EChT is not legally binding, but rather it constitutes a permanent consultive mechanism. There were four issues for discussion of common bilateral interest put forward on the agenda:

  1. Security of supply.
  2. Investment in the Russian energy sector.
  3. Climate change.
  4. Nuclear energy.[6]

With regard to the EU’s and Russia’s legislation, there are two focal developments:

  1. For the EU: The adoption of the third package and the Lisbon Treaty, including an energy paragraph.
  2. For Russia: The two federal laws of the Russian Federation of April 2008 amending the foreign investment regime in the strategic sector of Russia’s economy, including energy as well.[7]

Obviously, all of these measures reflect a high degree of bilateral distrust and constitute additional obstacles to mutual investments and cooperation in the energy sector. The EU is clearly a weak actor in this field concerning the partnership with Russia.[8]

Formats of cooperation

The history of official relations between Moscow and Brussels counts 30 years. The very first document regulating the relations between at that time the Soviet Union and later Russia as its successor state and the EU was the Agreement on Trade and Commercial and Economic Cooperation between the USSR, on one hand, and the European Community (from 1993 the European Union), on another, signed on December 18th, 1989. At that time, it was only about the establishment of cooperation. The Partnership and Cooperation Agreement, signed four and a half years later, on June 24th, 1994, became a significant step forward as it provided the foundation for the development of enhanced relations in the political sphere, trade, and economy, in legal and humanitarian areas. The next milestone in Russia’s relations with the EU was the endorsement at the Summit in St. Petersburg in May 2003 of the concept of four Common Spaces: Common Economic Space, Common Space of Freedom, Security and Justice, Common Space of External Security, and Common Space of Research and Education, including Cultural Aspects. The implementation of the so-called Roadmaps for these Common spaces, adopted at the Summit in Moscow in May 2005, remains a key track of interaction between Russia and the EU.[9] At their Summit in London in October 2005 Russia and the EU stated the necessity to renew the legal foundation, which was no longer matching the ambition of creating the four Common Spaces and in general no longer reflected the level of cooperation achieved. At the following Summit in Sochi in May 2006, the parties reached a political agreement to start work on a new basic document, aimed at filling with additional specific substance the very idea of the strategic partnership and establishing effective mechanisms of its implementation. Negotiations on the future agreement started in 2008 and have been continued.

Putin breakfast
European Union Leaders Emmanuel Macron of France and Angela Merkel of Germany with Russian President Vladimir Putin meet in Hamburg, Germany in July 2017

The relationship between Russia and the EU is supported by a well-established institutional architecture that enables the two sides to discuss at different levels practically all problems of today’s world. The existing formats of the Russia-EU cooperation include:

  1. Summits with the participation of the President of the Russian Federation, on one hand, and the Presidents of the European Council and the European Commission, on another.
  2. Meetings between the Russian Government and the European Commission.
  3. Sessions of the Permanent Partnership Council at Foreign Ministers’ level and in other specific sectoral configurations (including justice and home affairs, energy, transport, science, and technologies, etc.).
  4. Meetings at Political Directors’ level.
  5. Regular meetings between the Permanent Representative of Russia to the EU and the Chairman of the EU Political and Security Committee.

Interaction intensified in the format of sectoral dialogues (including in such fields as energy, transport, industrial policy, information society, space) and expert consultations on foreign policy issues (more than 20 meetings per year). Meetings between members of the Federal Assembly of the Russian Federation and the European Parliament have been taking place on a regular basis. Specific tasks for the nearest future aimed at strengthening the strategic partnership between Russia and the EU are determined by the very logic of development of relations with the EU. They include transition to a visa-free regime, the establishment of more effective and result-oriented interaction in the sphere of foreign policy, crisis management, and launch of a dialogue on the “coupling” of concepts of economic and social development in Russia and the EU until 2020.

In the context of overcoming the negative impact of the global financial and economic crisis which started in 2008, the initiative, endorsed at the 25th Russia-EU Summit in Rostov-on-Don on May 31st, −June 1st, 2010, to establish a Russia-EU Partnership for Modernization acquired special significance. This partnership was designed to serve as a flexible framework for promoting reform, enhancing growth and raising competitiveness in Russia and the EU. Its priority areas include expanding opportunities for investment in innovation, enhancing and deepening bilateral trade and economic relations, promoting alignment of technical regulations and standards, advancing sustainable low-carbon economy and energy efficiency, enhancing cooperation in innovation and research, promoting people-to-people links, and enhancing dialogue with civil society and the business community. At the 26th Russia-EU Summit in Brussels on December 7th, 2010 both sides launched a Rolling Work Plan for activities within the Partnership for Modernization.

Following the political and economic recovery presided by Putin and administrated by Medvedev, Russia has emerged in the role of norm transmitter, challenging not just the US but also the EU in their self-proclaimed mission in promoting the value of democracy and human rights worldwide. Within the framework of what has been referred to as a Greater Europe, there is unease, triggered in part by the Eurozone crisis, about the EU´s future role in global affairs and, ironically, in Europe itself. No longer is it self-evident that the EU is the moral, economic and political center of Europe; it is being increasingly challenged in this role by Russia. The norms that Russia promotes are different from those propagated by the EU such as democracy, human rights and the rule of law. The Russian standard is centered on a robust and resolute interpretation of sovereignty, national self-determination, and state’s struggle against international terrorism (in Syria, for instance). If the EU is in general decline the same may be said about the US, which is no longer an uncontested global superpower. In view of its chronic economic difficulties and the conspicuous lack of political initiatives to resolve the crisis that has characterizes the administrations of Presidents Barack Obama and Donald Trump, the US has lost ground in relation to both Russia and China.

EU Russia trade relationsFrom what we know of the construction of Russia´s image over time, there is little doubt that perceptions of the American and the EU’s decline will diminish the centrality of images of the US and the EU in the Russian national identity construction. It seems like a conclusion, that just as Russia´s attention during the 20th century shifted from Europe to the US, in the near future China will probably replace the US as the yardstick against which Russia will measure itself. Ever since Peter the Great, Russia´s leaders have been careful to assert Russia´s belonging to Europe. On this basis alone the prospective shift in focus from Europe to Asia-Pacific represents a major challenge for the future constructions of Russia´s national interest and Russia’s role in global politics.

The EU-Russia relationship: Focal interests

Focal EU’s interests in the relationship with Russia are:

  1. To establish a reliable supply of gas and oil from Russia.
  2. To settle transit regimes of gas and oil from Russia.
  3. To settle the advantageous prices of the gas and oil from Russia.
  4. To reach independent access to the markets of Central Asia without being obliged to use the transit via Russia.
  5. To establish a diversification in the energy mix, particularly of the new Member States from Central Europe, for the sake to avoid supply crisis as it happened, for instance, in winter 2009.
  6. To fix energy efficiency in the producer countries.

Focal Russia’s interests in dealing with the EU are:

  1. To remain the major player in the important EU’s gas and oil market.
  2. To have reliable and economically beneficiary transit routs or direct infrastructure regarding the export of the gas and oil on the EU’s market.
  3. To have the security of demand in gas and oil in the coming decades, in order to engage in investments.
  4. To increase energy efficiency as flaring and transport.
  5. To avoid conflicts, especially with the new eastern EU’s Member States (joined the EU in 2004, 2007, and 2013), but as well as with the other former republics of the USSR.[10]

Final remarks

During the first decade after the Cold War, before Russia renewed her international and regional reputation and self-assertion under the President Vladimir Putin, many of the principles contained later in the EU’s European Neighborhood Policy have been applied in reality by Brussels to Russia at that time lead by pro-Western leadership of Boris Yeltsin and his liberal Governments. The EU-Russia relationships in the 1990s were very asymmetrical and involving the attempts of conditionality practice by Brussels followed by an effort to “Europeanize” Russia and export West European norms and values to it. However, with its rejection of the European Neighborhood Policy by the EU, Putin’s Russia demanded a turning point in the relations with Brussels in which Russia was going to be respected as an equal partner but not a subordinated client as it is the case with all Central and East European states in their relations with the EU. Nevertheless, the EU’s relationship with Russia does not have a clear trajectory, particularly taking into consideration many political irritants that have the potential to halt progress.

The gap that has emerged between Russia and the EU including particularly strong Russophobic discourse in some new Member States, has reduced the trust that may be focal for the inclusion of Russia in the space for compromise dialogue and interaction that the EU formally is trying to establish. Very much will depend primarily on domestic developments in Russia which are due to the policy of West are getting defensive patriotic tendencies since the beginning of this millennium.

As a matter of fact, Russia is since 2004 once again a major player in global politics and international affairs and her political elite will for sure not accept the treatment of Russia as a kind of subordinated or junior partner of the sort that Brussels (and Washington) envisaged in the first post-Cold War’s decade.[11]

Reposts are welcomed with the reference to ORIENTAL REVIEW.

Endnotes:

[1] Roger E. Kanet (ed.), Russian Foreign Policy in the 21st Century, New York, USA: Palgrave Macmillan, 2011, 266.

[2] See more in [Simon Pirani (ed.), Russian and CIS Gas Markets and Their Impact on Europe, Oxford: Oxford University Press, 2009].

[3] See http://europa.eu on Partnership and Cooperation Agreements, 2009.

[4] Sergei Selivestov, Energy Security of Russia and the EU: Current Legal Problems, Note de l’lfri: Paris, 2009.

[5] Roger E. Kanet (ed.), Russian Foreign Policy in the 21st Century, New York, USA: Palgrave Macmillan, 2011, 274.

[6] “EU-Russia Energy Dialogue”, EurActiv, 2006-10-22.

[7] Sergei Selivestov, Energy Security of Russia and the EU: Current Legal Problems, Note de l’lfri: Paris, 2009, 16.

[8] On the issue of Russia’s geopolitics of energy resourses, see in [Срђан Перишић, Нова геополитика Русије, Београд: Медија центар „Одбрана“, 2015, 165−182].

[9] See [Commission of the European Communities, “EU-Russia Common Space, Progress Report 2009”, 2010].

[10] Bertil Nygren, The Rebuilding of Greater Russia: Putin’s Foreign Policy Toward the CIS Countries, Abingdon, UK: Routledge, 2007; Simon Pirani (ed.), Russian and CIS Gas Markets and Their Impact on Europe, Oxford, UK: Oxford University Press, 2009.

[11] Timothy Garton Ash, Free World: America, Europe, and the Surprising Future of the West, New York: Random House, 2004.

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