Which Way Forward for EU-Russia Relations?

By Dominik P. Jankowski and Paweł Świeżak

The results of the March 2012 presidential election in Russia were no surprise for Central European observers. Vladimir Putin, the new-old President, has returned to power and the political, social and economic atmosphere has again become tense and unpredictable. Yet the change might not be as radical as many fear. In the last few years, shifts in Russian foreign policy have not been strategic but merely tactical. During Dmitry Medvedev’s Presidency, Moscow attempted to create an atmosphere conducive to cooperation with Europe and was eager to pursue broader modernization. However, the ongoing economic crisis has revealed that Russia lacks the potential to implement any ambitious programs on the international stage. And now, Vladimir Putin will have to decide how to forge policy statements from his election campaign into real and concrete political actions. From a Central European perspective, three crucial questions have emerged following the election. First, how will Putin’s return influence Russia’s relationship with the EU? Second, what impact will that have on the potential future political and security scenarios in Europe’s Eastern neighborhood? And finally, what would a more assertive Russia mean both for the broader Central European security landscape at a time of relative U.S. retrenchment from the region, and for the prospects for sustainability and longevity of the rapprochement efforts between Moscow and several regional capitals, notably Warsaw?

EU-Russian Ambivalence

In 2012, one should expect neither major shifts nor a significant improvement in Russia’s relationship with the EU. Currently, only Brussels seems to be aware, at least rhetorically, that a bilateral strategic partnership with Russia has to be based on two staunch principles: constructive engagement and accountability. In a November 8, 2011 joint letter to EU High Representative Catherine Ashton on EU-Russia relations, Foreign Affairs Ministers Radosław Sikorski of Poland and Guido Westerwelle of Germany underlined that “there is no doubt that a strong EU-Russia relationship is achievable and throughout recent years both sides have proved that the reset and openness are tangible.” In 2011, two concrete examples provided evidence that this statement was justified.

First, on November 10, 2011, the World Trade Organization (WTO) Working Party on Russia’s accession approved the final package spelling out the terms of its entry into the organization. In recent years, the protracted negotiation process had been impeded mainly by the shift in the global economic landscape following the 2008 financial crisis and by the political stalemate in Russia’s relations with Georgia. The breakthrough was made possible not only by a change in Russia’s position — which agreed to entrust the monitoring and the electronic data exchange system for trading goods in the three transport corridors between Georgia and Russia to a private company (chosen by the Swiss) — but was also the result of the U.S. and EU’s engagement and determination to bring the talks to a successful conclusion.

For the EU, the main consequence of Russia’s accession to the WTO should be more predictable and stable trade flows, which would both cushion potential fluctuations as well as strengthen the economic security of the EU. The rules and procedures of the WTO provide the necessary protection through an effective dispute settlement mechanism against any unilateral or arbitrary introduction of restrictive trade policy measures. Moreover, the WTO system guarantees an equality of relations between partners. In reality, this implies that if any unfair trade policies are implemented by either the EU or Russia, both parties will have access to the instruments they need to respond. Therefore, one should expect that Russia’s WTO membership will provide a positive impetus for further strengthening trade exchanges, increasing levels of investment and consolidating the existing economic links. Finally, a greater predictability in trade relations could, to some extent, lessen the risk of political tensions in the future.

Second, the first signs of progress were also seen in the visa liberalization process — the single most substantial issue on the EU-Russian bilateral agenda. In 2007, Moscow and Brussels started talks about the possible liberalization of their visa regime, which could eventually lead to visa-free travel. In late 2011, Russia and the EU agreed on a set of common steps to be taken toward the regime’s full liberalization. On December 14, 2011, a Polish-Russian agreement on local border traffic in the Kaliningrad Oblast was signed. In fact, this should be perceived as a visible signal of openness on the part of both Poland and the EU toward the region, where a build-up of Russian military forces has been taking place and sensitivities abound. So far, the Polish experience in the management of local border traffic with Ukraine has indicated that numerous positive economic effects can be derived from better relations within border regions. Indeed, both Poles and Russians will benefit from the development of the tourist sector, improvement of the financial situation as well as competition in the small and medium-sized business sector. Thus, the bilateral agreement will have positive implications not only for the Polish–Russian relationship, but may also contribute to the improvement of EU-Russia relations.

Yet despite some positive signals and trends, the EU is still underperforming with regard to its relationship with Russia. Perhaps the best example of this is the Partnership for Modernization. At the EU-Russia Summit on May 31–June 1, 2010 in Rostov-on-Don, EU Commission President José Manuel Barroso and then-President Dmitry Medvedev signed a declaration of partnership. This initiative sought closer cooperation within the four “common spaces” created at the May 2003 St. Petersburg EU-Russia Summit — the Common Economic Space, the Common Space of Freedom, Security and Justice, the Common Space of External Security, and the Common Space of Research and Education. The declaration focused on expanding opportunities for investment in key sectors driving growth and innovation; strengthening scientific cooperation and the alignment of technical regulations and standards as well as a high-level enforcement of intellectual property rights; promoting a sustainable low-carbon economy and energy efficiency; ensuring the effective functioning of the judiciary and bolstering the fight against corruption; and expanding people-to-people links and enhancing dialogue with civil society. However, two years down the line one can clearly conclude that this partnership has not significantly accelerated the implementation of the EU-Russia Common Spaces, and the change in Russian leadership does not bring much faith that any notable progress will occur in the near future.

Eastern Partnership: An Equation with Multiple Unknowns

One aspect of the EU-Russia relationship that might yet flare up and raise political tensions is the Eastern Partnership Initiative (EaP), which remains the EU’s pivotal mechanism of engagement with Eastern Europe. Following the Russian presidential elections, some Central European observers have expressed serious doubts about the initiative’s prospects for success.

The past few years have surely not been an easy time for the six EaP countries. The global economic crisis as well as the Arab Spring seemed to scare the local ruling elites, and they responded with a consolidation of power, often coupled with an authoritarian stroke. Will democracy — without which one can hardly conceive of modernization and stability in the region — hold up? Some crucial evidence for answering this question will be provided this year as parliamentary elections are scheduled to take place in Armenia, Georgia and Ukraine.

The political situation in the other three EaP states has grown more complicated. First, Moldova, the greatest hope of the Eastern Partnership, has remained unstable since 2009. In the past three years, the country held parliamentary elections three times. Nicolae Timofti’s taking of the presidential office this March has brought some optimism, but the internal situation is still far from stable. In fact, the popularity of the political forces challenging rapprochement with the West has increased significantly and there is a sturdy lobby favoring stronger relations with Russia. Second, Azerbaijan has used the higher revenues from hydro-carbons sales both to support the broader development of the country as well as to augment its military capabilities. The result of this process, underpinned by activities undertaken by Russia (specifically the strengthening of military units in Abkhazia and South Ossetia, the development of military infrastructure on the territories, the prolongation of deployment of military bases in Armenia, and plans for large-scale military exercises in the Caucasus in 2012), is the substantial progression of the militarization of the South Caucasus. Should this lead to conflict at the regional level, or even open the door for Russian adventurism, it would serve to heighten Central Europe’s threat perceptions and lead to renewed calls, currently subsided, for strategic reassurance and U.S. security assets. This in turn could lead to tension in the region’s relationship with the United States, as America remains focused on conflicts in the Middle East and preoccupied with a changing Asian landscape. Third, in 2012 Belarus will once again hold “elections without any choice.” The country plunged into self-isolation following the December 2010 presidential election and Alyaksandr Lukashenka’s actions since have led to Belarus’ increasingly deeper strategic dependence on Russia. While holding the formal prerogatives of a sovereign state, Belarus is in fact losing its ability to make independent decisions with regard to the country’s future.

Eastern Europe’s fate will also be decided in the offices and corridors of Brussels, where the negotiations on the EU’s Multi-Annual Financial Framework 2014-2020 will soon be drawing to a close. Taking into account the Union’s internal problems, the prospects for maintaining the current level of expenditure on the Eastern Partnership, not to mention any possible increase, are vague. Therefore, it is possible that the principle of “more for more,” which the EU established in May 2011, will function à rebours — as “less for less.” This becomes an even more probable outcome, when financial austerity in the West is combined with the democracy challenges in the East.

Further, the still unsigned Association Agreement (which includes a Deep and Comprehensive Free Trade Agreement) between the EU and Ukraine remains a major impediment for the development prospects of the entire region. The bilateral negotiations were finalized in 2011, but the champagne corks have not popped yet. The imprisonment of former Prime Minister Yulia Tymoshenko, and the criminal charges and processes of other key figures of the Ukrainian opposition, have limited the chances of signing the agreement anytime soon. President Viktor Yanukovych has managed to lose much of the political capital and credibility that Ukraine had built after the 2004 Orange Revolution. In terms of democratic standards, Kyiv is heading toward Moscow rather than toward Warsaw. The agreement — which was supposed to serve as a signpost pointing the other countries in the region in the right direction — remains in abeyance.

With a potential Eastern European powder keg as a backdrop, Russia has not been idle. Vladimir Putin made integration of the post-Soviet space a leitmotif of his re-election campaign. The new-old President has already announced that the countries of the Commonwealth of Independent States (CIS) will top his priority list. For the past several years, the cooperation formats proposed by the Kremlin — such as the Common Economic Area and the Collective Security Treaty Organization — have been promoted with growing confidence as well as financial, political and organizational commitment. Russian attempts to reintegrate the post-Soviet space have for long been a subject of mockery. Now, however, one can clearly see a qualitative change in these initiatives. The current economic crisis, unlike the financial collapse of 1998-1999, has taken a toll on the West. The reaction of the nomenclature and clan elites of the post-Soviet states was to rely upon traditional links within the post-Soviet space rather than on the “uncertain” free-market solutions. Meanwhile, Vladimir Putin’s rule, coupled with a boom in the energy resources market, has led to an internal consolidation of both economic and political power within Russia. Moscow has tackled the effects of the 2008-2010 financial crises relatively well and has began to offer substantial financial aid to the post Soviet states (including loans to Belarus and Ukraine in 2010-2011). In fact, Russian financial assistance became particularly crucial when the lack of internal reforms led to a freeze of international aid programs granted by the International Monetary Fund (IMF). On top of that, the problems Western democracies have been facing have raised the appeal of the new Russian sociopolitical model, making it appear less archaic than before. The Russian-Georgian war of August 2008 also had a demonstrative effect — it clearly defined Russia’s “red lines,” but within the region it was also interpreted as an expression of the West’s lack of interest (or at least, its lack of effective tools to deal with an international crisis). As a result, the revival of Russia’s integration efforts has fallen on fertile ground.

In 2012, the main focus of the Kremlin’s offensive in the countries of the near abroad will most probably remain Ukraine. The non-aligned status, formally adopted by Kyiv in 2011, did not offer any answers to the key dilemmas of Ukrainian foreign and security policy. Moreover, it has not reduced Russian pressure on the country — on the contrary, this status was effectively interpreted as an invitation to increase it.

The final straw of bad news for Eastern Europe is that Russia’s integration projects do not contribute to the stability and prosperity of the region. Despite the rhetoric and the stylization of a “Eurasian Union and NATO,” the Common Economic Area and the Collective Security Treaty Organization do not resemble their Western counterparts. The dominant economic position of Russia makes it difficult to build institutions based on parity. In fact, as a result of the potential integration process one can expect a deepening of the imbalance between Russia and the CIS, as it is conducive to restoring the Soviet era economic models of centrally planned economies. The political equation in Eastern Europe, then, is dependent upon the level of moderation Russia is willing to show and the Kremlin’s sincerity in engaging constructively with the Euro-Atlantic community.

The Euro-Atlantic Community’s Tools

From a Central European perspective the crucial question is how these trends will affect the political and economic tools that the EU and the United States have at their disposal for engaging in Eastern Europe. The strategic assumption that lasting stability and prosperity are directly linked with economic modernization and political democratization remains valid. However, a mechanical and simplistic adherence to such criteria is not reasonable; in fact, often enough it appears to be an excuse for inaction. The West should therefore focus its attention on democracy as the goal (and not just the premise) of any actions it undertakes in the region. Indeed, a proactive approach — one that would enable the use of the tools that the Euro-Atlantic community has at its disposal — is necessary. These tools include:

• The resumption, after several years of stalling, of peace talks on Transnistria, where the EU and the United States have an observer status.
• The processes launched during the Polish Presidency of the Council of the EU (for instance, programs of practical cooperation with the countries in Eastern Europe within the framework of EU’s Common Security and Defense Policy) and at the Eastern Partnership Summit in September 2011 in Warsaw (among others on visa regime issues).
• The still existing prospect of signing an Association Agreement with Ukraine.
• The promising negotiations on an Association Agreement with Moldova, which has incentivized the EU to commit to fostering stability on both banks of the Dniester.
• The opening of talks on a free trade area with Georgia and Armenia.
• The renaissance of youth movements in the Eastern Partnership countries. Working groups bringing together young professionals from the West and the East to engage in discussions about the future of the EaP should be established.

In most cases of the above-mentioned processes and events, cooperation between the EU and Russia is achievable and could be fruitful for both sides. However, no one can truly guarantee that it can be sustained. Indeed, any success would depend on both sides’ goodwill.

Conclusion

It cannot be denied that in 2012, the EU will likely remain focused on attempts to overcome its internal crisis, which could, in turn, lead to a further decrease of its activities worldwide, including in Eastern Europe. Therefore, the Euro-Atlantic community should adopt a more flexible approach to its engagement in the Eastern neighborhood.

First, if the EU as a whole cannot pay as much attention to Eastern Europe as one would like, then activities in the region should be led by a group of devoted EU members — the V4, Germany, Sweden and the Baltic States are prime candidates — and supported both politically and financially by the United States.

Second, despite its internal problems, the EU should outline a plan for its actions in Eastern Europe, however limited theymight be. The plan should recognize that all of the above tools cannot be allowed to get rusty and ought to remain valid instruments of political and economic engagement.

Finally, in order to engage Russia (or at least to work out a feasible modus vivendi) the EU should continue to take action seeking to build both mutual trust and joint interests for instance by strengthening the visa dialogue and economic cooperation — while maintaining full awareness that there is no guarantee of success. Therefore, both the EU and the United States should simultaneously send a clear political message with regard to the Union’s interests in Eastern Europe, while remaining open to engagement with Russia. It is high time for the Euro-Atlantic community to draw and announce its own red lines and be willing to bring pressure to bear as necessary. In fact, two fundamental lines have remained unchanged for years — preventing any interference on the part of Russia in the domestic affairs of the EaP countries and ensuring the unresolved conflicts in the region do not escalate. Failing to do so would endanger the Eastern Partnership’s very existence and re-open old security dilemmas for the Western community in a region long hoped to remain dormant.

Dominik P. Jankowski and Paweł Świeżak serve as expert analysts at the National Security Bureau of the Republic of Poland.

This article first appeared as part of Navigating Uncertainty: U.S.-Central European Relations 2012, an Edited Volume published by the Center for European Policy Analysis (CEPA) on July 23, 2012.

The opinions, findings and conclusions expressed herein are those of the authors and do not necessarily reflect those of the National Security Bureau.