A new deal with Russia

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

The West and Russia should seek a new “grand bargain” to bridge their current differences, according to Charles Grant of the Centre for European Reform (CER).

“Relations between Russia and the West are at their prickliest since the break-up of the Soviet Union,” says the November paper, citing Russia’s opposition to a resolution of the future status of Kosovo, diverging views on Iran and the dispute over US plans to set up anti-missile sites in Eastern Europe. 

The CER paper says that “the Soviet Union was easier to deal with than Russia is today” because “you knew they were being obstructive in order to achieve an objective”. Today, “Russia seeks to block the West systemically on every subject, apparently without a purpose.”

Grant says the EU has a central role to play in any set of bargains between the West and Russia, referring to the extensive trade and investment links between the EU and Russia, which are far deeper than their Russia-US counterparts.

The EU “must be realistic” in its dealings with Russia and focus on interests rather than values, states Grant, identifiying three main areas of mutual interest where a “grand bargain” can be achieved: 

  • Energy: A mutual dependency exists between the EU and Russia, states Grant, explaining that the EU imports almost half of its gas from Russia, while the latter needs the EU as an important export market. Moreover, Russia needs Western technology and expertise to develop reserves in its far north and east, he says, advising Russia to abide by EU rules on energy markets, just as the EU has to accept that Russia limits foreign ownership of its leading energy assets.
  • Integration of Russia into the global financial system: Russian direct foreign direct investments are estimated at around $140 billion. The EU is increasingly concerned that Russia’s government is creating sovereign wealth funds to invest into foreign companies, says Grant. He advises European leaders to allow these funds to invest in European firms, as long as they are transparent and operated independently of politicians. The EU should welcome Russian acquisitions of its companies, provided that EU rules are respected and European companies gain reciprocal rights, he says. 
  • Common neigbourhood policy: The future status of Kosovo, EU dealings with former Soviet states such as Georgia and Ukraine and US plans to deploy missile defence systems in Poland and the Czech Republic are the main issues, the CER paper states. 

Grant concludes that regarding neighbourhood policy, Russia should accept that the EU has legitimate interests in the former Soviet republics and that both the EU and Russia benefit if these countries become stable and prosperous. 

The EU should work with Russia to promote peaceful change in Belarus, stability and unity in Ukraine and the resolution of “frozen conflicts” in places such as Transnistria, he says. 

On the future of Kosovo, Grant suggests linking the issue to the US anti-missile deployment plans. Europe should urge Washington to postpone the deployment indefinitely if Russia accepts independence for Kosovo in return, he says.  

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