On October 11, the US Congress presented a bill aimed at reducing Russian gas supplies to EU (!). According to TASS, the document envisages the allocation of $1 billion to finance projects on the use of new sources of energy in the EU, as well as the provision of diplomatic and technical assistance to the European Union between 2019 and 2023. The bill envisages measures for a number of US government agencies to support private US investment in strategically important energy projects in Central and Eastern Europe.
It also proposes to allocate an annual $5 million for project evaluation and technical seminars for early stage project support. The State Department is advised to ramp up political and diplomatic assistance to certain countries in the development of their energy markets. The draft of the European Energy Security and Diversification Act was submitted by the chairman of the Senate subcommittee on European and regional security cooperation, Ron Johnson, and a fellow subcommittee member, Senator Chris Murphy.
On October 17, Russia’s Deputy Energy Minister Anatoly Yanovsky said that Russia is the only country capable of offering Europe such great volumes of natural gas so cheap, therefore there is no real alternative to pipeline gas coming to Europe from Russia. How realistic are US plans to phase Russia out of the European gas market?
Prerequisites for redrawing the European gas market arose in 2009 with the adoption of the EU’s Third Energy Package. Capitalizing on the fact that the policy of developing alternative sources of energy has led to stagnation or a bigger drop in hydrocarbon imports than expected, the European Union has switched to a strategy of diversifying supplies and, in general, imposing new rules of doing business with supplier countries. Comprehensive measures were later taken to develop a new gas import infrastructure. The past years have seen the integration of individual states’ pipelines via the construction of numerous interconnectors as part of the EU’s effort to make sure that the consumer, not the supplier, dictates the rules in the energy market. As a result, a conflict of interest between the consumer and the supplier has moved from the sphere of purely commercial disputes to the area of political confrontation between countries.
It is no secret that the United States had both geopolitical and economic reasons to encourage the Europeans’ policy, with experts still undecided which of these two reasons was actually prevalent. A more traditional standpoint explains this by the current tendency for the US to return to the world energy market as a potentially significant exporter. The energy boom that started in the US in the mid-2000s, caused by the wide-scale use of hydraulic fracturing (fracking), made the country much less dependent on foreign exports. This simultaneously revived Washington’s claim to be the main regulator (arbiter) of global hydrocarbon markets.
The United States accuses Moscow for its alleged attempts to exert political pressure against the EU and Ukraine as a pretext for its desire to limit Russia’s presence on the European energy market. When meeting with EU leaders in March 2014, US President Barack Obama demanded (!) measures from Brussels that would reduce its energy dependence on Russia. The very same desire is at the core of Washington’s rejection of the Nord Stream 2 project . Last year, the US adopted the Countering America’s Adversaries Through Sanctions Act (CAATSA) that allows Washington to impose sanctions on companies participating in the construction of any new gas pipeline. As an alternative to Russian gas, Washington is offering Europeans to buy liquid natural gas (LNG) from the United States. In summer 2017, President Donald Trump unveiled an ambitious plan to make the US the world’s number one gas supplier.
The White House hopes to make America a net exporter to the LNG market by 2020.
Well, these hopes are not entirely ungrounded though. In line with the strategy of increased gas production initiated by President George W. Bush, the US Department of Energy reported in the spring of 2018 that United States had (for the first time in 60 years) reached the net gas export. The growth of shale production allowed the United States to produce 733 billion cubic meters by the end of 2017. Now, according to lenta.ru, America accounts for 21 percent of global gas production, and Russia, for 16 percent.
That being said, there are quite a few hurdles on the way of expanded US gas supplies to Europe. There is a notable energy shortage in the US domestic market. Therefore, it is hard to imagine an effective strategy for seizing foreign energy markets based on increased export of resources that are not in sufficient supply at home. What is the point of selling what you do not have enough yourself, the business weekly Expert wonders. Storms and severe frosts that hit the US in the early 2018 led to increased consumption of natural gas in the country, effectively dashing hopes for exports abroad.
As a result, 2017 gas deliveries to Europe did not exceed 3 billion cubic meters, while Europeans’ gas consumption in 2017 had reached 500 billion cubic meters. Moreover, within the next two or three years the currently high prices in the European gas market may drop due to growing LNG supplies, Reuters reported early this month, citing Norway’s draft budget for 2019.
Any further diversification of sources of gas supply, much talked about in the EU in recent years, will only reinforce this trend. How, in this case, US authorities will manage to convince their energy producers to continue supplies to Europe, where they will have to compete with possibly cheaper Russian or Iranian oil is a big question.
Despite a notable increase in political and sanctions pressure since 2014, in late 2017, Russia accounted for 35 percent of the European gas market. Still, it has had to pay a price for this by making concessions in terms of price and terms of supply. Anticipating a further sanctions squeeze, in late December 2017, Vladimir Putin ordered corrections to the country’s energy security doctrine, the transport strategy for the period until 2030, and also the energy strategy until 2035. He also ordered new projects in the field of LNG where Russia currently occupies a rather modest niche. Russian forecast an over 40 percent increase in global demand for gas by the year 2040. The largest uptick – up to 70 percent – is projected exactly in the LNG trade where competition will obviously heat up.
At the same time, Moscow will need to work out measures to prevent competition between Russian LNG and pipeline gas, Expert believes. This would call for urgent development of technologies and infrastructure in big- and medium-scale gas liquefaction and transportation.
The turn of 2019-2020 could become a turning point for the European gas market. By the end of 2019, the ten-year Russian-Ukrainian gas transit agreement expires. To bolster its position, in 2018-2019, Gazprom plans to complete two gas transportation megaprojects – Nord Stream 2 and Turkish Stream. President Trump’s announcement of entering the market exactly in 2020 may have also factored in the assessment of Gazprom’s future plans and the EU’s next steps to “liberalize” the gas market.
Meanwhile, pragmatically-minded politicians in Europe, primarily in Germany, have consistently been supporting the idea of the entirely economic nature of the second leg of Nord Stream – Nord Stream 2.
On October 12, the Prime Minister of the German Federal State of Mecklenburg-Vorpommern, Manuela Schwezig, posted an article on the website of the weekly Wirtschaftswoche about a steady increase in energy demand in Germany, adding that natural gas is the most efficient way of meeting this demand. She refutes the notion that a new gas pipeline will allegedly make Germany more dependent on Russia. Berlin and Moscow are equally interested in ensuring reliable energy supplies, Schwezig noted. Despite some lingering disagreements between the two, they have shared interests too, including the possibility of an early return to a “close partnership.” She believes that a gradual lifting of sanctions from Russia could also speed up the normalization of relations.
There is one more geostrategic view on what is going on. Many Russian analysts believe that a long-term US strategy is not about a struggle for the gas market (European or even global) as such, but for its transformation by analogy with the current oil market. Washington’s goal is to block as many existing gas pipelines and those still under construction so that the lion’s share of gas is transported by sea in the form of LNG.
This will help ‘‘unpeg’’ gas prices from oil and transform the international gas market into a single whole – global and spot  – where transactions are short-term and made in US dollars to minimize costs and risks. Such reformatting of the market will eventually make it possible to dictate terms to sellers and buyers through exchange rules and Fed policy. This means that the main purpose of the hype that has been going on about the “shale revolution” and “snapping up the world gas market” is to keep the world’s traditional energy market pegged to the US dollar.
Both the aforementioned scenarios are fraught with serious problems for Europe. If Russia halts gas transit via Ukraine from 2020, and all attempts to avoid the blocking of Nord Stream 2 fail, Europe will have to urgently look for alternative suppliers, and US LNG will be the first thing it will have to go for. However, in this case Germany’s economic leadership will be thrown in doubt, and, consequently, the prospects of strengthening the unity of the EU.
If the European Union is to fight for real energy independence, then it will have, among other things, to look for ways to bring down the share of international commodity trade made in US in dollars. In September 2018, the European Commission President, Jean-Claude Juncker, described as “absurd” a situation where 80 percent of the EU’s its energy imports (300 billion Euros a year) are paid for in dollars. Meanwhile, a mere 2 percent Europe’s energy imports come from the United States. Juncker said that the euro should become “an instrument of a new, more sovereign Europe” and promised to “present initiatives to strengthen the international role of the euro.”
German Foreign Minister Heiko Maas later came up with a proposal for the EU to have its own system of international payments. To make this happen, European financial authorities will need a greater deal of financial centralization of the EU and a political partner for the European Central Bank in the form of a pan-European Finance Ministry.
In this largely unpredictable and controversial situation, it is necessary to prepare for different scenarios. However, this task per se could further stoke up conflicts between EU members.
Faced with this largely unpredictable and controversial situation, countries need to get ready for different scenarios.
According to one such scenario, by increasing its LNG production and export capacity, the United States can toughen its sanctions on Russia. If and when Washington is ready to replace Russian gas with its LNG, the EU could once again consider restrictions on Russian gas supplies to Europe. According to expert estimates, shale gas liquefaction plants currently under construction in the US, will not be able to produce necessary volumes before 2020 and even 2022. In spite of all sticking points currently existing between the EU and the US, after meeting with President Trump in Washington in July 2018, Jean-Claude Juncker announced the EU’s intention to build “more terminals for importing LNG from the US.”
Another option could be a possible US attempt to impose a price war on Russia. If Washington shows readiness to sell its LNG to Europe at dumping prices, Gazprom would have to engage in an even tougher political and price struggle to keep the European gas market.
First published in our partner International Affairs
-  Nord Stream 2 project envisages the construction of two legs of a gas pipeline to annually deliver 55 billion cubic meters of Russian natural gas to Germany under the Baltic Sea. The construction’s estimated cost is 9.6 billion Euros. Nord Stream 2 AG acts as the project operator, while Gazprom is the only shareholder. Due to be wrapped up before the end of 2019, Nord Stream 2 is a joint project of Russia’s Gazprom with France’s Engie, Austria’s OMV AG, UK-Dutch Royal Dutch Shell, and Germany’s Uniper and Wintershall, which will finance 50 percent of the construction costs (Deutsche Welle)
-  Spot (business deal) a contract of buying or selling a commodity, security or currency for immediate settlement (payment and delivery) on the spot date, which is normally two business days after the trade date.
A New Wave of Euroscepticism in the Heart of Europe?
As we are about to enter a new decade, the European Union seems to be facing one of its worst existential crises since its conception. Euroscepticism is not something new; ever since the efforts to achieve the European integration started in the 1950s political parties that made of anti-integration their main platform started to mushroom throughout the continent. the current pandemic, lockdown measures, an economic crisis that looms seem to be exacerbating divisive trends in Europe.
Most recently, the 2008 and 2009 financial crises that brought radicalism, populism, and fringe politics to the forefront of the political agenda again, especially in southern Europe which felt the worst effects of the economic downturn: Spain, Portugal, Italy, and Greece. six years later, in 2015, the migrant crisis further deepened the already existing fractures among member states, and particularly throughout Eastern Europe, the continent witnessed can you surge in populist narratives, however this was also the case in countries that had been traditionally immune to such rhetoric such as the Scandinavian countries, and Sweden in particular.
There is a false sense of Swedish exceptionalism for welcoming refugees. it is true that Sweden has been a generous safe haven for migrants, and they have received more refugees than many other European countries. However, one cannot assume such policy truly reflects the sentiments of the population. soon after Sweden started welcoming migrants, political parties started to turn to an ultra-nationalist, anti-immigrant rhetoric blaming massive immigration for a possible collapse of their health, social and welfare systems.
Sweden is not an isolated case, populists have had considerable media exposure and have successfully started to alter the political agenda of the European Union in recent years. they cannot and should not be taken lightly. radical political parties do have realistic chances to become mainstream alternatives and attain power in many European countries such as France, Italy, Greece, The Netherlands, Austria, Poland, Hungary, and the UK.
Populism is particularly appealing to those that feel they do not belong in a new ever-changing reality because of its reactive nature. populism reminds voters of glorious pastthat is long gone because of the actions of those currently in power. populism thrives on the division of “us” vs “them”, and on the need to protect national institutions and inherent values that are being eroded and attacked.
While Euroscepticism trends started to subside ask the European economies started to grow and the migrant inflow started to stabilise , there was a widely spread false sentiment of stability and the assumption that Euroscepticism would wither away. Brexit and the domestic and international chaos it caused in the UK and in Europe reinforced this perception. soon after the failure in negotiations and the never-ending extensions of the process did translate into a drop in the demands for a membership referendum in most European countries. However, the current development may as well reverse that trend
Populist leaders across the continent have already started to use the pandemic to legitimise many of their prior ideological stances: protectionism; anti- globalization; anti-immigration policies; closure of borders; nationalism and tougher law and order policies. Italy so country that could dictate where European politics will head to in coming months or years. Italy has been hit particularly hard in this pandemic, not only by the high human cost, but also by the dark economic prospects for the country. Italy will be stricken by the worst economic contractions in Europe and its debt is expected to rise two over 150% of their GDP. Italy is therefore set for one of the longest recoveries in Europe. with all this into account, the idea that Italy could follow the UK in its anti-European mode is something that should not be that lightly put away.
Italy has been suffering from a wave of European anti integration sentiment since the 2008 crisis, according to a survey by the Tecné Agency, 42% of Italians are in favour of withdrawal from the EU, by December last year, only 26% of them supported the idea. This percentage could increase if Italians are not happy with post-pandemic measures and could further enflame North and South existing tensions. the pandemic has struck pre-existing weaknesses and frailties and has played on a sense of abandonment. populists in Italy are not an exception amidst this pandemic: they are returning to their very familiar core book: they are portraying themselves as the only answer to protect the people.
Italians feel they were abandoned by the rest of the European Union to fend for themselves; even now when the European Union has decided on a massive asset-purchase scheme of Eurobonds or coronabonds, the Union is blind to the fact that economies among their member states will be affected differently. these has also reinforced the belief that this measure is contrary to the solidarity principle the union is based upon. Ideally, to prevent widespread feelings of inaction a lack of solidarity, Germany and France should possibly toy with the idea of a shared debt, especially when there are already apparent cases of serious insolvency from southern member states. this can also potentially limit the support for populism across the continent.
Italy in particular he’s a worrying case, unlike the UK with Brexit, Italy is a founding member of the European Union and if they were to hold a referendum on European Union membership with the same result as the 2016 one in the UK it would be catastrophic for the European Union’s credibility and legitimacy. this is a very realistic result as the post pandemic continues to impact on the continents social, economic, and political cohesion; and especially in countries, like Italy, which have been flirting on and off with populism, and they seem to be a crisis away from becoming the next Brexit or the next debt disaster in Europe.
Kosovo between USA and EU
The issue of Kosovo is yet again becoming one of the hottest on the international agenda. While the US administration is set on the early (before the presidential elections in November) signing of an agreement on normalizing relations through territorial exchanges, the European Union leadership, under pressure from Germany, is pursuing their own agenda: a settlement of political crisis in the region and prevention of a new territorial carve-up in the Balkans. These differences can well result in a buildup of tension on both coasts of the Atlantic not only regarding the Balkan but also in relation to other burning international issues.
So far, the United States is somewhat outplaying the EU on this issue. The Trump administration, after securing solidarity with Kosovo’s President Hashim Taci in his confrontation with radical Prime Minister Albin Kurti, has de facto forced the latter to resign. It is the leader of the Self-Determination Radical Movement who is strongly opposed to an agreement with Belgrade and partition of Kosovo into Serbian and Albanian parts in exchange for the lifting of Serbia’s objections to Pristina’s membership in international organizations. Considering that Serbia’s position is backed by Russia as a permanent member of the UN Security Council, there are grounds to assume that Serbia’s refusal to counteract efforts by Kosovo diplomacy will mean Kosovo’s admission to the UN as an independent state – even in the absence of a legal acknowledgment of independence on the part of Belgrade and a number of EU members (Spain Greece, Cyprus, Rumania and Slovakia).
Understandably, the EU leadership is categorically against such a prospect as undermining the unity of the organization and fraught with new changes of the Balkan borders. Brussels has been doing its utmost to consolidate Kosovo’s political landscape and at the same time isolate the chief “negotiator” with Belgrade – President Hashim Taci. The EU Commissioner for Neighborhood and Enlargement Oliver Varhelyi said openly on May 7 that Kosovo needed a strong and stable government. Commenting on the situation following the vote of no confidence in the Albin Kurti Cabinet pronounced by the Kosovo Parliament on March 25, the Commissioner pointed out that ‘time is too valuable to be lost’: “If we do want to overcome the crisis, if we do mean to put Kosovo on the European track, we must do everything we can to come to an early solution in order to set up a sustainable government”.
Pristina should have no doubts which side Brussels is on in matters relative to Kosovo’s government and partition of Kosovo into Serbian and Albanian parts. To this end, the next day, on May 8th, spokesperson for Kosovo in European Parliament Viola von Cramon said that Germany is against changing the borders between Serbia and Kosovo. In her words, any carve-up of borders in Western Balkans requires public approval at the referendum. «A solution is not in the hands of the presidents of two countries since an agreement they sign is to be ratified by the parliaments of both countries and be acceptable for all», – she said in an interview on the Kosovo TV Channel RTK.
Simultaneously, she de facto acknowledged the presence in the EU of grave differences on a further development of relations between Belgrade and Pristina. When answering a question by a Kosovo journalist as to when we can expect liberalization of visa regime between Serbia and Kosovo, Viola von Cramon said that along with the current difficulties it looks like within the EU there is no political will to take such a decision.
Spain is among countries which refuse to acknowledge self-proclaimed independence of Kosovo and which speak against a carve-up of Balkan borders. Spanish media and public opinion have been following closely all the possible scenarios of the development of the situation in the Balkans through the prism of the country’s own problems that have to do with separatism on the part of Basques and Catalonians. However, they are fairly skeptical about EU efforts.
The Spanish El Mundo writes in this regard that «in the heat of coronavirus epidemic the heads of state and government of 27 EU members and six Balkan countries held a video conference. «It is not a summit on EU expansion», – Spain keeps repeating. For if it were different, Prime Minister Pedro Sanchez would have never agreed to take part in a high-level event, which was also attended by Kosovo’s president. This summit is designed to bring the sides concerned closer and bridge the differences. Citing Brussels’ sources El Mundo admits that the EU will not be able to offer the Balkan partners the prospect of early membership in the alliance , despite reports about the start of preliminary talks with Albania and North Macedonia. «Practically everybody came to the conclusion that the European Union would not expand for at least another ten years. What happened in 2004, when 10 countries joined the EU at a time, will not take place again. No appetite, no desire. And in the light of disagreements with Hungary and Poland in recent years, nobody wants more experiments», – El Mundo reports.
Mass media in Turkey – a country that found itself locked out of the EU – are as frank in their comments on the crisis in the EU’s Balkan policy. «The decision to start talks with Albania and North Macedonia about a full membership in the European Union means that the EU’s influence in Western Balkans will increase. However, this does not mean that the region will fully fall under the influence of the EU. For nearly 20 years the Balkans have been a buffer zone between big powers. Western Balkan countries where the US influence is strong include Kosovo, Bosnia and Herzegovina, North Macedonia», – the Turkish Anadolu Ajansı news agency.
Meanwhile, it is essential to remember that a mere idea – even if hypothetical – of granting Kosovo and other Balkan territories membership in the EU comes instrumental in confrontation with the USA. The latter can use financial and military-technical support but cannot promise membership in regional blocs or multilateral trade agreements. «The battle for influence in Western Balkans is currently in full swing. Given the circumstances, it is possible to say that the EU, which chose to start talks with Albanian and North Macedonia on full membership in the European Union, outflanked its competitors and has hit the top», – the Turkish news agency reports: «Besides, the EU considers it an advantage that countries such as Greece, Slovenia and Croatia are members of the EU, while Serbia and Montenegro continue talks on membership in the EU».
Given the situation, Russia is set on close coordination of effort with Serbian leaders and support of negotiating process in a format that makes it possible to take into account the interests of Serbs and ensures the possibility of a compromise. Simultaneously, Moscow underscores the priority of the UN mechanisms over any other formats of negotiations (including under the patronage of the EU) and the importance of taking any decisions that could be reached between Belgrade and Pristina to the UN Security Council.
From our partner International Affairs
A Sad Anniversary: Ten Years of the Partnership for Modernization
One approaching anniversary seems almost entirely lost in this spring’s torrent of different celebrations and commemorative dates. Ten years ago, the “Partnership for Modernization” Russia-EU Initiative was launched. Let us recap: at the 25th Russia-EU summit in Rostov-on-Don on May 31—June 1, 2010, Russia’s President Dmitry Medvedev and President of the European Commission Jose Barroso announced that the Partnership marked a new stage and level in the cooperation between Moscow and Brussels.
Back then, the parties also outlined the priorities for their joint efforts. These included expanding opportunities for investment in the key sectors driving growth and innovations, bolstering and deepening bilateral trade and economic collaboration, and promoting small- and medium-sized enterprises. The parties noted they would prioritize the alignment of technical regulations and standards and enhanced protection of intellectual property rights. Transportation earned special mention.
Promoting a sustainable low-carbon economy and energy efficiency, and support for international talks on fighting climate change were also set as forward-looking areas for sectoral cooperation. The parties agreed to strengthen collaboration in innovation, research and development, as well as space exploration. They noted the need to ensure balanced development by addressing the regional and social consequences of economic restructuring. Additionally, the Partnership envisioned effective functioning of the judiciary and stepping up the fight against corruption, promoting people-to-people links and boosting dialogue with civil society in order to foster participation by individuals and businesses.
Russia and the European Union pinned great hopes on this initiative. On the one hand, both Moscow and Brussels clearly saw that, following the surge in the early 21st century, Russia–EU relations were stalling and becoming bogged down in endless bureaucratic approvals and they were slowed down by many disagreements within the EU itself. Russia–EU biannual summits were gradually losing substance and were becoming less and less productive. The prospects for achieving agreement on such fundamental issues as energy cooperation or a visa-free regime remained vague, while the timeline for signing a new Russia–EU framework agreement to replace the hopelessly outdated 1994 Partnership and Cooperation Agreement was moving further and further into the indeterminate future.
On the other hand, the overall political climate at the turn of the first and second decades of the 21st century favoured new initiatives in Russia-Europe relations and prompted the parties to set more ambitious goals. By 2010, the Russia–US “reset” mechanism had already been launched, Moscow’s relations with Central European states, including Poland, were gradually improving; the EU had emerged from another constitutional crisis, and the armed conflict in the South Caucasus was receding into the past. Economic ties between Russia and its western neighbours had passed through the ordeal of the global financial and economic crisis of 2008-2009 and demonstrated steady positive dynamics.
Accordingly, the parties viewed the Partnership for Modernization agreement as summing up a certain intermediate stage in Russia–EU relations and creating an additional positive impetus for endowing these relations with new dynamics. Both Moscow and Brussels had reasons to be optimistic about the future: the second decade of the 21st century promised momentous new achievements, new political and economic breakthroughs in both the West and the East of Europe.
Nowadays, the 10th anniversary of the Partnership for Modernization is unlikely to attract much attention either in Russia or in the European Union. European leaders will not arrive at a new Russia–EU summit. Experts, entrepreneurs and journalists will not flock to crowded international conferences and forums marking the anniversary. The participants in the Rostov-on-Don summit will not be looking back and reminiscing to the younger generation about the preparations, discussions, and signing of the historic Partnership announcement. The coronavirus pandemic that has stopped all air travel in a petrified Europe and imposed a strict moratorium on public events is not the only reason for this. The thing is, the Partnership is no longer worth mentioning in either the West or East.
Jose Barroso, Former President of the European Commission, has been working for the USA’s Goldman Sachs for a long time; his move to the private sector was scandalous and prompted a special investigation by the European Union. Dmitry Medvedev left the office of Russian President less than two years after the Partnership was launched and, since January 2020, following his appointment as Deputy Chair of Russia’s Security Council, he is no longer involved in matters of international economic cooperation. Today, neither of these men apparently sees the Partnership for Modernization as one of their principal political achievements. Quite possibly, many of those who worked in some way on preparing the Partnership today feel a little bit awkward: how naïve and gullible we were ten years ago if we could discuss such a document in earnest!
It is hard to believe today that, just ten years ago, such in-depth cooperation between Brussels and Moscow could have been discussed as a practical matter. It is equally hard to believe that, in November 2010, the President of Russia attended the Russia–EU summit in Lisbon and discussed the practical prospects for partnership relations between Moscow and NATO based on delineating areas of responsibility for maintaining global security.
History has amended the plans of the Rostov-on-Don summit’s participants as it saw fit. The second decade of the 21st century was a time of trial for both Russia and the EU. Both parties are emerging from this decade with a heavy burden of new and unforeseen problems; acutely exacerbated bilateral relations make this burden all the heavier. Neither the East nor the West of Europe is any longer suffused with the cheerful historical optimism of ten years ago.
Given the radically new circumstances, is it worth remembering the events of ten years ago? Apparently it is, at least to understand what went wrong, why great expectations gave way to bitter disappointments, why, instead of an upswing, everything that had been achieved collapsed. These recollections are necessary at least for us to be able to assess the prospect for Russia-EU interactions in the third decade of the 21st century realistically.
Some believe (especially in Europe, but there are also some proponents in Russia) that, as regards implementing the Partnership for Modernization, everything went well between Moscow and Brussels up until the events in Crimea and Donbass in the spring and summer of 2014. Had there been no 2014 crisis, we would have been reaping the rich harvest of a decade of a mutually advantageous partnership and would have been building tremendous plans for the future.
The tragic events of 2014 did, indeed, draw a bold line under a long stretch of Russia–EU relations, as well as nullifying the Partnership’s prospects. Yet it would be a mistake to reduce all the problems to a single, if extremely acute, crisis. Had everything been going well with the Partnership (and the plans envisioned a new framework agreement following hard on the heels of the Partnership), the 2014 crisis is unlikely to have taken place. The parties would have had enough common sense and specific economic stimuli not to cross the line that separated us from a rapid and irreversible exacerbation of relations. And, if the line was, indeed, irreversibly crossed (be it in January, March or July 2014), this would have meant that, by 2014, the parties already had no particular expectations concerning the Partnership for Modernization achieving its full fruition or some positive breakthroughs taking place in bilateral relations in general. In other words, the four years of joint work within the Partnership’s framework did not perform their role of a deterrent that, under other circumstances, the parties might have hoped for.
The Partnership’s Ambiguity: Contents and Mechanisms
Did the Partnership concept contain some initial flaws, drawbacks or ambiguities that prevented its fully-fledged implementation? Today, looking back at it with the benefit of decade-long hindsight, we have to answer that question positively. From the very outset, the concept had inbuilt contradictions inherent in both the very term “modernization” and in the priority mechanisms chosen for implementing the concept.
Let us begin with the contents. When coordinating the Partnership’s concept and when implementing it, Russia invariably stressed its technological and innovative dimension. President Dmitry Medvedev repeatedly emphasized that the concept applied primarily to deepening cooperation in high tech spheres. These have always been among the most difficult and sensitive for international cooperation in general and between Russia and the West in particular. Implementing the idea of Russia and the EU’s mutual “interpenetration” into each other’s high-tech economic sectors can be likened to the most difficult open-heart surgery, which could only be performed by a top-notch professional. Even with both parties having the political will for it, it was virtually inevitable that they would run into many difficulties in the way of the Russia-EU “modernization alliance’s” functioning.
The EU focused most on Russia’s social and political modernization, on bringing Russia’s institutions and practices up to the European level. The “Partnership for Modernization” was frequently seen as some analogue of the EU’s Eastern Partnership programme for Central European states, which mostly emphasized the humanitarian and legal aspects. Naturally, the EU would act as the mentor and Russia was assigned the role of obedient student. That also required Brussels to act with the utmost delicacy and caution (brain surgery?), which, sadly, it did not. Suffice it to recall here the activities of the EU–Russia Civil Society Forum: Brussels officials assumed the unilateral right to determine who in Russia had the right to represent this civil society and who did not. Since Russia, unlike Central European states, was not aiming to join the European Union, such a pointedly and obtrusively paternalistic attitude on the part of the EU could not but annoy Moscow.
These contradictions in defining “modernization” probably were not irreconcilable and could have been settled somehow. Moscow could have acknowledged that technological modernization is closely linked to social modernization, while it is impossible to attract European investment and technologies without improving state governance, reforming the judiciary, protecting intellectual property and the rights of investors. Brussels could have remembered that the EU had always been rather flexible in applying the principle of “political conditionality” (the requirements that the EU’s partners respect democracy, human rights and the rule of law) and could have used the experience of the EU’s relations with, for instance, China. Brussels could have entertained a broader definition of “civil society” leaders in Russia, adding some politically neutral organizations working on environmental issues, education, socially-orientated business, etc. to politically-engaged NPOs. Unfortunately, both parties preferred to insist on their own interpretations of the Partnership’s priorities, thereby provoking a negative response from their counterpart.
The parties’ different approaches were manifested in their ideas concerning the forward-looking mechanisms for implementing the Partnership. Europe would have liked to emphasize “bottom-up” modernization, meaning modernization originating in the private sector, expert networks and civil society and moving toward major economic projects and sectoral cooperation. Russia, on the contrary, prioritized “top-down” modernization, that is, modernization originating with the government and ministries and moving toward individual enterprises. Moscow had always pinned its principal hopes on sectoral dialogue as the principal mechanism for implementing the Partnership. That is, the parties’ ideas concerning the cooperation drivers were quite different from the outset.
Let us add to the mix such a complicating factor as significant structural differences in the economies in the West and the East of Europe: Moscow had always pinned its principal expectations concerning the Partnership’s implementation on big business, while Brussels invariably emphasized the EU prioritization of development of cooperation at the small- and medium-sized business level. Consequently, Russia calling for the partners in Brussels to launch the development of specific large-scale infrastructure projects and create socially significant manufacturing enterprises did not prompt a particularly enthusiastic response on the part of EU officials.
On the other hand, the EU negotiators never missed an opportunity to say that Russia’s modernization could not be efficient and comprehensive if it did not extend to the so-called “strategic sectors” protected from foreign competition by their special legal and political status and not having real stimuli for technological re-equipment and introduction of up-to-date corporate governance. It is easy to imagine the response these statements must have prompted among influential top managers of Russia’s state corporations!
Under different circumstances, a mutually acceptable balance between these two approaches could probably have been found. Unfortunately, when it came to Russia, the traditional “agency-based” practice of structuring such projects was in the way: the efforts of government officials were rarely supplemented by the requisite mobilization of the expert community. The activities of the Institute of Contemporary Development (INSOR) were an exception as INSOR came to be an important venue for collaboration between officials and independent experts. As for the European Union, it was incapable of implementing the Partnership in the “top-down” format simply because the relevant agencies in Brussels were institutionally weak: the given departments of the European Commission, headed by their Directors General, could only loosely be seen as direct counterparts of Russian ministries and agencies headed by federal ministers.
It appears, however, that the fatal blow to implementation of the Partnership was delivered by something other than the differences outlined above. Such an initiative could have been implemented only if it had been constantly kept in sight by the parties’ top leadership unconditionally prioritizing it. In the meantime, over the years since the Partnership was signed, Russia was gradually moving away from the innovative development strategy, at least in the shape and form formulated during Dmitry Medvedev’s Presidency. Jose Barroso’s team, in turn, rapidly lost interest in the Partnership following Vladimir Putin’s return to the Kremlin and switched its attention to other projects on the eastern frontiers of the European Union.
The Virtue of Necessity
We cannot go back to the year 2010. Even if, by some miracle, the conflict within and around Ukraine were to be solved promptly, on mutually acceptable grounds, the contradictions inherent in the Partnership for Modernization would not go away. Additionally, ten years on, the concept has definitely become obsolete. Our world is now different, the relations between its major actors are structured differently, the dominant ideas of the main challenges and threats faced by individual states and by humanity as a whole have changed radically.
Yet it is too early to write off the Partnership for Modernization. Its relevance might increase precisely because the past ten years have proven to be such a trial for both Brussels and Moscow. Although the European Quarter in Brussels and the Kremlin in Moscow still sound triumphant fanfares, the off-key notes in that cheerful music can be heard with increasing clarity. Little is now left of the former triumphant sentiments of both the European and Russian elites and of the European and Russian societies. The European Union faced an unprecedented migration crisis, experienced a sharp upswing in the popularity right-wing populists and Euro-sceptics, went through a painful divorce from the UK and found itself on the receiving end of the USA’s previously unthinkable hostility.
Russia had to face a variety of economic sanctions, withstand the devaluation of its currency and a drop in the population’s real incomes, and acknowledge the essential loss of its energy superpower status. Both parties are among the countries and regions particularly affected by the coronavirus pandemic. Although, over the last ten years, both the European Union and Russia have demonstrated an impressive ability to weather shocks, it must be acknowledged today they have far fewer objective grounds than ten years ago for confidence in a sunny future. Recognizing one’s weakness and vulnerability and realizing one’s common interests with a partner—surely this is a combination that produces readiness to compromise?
Europe found itself squeezed between the US, which still dominates the world and looks on Europe with ever diminishing favour, and China, which is gradually gaining power. Naturally, expanding cooperation with Moscow will not resolve all of Europe’s problems, but it might turn out to be an instrument for buttressing the EU’s current standing in global politics and the global economy and, as such, it clearly should not be neglected.
Having lost a significant chunk of its natural resource rent, Russia is being forced to seek a new socio-economic development model, and it will have to do so under extremely unfavourable external circumstances. Where will it be looking for this model? Perhaps China, India or Singapore? Even given all their advantages, it is doubtful that Asian modernization models would suit the predominantly European society that Russia was in 2010, is in 2020, and will remain in 2030, irrespective of what the many proponents of “Eurasian identity” would like to convince us of.
Is this not an incentive to start working on Partnership for Modernization 2.0? Sceptics are likely to ask: what about the unresolved problems in the east of Ukraine? What about the continuing divergence between the Russian and European political development tracks? What about the unconditional priority both Brussels and Moscow accord their own domestic issues? These questions are reasonable and fair. Yet we will never be able to answer them if we remain unable at least to pencil in a general outline of the desired common future. An attractive image of a desired future should, among other things, become a powerful stimulus for overcoming the negative legacy of the past decade, for resolving the specific issues that stand in the way of a new rapprochement between Russia and the EU.
We would very much hope that the anniversary of the Partnership for Modernization will become not only a reason to mourn the failed hopes of the past decade but also an incentive to think about the opportunities offered by the next ten years.
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