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EU-Russia Review Oct2007.Pdf FOREWORD One of the main issues the EU Russia Centre seeks to promote is the importance of the EU speaking with one voice towards Russia. Politicians, diplomats, officials and others all agree with this aim. Yet the EU rarely manages to achieve a united position, let alone articulate one towards its large eastern neighbour. The EU- Russia summit at Samara on 30 May 2007 was an example of the Union speaking as one, but it came from a defensive position, not a coherent, positive, forward- looking approach. One of the main reasons for the EU’s failure to speak and act as one towards Moscow is the very substantial number of bilateral relationships that many member states enjoy with Russia. This is most apparent in the energy sector where in recent times there has been a rush to sign a plethora of bilateral energy deals with Russia. But the bilateral relationships go far beyond the energy sector, touching recent history, political and parliamentary contacts, trade and investment, the influence of diasporas, language, media, education, science and culture. This study by the EU Russia Centre is a unique attempt to examine the bilateral relations of all 27 member states with Russia. It is hoped that knowledge of these relationships will lead to a greater understanding of the problems in trying to reach a common EU position. Bilateral relations will continue in many areas, not least because the EU cannot claim ‘competence’ across the board. But there are areas where the Union could be much more effective if it were able to speak with one voice. These include inter alia energy, transport, the environment, migration, and security policy. Each chapter is divided into three broad categories. The first covers political relations and considers the impact of recent history, for example the fact that many new EU member states were either part of the former Soviet Union or under its direct control for several decades. This section also covers high-level contacts, parliamentary exchanges, official meetings and diplomatic representation. The second section covers economic and trade matters including foreign investment and trade promotion offices. There is a separate sub-section covering the vital aspect of energy. The third section covers societal issues such as respective diasporas, media, language, religion, NGOs, number of flight routes linking member states and Russia, plus culture, education and science. This study is a collective effort by the EU-Russia Centre team. The basic data collection was done by an external researcher, Dr Annette Semrau, who is also a Russian speaker. With such a complex undertaking there can never be one hundred percent accuracy. Most chapters have been reviewed by national experts or officials, but EU-Russia Centre takes full responsibility for the content. In some areas and for some countries it was quite difficult to obtain accurate figures. There are sometimes discrepancies between EU, member state and Russian statistics. The main sources for the study were the websites of member states’ foreign ministries and their embassies in Moscow, the Russian MFA, Eurostat, Rosstat, various think tanks and foundations, the EU-Russia Speaking Alliance, commercial firms and NGOs. It is intended to update the data at regular intervals and EU-Russia-Centre would be most pleased to receive comments about the material selected and suggestions for future reviews. 2 INTRODUCTION This unique study provides a revealing insight into the many factors that impact upon the bilateral relations between EU member states and Russia, and consequently on EU-Russia relations. These include the patchwork of historical links from centuries before the formation of the Soviet Union, as well as more recent agreements that have been signed since the Russian Federation replaced the USSR in 1991. It demonstrates that the EU could be a far more cohesive and influential actor if it was able to speak with one voice, something the EU Russia Centre has been advocating since its inception. History and geography are important components of bilateral relations. For example, the three Baltic States were incorporated for several decades into the Soviet Union, and this is an important element of their attitudes towards Russia. A number of new member states suffered under Soviet occupation for over four decades. All the states in these situations consider that they ‘know’ Russia better than the member states without such an experience and they often resent that the EU does not take their views more seriously. Finland also claims, as a direct neighbour, to know Russia well. Its attitude towards Russia is coloured by a painful history involving empire, humiliation, war, patriotism, defeat, reparation, collapse and recovery. Finland’s economic relations with Russia have oscillated between boom and bust. When Finland was an autonomous region of the Russian empire from 1860 to 1916, trade with Russia was 40% of total trade. This collapsed with Finland’s independence in 1917 and until 1944 Finland’s trade with Russia averaged just 2%. Between 1945 and1990, the period of ‘Finlandisation’, Russian trade averaged 16%. In 1991, when the Soviet Union collapsed, Finland suffered a 3% drop in GDP. Later in the 1990s Russia trade increased to 6% before falling again as a result of the 1998 financial crash. By 2005, Russia was again Finland’s main trading partner accounting for 12% of trade. The Bank of Finland estimates that Finnish exports to Russia have been growing at 25% a year this decade. But within this figure there is also about a quarter that is not really Finnish exports but rather re-exports of goods produced in another country. These figures make clear that the two countries share a complicated and volatile rapport. The study shows that, like Finland, most EU countries have significantly increased their trade with Russia over the past five years. Exports have tripled in some cases, while imports from Russia have doubled; a trend which is due mainly to increased costs for Russian energy supplies. Germany is also the top exporter to Russia (€23,132m) followed by Italy (€7,639m) and Finland (€6,200m). Germany again leads the import list (€29,023m) followed by the Netherlands (€17,018m) and Italy (€13,592m).The only EU countries whose exports exceed the import levels are Austria, Denmark, Ireland, and Slovenia. One of the most controversial aspects of bilateral relations is energy. At present EU piped gas imports come from just three sources – Russia, North Africa and Norway – hence the EU’s determination to seek diversification of supplies. This is difficult, however, because several major EU companies (Eon, Gaz de France. OMV, MOL, Eni, etc) have struck huge deals with Gazprom that undoubtedly have some impact on political relations. The example of Hungary is illustrative here. A central feature 3 of this strategy is the planned Nabucco pipeline that would bring gas from Central Asia, Iran and the Caspian Sea to Europe. Over the past year there is increasing evidence that Gazprom is seeking to undermine Nabucco. First, it signed a memorandum of understanding with MOL, the Hungarian company which was already a partner in Nabucco, to build a rival pipeline, an extension of the Blue Stream pipeline that brings gas from Russia to Turkey. Gazprom talked about Hungary becoming the ‘gas hub’ for central Europe and there were also rumours that Gazprom had provided finance for some key decision- makers in Hungary. In early 2007, Prime Minister Ferenc Gyorcsany described the Nabucco project as a ‘dream’ – yet by September 2007 he was again backing the EU’s favoured project. Poland has also been highly critical of the German-Russian plan to build the Nord Stream pipeline in the Baltic Sea which would bypass Poland. There is a widespread perception that the more dependent a country is on Russian energy supplies, the more pro Moscow it is in its political orientation. This thesis is not borne out by the study. Although seven EU member states have over 90% dependency on Russian energy supplies, this does not translate into clear political attitudes. For example, the four Visegrad states (Poland, the Czech Republic, Hungary, Slovakia) have roughly similar levels of dependency on Russian energy supplies but take very different attitudes towards Russia. On the political front, the number of summits is a good indication of the depth of bilateral relationships and levels of economic co-operation. The study reveals that Germany has far and away the most intense relationship with Russia, with 16 summits having taken place over the past three years. Italy follows with seven summits over the same period, then France and Greece with six, Finland five and the UK four. One notable trend is the rapid development of Russian tourism to Europe. The Russian population appears to be determined to visit EU countries, despite complex and often cumbersome visa requirements. The most popular destinations either as transit countries or final destinations are: Finland, Italy, Spain, Greece and Germany. There are also substantial Russian diasporas in EU member states. Germany has the largest Russian immigrant population at an estimated 3.6% of the total population, the second largest Russian populations is to be found in Spain. What then are the prospects of the EU speaking with one voice towards Russia? One would have to say that the prospects are not particularly good. Yet the political mood may be changing. The disappearance from politics of Messrs Schroeder, Chirac, Berlusconi and Blair has led to a more pragmatic group of leaders in power, none of whom look like enjoying a cosy relationship with Mr Putin. The Samara EU- Russia summit in May 2007 provided a convincing display of EU solidarity with Poland and other countries suffering bilateral problems with Russia.
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