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The Eastern Challenge to the European Union Sir Robert Cooper Quentin Peel Ivan Volodin

iCES Occasional Paper XV Institute of Contemporary European Studies


iCES Occasional Paper XV © Institute of Contemporary European Studies, Sir Robert Cooper, Quentin Peel and Ivan Volodin, 2015 All rights reserved. No part of this publication may be reproduced in any form or by any means without the permission of the publishers. ISSN [2040-6509] (paper) ISSN [2040-6517] (online) First published in Great Britain in 2015 by the Institute of Contemporary European Studies (iCES), Regent’s University London, Inner Circle, Regent’s Park, London NW1 4NS www.ebslondon.ac.uk/ices 2


Contents Professor John Drew

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Seminar Contributions Some Personal Reflections on the Subject and the Senior European Experts’ Paper Sir Robert Cooper

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Some Personal Reflections on the Subject and the Senior European Experts’ Paper Quentin Peel

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Some Personal Reflections on the Subject and the Senior European Experts’ Paper Ivan Volodin Discussion The Background Paper

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Senior European Experts The Eastern Challenge to the European Union Annex Institute of Contemporary European Studies (iCES) Publications

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Professor John Drew Chancellor, Regent’s University London Director, Institute of Contemporary European Studies A former UK diplomat in Paris, Kuwait and Bucharest, John has held the positions of director of international corporate affairs at Rank Xerox and director of European affairs at Touche Ross International. He was the representative of the European Commission in the UK and is the Jean Monnet Professor of European Business and Management, Regent’s University London.

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Foreword Once again the Senior European Experts have produced a comprehensive and challenging paper on a European subject of contemporary interest. The Institute of Contemporary European Studies (iCES) at Regent’s University has been pleased to be associated with it through one of our regular seminars On this occasion the subject was particularly timely and three experts were able to comment on the paper and address the subject from their different perspectives. Sir Robert has served as a British diplomat and on European Union foreign and security policy. His analysis of the present situation reflects his deep knowledge of the subject. The points he makes are as relevant to future strategic developments as they are to an analysis of the present situation and how it was arrived at. Quentin Peel is Mercator senior fellow at the Royal Institute for International Affairs (Chatham House) in London, and a freelance commentator for the Financial Times. He believes the EU– Russia relationship isn’t just going to define our bilateral relationship but will also set the postCold War rules. It’s the most important relationship to the EU – that’s why Ukraine matters so much. Ivan Volodin has spent a number of years with the Russian Ministry of Foreign Affairs legal department. In 2011, he joined the Russian Embassy in London as head of the foreign policy team. In that capacity, he is responsible for contributing to policy development of Russia–EU relations and the current crisis in Ukraine and elsewhere across the Middle East. When he read the background paper and saw the heading ‘Russian Perspectives’ he thought his job had already been done, but then realised it was just another version of the Western perspective on Russia. While stressing that Russia sees itself as part of Europe and its civilisation, he makes a number of articulate comments on the Senior European Experts’ paper from a Russian point of view. It is encouraging for us at Regent’s University that three such eminent experts agreed to spend this evening with us. We thank them for contributing to our discussion of ‘big issues’, which we believe is an important role for any university The iCES has had a special and developing relationship with the Senior European Experts over a number of years. During this time, and often thanks to support from the UK offices of the European Commission, Regent’s University London has been able to offer seminars to its students and to those from outside the University on different aspects of Europe, and to publish them for those not able to attend.

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Sir Robert Cooper, KCMG, MVO Former British diplomat and Special Advisor at the European Commission Sir Robert has served as a British diplomat and adviser, and has been a special adviser at the European Commission with regard to Myanmar. He has worked as Director-General for the Council of the European Union and later as counsellor for the European External Action Service. Since 2007 Sir Robert has also been a member of the European Council on Foreign Relations. .

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Some Personal Reflections on the Subject and the Senior European Experts’ Paper Sir Robert Cooper, KCMG, MVO This is not an organised lecture; these are a few scattered comments on what I thought was an excellent paper. There were two phrases in the paper I had to ask if I would have written myself when I read it. One is the deep division between the west and the east of Ukraine. I’m never sure about that; I think there is some mythology about the idea that there are Russian and Ukrainian speakers. I think those people in Ukraine understand both languages and some speak both, and the fact that strikes me above all is that the Donetsk football team, unable to play games at home because of the war, chose to play in Lviv. One can overemphasise this east–west divide. We all ask ourselves what we are seeing in the events that have taken place: is this an attempt to rerun the end of the Cold War? Quite a lot of what we hear is that the end was unfair, and maybe there is a case to be made about that. Certainly there seems to be a strong feeling in Russia that there were undertakings given about NATO (North Atlantic Treaty Organization) that were not fulfilled. It seems clear that those undertakings could never have existed in writing. I don’t think that taking over part of a neighbour’s territory is the only way to make one’s view clear on that. The other surprise about this (it is certainly a surprise for the EU) is that we in the European Union thought of ourselves as being vegetarian, not a red meat, threatening military organisation. I think people in Brussels are puzzled as to why the EU should be seen as an aggressive force. Nothing is done in secrecy; it just can’t be done with 27 states – everything goes on someone’s website. We see ourselves as an organisation that operates in the open by consensus. If others see us in a different way then it’s interesting to reflect on that. The third interesting reflection is that this problem began with Russia creating the Eurasian Economic Union (EEU), which is about as close a copy that you can get of the EU. It is somehow a surprise that Russia, in creating a body that resembles the EU so closely, has found itself suddenly in conflict with the European Union. The origins of this really are quite surprising. On the other hand, consequences seem to be very clear if you ask the fundamental question: How are people going to get along? They can live together by having a framework of rules, but the number of rules that have been broken by Russia is stupendous. That is the cause of the outrage. That is the cause of the sanctions. The reason people got sanctioned was not because they planned to overthrow someone’s government but because of an enormous sense of outrage that you cannot just do nothing. On the other hand is the wish not to use force, which I personally believe in because once you use force you never know where it ends. In this dilemma, sanctions are never a perfect 5


tool for doing anything, but like all things in foreign policy, life is a choice between bad and worse – sanctions are not good but they are better than doing nothing. The paper perhaps doesn’t go as far as it might into the question of the competing narratives – this is difficult to do because the narratives change all the time. It sets out in my mind what you might describe as the Western narrative very well, which is very different to what you’d hear from Russia, which starts as different descriptions of what happened on 21 February and after 21 February in Kiev. Sometimes the narrative you hear is that it was a great Western conspiracy. Again, I deny the EU is capable of such a conspiracy. Sometimes you hear that it’s the result of the clever plot by Victoria Nuland. I’m sure she’s capable. But actually, I don’t think anyone is clever enough to get that number of people out in the cold in Maidan Square for so long. I think there is another bit of misunderstanding here in that a lot of what you read is how the EU is trying to make a grab for Ukraine, which in some way belongs to Russia. Actually, the EU is far from being hot for enlargement. In practice, when I was taking notes at the Council, there were people who were refusing in joint statements on Ukraine to admit that Ukraine was a European country as they were scared they would use it as grounds for membership. There were at least some people in the EU who wanted as little as possible to do with Ukraine. All of that has probably changed because of Russian actions. I thought I’d finish by saying a little bit about whether these problems can be resolved easily. I don’t think they can. It does seem to me there are some elements of a common ground between Europe and Russia. I think that first of all what ought to be common ground is that the EU has never thought it was desirable or possible to cut Ukraine off from Russia. We’ve always said to Ukraine that we don’t want to present you with a choice between your relationship with the EU and a relationship with Russia. We can’t do that. That seems to be an element of common ground. Another piece of common ground that needs to be analysed is that somewhere at the back of this there will be a gigantic bill. How that is going to be paid, I don’t know. It will be bad for both Europe and Russia. I think the other piece of common ground, which you hear mentioned less often but which we ought to be aware of, is that if you wanted to identify a winner in this, I definitely don’t think it’s Europe. We have paid different costs in different ways; we have paid a lot for Ukraine. The sanctions placed on Russia cost us as well. I don’t think it’s Russia either. The only person – it’s certainly not Ukraine – that seems like a winner to me is China, which Europe and Russia must think about in the long run. But before we can think about that we need to get past the present problem. The real difficulty for me is the question: How do you make a deal – reach some kind of understanding – with a country that has just torn up some important agreements of understanding?

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Quentin Peel Lord Kerr of Kinlochard GCMG Former international affairs editor, The Financial Times John Kerr is Deputy Chairman of Scottish Power, a non-executive director of Rio Tinto plc andQuentin a former Deputy Chairman of Royal He served as the UK’s Permanent Peel is Mercator senior fellowDutch at the Shell Royalplc. Institute for International Affairs Representative to theinEuropean Union from 1990 to 1995, Ambassador to the Times United(FT). In (Chatham House) London, and a freelance commentator for the Financial States from 1995atto andwas then Permanent Under-Secretary the Foreign Office a long career the1997 FT he correspondent in Berlin, Bonn, at Brussels, Moscow and Africa. and Head of the Diplomatic Service from 1997 to 2002. He was Secretary General of the European 2002/03. HeFT is from now an active member the House Lords, QuentinConvention was foreignineditor of the 1994–98, and chiefofforeign affairsofcolumnist Chairman of the Centre for bureau European Reform and a from member of the in SEE. from 1998–2008. He was chief in Brussels 1984–87, Moscow from 1988–91, and Bonn from 1991–94. In 2010, he returned to Germany to be based in Berlin as chief correspondent with responsibility for writing about wider European affairs, including the EU and relations with Russia. He is a regular speaker and broadcaster on international relations, the global economy and European politics.

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Some Personal Reflections on the Subject and the Senior European Experts’ Paper Quentin Peel Many thanks for the invitation. Many thanks to the Senior European Experts for their excellent report, which I could tell wouldn’t go down entirely well with my neighbour here. I’d like to start by saying just how important I feel this is; I think the EU–Russia relationship isn’t just going to define that bilateral relationship but will also set the post-Cold War rules. It’s the most important relationship to the EU – that’s why Ukraine matters so much. It’s not just about Ukraine. We can’t go back to business as usual because there is a fundamental problem, which Robert Cooper put his finger on, which is the unilateral re-join of borders. If I might just quote Angela Merkel in Australia last week, after she had spent four hours with Putin making an enormous effort to solve the problem. Angela Merkel – a Russian speaker – is chancellor of a country that has always seen the relationship with Russia as something that must not be upset and should never be upset. Here was Germany as the great intermediary between Russia and the rest of Europe. What she came out and said was this: Even in Europe there are still forces that refuse to accept the concept of mutual respect towards the settlement of conflicts using democratic and rule-of-law means. That’s what happened when Russia flouted international law and annexed Crimea at the start of the year. Russia is violating the territorial integrity and sovereignty of Ukraine. It regards one of its neighbours as part of its sphere of influence. I ask myself: Why should she be so particularly worried about this border question? When you look at it in the wider context, I think what she’s worried about is that when you start unpicking one border of the post-Cold War settlement, what else will come into question. It’s not just borders between Romania and Hungary, or the borders of Moldova. It’s the borders of Poland, and that means it’s the borders of Germany. Fundamentally there is a real worry in Berlin that some forces could be opened up that could unpick the whole post-Cold War settlement, and maybe that is exactly what Mr Putin is trying to do. I very much try to answer questions such as: Where did we go wrong? How did we get into this situation where it does look, as Gorbachev said in Berlin the other day, as if we are sort of blundering back into Cold War psychology, if not precisely a Cold War situation? I’d just like to go back for a moment to a couple of thoughts from my time in Moscow, which was between 1988 and 1991. I remember when I went and the whole perestroika exercise was already underway. We had the 1987 Soviet Communist Party Conference, which really opened things up. It was an extraordinary moment of uncertainty. One of my wisest old buddies at the FT said, ‘Quentin, never lose sight of the fact that empires disappear slowly, they do not collapse quickly.’ I remember going to Moscow in April 1988 and saying, ‘Bloody hell, I think this one is going rather quickly.’ When I left in 1991, we were just on the eve of the Soviet Union (as such) falling apart. Yet what we are seeing is precisely that – empires 9


psychologically fall apart quite slowly. We are living in a country that was a classic example of absolutely that. British attitudes towards the rest of Europe are still to this day, decades after the end of the British Empire, affected by our imperial psychology. This is certainly how a lot of the former parts of the Soviet Union see it. David Hannay was talking about speaking at a conference in Vilnius. He said that it is absolutely clear that if you go up to the Baltic States they see themselves as having been colonised and don’t wish to be colonised again. This relationship, therefore, between this great nation that is Russia (a great empire that in a way still is – it has the whole of Siberia) and the EU – which is this sort of postmodern empire, this sort of un-colonial empire – is very difficult. As Robert said earlier, the EU sees itself as herbivorous, or unthreatening. Russia sees the EU as threatening – why? I can see why NATO is possibly regarded as threatening because in a way it was set up to be. Why is the EU threatening? This whole Ukraine problem started with demonstrators on the Maidan saying, ‘We want to be part of Europe and we don’t want to be stopped from being part of Europe, and that is why we feel we are being pushed by Moscow and are being prevented from being opened to Europe.’ We come down to the fundamental problem that we have to resolve, which I think we have seen on several occasions now, that Moscow seems to feel more comfortable with unstable neighbours than with stable neighbours. There is the EU wanting to be a vegetarian, or a herbivore, surrounded by a sea of stability, which is not what Mr Putin seems to feel comfortable with. I was covering the Georgian crisis before. For 18 months Georgia was under a total trade embargo before that war broke out. It’s not the sort of action that encourages a stable neighbourhood. Let me quickly move on because otherwise there will be no time for a proper debate. I think Mr Putin has a real problem with Europe, which is that he finds it very difficult, as many people do, to read the internal politics. We clearly have the hard-liners in the Russian context: Poland; the Baltic States; Sweden; those who drafted the Eastern Partnership. You have Germany in the middle. You have the pro-Russian south – Italy, Greece, Bulgaria, Hungary, Czech Republic – all much more inclined to doing a deal. Then, rather strangely, interestingly and geographically predictably, you have Britain and France, which are actually a rather long way away. A very interesting thing is that where Mr Putin has made fundamental miscalculations I come back to Angela Merkel and the Germans. He has alienated his most important European intermediary. He has also misread Ukraine. It was clear at the time of the Orange Revolution that Moscow was misreading what was happening in Ukraine, and it has been clear again at Maidan. I was in Kiev two weeks ago for the first time in about three or four years. I was struck by how the nationalist feeling there has been stirred up in this country where people are really first cousins or blood brothers and sisters to Russia. It has stirred up a degree of nationalism that will be very difficult to get rid of. I think that Mr Putin has opened a Pandora’s box of pan-Slavic nationalism that he may find is very difficult to control at home. Inevitably what has been happening has undermined the Russian economy. Will Europe stay united in its sanctions in the face of this? Europe is divided not in its action, because it has agreed unanimously on sanctions, but there are tensions between the member states. The reality is we need each other but we don’t 10


understand each other. The old myths die very hard: Russian fear of encirclement, insistence on a sphere of influence that is its own, whereas now we have in that sphere of influence Ukraine as a neighbour to the EU and to Russia. I think in Russia what I feel is a failure to remember and realise the resentment of the smaller countries. I have an Irish wife and one of the things she always likes to remind me is that the British never remember and the Irish never forget. I think Russia has these problems with the former members of the Soviet Union. I think Russia never remembers, the Baltic States and the Georgians never forget. It’s a real problem – can we stabilise Ukraine? This is a huge challenge: this is a semi-failing state, and it is much easier to destabilise (if that is what Mr Putin wants) than to stabilise. What we must do is design an Eastern Partnership that embraces Russian participation; then we could agree on a stable Ukraine. But I don’t think that is what Mr Putin wants.

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Ivan Volodin Lord Kerr of Kinlochard GCMG Head of the Foreign Policy Group of the Russian Embassy John Kerr is Deputy Chairman of Scottish Power, a non-executive director of Rio Tinto plc andIvan a former Chairman of Royal Dutchservice Shell plc. He served as the Permanent VolodinDeputy entered the Russian diplomatic in 2001. A lawyer byUK’s education, he has Representative to the European Union from Ministry 1990 to of 1995, Ambassador to the United In spent a number of years with the Russian Foreign Affairs legal department. States 1995 to and Embassy then Permanent Under-Secretary the Foreign 2011,from he joined the1997 Russian in London as head of theat foreign policy Office team. In that andcapacity, Head ofhethe Diplomatic Service from 1997 to 2002. He wasinternational Secretary General of the is responsible for Russia–UK dialogue on topical issues including European Convention in Iraq, 2002/03. He is now active member of the House of Lords, the crises in Syria and the situation in an Afghanistan, the negotiations over the Iranian Chairman of the Centre forofEuropean Reform andrelations a member thecurrent SEE. crisis in Ukraine. nuclear programme and, course, Russia–EU andofthe

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Some Personal Reflections on the Subject and the Senior European Experts’ Paper Ivan Volodin Thank you very much for the other narrative. When I read the background paper and saw the heading ‘Russian Perspectives’, I thought my job had already been done, but I realised it was just another version of the Western perspective on Russia. First of all, I must stress that Russia sees itself as part of Europe and its civilisation. After the collapse of the Soviet Union we were prepared to cooperate with Western Europe, as were all other countries within the Soviet bloc. Today, the EU is our western neighbour and our largest trading partner. For all the talk about Russia turning east, or Europe seeking alternatives to Russia, I think it’s dependent on our economic situation. We need each other in economy, human contacts, and when it comes to addressing conflict in our regions. When it came to the end of the Cold War, Russia was eager to cooperate with Europe over a broad range of issues under a sophisticated framework of political contacts. We were moving towards the so-called four common spaces – economy, freedom of speech and justice, and negotiating the visa-free travel scheme – and Russia had every intention to continue along that line. The West explains this by Russia’s imperial ambitions – Russia’s determination to maintain its sphere of influence. Russia is accused of breaking the post-Cold War settlement. I understand where this comes from. My message to you is that the Russian government and the vast majority of Russia’s public believe that it is the West that is thinking and behaving within that logic of the sphere of influence and along that Cold War mentality. Ukraine is seen in Moscow as a symptom of the wider problem rather than the essence. For example, the background paper discusses the European Neighbourhood Policy (ENP) as something natural and good. It is only natural for anyone or for any country to be interested in good relations with neighbours. Russia for some reason is being denied the right to treat its neighbours with the same policy; according to the paper, EU enlargement has an emotional dimension of reuniting the European family of nations, but some of those nations have been part of our family for centuries. One does not exclude the other. Russia has been denied the right to keep that family. The EEU, which is a purely economic project, has been seen as a way for Russia to consolidate its sphere of influence. At the same time, when we say that the EU is a means of consolidating Western influence we are accused of outdated thinking. We are accused of using energy as a political tool, but at the same time we see Europe discussing openly the need to limit their energy dependency on Russia. A more concrete example with Ukraine in the paper says: ‘Pro-Russian Yanukovych faced pressure from Putin’s government to abandon the agreements with the EU and instead to join the Russian-led customs union.’ Whereas in Russia we would say that the successive pro-Western presidents of Ukraine faced pressure from the EU to abandon their customs union and instead sign the Association Agreement with the EU. This is all a mirror picture; it’s all a game of words. It reflects the Western assumption 13


that EU integration is the natural direction for former socialist counties, and if existing ties with Russia are an obstacle to EU integration they must be cut. To be clear, Russia has no problems with its neighbours integrating with the EU. However, the way the ENP was framed from the beginning could only cause concern. First of all, the ENP was addressed to all post-Soviet countries in Eastern Europe except Russia. Second, its architects were Poland, Sweden and the Baltic countries, which had publicly said that the political exercise was to cut the respective countries off from Russian influence or to limit Russian goods. The fact that the bigger EU countries outsourced the ENP to the Eastern Europeans is widely seen in Moscow as a crucial mistake. The background paper says that Ministers Sikorski and Bildt provided leadership, whereas the new EU High Representative Federica Mogherini would be less robust than them. If the aim of the EU is to be robust, don’t be surprised that Russia responds robustly. On Ukraine [in the paper], there is much of the same logic and the same different perceptions. Russia has been saying for a number of years that the Deep and Comprehensive Free Trade Agreement (DCFTA) between Ukraine and the EU would create significant pressure on the Russian market. This would require us to reconsider our trade agreements with Ukraine. Put simply, Ukrainian goods cannot compete with European goods but they cannot compete with Russian ones. Therefore, if the Ukrainian market is filled with European goods then Ukrainian goods will flow to Russia and we’ll need to protect ourselves against the free trade arrangements with Ukraine in the framework of the Commonwealth of Independent States. We didn’t want this and we still don’t want this. We are prepared to discuss this in a triangular format but we’re told that would amount to a Russian veto over Ukraine’s EU integration. Russia is also a sovereign country and gets to decide who it has free trade arrangements with. The West has said Ukraine has the right to choose the EU path; Russia says Ukraine has the right to choose or not to choose the EU path. You see the difference: we are being accused of imposing an artificial choice on them, whereas Moscow sincerely believes that it’s the West who is imposing the choice. Our goal has been to avoid the choice imposed on Ukraine and allow it to benefit from relations with both the EU and the Eurasian project in a mutually agreed way. The ambassador rightly said that Russia’s perception of what has happened in the last year in Ukraine is frankly different from Western perceptions. In Russia, people believe the West has supported an unconstitutional coup and has turned a blind eye to the emergence of farright, violent and extremist groups, and that the West has encouraged Kiev to launch punitive operations against the regions that had rejected Russia. I’m afraid these differences cannot be overcome in the short term. At the same time I would like to draw your attention to the repeated calls from Moscow for dialogue between Donetsk, Kiev and Luhansk, but it is also true about the dialogue on serious and honest talks with Moscow and the West. One idea voiced for a number of years, and repeated by President Putin, is that what has been seen as constructed development has been less. The idea of the integration of integrations, namely dialogues between the EU and the EEU with the ultimate goal of a free trade area from 14


Lisbon to Vladivostok. This may take a long time to achieve, but if we set that goal at least we set a direction to move in, and in this way Ukraine and Moldova will not have to choose one way or another and both can benefit. Confidence is key and is probably the most important element that we are lacking between Moscow and the EU, or between Kiev and Donetsk. I will leave it here.

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Discussion The debate focused on the immediate issue of the crisis in Ukraine and the prospects for resolving the current dispute. Ukraine and Crimea Ivan Volodin of the Russian Embassy disputed the assertion implicit in a question from the floor that Russia had seized Crimea by force. He argued that there had been a ‘coup’ in Kiev and that a popular movement of people in Crimea and Eastern Ukraine had rejected it. There was a referendum in Crimea and the people had asked ‘Russia to unite and reaccept Crimea into Russia – Crimea was part of the Russian republic of the Soviet Union before 1954’. Mr Volodin went on to say that ‘not a single shot was fired nor a single person killed’ in Crimea. It was not right to say that Russia had torn up the international rule book given what had happened in Kosovo and Iraq, he continued. Sir Robert Cooper said that there was force because there had been Russian troops in Crimea, and while he agreed that the Russian forces did not kill anybody, ‘there was a threat of force’. He added that the ‘acquisition of territory by force is not normal in the post-war world’. Quentin Peel noted that some commentators felt that the relationship between Russia and the West could not return to ‘business as usual until we have a solution with Crimea that is recognised’. He thought that would need a treaty between Russia and Ukraine on Crimea, and he wondered whether that was conceivable on either side. Asked whether there were similarities between the Nazi seizure of the Sudetenland and Crimea becoming part of Russia, Robert Cooper said he thought it ‘a mistake to compare anything or anybody to Nazi Germany … If you want to look for a reference for this, the reference is the Ukrainian constitution,’ he said, ‘which provided for the possibility of secession, but not in the way that it happened. This was a bit of Ukraine, and the Ukrainian constitution applied to it.’ Quentin Peel also didn’t see Crimea as being the Sudetenland. He thought the Crimea problem had a huge strategic element: ‘I’m not sure that the status of Crimea was indefinitely tenable as long as it had Russia’s largest naval base there on lease from another country … a solution would have to have been found. This should have been a mutually acceptable solution rather than a unilaterally acceptable solution.’ He went on to say that he was ‘baffled by the speed and the apparent joy with which Mr Putin rushed down the path of saying “self-determination”’ as ‘the idea of giving every minority in another country the right to self-determination flies in the face of Russian policy over the years’. Mr Volodin argued that the Ukrainian constitution ‘was changed unconstitutionally’. He continued: ‘We have different perspectives and different interpretations, and I would say to 16


your question that historians will draw comparisons. If you come to Mr Putin and say: “You behave like Hitler – let’s negotiate”, I don’t think he would be very enthusiastic.’ One questioner suggested that Ukraine was Russian historically, but so was Odessa and the entire south coast of the Black Sea; he wanted to know what its future was and whether it should be different to that of Crimea. Mr Volodin replied that it ‘all depends on the Ukrainian government and the Ukrainian people’. He reminded the audience that ‘there are parts of the west of Ukraine that had never been part of the same country as Moscow before 1945. This is something that people in Russia tend to forget. In Eastern Ukraine there are territories that have been in the same state as Moscow since the 13th and 14th centuries.’ He argued that Ukraine was now a very different country and ‘basically it has had an existential crisis. Kiev must ensure that all people living in Ukraine feel at home, and that none of them feel alien, rejected or discriminated [against].’ Trade One questioner asked about the trade aspects of the Ukraine–Russia dispute. He pointed out that the Eurasian Customs Union would prevent Armenia and Ukraine having control of their trade policy. ‘Their trade policy would be in the hands of something called the Eurasian Customs Union’ and that meant that Russia, in asking countries to join the Eurasian Customs Union, were asking them to give up their trade policy autonomy. Mr Volodin replied that that he was not sure how free trade areas work, but his understanding was that ‘the amount of Russia–EU trade is such that you cannot just overnight change the scheme and remove Ukraine into a DCFTA with the EU’. Sir Robert agreed that a customs union means that there is no longer a Ukrainian trade policy. ‘You can have free trade agreements with the EU on one side and Russia on the other, but once you join a customs union, then you can’t – either the whole of the customs union has a free trade agreement with the EU or you can’t.’ He continued: ‘What to me is amazing, horrifying and tragic is that this story that begins with the question about DCFTA and customs union ends with 5,000 people dead.’

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The Eastern Challenge to the European Union Background Paper by the Senior European Experts Introduction The successive enlargements of the European Union in 2004 and 2007 to include a number of former communist countries, which had been behind the Iron Curtain during the Cold War, changed the EU and changed Europe. This meant a significant shift for these countries, as well as for the countries of Western Europe and for Russia, as the new member states who had looked east to Moscow for most of the period since 1945 now looked west to Brussels. Since then, EU membership has consolidated democracy (not without some difficulties) and brought economic and political benefits to the former communist countries who have now joined. On the security and political side their accession, even before they joined the EU, has similarly brought them into the fellowship of Western democracies1. There has been a widening gap between their economic growth and those Eastern European countries that have remained outside. The appeal of greater economic and political opportunities has continued to attract these other countries. Currently Montenegro, Serbia and Macedonia are three official candidates for membership, although none is expected to join before 2019 (Montenegro)2. Others with EU membership aspirations who have not been offered that prospect include Moldova, Ukraine and, in the Caucasus, Georgia. To accommodate them and to strengthen the EU’s ties with them, the EU has developed its European Neighbourhood Policy (ENP) for all bordering countries (except Russia) to its east and south, and within that a specific Eastern Partnership for the remaining East European non-members, including Ukraine. While the EU sees its eastern neighbours as its ‘partners’, however, they are also seen by Russia as what it terms its ‘near abroad’. In the early post-Soviet years, Russia acquiesced, even if without enthusiasm, in the accession to the EU and (with even greater reluctance) to the North Atlantic Treaty Organization (NATO) of Poland and the other former communist countries. It even accepted the three Baltic States that had historically been part of Tsarist Russia from the 18th century until 1918 and then part of the Soviet Union after 1940, with many Russians still living there, joining both the EU and NATO3. But to Russians, Ukraine has been a different case. Ukraine is seen by many, perhaps most, Russians in an almost mystical sense as an inherent part of Russia because of the historical origins of Russia in the eastern Slav state of Kievan Rus. The

1 Partly through an extensive programme of EU, and EU member states’, bilateral support for both civic and economic development (the PHARE programme); see: http://www.europarl.europa.eu/enlargement/briefings/33a1_en.htm. 2 But this paper does not consider the western Balkans as this was outside the scope of the seminar. 3 ‘Baltic States wary as Russia takes strident more tone with neighbours,’ The Guardian, 18.09.14: http://www.theguardian.com/world/2014/sep/18/baltic-states-wary-russia-strident-estonia-latvia-lithuania-nato

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notion of an independent Ukraine after 1991, when the Soviet Union collapsed, is seen as extraordinary, even as the loss of inherently Russian territory4. This perception is reinforced by the long-standing strategic need for a permanent naval base on the Black Sea. The wish of a majority of Ukrainians to develop a closer association with the EU has come to represent a politically intractable problem in EU–Russia relations. Russia’s actions, and the use of force in the region, have been described by the prime minister as ‘ripping up the international rulebook’5. Despite the current tensions and the economic sanctions imposed by the EU in response to Russia’s actions in Ukraine, Europe needs Russian energy resources and Russia is dependent on the income gained from them. All countries involved would benefit from greater trade and economic cooperation between them, and ethnic tensions could be reduced by a more harmonious relationship between Russia and its neighbours. Background The EU faces major challenges on its eastern borders. As a result of recent accessions, the EU now shares several borders with Russia (it has had one since 1995 when Finland joined) and its members surround the Russian exclave of Kaliningrad on the Baltic (formerly Königsberg, the capital of East Prussia). The resurgence of Russian nationalism, the impact of ‘frozen conflicts’ in countries to the east of the EU (such as the disputed territories within Azerbaijan, Georgia, Moldova and now Ukraine) and the sizeable number of people of Russian descent and language living in some EU member states and Eastern Partnership countries, all combine to pose a complex web of inter-related causes of tension and potential conflict. The current challenges have undermined and called into question the post-Cold War settlement in the region, the further enlargement of the EU and the relationship of Russia with the EU. The issue of energy creates an additional dimension. The Post-Cold War Settlement in Eastern Europe Enlargement of the European Union to bring into the European family the countries behind the Iron Curtain was being discussed before the sudden collapse of communism in Europe in 1989 (Margaret Thatcher had referred to it in her 1988 Bruges speech, for example). The initial response from the (then) European Community was focused around the immediate issues of financial stability for the Eastern European countries and border management as the various totalitarian regimes collapsed. But debate soon moved on to wider questions, the most pressing being the reunification of Germany (which leaders in both Britain and France initially opposed), as well as the stability and governance of the ex-communist countries, their relationship with the European Union and their security and possible NATO membership. The December 1989 European Council supported the reunification of Germany but without any reopening of the question of its borders. It also agreed to establish the European Bank 4 See ‘Ukraine and Russia’s History Wars’, Charles Emmerson, History Today: http://www.historytoday.com/blog/2014/03/ukraine-and-russia%E2%80%99s-history-wars 5 ‘Cameron warns Putin against ripping up international rulebook over Ukraine’, The Guardian, 10.11.2014: http://www.theguardian.com/politics/2014/nov/10/cameron-warns-putin-ripping-rulebook-ukraine

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for Reconstruction & Development as part of a package of measures aimed at supporting economic development in the East, including Russia6. Over the following years a number of important issues had to be dealt with: the need for a peace treaty to confirm the borders of countries in Europe (there had been no peace treaty after the Second World War because of the Cold War); the future of nuclear weapons in the hands of countries that had been part of the Soviet Union until 1991 (Belarus, Kazakhstan and Ukraine); the relationship between the newly ex-communist countries and Russia; the future of the Warsaw Pact and the future of NATO; and in addition the question of whether the EU (which was preoccupied with establishing the single market following the 1986 Single European Act and with proposals to establish economic and monetary union) would enlarge to take in the countries of Eastern Europe. This formidable agenda, which was the subject of numerous bilateral and international meetings, including the twice-yearly meetings of the European Council, during the period 1990–95, was not being considered in isolation. The collapse of communism and the break-up of the Soviet Union triggered a series of vicious internal conflicts in Azerbaijan, Chechnya, Georgia, Moldova and Yugoslavia (in this case, also following the death of Tito), all of which had to be addressed alongside events outside Europe, including the massacres in Rwanda. Over a period of time, the big questions were addressed: –– the four occupying powers signed a peace treaty with Germany in 1990; ––

also in 1990, the Paris Charter (which led on later to the establishment of the Organisation for Security and Cooperation in Europe) was concluded between Russia and the West, laying down the principles of the post-Cold War European settlement, including respect for the territorial integrity and sovereignty of all the signatories;

––

in the 1994 Budapest Memorandum, Russia (together with the US and the UK) gave security assurances against threats or use of force against the territorial integrity of Ukraine, Belarus and Kazakhstan in exchange for the removal of nuclear weapons; and

––

NATO membership was extended to a number of former Warsaw Pact countries who had asked to join, beginning with the Czech Republic, Hungary and Poland in 1999. The enlargement of NATO was the most sensitive issue in relations between Russia and the West (once German reunification had been agreed), with Russian leaders arguing to this day that NATO had promised not to take in former Warsaw Pact countries (see below).

EU Enlargement There were disagreements within the EU about eastern enlargement, both in terms of the principle and over the timetable. But the pressure to admit ex-communist countries was considerable, not least from the UK, which championed enlargement from the outset, and from the United States, which had long been an enthusiast for closer European integration. As new democratic governments took office east of the old Iron Curtain, joining the EU became an established political 6 ‘Europe Backs the Idea of One Germany, New York Times, 10.12.89; European Council conclusions: http://www.european-council.europa.eu/media/849019/1989_december_-_strasbourg__eng_.pdf

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goal – they wanted the economic opportunities the developing single market could offer their underperforming economies as well as the political benefits of being part of a wider union with influence beyond Europe. For the EU, the prospect of enlargement to the east offered the chance, as it had in the 1970s and 1980s with the southern countries, to support the former communist countries as they moved from authoritarianism to democracy and from command economies to the free market. Although the economies of the ex-communist countries were weak at that time, they had considerable potential that could boost the single market through new markets for western European businesses. Enlargement to the east also reflected the commitment in the treaties that EU membership is open to all European countries that subscribe to the principles of the EU (supplemented by the ‘Copenhagen Criteria’). The EU of 12 and then 15 could hardly justify keeping the Cold War division of Europe into two halves. It was also about something less tangible and more emotive: reuniting the European family of nations after almost a century of division, conflict and dictatorship. The EU’s Energy Security The EU is particularly reliant on the Middle East and Russia for its energy supplies. The Middle East has been unstable as a region, both politically and in terms of oil price fluctuations, since the early 1970s. Further instability in energy markets has been brought about by the political turmoil that followed the Arab Spring of 2010–12, by the chaos in Libya following Gaddafi’s overthrow, by the subsequent Syrian civil war and the more recent role of the so-called Islamic State in taking over large parts of Syria and Iraq (including oil fields). EU reliance on Russian natural resources is high, with the EU-28 importing a third of both its crude oil and its natural gas from Russia.7 While Russian oil is replaceable, this dependence is greater in the case of natural gas, which largely depends for its delivery on fixed pipelines. The gas situation is particularly acute in Eastern European member states. Finland, Estonia, Latvia and Lithuania are 100 per cent dependent on natural gas deliveries from Russia8. The European Commission has estimated that, should there be interruptions in Russian gas deliveries over the winter of 2014, there would be severe disruption in Finland, Poland, the Czech Republic, Slovakia, Croatia, Slovenia, Lithuania, Latvia and Estonia9. Nor is energy dependency geographically limited to the east of the EU; Germany is the largest importer of natural gas in the EU, as 39 per cent of its gas came from Russia in 201010. But this EU dependence on Russian energy is matched by Russian vulnerability to the loss of income that would result from breaking with the EU. Half of Russia’s state income comes from energy exports, so it is exceptionally vulnerable to loss of its energy markets11. Were the EU member states who buy from Russia to work together in negotiations with Russia on energy supplies, they could use their combined weight to apply more conditionality.

7 http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/File:Main_origin_of_primary_energy_imports,_EU28,_2002%E2%80%9312_(%25_of_extra_EU-28_imports)_YB14.png 8 http://ec.europa.eu/energy/doc/20140528_energy_security_study.pdf 9 ibid 10 Figures from Energy Delta Institute, www.energydelta.org 11 See discussion at: http://www.wilsoncenter.org/article/the-foreign-policy-essay-could-energy-sanctions-russia-work

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ENP and the Eastern Partnership The EU has sought to establish a coherent approach to relations with countries on its borders through its ENP. The EU’s policies concerning relations with Russia, ENP South (the countries on the south of the Mediterranean) and ENP East (the non-EU countries that were formerly part of the Soviet Union) are grouped under the umbrella of the ENP. As a foreign policy instrument, the ENP is a potentially powerful political tool that seeks to conclude Association Agreements (AAs) (providing financial and/or technical assistance and tariff-free access to EU markets) in exchange for commitments to political, economic and social reform in third countries. Eastern Partnership The Eastern Partnership forms part of this neighbourhood policy and was formally launched by the EU in May 2009. It covers (potentially) six ex-Soviet nations: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine (although no progress has been made with Belarus as a result of its human rights problems and the lack of democracy there). The partnership operates through a series of what the EU calls ‘multilateral platforms’, which aim to promote cooperation between the EU and the partnership countries: ––

Platform I: Democracy, Good Governance and Stability

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Platform II: Economic Integration and Convergence with EU Policies

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Platform III: Energy Security

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Platform IV: Contacts Between People (Civil Society Promotion)

In addition to the multilateral platforms, there are a number of flagship projects that were launched as part of the Eastern Partnership. A number of these projects replicate EU policy areas in an effort to promote economic development in the Eastern Partnership nations in line with broader EU policy: ––

Integrated border management programme (partly because of the desire of the EU’s eastern neighbours to have visa-free travel for their citizens in the EU);

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Small and medium-size enterprise flagship initiative (to help establish more robust and diverse economies);

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Regional energy markets and energy efficiency (to address the issues described above);

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Diversification of energy supply: the southern energy corridor (a new gas pipeline);

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Prevention of, preparedness for and response to natural and man-made disasters;

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Flagship initiative to promote good environmental governance (to assist with the legacy of pollution and energy inefficiency from the communist era)12.

12 http://www.easternpartnership.org/content/eastern-partnership-funds

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While the Eastern Partnership contains no commitment to EU membership, it is intended to deepen the relationship between the EU and the partnership countries through: the promotion of good governance; EU grants (totalling €2.5bn in 2014) to develop economies and civic capacity; the relaxation of visa requirements; and free trade agreements. These opportunities have already brought the nations of the Eastern Partnership much closer to the EU and have been a cause of concern for Russia since the partnership’s inception. Ukraine After Ukraine established its independence from Russia during the break-up of the Soviet Union in 1991, it experienced a dramatic economic slowdown in which it lost, in eight years, 60 per cent of its gross domestic product (GDP). Its economy did not return to the size it had been in 1992 until 200613. The economy did recover, growing at about 7 per cent a year after 2000, but political instability, which had been endemic from the date of independence, was further aggravated by the disputed elections of 2004. In the Orange Revolution that followed, the pro-Western duo of Julia Tymoshenko and Viktor Yushchenko came to power. Their period in office was marked by disputes with Russia over the supply of gas and internal turmoil in Ukraine, reflecting divisions between the largely Russian-speaking east of the country and the Ukrainian-speaking western part. Yanukovych’s return to the presidency in 2010 caused deep unease in the western part of Ukraine, but it was his decision to reject an AA with the EU in 2013 that led to the internal political upheaval moving to the streets once again. Some have argued that the EU mishandled its relationship with Ukraine, having taken a long time to reach agreement with the country (because of EU objections to what it saw as the imprisonment for political reasons of Julia Tymoshenko) and because there was insufficient consultation with Russia and a failure to grasp the significance to Russia of Ukraine signing an AA with the EU. Others vigorously dispute this thesis, observing that a clash with Russia over the ambition of a majority of Ukrainians for closer ties with the EU was inevitable, and that it was the Russians who resisted repeated opportunities to address the problem. Whatever the truth, the Russian decision to repudiate the 1994 memorandum by using force in Crimea and Eastern Ukraine was wholly unjustified and threatens the peace of Europe. The pro-Russian Yanukovych already faced pressure from Putin’s government to abandon the agreements with the EU and instead join the Russian-led Eurasian Customs Union (ECU)14. After several months of pressure, Yanukovych announced at the end of November 2013 that he was suspending the countdown to agreement with the EU because Ukraine could not afford the loss of trade with Russia that he said would come from signing the AA (although in fact the agreement – a free trade agreement and not a customs union – would not have prevented Ukraine from making its own trading arrangements with Russia)15. The resulting aftermath was a major political crisis with large-scale demonstrations throughout Ukraine, centred on

13 Figures from the International Monetary Fund, World Economic Outlook Database, 2007. 14 ‘Putin warns Ukraine over Europe ambitions,’ Reuters, 19.09.13: http://www.reuters.com/article/2013/09/19/us-russia-ukraine-putin-idUSBRE98I0WB20130919 15 The events were described by the BBC at: http://www.bbc.co.uk/news/world-europe-25162563

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Independence Square in Kiev, against President Yanukovych and his policies. This reaction was not solely driven by his apparent rejection of closer integration with the EU but also by concerns about corruption and poor governance under his administration. The consequences were profound: not only were deep divisions between parts of the east (predominantly Russian speaking, as well as more economically deprived) and the western part of the country (mostly Ukrainian speaking and broadly more prosperous) exposed and made worse, but at just the moment when the EU had brokered a deal with Yanukovych for new elections, he turned tail and fled in a move that surprised Russia as much as the West. In the resulting chaos, Russia opportunistically seized Crimea by force in March 2014 following a controversial referendum. EU–Russian relations reached a new low following the illegal annexation of Crimea. Tensions exploded over the annexation, with widespread international condemnation, the EU (and the US) imposing a first package of economic sanctions against Russia, with Russia retaliating. A key claim by Russia was that they intended to defend the interests of Russian peoples and Russian speakers wherever they might live. In the Baltic States, where ethnic Russians number as much as a quarter of the population in Estonia and Latvia, there was considerable concern that Russia might support ethnic Russian nationalists against the governments of those countries. The Lithuanian president likened Russian actions to terrorism, and accused Russia of terrorising its neighbours. 16 NATO decided to respond to these concerns in the short term by deploying fighter jets to the Baltic States and conducting military exercises in these countries, and in the longer term by reviewing its approach to Russia and European security. Following Yanukovych’s decision to abandon his office of president of Ukraine, and the election of President Poroshenko in May 2014, Ukraine (along with Georgia and Moldova) signed AAs and Deep and Comprehensive Free Trade Agreements (DCFTAs) with the EU. Armenia backed out of its agreement with the EU and now intends to join the ECU. Belarus, which is not a member of the World Trade Organization and does not meet the human rights standards expected by the EU in order to be eligible for a partnership with it, has not been involved in any deepening of economic ties with the EU so far. Since Ukraine’s signature of its agreement with the EU, Russia has said that it will curtail Ukrainian access to Russian markets should Ukraine implement it (implementation of some of its provisions was delayed for a year)17. If it does so, this confrontational approach can only create further problems in Russia’s already difficult relationship with Ukraine and the EU. The Russian Perspective Over the past 25 years, Russia has been through a highly complex and difficult transitional period from the fall of communism and Yeltsin’s transformation of the socialist command economy to

16 http://www.washingtonpost.com/opinions/lithuanias-president-russia-is-terrorizing-its-neighbors-and-using-terrorist-methods/2014/09/24/ eb32b9fc-4410-11e4-b47c-f5889e061e5f_story.html 17 http://www.reuters.com/article/2014/10/23/us-ukraine-crisis-trade-idUSKCN0IC22520141023

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mass (but flawed) privatisation, and the (initially) high growth of GDP under Putin and Medvedev. Occurring in tandem with these changes were the first and second Chechen wars in 1994 and 1999. Tension with the West grew over the civil wars in Yugoslavia and the future of Kosovo in the 1990s, over Russia’s tactics in Chechnya and over the war with Georgia in 200818. Russian foreign policy has shifted over the period since the end of the Cold War from one of cooperation and negotiation with the West, and constructive participation in the global institutions, towards a more assertive and at times antagonistic stance under Putin. The sharp increase in military spending – 85 per cent between 2012 and 2017 – is a vivid demonstration of this change in Russian policy19. The revival of the Commonwealth of Independent States in the form of the ECU also reflects a wider change in Russian foreign policy, in which it has sought to establish a zone of influence in the countries of the former Soviet Union. In addition, some of the trappings of the former Soviet Union, such as its national anthem and the awarding of Hero of Labour medals, have been revived under Putin as part of this in some ways nostalgic assertion of Russian ‘greatness’. Lavish spending on the Sochi Winter Olympics was another manifestation of this phenomenon. In the eyes of many Russians, the West has broken undertakings that it gave at the end of the Cold War, particularly, they assert, not to extend NATO to Russia’s borders.20 Russians also object to the increasing political influence of the EU and its objective of aligning Ukrainian foreign and security policy to the EU; its enlargement to the east having never been particularly popular in Moscow, it is now seen as threatening because it reduces the influence of Russia in its neighbours. Countries that once looked east to Russia for their trading opportunities (and for political leadership) now look west to the more prosperous EU. And the EU has been able to provide those who have joined since 2004 with considerable financial support as they rebuild their economic and social infrastructure after communism; Russia cannot match such support. The ECU and the Eurasian Economic Union (EEU) Efforts to further the reach of the Russian-led ECU were made in 2010, following the launch of the EU’s Eastern Partnership, and can be seen as an attempt by Russia to entice the partnership countries into the ECU and thus consolidate Russia’s sphere of influence. The ECU was modelled on aspects of the EU, with a strong institutional framework backed by a governing commission, legal agreements and an institutional court.21 But it is important to understand that the ECU differs fundamentally from the trade agreements offered by the EU to partnership countries. A non-EU country that signs up to a free trade agreement with the EU does not give up its sovereign right to manage its trade relations with non-EU countries. Members of the ECU, being within a customs union, do give up that right.

18 A full account of these frustrations and resentments is contained in President Putin’s speech to the Valdai International Discussion Club in October 2014: http://eng.kremlin.ru/news/23137 19 Figures quoted in the Financial Times, 01.10.14: http://ftalphaville.ft.com/2014/10/01/1990482/russia-defence-spending-facts-of-the-day/ 20 See Valdai speech, ibid, and: ‘NATO enlargement and Russia: myths and realities’, NATO Review, 2014: http://www.nato.int/docu/review/2014/Russia-Ukraine-Nato-crisis/Nato-enlargement-Russia/EN/index.htm 21 http://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Russia%20and%20Eurasia/0812bp_dragnevawolczuk.pdf

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The ECU, which is now in the process of developing into the EEU, currently consists of Belarus, Kazakhstan and Russia. The EEU will come into force on 1 January 2015. It will have a population of 171 million people and a combined GDP of £1.68 trillion22. The EEU revives the commitments of the post-Soviet Commonwealth of Independent States, which provided for free trade in its nine participating members (and also established the defensive military alliance of the Collective Security Treaty Organisation in 1992)23. The formation of the EEU in 2015 could lead to further economic integration. Russia’s confrontational approach to Ukraine was accompanied by a more discreet but forceful attitude towards Armenia. The EU and Armenia completed negotiations on an AA, as well as a DCFTA, in June 2013, after three and a half years. Three months later, the Armenian government unexpectedly withdrew from those commitments, opted to negotiate membership of the ECU and announced its commitment to take part in the establishment of the EEU24. Russia has considerable leverage over Armenia because it is seen there as a guarantor of its security; Russian troops are stationed in Armenia. The speedy adoption of the EEU treaty demonstrated how much of a priority it has become for Russia. It was signed in May 2014, with the official establishment of the EEU and its consolidation of the ECU set to occur in January 2015. In August 2014, Russia allocated £312m to speed up Kyrgyzstan’s entry to the EEU25. The Russian and Kazakh parliaments have ratified the treaties, with the National Assembly of Armenia expected to ratify the EEU treaty in late November 2014.26 Russia and the EU Recent Russian actions in Eastern Europe have been a mixture of hard and soft power. Military power was used against Ukraine, initially through the veiled threat of placing substantial military forces on the Ukrainian borders, and later by support for secessionist movements carried out by thinly disguised Russian military personnel. Local militias emerged in Crimea and in Eastern Ukraine, apparently including serving Russian soldiers, and much Russian military equipment, including tanks and missile launchers, was moved into Eastern Ukraine. Alongside the threat of military force, Russia has used its soft power in the form of its historic ties and regional loyalty in some neighbouring ex-Soviet states to promote membership of the ECU. While the latter might be said to bear some similarity to the approach of the EU through the ENP, in that it seeks to promote shared values through the promotion of economic growth, the values behind Russia’s tactics are fundamentally different. The EU has been divided over how to handle Russia for a long time. But recent events have created a more unified approach than in the past, although tensions still exist. Russia’s intervention in Ukraine, including its annexation of Crimea, has driven the members of the EU together. This apparent new consensus has seen the EU impose significant sanctions against Russia, which, together with the recent fall in the global price of oil, is doing substantial damage 22 http://www.reuters.com/article/2014/05/29/us-ukraine-crisis-eurasia-idUSKBN0E90O520140529 23 Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, Tajikistan. Azerbaijan, Georgia and Uzbekistan were members but have withdrawn. 24 http://www.eurasianet.org/node/67461 25 http://en.ria.ru/business/20140811/191918441/Russia-Vows-500-Mln-for-Kyrgyzstans-Integration-Into-Eurasian.html 26 http://armenianow.com/news/58024/armenia_eu_cooperation_eurasian_union_hristea

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to the already weakening Russian economy (the economy is expected to decline by 1 per cent in 2014 with zero growth in 2015)27. Russia has retaliated by banning imports of agricultural products and foodstuffs from the EU, but the impact on the EU economy will be minor compared to the impact of EU (and US) sanctions on Russia. Future Challenges Future challenges for the EU will include how to effectively safeguard member states from energy shortages, how to help countries in the Eastern Partnership stabilise their economies and carry out political reforms, and how to approach the sensitive subject of shared borders with an antagonistic neighbour, if possible moving back from confrontation to cooperation with Russia (and staying united while the EU does so). Ukraine There is an urgent need to stabilise the situation in Ukraine and to bring lasting peace to the country. There are a multitude of issues that must be addressed for this to be achieved. These issues include equitable treatment for ethnic Russians in the eastern part of Ukraine and an end to the separatist regimes there. Russian annexation of Crimea is a long-term problem that threatens to impede normalisation of relations with the EU for many years and could become another ‘frozen conflict’ in the area of the former Soviet Union. This adds further complexity to the politics of energy policy and places even greater importance on making the recent agreement to bring an end to the Gazprom/Ukraine disputes a permanent settlement of this long-running issue. Now that Ukraine has ratified the political part of its AA but delayed (by agreement) the implementation of the free trade aspects of it until 1 January 2016, there is a framework to continue to support Ukraine to improve its economy and the rule of law, but this is likely to further irritate Russia.28 Energy Politics Part of the challenge posed by Russia comes from its use of energy as a geopolitical tool. The issue of delays or the cutting off of Russian deliveries of gas could continue to be a significant challenge for member states. The sudden interruptions in the supply of gas in September 2014, when there was an unexpected 24 per cent decrease in Russian gas supplies to several member states, highlighted the dependency on Russian gas – as, no doubt, it was intended to do.29 But while EU member states are very dependent on Russian energy resources, it is also important to note the dependence of the Russian economy on the export of natural resources. Oil and natural gas accounted for 68 per cent of Russia’s total export revenues in 2013 and provide half of its state income, suggesting a fragile balance between Russia’s and Europe’s

27 The Economic Effects of the EU’s Russia Sanctions and Russia’s Counter-sanctions, Ministry of Finance, Finland, 27.08.14: http://valtioneuvosto.fi/tiedostot/julkinen/pdf/2014/budjettineuvottelut-2014/eu-venaja-pakotteet/en.pdf 28 A possible longer-term solution would be for Ukraine to adopt the Austrian model of neutrality inside the EU. 29 http://www.theguardian.com/world/2014/sep/10/poland-russia-gas-supply-cut-gazprom-tensions-ukraine

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needs.30 Russia is seeking alternative markets, including building a gas pipeline to China, but these efforts will not fill the gap if Europe becomes markedly less dependent on Russian energy. The EU is now pursuing the further integration and liberalisation of the EU’s energy market in order to achieve greater energy security. In an emergency situation it would be possible to bring in supplies of liquid natural gas (LNG) by ship from the Middle East (assuming they are available), but it would require a considerable amount of investment.31 In response to this situation, the European Commission proposed the construction of one or two LNG terminals in the Baltic region two years ago; one will open in late 2014 and the other in 2015. Should a combination of these policies within the framework of an energy union result in a reduction in the EU dependence over time on Russian gas supplies, this would considerably affect the balance in the EU–Russia relationship. Other Eastern Partnership Countries With regard to other Eastern Partnership nations, there is now a need to ratify and implement the agreements with Georgia and Moldova in order to support the economic and political development in those countries. As neither country is being considered for EU membership, continuing to work within the framework of the partnership will give Georgia and Moldova the chance to develop economically and politically, and will place them closer to the values of the EU. Azerbaijan continues to participate in the Eastern Partnership and, indeed, hosted an informal meeting of foreign ministers of partnership countries in September 2014.32 But neither Azerbaijan nor Belarus meet the EU’s human rights, democracy and rule-of-law expectations, and both have stronger ties to Russia than to the EU. Neither country is likely to seek or to achieve a deepening of relations with the EU in the short term. Conclusion The Eastern challenge to the EU will last for a matter of decades; it is not an issue for a few months or even a few years. The EU’s response will fundamentally affect the countries in the partnership and the EU’s relations with Russia. The EEU is due to come into force on 1 January 2015, with Russia seemingly intent on pursuing an antagonistic line towards countries that show interest in the EU’s Eastern Partnership. The success of the EEU remains to be seen (and cannot provide its members with economic opportunities on the scale of the EU), but Russia has a strong political desire to see deeper and wider economic integration in what it sees as its sphere of influence. Russian interference in EU–Armenian negotiations, actions against Ukraine and Russia’s financial assistance to Kyrgyzstan show the apparent willingness of Russia to consolidate the EEU and to undermine the Eastern Partnership. The EU’s success thus far in promoting the Eastern Partnership has relied on economic arguments and developing projects promoting concepts such as good governance, stability and civil society. 30 http://www.eia.gov/todayinenergy/detail.cfm?id=17231 31 A point made by Philip Lowe, former DG Energy at the European Commission, at an iCES/SEE seminar: http://www.regents.ac.uk/events/seminar-the-energy-challenges-facing-europe-what-can-the-eu-do/panel-details.aspx 32 http://europa.eu/rapid/press-release_STATEMENT-14-275_en.htm

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The departure of Radosław Sikorski and Carl Bildt from their posts as foreign ministers of Poland and Sweden, respectively, could leave a leadership gap in the EU’s response to Russia on the Eastern Partnership. As architects of the Eastern Partnership, they have provided leadership and played key roles in promoting it to neighbouring countries. The appointment of the Italian politician Federica Mogherini as the new EU High Representative for Foreign Affairs, who critics suggest is not as robust in her attitude to Russia, could affect the EU’s future stance towards Russia on the Eastern Partnership. But that view has to be balanced against the increasing activism of the European Council in EU foreign policy and its tendency to set the agenda for the foreign ministers (and therefore the High Representative/Vice President) to follow. 25 November 2014

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Annexe

Glossary of abbreviations: AA Association Agreements DCFTA Deep and Comprehensive Free Trade Agreement ECU Eurasian Customs Union EEU Eurasian Economic Union ENP European Neighbourhood Policy FT Financial Times GDP Gross domestic product iCES Institute of Contemporary European Studies LNG Liquid natural gas NATO North Atlantic Treaty Organization 30


iCES Occasional Papers The iCES Occasional Paper series publishes expert position papers by distinguished authors and specialists on European themes. They are published throughout the year and available online: http://www.regents.ac.uk/research-enterprise/research/research-centres/institute-ofcontemporary-european-studies-ices/publications.aspx 1. Learning from the Financial Crisis: Global Imbalances and Lessons for Europe Gieve, J. Learning from the Financial Crisis: Global Imbalances and Lessons for Europe. iCES Occasional Paper 01, Institute of Contemporary European Studies, Regent’s University London: London, (2009) ISSN: 2040-6509 (paper), ISSN: 2040-6517 (online). 2. Twenty Years On: The EU Since the Fall of the Berlin Wall Brittan, L., Hannay, D., Zielonka, J., SEE. Twenty Years On: The EU Since the Fall of the Berlin Wall. iCES Occasional Paper 02, Institute of Contemporary European Studies, Regent’s University London: London, (2009) ISSN: 2040-6509 (paper), ISSN: 2040-6517 (online). 3. Jobs, Innovation and Growth Monks, J., Cridland, J., Walby, S., Lambert, S. Jobs, Innovation and Growth. iCES Occasional Paper 03, Institute of Contemporary European Studies, Regent’s University London: London, (2010) ISSN: 2040-6509 (paper), ISSN: 2040-6517 (online). 4. Where Will the EU’s Final Frontiers Lie? Avery, G., Butler, M., Kent, N., SEE. Where Will the EU’s Final Frontiers Lie? iCES Occasional Paper 04, Institute of Contemporary European Studies, Regent’s University London: London, (2010) ISSN: 2040-6509 (paper), ISSN: 2040-6517 (online). 5. Climate Change Post Copenhagen Porritt, J., Katz, I., Mehra, M., Luff, P. Climate Change Post Copenhagen. iCES Occasional Paper 05, Institute of Contemporary European Studies, Regent’s University London: London, (2010) ISSN: 2040-6509 (paper), ISSN: 2040-6517 (online). 6. EU and US Relations in the 21st Century Witney, K., Graffy, C., Jay, M., SEE. EU and US Relations in the 21st Century. iCES Occasional Paper 06, Institute of Contemporary European Studies, Regent’s University London: London, (2010) ISSN: 2040-6509 (paper), ISSN: 2040-6517 (online). 7. Towards a European Foreign Policy Avery, G., Bond, M., Crowe, B., Hannay, D. Towards a European Foreign Policy: The European External Action Service and the Role of the EU High Representative for Foreign Affairs & Security. iCES Occasional Paper 07, Institute of Contemporary European Studies, Regent’s University London: London, (2011) ISSN: 2040-6509 (hard-copy edition only).

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8. The Regent’s Lecture 2011: Business at the Crossroads: UK Issues in a European & Global Economy Cridland, J., Gieve, J., Hurley, B., Taylor, J. The Regent’s Lecture 2011: Business at the Crossroads: UK Issues in a European & Global Economy. iCES Occasional Paper 08, Institute of Contemporary European Studies, Regent’s University London: London, (2011) ISSN: 20406517 (online). 9. The EU & the Arab Awakening Hannay, D., Cowper-Coles, S., Segal, H.M., Black, I., SEE. The EU & the Arab Awakening. iCES Occasional Paper 09, Institute of Contemporary European Studies, Regent’s University London: London, (2011) ISSN: 2040-6517 (online). 10. The UK in Europe Budd. C., Cowen. T., Hutton, W., SEE. The UK in Europe. iCES Occasional Paper 10, Institute of Contemporary European Studies, Regent’s University London: London, (2012) ISSN: 2040-6517 (online). 11. The Russian Federation & the European Union at the Crossroads Yakovenko, A., Avery, G., Arsenyev, S., Barton, T. The Russian Federation & the European Union at the Crossroads. iCES Occasional Paper 10, Institute of Contemporary European Studies, Regent’s University London: London, (2013) ISSN: 2040-6517(online). 12. The UK & Europe: Costs, Benefits, Options Simon, D., Meyer, C., Carroll. D., Minor, J. The UK & Europe: Costs, Benefits, Options. iCES Occasional Paper 12, Institute of Contemporary European Studies, Regent’s University London: London, (2013) ISSN: 2040-6509 (online). 13. The European Union in the World Van Rompuy, H., President of the European Council. The European Union in the World. iCES Occasional Paper 13, Institute of Contemporary European Studies, Regent’s University London: London, (2013) ISSN: 2040-6517 (online). 14. The Energy Challenges Facing Europe: What Can the EU Do? Kerr, J., Lowe, P., Drew, J. The Energy Challenges Facing Europe: What Can the EU Do? iCES Occasional Paper 14, Institute of Contemporary European Studies, Regent’s University London: London, (2014) ISSN 2040-6517 (online), ISSN 2040-6509 (paper). 15. The Eastern Challenge to the European Union Cooper, R., Peel, Q., Volodin, I., SEE. The Eastern Challenge to the European Union. iCES Occasional Paper 15, Institute of Contemporary European Studies, Regent’s University London: London, (2015) ISSN 2040-6517 (online), ISSN 2040-6509 (paper).

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Institute of Contemporary European Studies The Institute of Contemporary European Studies at the European Business School, Regent’s University London, seeks to build on the existing pool of research and expertise within the University and its networks. It discusses topical events and publishes regular papers on contemporary European, business, political and cultural matters. Senior European Experts The Senior European Experts is an independent body consisting of former high-ranking British diplomats and civil servants, including several former UK ambassadors to the EU and other former officials of the institutions of the EU. It prepares briefing papers on current EU topics for opinion-formers, which are widely read in government, business and academia.

Acknowledgments: The Eastern Challenge to the European Union was compiled by Nicholas Kent, Director of Research, British Influence, and Secretary of the Senior European Experts. David Whitaker, Head of Development & Alumni Relations, and Caroline Waterfall, Stewardship Coordinator, coordinated the seminar and produced this iCES occasional paper on behalf of Regent’s University London. The seminar was supported by the European Commission. 33


Department of Development & Alumni Relations Regent’s University London Inner Circle Regent’s Park London NW1 4NS T +44 (0)20 7487 7792 E lectures@regents.ac.uk © Institute of Contemporary European Studies, 2015 34

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Occasional Paper 15 - The Eastern Challenge to the European Union  

iCES Occasional Paper XV - Institute of Contemporary European Studies

Occasional Paper 15 - The Eastern Challenge to the European Union  

iCES Occasional Paper XV - Institute of Contemporary European Studies