Analytics, Baltic States – CIS, EU – CIS, Modern EU, Russia

Each state and region has its “interests” proceeding from both internal and external policies; best way to mediate such interests is through fruitful cooperation. So far situation in the Baltic Sea Area (BSR) and Europe as a whole is far from being good. After 25 years since the Soviet Union’s collapse, Western politicians exert negative stance and often hatred towards Russia. On top of this, NATO troops are moving closer and closer to Russia’s borders…  

According for some western experts, one of the reasons for that is that Western politicians are too much afraid of more self-sufficient and powerful “player” on both the global and the BSR’s area, of Russia becoming a super-power.

Mistrust on both sides of western-Russian confrontation could only lead to avalanche of “actions & reactions”, which might easily evolve – God bless, no- into an open conflict, acknowledged recently annual Danish military intelligence report (December 2016). Source: Politiken-Daily/Denmark, Security policy.- 21.xii.2016, p. 15.   

Differences in perceptions

Through hundreds of years in Western development, some versions of liberal capitalism appeared paving the way to specific forms of democracy. Already in 2010, a notable book appeared mentioning the fourth type of capitalism at present: first was a world of laisser faire (from the “Wealth of Nations” to the Great Depression); second, recognized the interdependence of politics and economics, giving governments a role in macro-economic management and the direction of industry; a regime of market fundamentalism, in which inequality widened and financial sector flourished was a key to “capitalism 3.0”. Modern capitalism 4.0 has shown that market fundamentalism is a dangerously misleading guide to policy. See more in: Kaletsky A. Capitalism 4.0. The birth of a new economy. - Bloomsbury, Public Affairs Publ. 2010. 

Russian short –for about 25 years -and turbulent “capitalist history” doesn’t leave much room to western-type capitalism; and this path is hardly “the Russian cup of tea”. Instead, Russia has developed a sort of state capitalism with economic power concentrated in the hands of limited number of elites and oligarchs with closer contacts to central administration. That seems to be a specific feature in Russian path to free market/liberal economy as socialist past doesn’t provide a lot of options for fundamental western-type democratic outcome.

Probably, for the time being that “path” would persist to the despair of western politicians and making ground for constant misunderstandings and conflicts.    

There is another problem as well: after the USSR’s collapse during December days in 1991, about 25 million ethnic Russians have been “left” in the so-called “Russian near-neighborhood”. These and other Russian-speaking population has become the background of widely popular “Russian World” movement. In perspective, there will be a kind of integration moves at one time anyway…

Western leaders seem not to see the multiple political, economic and ideological effect of the Soviet collapse; but these effects will be felt for several decades to come.    

Economic sanctions

Most “exotic” in western-Russian attitude in “mutual relationships” have been the issue of western/EU economic sanctions imposed on Russia in June 2014 and aimed at “punishing” financially, militarily, economically (e.g. through energy sector), etc. spheres in Russian development. In retaliation, Russia imposed sanctions on the EU’s agro-produce export to the country.

These sanctions have been fixed up to the end of January 2017, but in mid-December 2016 the EU prolonged them for another six months.

Although the sanctions’ negative effect was felt in Russia (reducing country’s GDP by about 2-3%), the damaging effect was felt by the eastern-EU states as well. For example, Estonian export to Russia reduced by a third, Latvian by about 11%, Lithuanian by 10%, Slovakian by about 8%, as well as Czech, Polish and Finish export by about 7% each.

The Baltic States and Poland suffered most; however, strange enough, they have been the most voiced supporters in prolonging sanctions. The European Commission provided some financial support to farmers in these states to ease the damage which partly sustained the adversary trends.

In general, the EU-28 export share has reduced by about 3% due to sanctions.  Greece and Italy suffered less but they were most active in lifting sanctions; Greece export to Russia has even slightly increased recently.   

Behind the sanction’s effect rests a general motive: if sanctions do not produce “political consequence” (which is apparently most evident outcome), the whole “sanctions’ idea” might suffer with very serious and negative consequences for the EU’s governance at present and in future. See: http://www.baltic-course.com/rus/_analytics/?doc=125302&ins_print

According to Bloomberg, more than half questioned politicians and businessmen acknowledged that the US would reconsider Russian sanctions; then, most probably the EU would follow the suit. See: http://4teller.com/snimut-li-sankcii-s-rossii-v-2017-godu

The EU’s situation presently

Recent Eurostat statistics has revealed the EU’s status quo: thus, at the European national level, the main concerns are unemployment (31%, still nr. 2 in the total “vitality ranks”) and immigration (26%, the second rank in importance). The economic situation in 2016 is in third place with about 19% and unchanged compared with 2015.

Quite amazingly, that the trust in the EU institutions is higher than the trust in national governments: the EU citizens showed that their trust in the EU increased to 36% (up from 33%). Trust in national parliaments and governments have also increased but remains below trust in the EU institutions.

At the same time, 38% of Europeans have a neutral image of the EU, a proportion that has remained unchanged since spring 2015. It seems that the positive image of the EU has gained some ground, while the negative image has declined to 25%.

Only four in ten Europeans consider that their voice counts in the EU, just below the peak of 42% recorded in spring 2014 and spring 2015. At the same time, 67% of Europeans feel they are citizens of the EU. See: http://europa.eu/rapid/press-release_IP-16-4493_en.htm

Besides, popular movement in the EU member states is greatly dissatisfied with the growing “distance” between elites/bureaucrats in Brussels and decision-makers at the national level.

To resolve all controversial issues within the EU needs a “comfortable calm” on its borders; hence a peaceful and stable relationship with Russia is more than desirable. 

Then, after all: the ultimate EU’s idea is integration and common/single market. That means, borderless Europe and less nationalism, finding what is “common” to all Europeans. Russia is as European as any other country on this continent; and she needs an adequate approach! Behind all EU-Russia controversies are just cultural and spiritual misunderstandings…    

EU-Russian tense relations  

Present legal basis for EU-Russia relations is the Partnership and Cooperation Agreement (PCA) which came into force in 1997, initially for 10 years. Since 2007 it has been renewed annually. It established a political framework for regular consultation between the EU and Russia, based on the principles of respect for democracy and human rights, political and economic freedom, and commitment to international peace and security. Furthermore, the PCA is complemented by sectorial agreements covering a wide range of policy areas, including political dialogue, trade, science and technology, education, energy and environment, transport, and prevention of illegal activities.

The EU issues are of extreme importance for Russia and vice versa: i.e. in trade, energy resources, science and research, etc. The EU is Russia's main trading and investment partner, while Russia is the EU's fourth. In 2014, EU exports to Russia totaled €103.3 billion, while EU imports from Russia amounted to €181.3 billion. The EU trade deficit with Russia was therefore €78 billion in 2014.

The EU is by far the largest investor in Russia. The total stock of foreign direct investment in Russia originating from the EU totaled €154.8 billion as of the end of 2013. https://eeas.europa.eu/headquarters/headquarters-homepage/720/russian-federation-and-european-union-eu_en

At a recent grand-press meeting in Moscow (assembling about 1,5 thousand local and foreign journalists), President Putin underlined that Russian needed a stronger partner to deal with. However, he added if the EU’s “with one strong voice” is not possible, Russia is ready to take bi-lateral discussions.

Brexit effect

Brexit doesn’t stimulate peace and calm within the rest of 27 left EU members; on the contrary, the UK’s exit is a sign of deep EU problems. Suffice it to say that present EU-27 states (without the UK) are far from being unanimous on British future relationships with the EU. The lack of unanimity is felt even among the EU institutions: at the EU summit in mid-December, the European Parliament (EP) Martin Schultz expressed deep dissatisfaction on “degrading EP’s role” in EU-UK negotiation process. The EU decided to concentrate the whole negotiation deals in the hands of an EU chief-negotiator and former commissioner, Michel Barnier from France, which means that the Commission is going to “run the show”. The EP is furious, as finally it will be the Parliament to blue-stamp the deal. Only the time will show whether the EP is being involved when the UK presents the formal papers in March 2017.   

Both, the EU and Russia are having their own internal problems; however, instead of making their life easier and somehow help each other in resolving stumbling blocks, “the sides” do their utmost to damage the not so good relationships.  

Media confrontation

On both sides, almost all sources of mass media are doing their utmost to defend the status-quo. For example, Russian media praises its military and political advances to show the internal and external public the country’s just and fair actions in Syria and Ukraine.

Russian media defends the governments’ actions as a sign of patriotism, solidarity and respect for Russian interests, which the western side generally ignores.

Om another side, the European media is doing their propaganda steps: thus, the EU Parliament (in a resolution from 23 November 2016) even “expressed a warning sign” to the EU member states concerning some Russian forms of public diplomacy and instruments of soft power. 

The damaging confrontation effect of the west-Russia “media war” just adds up to the negative climate in relationships.

Several experts have already questioned the leaders on both side, whether it was the right of any sovereign state to pursue the media policy in line with the state’s general interests? It seems that the West wants to impose on its eastern neighbor the “pattern of truth” and values appropriate and accepted in their own states. Such interference into the internal affairs of a sovereign state can hardly be acceptable; besides, it doesn’t help in creating a kind of trustworthy relations.

Conclusion

Both societies, western and eastern are evolving, so-to-say shifting while following the seismic changes in the global and the European developments. Very often these “shifts” are becoming quite challenging for the stability status quo in 2017.

The global moves (at least for now) are not mainly confined to Europe and America; all developed and highly successful societies are searching for a new narrative to explain the public the real course of events. Here the western- Russian issues are becoming even more important requiring quick solution…  

However, West has never made plans for peaceful coexistence with Russia; all the time there were plans for tackling confrontation. Isn’t it time to change the pattern and stop treating Russia as a potential (or even real) adversary?