The EU badly needs a new approach in its dealings with resurgent Russia, write Mark Leonard and Nicu Popescu. They set out the five broad elements of a fresh European strategy

Russia’s parliamentary elections in December not only confirmed President Vladimir Putin’s position as the ‘father of the nation’ but further weakened the European Union’s leverage over a resurgent and increasingly assertive Russia. The election also marked a series of indirect humiliations for the EU, ranging from the Russian government’s refusal to grant visas to OSCE election observers to the successful bid for a Duma seat (and immunity from prosecution) by Andrei Lugovoi, the former intelligence officer suspected by the British authorities of the poisoning in London of Alexander Litvinenko. Putin’s crushing victory – together with the anointment of deputy-prime minister and chair of Gazprom board Dimitri Medvedev as his successor – have confirmed what most EU officials have long known: the EU’s strategy for democratising Russia is now officially dead.

In the 1990s, EU member states coalesced around a strategy of democratising and westernising a weak and indebted Russia, and managed to get the Russians to sign up to all major international standards on democracy and human rights. Btu since then, soaring oil and gas prices have made the Russian governing elite incredibly powerful, less cooperative and, above all, less interested in joining the west. The old strategy is increasingly out of synch with the realities of the new Russia. Although the EU is a far bigger power than Russia in conventional terms – its population is three and a half times the size of Russia's, its military spending ten times bigger, its economy 15 times the size of Russia’s – Europeans are increasingly finding that Russia is setting the terms of the relationship between the two blocs.

While not reproducing the ideological divisions of the cold war, Russia seems to be setting itself up as an ideological alternative to the EU, with a different approach to sovereignty, power and world order. Where the European project is founded on the rule of law and multilateralism, Moscow believes that laws are a mere expression of power, and that when the balance of power changes, laws should be changed unilaterally if needed to reflect it. In recent years, Moscow has tried to revise the terms of commercial deals with western companies, military agreements such as the Conventional Forces in Europe Treaty, and even breached diplomatic codes of conduct like the Vienna Convention. These trends are not just a pre-electoral ritual, but a consolidated and widely accepted desire in Russia to revise the whole set of agreements with the EU.

MATTERS OF OPINION

Support for Putin not as solid as the recent elections suggest Russians returned President Putin’s United Russia party to government last December, with almost two-thirds of the votes, in elections that were widely seen as a referendum on Putin’s policies after eight years in power. But polls carried out by Gallup before Putin dissolved the government, in April and May 2007, showed that Russians were divided over their government’s performance. While four out of 10 said they approved of the government’s performance, almost the same number (38%) disapproved. Just 13% of people reported that the government was doing an excellent or a good job. Western observers were critical of irregularities in the December ballot, with the Organisation of Security & Cooperation in Europe (OSCE) and the Council of Europe describing the results as “unfair”. This would seem to support unease among Russia’s voters noted by the Gallup survey: when questioned six months beforehand, only 18% of citizens said they had confidence in the honesty of elections. However, people were more optimistic in early 2007 about Russia’s future than in 2006: 43% of people said that they thought economic conditions were getting better (up from 33% in 2006); while 15% thought conditions were getting worse, compared to 22% the previous year.  http://www.gallupworldpoll.com/

Moscow is also challenging another aspect of the EU’s world view – its belief that security is built through inter-dependence. The Kremlin’s philosophy of “sovereign democracy”, however, has led it to try to decrease its reliance on the European Union, while trying to increase the EU’s dependence on Russia. This quest for “asymmetric inter-dependence” is a tool of power projection rather than stability. The Kremlin has deployed a powerful mix of charm and aggression to divide and rule EU member states – so that it can deal with each member state individually from a position of strength. On the one hand, it has reached out and flattered several member states – in particular the big ones – signing long-term bilateral energy deals and exchanging state visits. On the other, Russia has picked bilateral disputes with 11 member states so far on issues ranging from Polish meat to Finnish timber which have had an equally adverse impact on EU unity.

The European Union’s response to December’s parliamentary elections followed a pattern of division and confusion that have plagued its Russia policy in recent years. Even though the elections were denounced by parliamentarians from the Council of Europe and the OSCE, different EU governments gave out very mixed messages. It took three days for the Portuguese EU presidency to release a statement on the arrest of opposition activists such as Garry Kasparov – and once published it was withdrawn and replaced by a milder version. After the poll, the EU issued a mildly-worded statement about “election irregularities”, while strong condemnation by Germany and Poland was cancelled out by French President Nicolas Sarkozy’s congratulatory telephone call to Putin.

The conventional wisdom is that relations with Russia have deteriorated as a result of the 2004 enlargement which imported a hostile, anti-Russian bloc into the EU. But while it is true that the relationship with Russia has become the most divisive factor within the EU since Donald Rumsfeld divided member states into “new” and “old” Europe – it is wrong to see the main dividing line between the EU’s eastern and western member states.

In a comprehensive “power audit” of the EU Russia relationship published last November, the European Council on Foreign Relations commissioned experts from all 27 member states to examine the bi-lateral relationship between their own country and Russia. We identified five distinct policy approaches to Russia shared by old and new members alike: “Trojan Horses” (Cyprus and Greece) who often defend Russian interests in the EU system, and are willing to veto common EU positions; “Strategic Partners” (France, Germany, Italy, Spain) who enjoy a “special relationship” and whose governments have built special bilateral relationships with Russia, which occasionally cuts against the grain of common EU objectives in areas such as energy and the EU Neighbourhood Policy; “Friendly Pragmatists” (Austria, Belgium, Bulgaria, Finland, Hungary, Luxembourg, Malta, Portugal, Slovakia, and Slovenia) who maintain a close relationship with Russia and tend to put their business interests above political goals; “Frosty Pragmatists” (Czech Republic, Denmark, Estonia, Ireland, Latvia, the Netherlands, Romania, Sweden and the United Kingdom) who also focus on business interests but are less afraid than others to speak out against Russian behaviour on human rights or other issues; 'New Cold Warriors' (Lithuania and Poland) who have an overtly hostile relationship with Moscow and are willing to use the veto to block EU negotiations with Russia.

Broadly speaking, the EU is split between two approaches – and each of the five groups tends towards one of the main policy paradigms. At one end of the spectrum are those who view Russia as a potential partner that can be drawn into the EU’s orbit through a process of 'creeping integration'. They favour involving Russia in as many institutions as possible and encouraging Russian investment in the EU's energy sector, even if Russia sometimes breaks the rules. At the other end are member states who see and treat Russia as a threat. According to them, Russian expansionism and contempt for democracy must be rolled back through a policy of “soft containment” that involves excluding Russia from the G-8, expanding NATO to include Georgia, supporting anti-Russian regimes in the neighbourhood, building missile shields, developing an “Energy NATO”, and excluding Russian investment from the European energy sector.

Both approaches have obvious drawbacks, making them unpalatable to a majority of EU member states. The first approach would give Russia access to all the benefits of co-operation with the EU without demanding that it abides by stable rules. The other approach – of open hostility – would make it hard for the EU to draw on Russia’s help to tackle a host of common problems in the European neighbourhood and beyond.

The EU badly needs a new approach to deal with the new Russia. Ultimately, this fragmentation of EU power does not serve the strategic interests of any of these five groups. No single country can shape the EU’s Russia policy on their own, and the different approaches end up cancelling each other out. No single EU government is influential enough with Russia to withstand bilateral pressures, or to push Moscow to implement existing commitments and deals. This was shown aptly by Russia’s recent attempt to revise some of its energy deals with friendly states, such as Bulgaria and Germany.

While the EU’s long-term goal should still be to have a liberal democratic Russia as a neighbour, a more realistic mid-term goal would be to encourage Russia to respect the rule of law, which would allow it to become a reliable partner.

The rule of law is central to the European project, and its weakness in Russia is a concern for businesses who worry about respect of contracts, diplomats who fear breaches of international treaties, human rights activists concerned about authoritarianism, and defence establishments who want to avoid military tensions. If EU leaders manage to unite around a common strategy, they will be able to use many points of leverage to reinforce it.

The first element of this would be a conditional engagement with Russia. This will allow the EU to escape from the argument between proponents of “soft containment” and “creeping integration” over whether Russia should be excluded from the G-8, and whether to negotiate a new Partnership and Co-operation Agreement. Under a new approach, the EU should adjust the level of cooperation to Russia’s observance of the spirit and the letter of common rules and agreements. If Moscow drags its feet on given G-8 commitments and policies, more meetings should be organised at a junior level under a G-7 format, without excluding Russia from the G-8. Similarly, the Union should not be afraid to use the EU-Russia summit and the negotiation of a new Partnership and Cooperation Agreement to highlight issues where Russia is being unhelpful, such as Kosovo and the conflicts in Georgia and Moldova.

The second element of this strategy should be a principled bilateralism. Here again, the EU needs to find a middle way between those who see bilateral relations as a good way to reach out to Russia at a time of tension, and states who see such contact as a kind of betrayal (for example, Polish politicians have compared the deal on the Nordstream pipeline to the Molotov-Ribbentrop pact). The goal would be to ensure that bilateral contacts between Russia and individual EU member states reinforce common EU objectives. This would involve the creation of an early warning system which would allow both upcoming crises and deals to be discussed internally within the EU.

Third, the EU should work harder to integrate its Eastern Neighbourhood. While some member states want to avoid competition for influence with Russia in Europe’s neighbourhood, and others want an “anti-Russian” neighbourhood policy, we believe that the EU should focus on encourage its neighbours to adopt European norms and regulations and thus integrate them into the European project. The EU could could also invest in electricity interconnections with some neighbouring countries, give them access to the Nabucco pipeline, extend the European Energy Community and seek the full application the energy acquis in Turkey, Ukraine and Moldova. Equally, the EU should explore the possibility of giving the Trade Commissioner a mandate to fast-track access to the EU market for selected products in case of any more politically motivated Russian embargoes such as those imposed on Georgian and Moldovan wines.

Fourth, the EU should insist on the implementation of contractual obligations and international commitments by Russia. The European Commission should, for instance, be given more political support to apply competition policy in the energy sector, and to investigate the more dubious deals between Russian and EU companies. More generally, the EU should demand the enforcement of the growing number of agreements which have not been implemented – the PCA, the four Common Spaces and the European Energy Charter. Ignoring Russian foot-dragging undermines the very principle of a rules-based relationship with Russia.

Finally, the EU needs to work hard on rebalancing the relationship with Russia. To achieve this, the EU needs to adopt an internal code of conduct on energy deals and guidelines on long-term contracts and forthcoming mergers. In order to avoid further monopolisation and partitioning of the EU energy market, the European Commission could be granted the right to pre-approve big energy deals on long-term contracts and pipelines concluded between European and foreign energy companies. The practical goals should be open competition, the rule of law and an integrated and flexible gas market.

If the EU wants to turn the new Russia to be a predictable and viable neighbour, it must build its partnership with Russia on the same foundations that made European integration a success – interdependence based on stable rules, transparency and consensus. But these foundations will not build themselves. The Union must be much more determined about agreeing rules of engagement with Russia, and then defending them.