The spring of 2004 will figure in the history of Russia-EU relations as a period of major achievements and resolute steps toward rapprochement. Two consecutive and highly important documents were signed which symbolize the new quality of Russia-EU interaction. In late April, a protocol extending the EU-Russia Partnership and Cooperation Agreement (PCA) to the ten new EU member states was signed. During the Russia-EU summit in Moscow in May, the parties signed a protocol on Russia’s accession to the World Trade Organization (WTO).

The preparation of these documents was difficult: the parties exchanged tough statements, and at times it looked as if a crisis was on the horizon. Yet a compromise was eventually reached. Commenting on the situation, EU Trade Commissioner Pascal Lamy said that storm clouds were gathering, but now the weather has improved.

The success of the negotiations and the experience gained from them inspire hope that the complicated issues that will inevitably emerge between Moscow and Brussels in the future will be addressed on a mutually beneficial basis. The ratified documents are proof of progress on stubborn problems that the parties had been unable to solve for years. Thus, a line has been drawn under the previously thorny relationship that stalled progress on a whole range of essential issues. These obstructed the broadening of ties between Russia and the European Union.

Clearly, future relations will not be idyllic, but this is normal where interaction between major players in the global arena, like Russia and the European Union, is concerned. Today, it is impossible to fully assess the advantages and disadvantages of the EU getting closer to Russia’s borders. However, the strategic benefits of a substantial broadening of economic, political, cultural and scientific ties on the continent are obvious.

THE ATMOSPHERE IS SHOWING IMPROVEMENT

Russia’s interaction with the Baltic nations of Latvia, Lithuania and Estonia is an essential element for the creation of a common European economic and political space. This spring witnessed a historical moment for the Baltic states as they became full-fledged members of the European Union and NATO. Accords between Russia and the EU were good news for the Baltics. Had an unexpected ‘storm,’ such as a trade war, broken out, Russian-Baltic relations would have been dealt a heavy blow yet again.

Fortunately, this did not happen. At the same time, a new cooperation model has yet to be forwarded. Unlike the previous trade agreements signed with Lithuania and Latvia (but not with Estonia), the PCA calls for the introduction of most favored nation regimes in trade, including free access to financial markets, internal waterways etc. Still, having joined the European Union, the Baltic nations have isolated themselves from Russia by the Schengen visa accords, high land transit tariffs, and quotas for supplies from Russia, which comprise a substantial share of Russian exports.

Despite Russia’s tenuous relations with the Baltic states (less noticeable with Lithuania, more so with Latvia), contacts in the economic, financial and security spheres have intensified over the past few years in comparison with the previous decade. This is the result of objective economic and social processes.

It is worth noting that Finland, Sweden and Denmark greatly promoted those ties when they chaired the European Union (in 1999, 2001 and 2002, respectively). The leadership of these countries helped to draw the attention of politicians, the world public and businesses to the potential of Northern Europe, including north-western Russia. This, in turn, helped consolidate the foundations for cooperation between the EU and Russia, as well as settle stubborn problems.

The political atmosphere improved following September 11, 2001 when Russia and the United States initiated the war on terror as close allies. Anti-NATO rhetoric immediately weakened in Russia, while anti-Russian nationalistic forces in the Baltic states alienated part of their Washington supporters. Nevertheless, tensions continued to intensify for ethnic Russians living in the Baltic nations. This situation had a particularly negative effect on relations between Russia and Latvia.

For the current problems not to impair long-term strategic considerations, Russia and the Baltic nations will have to reinforce their efforts to promote bilateral and multilateral partnerships. Unfortunately, the history of bilateral relations can be of little value. Nevertheless, all of the parties will have to search for mutually acceptable solutions to their problems.

Kaliningrad has been the focal point of many outstanding issues related to the whole region’s future. Moscow has made its choice clear: it wants Kaliningrad to be a flagship of the Russian economy, as opposed to some sort of a distant military outpost. Clearly, Kaliningrad has retained a role in Russia’s defense planning, and this significance has grown more pronounced following NATO’s enlargement; the Russian enclave serves the unique role in Russia’s early warning system. Thus, given the current level of relations between Russia and NATO, maintaining the system and making it more efficient would be in the interests of both Russia and the West.

The problem of transit to Kaliningrad via Lithuania has yet to be fully resolved. Now that the passenger transit issue has been settled more or less successfully, Russia is insisting on the need to facilitate the clearance of cargoes. It is also looking to reduce cargo transit tariffs. Since May 1, 2004, the cost for a long-haul truck to travel to Kaliningrad and back again is $250. This price far exceeds the cost prior to Lithuania joining the European Union.
Cooperation in the transit of goods and energy resources via the Baltic states is a key element of regional integration. The construction of new ports, the modernization of old ports in Russia and the commissioning of the Baltic Pipeline System (BPS) will substantially increase the region’s economic potential. In the near future, the BPS will reach its planned capacity of 40 million tons of oil a year, and oil export volumes may further increase.

In the opinion of many Russian analysts, and particularly the leadership of the Transneft state pipeline monopoly, Russia’s oil business will not require the services of the Baltic states’ seaports, since its demand will be fully met by Russian pipeline and transshipment capacities. However, not all of the Baltic and Russian specialists share the view; they point to the geographic attractiveness of ports like Ventspils, for example. Regardless, both the consumers of services and the population at large must benefit from the fact that more than 20 ports in the region will be competing with each other.

Presently, there are heated debates concerning Moscow’s reluctance to use the pipeline running to Ventspils, which is one-third owned by Transneft. These controversies are rooted in contradictions between Russia and other countries, including Europe, in the field of energy. The YUKOS case has clearly demonstrated that the Kremlin intends to retain strategic control over the country’s natural riches – above all, its hydrocarbons – and use them as levers in Russia’s foreign policy.

This position certainly runs counter to the European Union’s interests: the EU is seeking to create an internal market of energy consumers, while forcing the energy producers, including those in Russia, to compete with each other for those consumers. As a result of these differing approaches, the EU-Russia energy dialog has stalled, while problems have emerged in Russia’s energy dialog with the United States. Furthermore, talks on Russia’s accession to the WTO proceed in a “two steps forward and one step back” fashion. Therefore, it is obvious that the transit of energy resources across the Baltic states is just one feature of a much more complex problem.

SCHOOL OF INSTABILITY

The status of Russian-speaking communities in Latvia and Estonia remains a serious problem. The legacy of the Soviet period and the difficult period of the 1990s has not been overcome. The problem remains and there is the risk of destabilization, even if its gravity has subsided.

Ethnic Russians in Latvia, Lithuania and Estonia have accepted the new rules of the game. Their repatriation to Russia has almost ended. In the early 1990s, 70,000-80,000 individuals annually arrived in Russia for permanent residence, while in 2000 this figure dropped to approximately 1,000. There are grounds for saying that the migration situation has normalized, especially when we take into account that about 400 Russians migrated to the Baltic countries during the same period.

The ethnic Russian communities, as well as the native population, are forced to endure all of the inherent hardships associated with a nascent democracy. However, unlike Lithuania, which from the very start of its independence granted citizenship to all those who lived there, the situation for ethnic Russians in Estonia and Latvia has been knotty.

Russia is still dissatisfied with the pace of naturalization of ethnic Russians in Latvia and Estonia, as it is beginning to noticeably stall. Following some liberalization of tough legislative requirements concerning citizenship in 1998 due to pressure from Russia, the OSCE and the Council of Europe, 14,000 to 15,000 individuals acquired Latvian citizenship annually. However, in 2001, only 8,000 out of 500,000 non-citizens received Latvian citizenship. Estonian citizenship was granted to just 3,500 out of 220,000 non-citizens in 2000 and 2001. In both countries, restrictions on permanent residency are still in place. Furthermore, the violation of social rights, as well as bans on particular professions for non-citizens, have still not been removed.

Moscow’s relations with Riga became aggravated last winter in connection with Latvia’s numerous Russian schools. Latvia’s educational reform called for teaching exclusively in the Latvian language from September of this year. In the wake of heated debates and protests by the Russian-speaking community, Latvia’s Saeima (parliament) adopted a law which stipulated that 60 percent of all subjects will be taught in Latvian beginning with the tenth year at school (Latvia has a 12-year secondary education).

Reaction by Latvia’s Russian-speaking community was flatly negative. Latvia’s initiative united previously isolated groups and radicalized them, while young people who are more traditionally inclined to protest radically set the tone. An additional factor which helped to stir up tensions in Latvia is that neighboring Estonia has opted for a more flexible approach to a similar reform. Estonia has decided to postpone its school transition to the Estonian language until 2007, and has granted municipalities the right to decide whether or not a particular school should move to the new mode.

As a result, Latvia is on the verge of a very real ethnic conflict, which adversely affects its relations with Russia. A moratorium on reform could ease tensions: a postponement on this decision will provide the necessary time to conduct serious talks with the biggest organizations of students and teachers. This point of view is shared by the OSCE and the Council of Europe. It should be realized that the school reform aimed at the integration of ethnic minorities into Latvian society was perceived by Latvia’s ethnic Russians as an integral part of the government’s discriminatory policy. They regard the restrictions on the use of their mother tongue as a problem equal to the loss of citizenship.

Both Riga and Brussels will have to look for answers to these intricate questions, especially given that similar problems have also emerged in Estonia and Lithuania, however less pronounced. It is to their own benefit that the Baltic nations find civilized solutions to the problems faced by their Russian-speaking minorities. Yet Riga and Tallinn have done little so far to make the non-citizens believe that the authorities are capable of protecting them, as opposed to infringing upon their rights. Latvia and Estonia have done far too little to turn Russian ethnics into patriots of their countries. The risk remains that Latvia and Estonia will develop into countries split into two ethnic communities, with each of those communities voting on ethnic grounds.

‘NORTHERN DIMENSION’

Multilateral cooperation could make its weighty contribution to the strengthening of stability in the region, including the development of Russian-Baltic relations. It took the European Union’s Northern Dimension program rather long to take off, but it got off the ground at last. Today, eleven countries in the Baltic Sea region are within its sphere of activities.

According to the Nordic Council of Ministers, which deals with the Northern Dimension on a permanent basis, the program has substantial economic and political potential. In some form or other, integration processes in the region – which includes north-western Russia – have been underway for 12 years, that is, since the time the Nordic Council opened its information offices in the Baltic nations and Russia. At that time, around 40 specialists got engaged in creating networks for establishing ties with governmental and public organizations. The Nordic Council began financing projects involving small and mid-sized enterprises, as well as exchanges between nongovernmental organizations. The project’s annual budget is around 100 million euros, 20 percent of that sum has been spent on north-western Russia and the Baltic states.

Between the years 2004-2006, the Northern Dimension plan of activities calls for the implementation of initiatives that are aimed at advancements in the economic, social and environmental spheres of the Baltic region.

In the economic sphere, priority has been given to improving the proficiency of the specialists, stepping up financial assistance for research and development projects and creating modern infrastructures. The activities of the Baltic Sea Region Energy Cooperation (BASREC) association are aimed at bringing Russia into the energy chains of the EU and the Nordic nations, broadening the EU-Russia energy dialog and exploring the opportunities for further integration of power supply systems in the region.

The Northern Dimension Environmental Partnership (NDEP) projects are particularly topical for Russia. The European Council fully supported NDEP during the Gцteborg summit in June 2001, and NDEP has accumulated more than a billion euros for its projects. The Nordic Investment Bank established by the Nordic Council of Ministers, the European Bank for Reconstruction and Development, the World Bank, the European Investment Bank and the governments of Sweden and Finland have also made their contributions. In 2003, Russia also agreed to finance NDEP programs.

Water purification, energy-saving and other NDEP projects have been drawn up. The implementation of some of these proposals has already started in Arkhangelsk, Kaliningrad, Murmansk, St. Petersburg, the Leningrad Region, Novgorod and the Komi Republic. The biggest funds are to be spent on completing the construction of a protective dam in St. Petersburg (more than 400 million euros) and water treatment facilities in the city and its region (around 200 million euros).

While pooling the efforts of countries in the region for addressing particular problems, the Northern Dimension promotes understanding among politicians, businesspeople and public figures. On a small stretch of Europe, they have been testing methods for the creation of four common spaces – economic, humanitarian, internal and external security. Those four spaces will constitute Wider Europe in the future, and Russia will be a part of it. The significance of this regional ‘laboratory’ can hardly be overestimated: this is where the compatibility of culture, history, traditions, climatic and natural specifics, educational and economic development levels creates unique chances for real integration.

For this approach to be successful, it is necessary for us to persistently work for the future, while reducing the risks of political conflicts that have their roots in the past.