20.06.2003
Political Duty of Bringing Russia Back to the European Fold
№2 2003 April/June
Carl Bildt

Carl Bildt was Sweden’s foreign minister from 2006 to October 2014 and Prime Minister from 1991 to 1994, when he negotiated Sweden’s EU accession.

Three hundred years after Peter the Great founded his new
capital around the marshlands of the Neva River, Russia is finally
becoming a true member of the West. Unfortunately, this ongoing
process of integration between Russia and Europe, and the Western
world as a whole, was interrupted by seven tragic decades of
communist dictatorship. Today, with the collapse of the Soviet
Union, the integration has been gathering momentum once again.

It was a truly daring move when Peter the Great decided to build
St. Petersburg in the easternmost extension of the Baltic Sea. In
1703, this land was still formally Swedish territory, and would
remain so until a peace treaty was concluded in Nystad in 1721.
Thereafter, the small town of Nyen was razed to the ground, and
magnificent architecture in the most advanced European styles began
to go up along the banks of the Neva.

This region had been the convening point between Russia and
various parts of Western Europe for centuries. Here, the early
Viking traders chartered their way down the mighty rivers on their
way to the new Kingdom of Rus; the long ships of the Rurik family
must have passed the small sandy island which was to be the future
site of the famous Peter and Paul Fortress in St. Petersburg. From
there they would travel to Stary Novgorod (which they called
HolmgIrd), and then further along the Dnepr River to Kiev. They
eventually made their passage all the way to Constantinople (called
MiklagIrd). It is believed that some of them were even called upon
to rule over the early Slav settlements of the area.

History often highlights the various conflicts of the area: from
the victory of Alexander Nevsky against the advancing Nordics, to
the historic heroism displayed during the 900-day siege of
Leningrad. But if we take a more detached view, it is the long
periods of trade and creative interaction between Russia and the
rest of Europe that dominate the pages of history. It was at the
island fortress that bears the Swedish name N?teborg, where the
Ladoga River flows into the Neva, that a peace treaty was concluded
in 1353 which determined the borders in this part of Europe. That
peace facilitated the development of important trade routes and, as
a result, the unification of Europe.

In spite of various conflicts the region never lost its
significant role. A century ago, St. Petersburg was emerging as the
premier metropolis of northern Europe. The impressive economic
development of Russia as the old century came to a close attracted
new talent and capital from all over Europe. From the Swedish point
of view, the most successful entrepreneurs and artists of the time
gravitated toward the metropolis on the Neva, where Russia was
often perceived as the land of endless opportunities. And the
Swedes were certainly not alone in their sentiment. St. Petersburg
was a city where the heart was beating together with the pulse of
Europe.

But in August 1914 Europe entered a long dark night. This tragic
period did not come to its actual conclusion until November 1989
when the great wall that divided Berlin, Germany and Europe finally
collapsed. During this time, Russia was dragged into a maelstrom
that brought conflict, revolutions, dictatorships, repression and
genocide across the face of Europe. In 1945, the fascist threat was
defeated as the sons of Russian peasants stormed Berlin. But the
dark night was to last until 1989 when the “evil empire” of the
Soviet Union started to relinquish its stranglehold over half of
the European continent. In late 1991, the liberating forces freed
Russia itself from the yoke of communism.

History happens but once, and it is futile to speculate on what
could have transpired had history been somehow different. But we
can see from the historical facts that the communist decades led to
the self-isolation of Russia from the rest of Europe; this
isolation was to the great detriment for both Russia and the other
European countries. From having been the natural metropolis of
northern Europe, St. Petersburg sank down to the level of a
repressed, isolated and often intellectually devastated city. With
the “window to the West” closed, there were only the chilly winds
from the East sweeping through the empty buildings of the once
magnificent city. And the Party slogans of “internationalism” could
not alter the grayness and emptiness of even Moscow.

The tremendous task which was passed to us in 1989 was no less
than the creation of a new system of peace and security throughout
Europe. It involved the question of including a reunited and strong
Germany back into the new system, of giving stability and a sense
of security to the re-emerging democracies in the countries of the
Baltic region and Central Europe; finally, it demanded that we
facilitate the transition of the volatile area of South-Eastern
Europe into a new order of stability.

The alternatives to such a plan were few. A Europe divided into
separate spheres dominated by the military powers locked into
confrontation with each other was neither feasible nor desirable. A
Europe of the empires acting in line with the Congress of Vienna
was not an alternative either. And a Europe consisting of a large
number of nation states, maneuvering against each other in ways we
had often seen in the past, was clearly not going to provide the
stability we were seeking.

The road finally chosen was to build a stronger European Union.
Eventually, this loose aggregate would gradually start to coalesce
into a federation of nation states and encompass as much of Europe
as possible. In Western Europe, the 1990s were gradually dominated
by the emergence of a single common market, and a common currency –
the euro – was launched. At the same time, decisive steps were
taken toward completing the integration of the western parts of
Europe through the entry of Finland, Sweden and Austria into the
Union. In 1993, the Union decided to open its doors to the former
socialist states of Europe, provided they were willing and able to
meet certain political criteria in the form of democracy and the
rule of the law.

Since then, we have seen a remarkable transition from the closed
socialist economic and political systems across half of Europe, to
firmly established democracies and open market economies. While the
political transition was relatively straightforward in most of
these countries, the monumental task of building capitalism, and
all its associated structures, has been, and still remains, a most
demanding one. While there are an endless number of books available
on the transition from capitalism to socialism, there are none on
how to build capitalism upon the ruins of socialism. Nevertheless,
the eight countries of Central Europe, together with the Baltic
states, which will soon sign their treaties of accession into the
European Union, have successfully organized all the institutions of
an open capitalist economic system – while maintaining the rule of
the law – in a remarkably short time. With the template given by
the aquis communautaire of the European Union this would hardly
have been a possible achievement [1].

By May 1st 2004, we are likely to witness all the countries of
Central Europe and the Baltic States formally enter both the
European Union and the Atlantic Alliance. We will then be halfway
toward our goal of introducing a new system of security and
stability in Europe which was placed on the agenda of history by
the momentous events of 1989.

During the past few years, we have also witnessed a rapid
evolution of links between the European Union and the Russian
Federation. In 1994, at the same European summit in Corfu, Greece,
where Sweden, Finland and Austria signed their treaties of
accession to the European Union, President Boris Yeltsin signed the
landmark Partnership and Cooperation Agreement with the EU. As
Prime Minister of Sweden at the time, I vividly remember the dinner
with the various Prime Ministers and Presidents of Europe during
which we discussed with President Yeltsin the desire to open a
truly new historic era of cooperation between Russia and our
respective countries.

Since then we have seen this relationship improve year by year.
The ongoing transformation of the Russian economy has paved the way
for new relationships, and following the recovery of the economy
after the 1998 crisis, there is a surge of new interest in
developing economic cooperation between Europe and Russia. There
has been organized a bi-annual political summit between the
European Union and Russia, as well as a dialog on energy use which
promises great potential for the future.

As the process of European Union enlargement has now reached an
important milestone, it is important to focus on how Europe may
further develop its cooperative relationship with Russia. There can
be no doubt that this is in the interest of both regions. There is
an increasing economic interdependence between Russia and the rest
of Europe, notably in, but not limited to, the field of energy;
there is an obvious interest in tackling different security issues
in cooperation with each other; and there is an emerging broader
agenda that includes everything from the development of human
contacts to more intense cooperation in science and research.

The recent decision by British Petroleum to work together with
the Alfa Group and invest U.S. $7.1 billion in the new TNK oil
giant represents a new step in the development of direct
investments in Russia. Numerous consumer-oriented service companies
– notably IKEA, with its very successful stores in Moscow – have
already established themselves on the Russian markets, but to date
investments in the vital oil and gas sectors have been relatively
limited.

However, this is now likely to change. The transformation of the
Russian oil industry has resulted in the emergence of a number of
independent, private companies which are increasingly interested in
developing different sorts of partnerships with the outside world.
In the past, this involvement had been impeded by the lingering
suspicions of the EU countries and the United States concerning the
state of corporate governance, as well as commercial legislation,
in Russia; a number of cases have served to reinforce these
suspicions.

The recent move by BP can be seen as a critical sign that at
least part of the new oil industry of Russia meets the core
international demands mentioned above. This development is likely
to open up further opportunities for the internationalization of
the Russian oil industry. It should be stressed that this new
relationship will probably reveal itself in the increased
international operations of the Russian oil companies, as well as
through increased investments by other European and U.S. oil
companies in the exploration of oil resources inside Russia.

But this is only the beginning of the cooperation that is likely
to develop between Russia and the rest of Europe in the energy
sector. While enjoying a high level of oil production, Russia’s
actual share of the global oil reserves is more limited. However,
Russia remains unchallenged in terms of its abundant reserves of
natural gas. And with other sources of energy facing different
limitations, it is safe to assume that the EU countries will
gradually increase their levels of gas consumption, with Russia
being the dominant supplier of this increasingly important energy
source. While the EU today relies on Russia for approximately a
half of its natural gas imports, this figure will increase
substantially with the entry of new Central European nations into
the European Union.

A new phase of integration and cooperation in the energy sector
will open between Russia and the rest of Europe once Russia begins
to reform and liberalize its gigantic gas and pipeline monopolies
of Gazprom and Transneft. The decision to move on with the
liberalization of that part of the power sector covered by the UES
must be seen as a positive and encouraging sign in these
regards.

Nevertheless, there is no underestimating of the difficulties
that this liberalization will entail. The difficulties in the
ongoing discussions between the European Union and Russia on the
level of energy prices clearly demonstrate how important and
sensitive these issues are. And the issue of liberalizing the
energy sectors of the European Union has proven difficult as well,
with the process still far from being completed. But it is safe to
assume that all of the issues concerning energy reform, as well as
the move toward a new level of cooperation between Russia and the
European Union, will be high up on the agenda. This will be
especially so following the March 2004 presidential elections in
Russia, and the formation of a new European Commission following
the June 2004 elections of the European Parliament.

Then, it will be crucial to give these issues a new political
impetus. So far, the energy dialog between Russia and the European
Union has been richer in rhetoric than it has been in results.
Often, the dialog has been bogged down in more technical questions,
such as Gazprom’s long-term contracts for the supply of gas to
different EU countries at different prices, which goes against the
EU rules on competition policy. There is also the question of the
absence of a legal basis for the “production sharing agreements”
that foreign investors often require. With a new emphasis placed on
reforming the broader energy sector in Russia, and with a new
political impetus from both Russia and the EU, it should be
possible to solve these issues and pave the way to a broader and
deeper relationship.

The common vision expressed by Russia and the European Union is
to create a common economic space, and one can foresee this process
moving through different stages in the years ahead. Of paramount
importance, however, is the early accession of Russia to the World
Trade Organization (WTO), and there is hope that this goal may be
achieved sometime this year.

This is a move very much in the interest of Russia. While oil
and gas were responsible for 90 percent of Russian exports just a
decade ago, they now make up approximately half of this percentage.
Today, exports of metals and chemicals are becoming increasingly
important for Russia, while agricultural exports are also assuming
a more prominent role. It is worth noting that while the old Soviet
Union depended upon massive grain imports in order to feed its
population at a minimum level, Russia, Ukraine and Kazakhstan are
entering the global markets as major exporters of grain. Indeed,
many entrepreneurs speak in glowing terms of the future prospects
for agricultural production and the food processing industry in
Russia [2].

Russia’s membership in the WTO would protect Russian exports
from the often arbitrary protectionist measures that we have seen
applied, among other areas, in the Russian steel sector. It would
also provide the basis for the further development of trade
relationships with the European Union, with trade in food and other
agricultural products one day playing a natural part of an
increasingly close economic relationship. WTO membership would
facilitate foreign direct investment in Russia.

Already today, the EU is Russia’s largest trading partner, with
more than half of Russia’s exports going to the new and enlarged
EU. The further development of this relationship will to a large
extent depend upon the evolution of Russia’s economic policy,
together with progress in the administrative reform.

Russia’s recently released initiatives call for measures to
facilitate the economy growing by five percent a year until 2008
and by seven to eight percent thereafter. Among the various
measures discussed in order to make this projection a reality are
reducing governmental interference in the economy, reducing the tax
burden, further reforming the various remaining state-controlled
enterprises, and bringing legislation in different sectors in line
with international laws [3].

It would be difficult to find a businessman in Russia who cannot
testify to the importance of measures along these lines.
Increasingly, it is an administrative problem that impedes the
potential of Russia from economic development, and, therefore, the
development of more intense economic links with the West. With
companies from other European countries often suffering from the
erratic rules of the Russian customs, or overt extortion practices
of the Russian road authorities, one can only guess at the problems
this must pose for Russian business entrepreneurs.

The burden of inadequate administrative capabilities has been
felt acutely at the border between the present EU and Russia, i.e.
between Finland and Russia. The media has even spoken of a “war on
transportation” that has served to underline the inadequacy of the
economic links between Russia and the rest of Europe. This is worth
noting since this particular border is likely to function better
than any other border between Russia and the world.

But it is not only Russia that needs to reform in order to
facilitate the further development of the economic relationship.
Apart from opening up agricultural and related sectors to trade, it
is important to be sensitive to the new problems surrounding the
citizens’ travel across national borders. This is vital since new
visa regimes are being introduced, and the Schengen agreement,
which promotes passport-free travel across Europe, is gradually
extended. And new Russian administrative practices have also
further complicated existing difficulties in acquiring visas to
Russia. These impediments cannot be in anybody’s best interests,
therefore, initiatives to remove these unnecessary bureaucratic
procedures must be given political priority before these
difficulties start to affect the overall relationship.

In the fields of science and technology, there are numerous
areas with considerable scope for expanding cooperation between
Russia and the EU. I particularly believe in the potential of
cooperative efforts in the space sector. Global dependence on
Russian launching technologies was already on the increase even
before the recent Columbia space shuttle tragedy. European projects
like the Galileo global navigation and positioning system should
open up new possibilities for cooperation, while other future plans
provide for the use of the European space facilities in Kourou,
French Guyana, to launch the Russian-made Soyuz boosters.

In the wider aerospace sector, there are numerous other
possibilities of cooperation considering the impressive Russian
achievements in certain technologies and systems. It has not
escaped the attention of the European aerospace industry that the
Boeing Corporation of the U.S. has relocated their design and
manufacturing facilities for the subsystems of their modern
commercial airliners to Russia, thereby demonstrating the high
potential for further cooperation in this sphere.

Although Russia and the European Union are deeply interested in
improving the economic integration environment, the relationship
between them can never be limited to the economy. We share a
continent as well as a concern for its continued stability and
security. Thus, political issues should be regarded as critical for
improved relationship between Moscow and Brussels.

Presently, many Russians are claiming that the continuing dialog
with the European Union lacks the depth and significance it must
have; at the same time, EU officials are struggling to give this
dialog a more substantial content, especially in light of Russia’s
alleged lack of interest.

There are numerous structures for political dialog between
Russia and the EU, and it is far from clear that further additions
to those already existing will make much of a difference.
Nevertheless there is an ongoing discussion concerning the
possibility of augmenting the dialog along the lines of the
NATO-Russia Council that has so far been to the obvious
satisfaction of both parties. While that model might be difficult
to duplicate in every detail, it is imperative to breathe life into
the political dialog that has been remarkably empty in terms of
regional policies as well as global issues that are of mutual
concern to both Russia and the EU.

Far more important than the institutions of the dialog is the
substance. And there should be no lack of issues of common interest
to not only exchange views, but also to define to which extent it
is possible to develop a common position.

The turbulent issues of the Middle East are high up on the
agenda of both the EU and Russia. While being an area of obvious
interest to the United States, the region is the “near abroad” for
both Russia and the EU, and any developments in this region are
likely to have a direct impact on both our external security and,
over time, our internal stability. Within the Quartet there is an
obvious interest in developing cooperation on these issues.

Afghanistan, together with its neighbors in this vicinity, is
another hotspot region where Russia and Europe share a direct
interest. More than three quarters of the heroin being distributed
on the streets of the EU countries arrive from Afghanistan; in
Russia, virtually all of its heroin arrives from this nation.
Therefore, it is obvious that Russia and Europe must work together
– not only to combat drug trafficking – but also to contribute to
the stability of Afghanistan and the adjoining countries of Central
Asia.

These issues are only a small part of a much larger problem, a
problem which concerns the future of the entire region of Central
Asia and the Caucasus. The war in Chechnya has not only caused
immense human suffering for those living in the region; Russia is
feeling the effects as well. The annual losses being suffered by
the Russian Armed Forces seem to be on the same level as those
incurred during the war in Afghanistan after 1979. The war in
Chechnya has also served to further alienate the Slavic population
from the natives of the Caucasus. It is not difficult to predict
that if this situation is not properly managed, and the
intensifying alienation somehow mitigated, it will only become a
more serious concern to all of the countries of Europe.

Concerning developments in the regions close the European Union,
we are faced with the remaining issues of the Balkans; here, Russia
has played a significant diplomatic role, while supporting the
international peacekeeping forces in Bosnia and Kosovo. In light of
its significant role in the United Nations, Russia is acknowledged
as an indispensable partner of the European Union, therefore it
must be more intensively involved in tackling the persisting issues
of the region. Since 1999, with the conclusion of hostilities in
Kosovo, it has been too easily forgotten that this war ended
without a formal peace agreement, thus leaving open one of the most
difficult issues of the region. And in this volatile region, one
issue left open and unresolved means that all other issues are also
open and subject to controversy.

In the region between the new European Union and Russia, there
are areas that need to be the focus of increased attention. From
the European point of view, it seems incomprehensible that Moscow
seems to take such a relaxed attitude toward the internal and
external policies of its neighbor, Belarus. The Soviet-style
authoritarianism of Belarus’ political system, together with its
miserable economic record, threatens to cause embarrassing problems
for Russia in the future. While the EU has taken specific measures
to demonstrate that there are certain standards and values which
must be upheld in the new Europe, Moscow has accomplished far too
little on this particular issue.

The breakaway region of Transdniestria in Moldova is yet another
issue that must be addressed. This region has already built a solid
reputation for itself as a haven for illicit activities of the most
diverse kinds, which could well develop into a major problem in the
near future. Of course, Russia must fulfill its commitments to
withdraw arms and military equipment from this region, but our
concern must go beyond this particular issue. Neither the EU nor
Russia can afford to have a “black hole” in Europe in the long
run.

As St. Petersburg celebrates the 300-year anniversary of its
founding, Russia and Europe are entering a new era. It has been
argued that the Eurasian era is over for Russia, and its future
lies in its gradual integration and cooperation with the rest of
Europe; this integration is essential in view of the common
economic interests, as well as the geopolitical challenges now
faced by both Russia and the European Union [4].

At the same time, Europe is undergoing the greatest
transformation in its history. Having broken itself out of the
original mold of Charlemagne’s Frankish Empire and sought to
broaden the Atlantic perspectives of the Anglo-Saxons, give
stability to the northern shores of the Mediterranean and receive
inspiration from the different geopolitical outlooks of the Nordic
countries, today the EU is looking forward to accepting new members
from Tallinn to Nicosia. These moves will profoundly change not
only its structures but also its geopolitical perspectives.
Brussels will remain the administrative center of the evolving
federation of nation states, but its true political center has
already started to gravitate toward the East.

This dynamic environment naturally motivates Europe to develop
its relations with Russia. The Baltic and Central European
countries, which suffered from decades of Soviet occupation and
communist repression, will find it far easier to develop new
relations with Russia since they are firmly anchored to the
European and Atlantic process of integration. Approximately one
million people of Russian descent will gradually become formal
citizens of the European Union, therefore the level of mutual
dependence is bound to increase across the board. But while the
strategic direction toward a closer relationship is as clear as it
is firm, the new European Union will need time to discover its true
form. For this evolving federation of nation states – eventually
including all of Europe to the West of Russia and Ukraine – the
forging of a strong relationship that assists the continued
integration and transformation of Russia is a top priority.

Most of us grew up in a Europe still living in the shadow of the
threat of “the evil Soviet empire,” and some of us took pride in
being called “anti-Soviet” during the dark decades of alienation
and dictatorships. We have a moral imperative, as well as a
political duty, to make certain that this alienation never occurs
again and that Russia truly becomes part of our common Europe.

1. This has been described
in Anders ‚slund’s ground-breaking book Building Capitalism – The
Transformation of the Former Soviet Bloc. Cambridge University
Press, 2002.

2. Anders Aslund. WTO Entry:
No Time to Lose. Moscow Times, February 3, 2003.

3. “Cabinet Approves Plan
for 8-Percent GDP Growth.” Moscow Times, February 21, 2003.

4. Dmitry Trenin. The End of
Eurasia: Russia on the Border Between Geopolitics and
Globalization. Carnegie Endowment, 2002.