The cooperation between Russia and the European Union often
resembles an idyll. Even a recent controversy – sparked by a change
of transit rules for Russians traveling between the Baltic enclave
of Kaliningrad and other parts of the country – has not diminished
the image. However, the real scale of Russia-EU cooperation remains
a token act, since the EU has been unable to formulate a clear-cut
plan for cooperation with Russia, while the Russian government has
failed to keep its contractual commitments.
The trade balance between Russia and the EU remains clearly
disproportional, with the 34 percent of Russian exports totaling a
mere 3.8 percent of European imports . There
are good reasons to believe that this trade imbalance will continue
to grow as long as the countries of Central and Eastern Europe are
reorienting their markets toward the West.
Nevertheless, the two trading partners continue to search for
mutually acceptable forms of cooperation. President Vladimir Putin
stated in his 2002 address to the Russian parliament: “We will
continue our cooperation with the EU in a search for ways to build
a common economic area.” The concept for a Common Economic Space
(CES), a discussion of which is now underway, has set the ambitious
goal for Russia’s greater integration into the United Europe
. The debates surrounding this question began
rather recently, and many crucial issues remain unexplored thus
far. Is it possible for Russia to accept some preferable aspects of
European integration, while rejecting others at the same time? What
will be the political repercussions for Russia if there is an
intensified level of economic cooperation with Europe? Does Moscow
have other viable options on how to promote its integration into
the European Union? The answers to these questions are essential
for making well-grounded decisions on the strategic goals of
Experience Of The Partnership And Cooperation Agreement
The official history of relations between Russia and the EU
could be said to have begun with the establishment of regular
summits in 1998. Despite this rather short history Russia has
already gained some illustrative experience in its relations with
the EU. For a general overview, let us analyze the Partnership and
Cooperation Agreement between Russia and the EU, signed on the
Greek island of Corfu in 1994.
A number of the provisions set forth in this agreement outline
certain conditions which must be met before economic activity may
take place on the territories of partner countries. One
qualification for the successful realization of Russia-EU
cooperation is that Moscow must meet serious requirements, like
opening up Russian markets to European businesses . The various steps toward bridging the gap between
the Russian and European markets aim to set up a free trade zone in
the future. The European Commission stated in its policy documents
that the goal of the Partnership and Cooperation Agreement was to
bring Russia into conformity with the legislative formats of the
European market and the World Trade Organization . Specifically, it provides for more active
cooperation in developing the Law of Competition and gradual
transition to market principles in the field of natural monopolies
and state support. Article 55 of the Agreement stipulates that
“Russia shall endeavor to ensure that its legislation will be
gradually made compatible with that of the Community.” It also
lists specific rules of law where approximation was necessary
The Partnership and Cooperation Agreement is far from the most
advanced legal form for establishing mutual relations between the
EU and its immediate neighboring countries, although it is a much
more binding document, of course, than the Agreement on Trade and
Cooperation endorsed by the Soviet Union in 1989. However, the
Partnership and Cooperation Agreement appears to take a lower
position in the hierarchy of the EU foreign policy instruments than
the more integration-oriented agreements with third world
countries, which provide for gradual extension of the EU’s four
basic privileges – free flow of goods, services, capital and
investment. One may recall the Agreement on a European Economic
Area which the EU signed with Norway, Iceland and Liechtenstein in
1994, or the so-called next-generation agreements with Central and
East European countries, which are aimed at preparing candidate
countries for full accession to the EU .
Russia has difficulties in fulfilling even the Partnership and
Cooperation Agreement, which has caused several complaints from the
European Commission. One of them came in March 2002 from EU Trade
Commissioner Pascal Lamy. His letter to Russia’s Deputy Prime
Minister Alexei Kudrin insisted that Russia should open up its
market for European insurance companies .
Furthermore, the EU brought legal action against Russia’s natural
monopolies, in particular against the Gazprom company which
received the strongest protests from the EU.
Some observers rightly argue that the Partnership and
Cooperation Agreement was the result of an overestimation of a high
potential for a Russo-European rapprochement .
It is no secret that in the early 1990s Russia sought membership in
various prestigious clubs of particular nations, or at least hoped
to establish the closest possible relations with them. However,
this objective was pursued without considering how difficult it
would be for Russia to meet its obligations to those countries. On
the other hand, European officials, too, cherished overblown hope
over actual concrete reforms in the former Soviet republics.
The political section of the Russia-EU agreement reflected the
Union’s willingness to link economic relations with Russia in
accordance with the rate of Russia’s transition to the European
model of democracy – a manifestation of the “principle of political
conditionality,” which the EU developed in the late 1980s .
After the agreement entered into force, Brussels observed the
pace of its implementation in order to measure Russia’s readiness
for consistent and fruitful cooperation . EU
officials made it clear to Moscow that they were not prepared to go
beyond the goals stipulated by the agreement, and that more
ambitious plans could be discussed only after the agreement was
What Does The Compatibility Of Legislation Entail?
The Common Economic Space, proposed at the Russia-EU summit in
Moscow in May 2001, might be a promising project for both Russia
and Europe . The official goal of the CES
was to unite the interdependent and permanently interacting
economies of Russia and the EU. The parties declared that the
coordination of their state legislation was the cornerstone of the
concept. In keeping with their joint declaration the CES concept
was to be worked out within the old framework of the Partnership
and Cooperation Agreement. Even the agendas prepared for the ad hoc
working groups matched the main sections of the 1994 document.
These factors prompt a conclusion that the EU’s CES concept was
nothing more than pretty new gift wrapping for an old package of
requirements for Moscow.
Nevertheless, the current discussions between Russia and the EU
do not rule out the possibility that the parties may endorse a new
agreement which is more precisely oriented toward integration, as
well as featuring a somewhat different concept of rapprochement
. This is precisely why the very discussion
concerning new forms of cooperation is important.
Interestingly, these types of discussions may bring about
unpredictable results. For example, the so-called energy dialog,
initially a very limited project, ultimately resulted in very
serious negotiations. These centered on the possibility – and even
the necessity – of a special Russia-EU agreement which would be
more narrowly focused, yet still open up new prospects for
increased economic cooperation.
Returning to the focal idea of the CES (harmonizing national
laws and working out common regulation rules): the fact that this
question was raised already at the time of drafting the Partnership
and Cooperation Agreement and the importance attached to it now
proves that even a moderate scope of Russia’s cooperation with the
EU goes far beyond the gas-for-food formula and requires essential
changes in Russian legislation. The harmonization of Russian and
European legislation in this context means bringing Russian laws
into line with EU standards, without discussing specific aspects of
legislation or amending certain legal acts – something that might
help protect Russian companies’ interests.
Some Russian experts propose implementing the EU’s best
attributes, such as free movement of people, capital, goods and
services, while jettisoning what the Russian government or
businesses cannot afford at this time: social policies, natural
conservation policies, protection of consumers’ rights and health,
etc . However, an approach of this kind
seems improbable for at least three reasons.
In the first place, this approach is impossible since the EU’s
legislative format was not a result of simple political
decision-making, as was the case in the Commonwealth of Independent
States, or in the pseudo-integrated alliances of Latin America.
Rather, it came into being through a long process of adjustment to
different areas of human activity, where one dimension of
integration cannot exist without the second, third, fourth, etc.
Some analysts speak of a possible cumulative effect, meaning that
the alignment of corporate laws and policies in the field of
competition may eventually force Russia into adopting other parts
of acquis communautaire (EU secondary legislation), including the
more unpopular ones, like environmental protection and the
protection of consumer rights .
Secondly, the EU is unlikely to encourage its companies to
operate in a territory which fails to aspire to the level of
European legal norms. It would prove difficult to convince European
businesses to enter into a market where environmental laws, as well
as certain aspects of its social welfare legislation, fall below
the EU norms. This sentiment was strongly supported by Chris
Patten, the European Commissioner in charge of External Relations,
who stated that no one insisted on Russia’s remodeling its laws to
comply with the EU norms, but Russian companies would find
operations on the EU internal market much easier should Russia
adopt the same legislative format . The
issue is especially topical now that the international formation of
particular anti-monopolistic laws and competition mechanisms has
moved center-stage, and different countries are also unifying their
laws on ecological issues.
The harmonization of these “unpopular” aspects of law would make
it easier for Russian companies to operate on the EU internal
market. The sale of electric power, for example, would be more
profitable to Russia than the export of crude fuel resources.
However, this issue immediately brings up the questions of
compliance with particular ecological laws; there would have to be
investment made into pollution control, economical efficiency, and
the overall ecological safety of the thermal power plants.
Moreover, the sensitive subject of Russia’s nuclear reactors would
probably be drawn into the debate as well.
Thirdly, Moscow currently finds itself in a somewhat subordinate
position in the financial sphere. After the reform initiatives of
1999 and 2000, the EU has been earmarking funds via its TACIS
program to finance the activities – specified by the Partnership
and Cooperation Agreement – to introduce acquis communautaire into
Russia. The stabilization of the political regime in this country
has made Russia-EU relations more constructive and has prompted the
participants to shore up areas of cooperation that have been
independent to date. Brussels is increasingly inclined to honor the
provision of technical aid upon the passage of certain laws
strictly prescribed by the EU. The proposed bills are based on the
EU’s internal regulations, while the supervisory positions in the
TACIS program are held by Western experts who are best acquainted
with the European legal codes.
The above strongly suggests that any form of cooperation with
the EU that involves elements of integration will inevitably
produce a cumulative effect on the entire legal system of the EU’s
partner. This has been plainly witnessed in the nine years since
the signing of the 1994 Partnership and Cooperation Agreement, and
closer economic integration is most likely to make that effect even
more pronounced. The chances that Russia will be able to make the
best “acquisition” by integrating with the EU and share only the
best qualities of European life are very slim. Therefore, those who
speak in favor of the CES, or other similar ambitious plans, must
admit that Russia will have to adapt its legislation to that of the
EU in order to conform to the economic rules and regulations of the
common market countries.
Political Consequences Of Economic Integration
A heightened level of economic interdependence between the EU
and Russia will obviously result in a partial loss of Moscow’s
political independence, while it will continue to have no levers by
which to influence the decision-making process in Brussels.
Russia is now skilfully positioning itself on the international
stage as an independent player, albeit less influential than it was
in the past. However, after its interdependence with – or, rather,
dependence on – the European Union reaches a certain point, such
strategic positioning will become almost impossible. In that
situation, three scenarios are possible.
A worst-case scenario may bring to mind the EU’s “development
policy” toward developing countries in Africa, the Caribbean and
the Pacific. As their economic dependence on the EU increased,
Europe’s political demands acquired a dominating role in their
The best example is provided by the 1975 Lome agreements which
initially focused solely on humanitarian aid and technical
assistance to the least developed of their former colonies . However, political conditionality – a principle
which allows the Europeans to suspend aid or even impose sanctions
on a country if it violates the principles of democracy or human
rights – gradually started to appear in EU documents on
humanitarian cooperation. This principle was first introduced into
the Lome agreements in the mid-1990s. The version of the document
now in effect features political conditionality in all of its
provisions, thus limiting the political maneuverability of the EU’s
Of course, comparisons between the EU policies toward Russia and
developing countries in the Caribbean, Africa and the Pacific are
highly relative. Unlike Russia, those nations can hardly hope for
close economic relations with the EU, or for an approximation of
their legislation with that of Europe. What is more, their very
survival is often totally contingent on European aid. Relations
between the EU and the Lome signatory countries are undoubtedly the
epitome of the political conditionality principle, while Russia
possesses certain elements of persuasion over the Europeans.
Furthermore, the EU makes this principle applicable only to
countries seeking accession to it. Yet, economic integration may
have extreme political consequences for Russia if reform
initiatives are conducted under the influence of technical and
financial aid from the EU, and do not come about as a matter of
The second scenario also provides for a domineering role of the
European economy in case Russia-EU economic integration becomes so
intensive that Moscow will simply be unable to make independent
foreign-policy moves. Any challenge to the West – and Brussels will
have the exclusive power to decide whether a move on Moscow’s part
would constitute a challenge – may prompt the EU to “tighten the
reins.” Turkey and the EU provide an illustrative example of such
relations: any political initiative by Ankara that does not conform
to EU policy guidelines meets with strong opposition from
With Russia, the situation would be more complex as, due to its
high military potential, this country has traditionally possessed a
far more independent political line than Turkey. Moreover, Turkey
has the military backing of NATO and the U.S., without which the EU
is unable to ensure its security or even manage crisis situations.
Washington, on its part, insists on closer relations between Turkey
and the EU, as well as Turkey’s full admission to the Union. A
powerful ally like the U.S. gives Ankara some room for maneuvering
– something that Russia lacks.
In the third scenario, Russia may acquire the same status with
Europe that Norway and Switzerland enjoy today. Those two countries
refrain from joining the EU for different reasons – disagreement on
economic issues, historical orientation, fear of losing
independence, and so forth. Nevertheless, the degree of their
integration into the EU is so great that they must follow the logic
of the decision-makers in Brussels and adapt their domestic laws to
European legislation. The decisions coming from Brussels are worked
out without their participation, and do not always meet with their
interests. The Norwegians and the Swiss, however, maintain a
certain difference of approach toward the process. While Norwegians
have been aligning their laws with the EU on the basis of the CES
agreements, the Swiss have been doing this voluntarily to maintain
the traditional magnitude of their economic ties with other
In Norway – whose relations with the EU have been
institutionalized by agreements and are thus more suitable for
Russia as a model – the adoption of legislative procedures designed
in Brussels may occasionally trigger conflicts. If the Norwegians
determine that a particular European bill runs counter to their
interests (cf. the 1992 directive for licensing oil fields), the EU
may proceed with legal actions against Oslo, thus resulting in
Norway’s compliance with the EU’s decision. This is what transpired
when the 1998 directive for the liberalization of the natural gas
sector was enacted . The European Economic
Area rules make a provision for non-member countries to veto
mandatory adaptation of one or another law, but the actual use of
the veto power is tantamount to a breakup of economic relations or
a threat to their normal functioning.
The third scenario looks most beneficial for Russia. One must
realize, however, that tight economic integration of this kind will
inevitably necessitate a closer coordination of foreign policy
initiatives and the development of a unified stance on key
international issues. To make this relationship solid, the partners
must possess an equal economic status, together with identical
rates of development. Another important requirement is that Russia
should receive no technical or financial aid from the EU (Norway
itself contributes funds to the EU budget). At the moment Russia
does not meet any of the three criteria.
Whatever the situation, efforts to fit into the EU legislative
framework – in the absence of even a hypothetical prospect of
joining the union – will amount to reducing Russia (not unlike
Ukraine, Belarus and Moldova) to the position of a satellite nation
within the newly renovated European Union. Given Russia’s
geopolitical ambitions, this discriminatory status will unavoidably
spark tensions between Moscow and Brussels. Therefore, the model of
economic rapprochement proposed by Brussels and accepted by Moscow,
which provides for Russia’s adaptation of EU legislation, will
entail political problems.
Besides, the Kremlin has no powers or opportunity to influence
the CES legislative parameters, which may cast doubts over the
actual democratic legitimacy of Russia’s “cohabitation” with
Europe. If the Russian executive office and, moreover, its
legislative bodies, are denied participation in drafting unified
legal resolutions, then the legitimacy of the latter will be
brought under scrutiny.
Areas Of Choice
EU policymakers are unlikely to ease their rules with regard to
their outside partners, especially if these partners decide to
share the advantages of the EU’s four freedoms –free movement of
people, capital, goods, and services. Yet the situation is not at
First, there have been past incidences of the EU finding
compromises to exceptional cases. Its reckoning with Russia’s
natural gas monopoly, Gazprom, stands as a very good example. The
EU filed a lawsuit against this company, charging it with
infringing on the EU’s laws on market competition. However, the
European Commission found it possible to seek a compromise. It
convened a conference of officials from the General Directorates
for External Relations, Energy and Transport, and Competition and
Gazprom’s chief executives to work out a solution which would
observe EU legislation on the one hand, while respecting the
interests of Gazprom on the other. So it is possible that Brussels
may waive its principles and make concessions in some cases,
however, this is rather an exception than the rule since the import
of energy resources is virtually the only field where Europe
depends on Russia.
On the whole, the degree to which Russia is interested in a
rapprochement with the EU prompts the latter to stand firm on most
issues. In this context, Russia must seriously analyze its overall
development potential in light of integration with the EU, and
assess the three patterns of partnership discussed above.
Obviously, in order to enjoy the benefits of a partnership with
the EU, while retaining as much freedom and independence in global
affairs as possible, Russia should orient toward the third
relationship scenario with Europe, i.e. the model of the European
Economic Area, upon which the EU is presently developing its
relations with Norway and Switzerland.
Can Russia influence the decision-making process in Brussels
when it is not present at the European Council? Any decision to use
the veto, as is provided by the European Economic Area agreements,
is a measure of last resort and rarely used. This is why Russia
will have to find somewhat milder levers of influence.
It has at least three of these levers of influence at its
disposal. First, Russian companies, manufacturing associations and
various consumer advocates have offices located in Brussels. It
would be their responsibility to inform the European Commission and
the European Parliament on the regulation of various sectors of the
Russian economy, the opportunities for fulfilling obligations
before the EU, and the special interests of Russian industries, as
well as lobbying functions. At the same time, those offices could
update the industries at home on particular developments inside the
EU, and help draft decisions acceptable to Russian businesses.
Secondly, Russian interests in the EU can receive a real boost
if Russian experts join various workgroups at the EU commission in
charge of legislative drafting. In this case information on current
and future developments in Russia will reach the EU by official
channels, rather than through lobbyists. Other opportunities to
engage in dialog on issues which demand more focus may be explored
by the Russia-EU parliamentary sessions. Parliamentary contacts may
be helpful at the stage of drafting legislative amendments, as well
as during debates on legislation in the European Parliament.
The veto option may be implemented if insurmountable differences
arise between Russia’s interests and the European legislation. It
would stand to reason to include the veto provisions in the CES
legislation. These measures will provide, at least, a partial
solution to the problem of democracy deficit.
Finally there is a third way of defending Russia’s interests.
This would entail gathering supporters among the EU
member-countries who have identical positions with Russia, or who
are ready to lobby on behalf of their interests. This approach
would be instrumental in Russia’s relations with the East European
nations since economic and cultural ties in this region would help
to promote Russia’s interests. Furthermore, the East and Central
European countries will soon take seats in the European Council and
the European Parliament. The decision-making process of these
states will inevitably have an impact on Russia.
Russia should bear in mind the above three mechanisms for
protecting its interests when working on the regulatory details of
the common economic area. Negotiations on the CES have already
entered the conclusive phase, therefore Russia has very little time
left to ensure legislative guarantees of its rights. The situation
also calls for a large-scale campaign in Russia to inform domestic
businesses on how they should do business in Europe. They will
require assistance on how to shape their relationships with
European executive bodies, as well as with the Russian officials
who are responsible for ties with the EU.
Russia is not the only country to encounter problems while
implementing the existing agreements. We have already mentioned
court cases in Norway over its failure to bring its laws into line
with the EU legislation. Some of the EU countries themselves have
run into the same sort of problems. To solve these issues, the EU
has set up the European Court for member countries, as well as the
Joint Committee, the Court and the Surveillance Authority for the
European Economic Area countries. Other special agencies could be
set up as well to monitor the approximation of Russian and European
Following the accomplishment of its eastward expansion plans,
the EU will remain every bit as interested in the inviolability of
its acquis communautaire as it is now, and will hardly make
any concessions on it. Although the EU’s planned enlargement,
together with the simplification and operability of its structures,
has brought about marked changes in the Union, the results of the
forthcoming inter-governmental conference will have little effect
on the issues discussed herein. There are no indications that the
EU will ease its stringent position on economic regulation, so
Russia must establish influential methods to deal with the European
The record in fulfilling the Partnership and Cooperation
Agreement and the current strategy of Russia-EU relations prove
that a harmonization of the two parties’ legislation is inevitable.
Importantly, there is no possibility for Russia’s integrating into
Europe along desired directions while discarding others. The
establishment of a Common European Economic Area will take away
part of Russia’s sovereignty, as the country will have to
assimilate legislative acts which it did not assist in
The voluntary restriction of one’s sovereignty is difficult for
any country, and the ongoing debates in EU member states and
candidate countries over the existing rules, new legislative acts
and further reform initiatives of the European Union provide ample
proof of the inherent problems. For Russia, partial loss of
sovereignty will be particularly difficult given its historical
traditions and perception of the world. Unlike most European
nations, Russia has a special approach to the sovereignty concept,
which provides for its indivisibility.
Although Russia can scarcely hope for full-fledged EU membership
over the long-term prospect, even small-scale rapprochement will
require very serious concessions from it, which will necessitate
changes in its concept of sovereignty. As was mentioned above,
there are three options for building Russia-EU relations, depending
on Russian economic growth rates and Russia’s reliance on European
funds and expertise. It is highly desirable for Moscow to make a
conscientious choice in favor of the third option, and build its
relations with the EU in the manner of Norway and Switzerland. The
move will require much effort from Russia to develop its economy
and will yield results only in the long term, yet orientation
toward this model of relations will help keep Russia from falling
into full dependence.
Moscow must realize that it will not be able to wall itself off
from its “difficult” neighbor and pursue its policies without
regard to what is happening in Europe. “Obviously, Russia no longer
is facing a dilemma whether or not it should integrate into the
world economy,” President Vladimir Putin told Russian MPs. “The
world market has come here, and our own market has merged with the
There are only a few months left before the CES negotiations are
scheduled to be concluded (October, 2003). Russia must make the
best of this period of time and work out a legal mechanism for
influencing the European law-making process so that it does not
inadvertently turn itself into a powerless satellite nation.
1. Havlik P. Relations Between Russia and the
European Union in the Context of the EU Expansion. RECEP Papers,
Moscow, 2002, pp. 2-3.
2. Cf.: Mau V., Novikov V. Russia-EU
Relations: Area of Choice or Choice of Area. Voprosy Ekonomiki,
2002, pp. 133-143; Havlik P. Relations Between Russia and the
European Union; Samson I. Common Economic Area as a Factor of
Steady Growth in Russia. RECEP Analytic Reports, Moscow, 2002.
4. Country Strategy Paper 2002-2006. Russian
Federation. P. 3, EC 2001.
6. Hillion C. Partnership and Co-operation
Agreements Between the European Union and the New Independent
States of the ex-Soviet Union. European Foreign Affairs Review.
1998. Vol. 3. No. 3.
8. Leshukov I. Russia and the European Union:
A Strategy of Relations. In: Trenin D. Russia and Major Security
Institutions in Europe. Moscow, 2000, p. 43.
9. Smith, K.E. The Use of Political
Conditionality in the EU’s Relations with Third Countries: How
Effective? EUI Working Papers, No. 97/7. Florence: European
University Institute, June 24, 1997.
10. Cf.: Implementation of the EU/Russia
Common Strategy: EU Trade Policy Priorities in the Short to Medium
Term, Official Journal, L/157, 1999.
11. Joint Statement by V. Putin, President of
the Russian Federation,
G. Persson, President of the European Council, assisted by J.
Solana, Secretary-General of the EU Council/High Representative for
Common Foreign and Security Policy of the EU, and R. Prodi,
President of the Commission of the European Communities. Moscow,
May 17, 2001.
The European Union On-Line.
14. Samson I., p.16.
17. Also see: Sverdrup U., Kux S. Balancing
Effectiveness and Legitimacy in European Integration: The Norwegian
and the Swiss Case. Arena Papers, Oslo, 1996; Church C.
Switzerland: An Overlooked Case of Europeanisation? Queen’s Papers
on Europeanisation, Cantebury, No. 3/2000.; Andersen S. Norway:
Insider AND Outsider. Arena Papers, Oslo, No. 4/2000; Claes D.G.,
Fossum J.E. Norway, the EEA and Neo-Liberal Globalism. Arena
Papers, Oslo, No. 29/2002.
18. Claes D.G. The Process of
Europeanization. The Case of Norway and the Internal Energy Market.
Arena Papers, Oslo, No.12/2002.