https://www.esteri.it/mae/it/sala_stampa/interviste/2019/07/le-sanzioni-alla-russia-dimezzano-l-export-italiano-ambasciatore-pasquale-terracciano-il-sole-24ore.html
Some
preliminary background reading on Russia (old but interesting if you
have time)
https://www.jstor.org/stable/pdf/25800386.pdf?seq=1#page_scan_tab_contents
Introduction:
This relationship is important to the EU because Russia is the EU’s
largest neighbor, the EU’s fourth biggest trading partner (see
notes below #)
and a major (re-)emerging economy (one of the BRICS), an important
market for European exports, a major military power, and one of the
world’s two biggest nuclear powers, a permanent member of the UN
Security Council, and so a major player in international relations,
and for Europe a vital supplier of energy (e.g. the opening of Nord
Stream pipeline in 2011).
After
the fall of the Berlin Wall in 1989, the disintegration of the Warsaw
Pact, the decline and collapse of Communism, the reunification of
Germany and the end of the Soviet Union in December 1991, there was,
in the early 1990s, real hope and expectation that Russia would, with
some unavoidable difficulties due to the transition, gradually turn
into a Western-style democracy, allowing the EU to develop the same
kind of relationship with Russia that it has with the US, Canada,
Australia or Japan.
This
did not happen and there was a period of economic chaos, corruption
and decline which led first to the emergence of a small number of
extremely rich ‘oligarchs’ and a general impoverishment of the
mass of the population, and then to a return to an authoritarian
model under Putin and Medvedev. Relations today are dominated by 2
factors which are in contradiction. The EU in particular, and the
West in general, needs a close relationship with Russia as a partner
both politically (e.g. on security questions) and economically. At
the same time Russia is not perceived as a real democracy based on
respect for human and civil rights, so this partnership is one of
convenience rather than of conviction (in clear contrast to the EU's
relations with Canada, Japan, Brazil and South Africa, for example).
There is a fundamental element of trust missing, which is what
characterizes relations among EU members, and between them and many
other democratic states or states committed to implementing
democratic development. With the conflict in Georgia, the current
conflict in Ukraine and Russia’s growing assertiveness in
international relations new questions have been raised about the
prospects for good future relations between the European
Union and the Russian Federation.
The
main factors:
1)
In Soviet times there was very little trade between The Communist
bloc and Western Europe. Today there is very significant trade
between the two. Russia is Europe’s main gas supplier and an
important oil supplier and a market for European luxury goods,
capital equipment, technology, transport equipment, chemicals,
medicines and agricultural products, and this has created real
economic interdependence, only partly weakened by sanctions. There
are some, however, concerns about whether Russia might try to use
energy supplies as a weapon to put short term pressure on the EU
regarding political questions, as it did regarding economic questions
with its non-EU neighbor, Ukraine, in 2009, with follow-on effects
also on EU members. As a result, the EU is involved in various
projects to build new pipelines and gain access to resources outside
Russia’s control and thus to diversify suppliers. At the same time
it is committed to developing new, greener energy sources and since
the Fukushima Daiichi disaster in Japan several EU countries (notably
Germany) have been trying to cut back on their dependence on energy
production from nuclear power. This may, at least in the short term,
make it difficult to reduce the EU’s dependence on Russia. Some
critics argue that as a result the EU is surprisingly quiet about
violations of civil and human rights within
Russia (certainly in terms of action but often also in terms of
words) and until recent events in Ukraine, the EU clearly gave
priority to economic security. On the other hand, some experts argue
that building a strong and reliable relationship with Russia will act
as a demonstration of Europe’s good will towards Russia and
encourage Russia to reform and overcome its democratic deficit. The
rapid development and exploitation of US and Canadian shale oil and
gas resources (as well as potential European resources, e.g. in
Poland and Arctic reserves) could one day provide real alternatives
to Russian energy supplies and a welcome diversification of suppliers
but this remains only a long-term and ecologically dubious prospect.
Crude oil prices have fallen in 2019 to about
$57 a barrel (in 2018 they were $75/b). At their lowest they were
$26.55 in January 2016 and at their highest
in
June 2014, they were $100.26.
Trade
between the EU and Russia fell significantly in 2014 with the
introduction of sanctions in response to Russia’s intervention in
Ukraine. EU-Russia
trade dropped by 44% between 2012 and 2016
from €339 billion in 2012 to €191 billion in 2016. EU- Russia
trade rose in 2017 but in December 2017 was still down on trade in
December 2013. There was a further improvement in trade in 2018 but
in February 2019 EU
exports to Russia still remained about 20% (EUR 30 billion) below the
pre-sanctions level of 2013.
Nevertheless,
in
2018 Russia (4 %) was the 4th largest partner for EU exports of
goods and the 3rd largest partner for EU imports of goods (8 %).
For
more data see:
Russia
too is trying to diversify by finding new customers. and has expanded
its trade with China in response to EU sanctions.
In
2014 and 2017 it signed deals with China to supply crude oil and
build a new pipeline to supply gas.
http://www.platts.com/latest-news/natural-gas/yuzhno-sakhalinsk/china-russia-pipeline-deal-to-shape-global-lng-27663702
http://www.bloomberg.com/news/2014-03-25/russian-oil-seen-heading-east-not-west-in-crimea-spat.html
https://www.bloomberg.com/news/articles/2017-09-08/china-s-cefc-buys-stake-in-rosneft-from-glencore-and-qatar
It
also obtained funding from China
and
signed deals with Iran in 2014 and 2017
http://www.euractiv.com/sections/european-business-summit-2014/eu-russia-trade-drops-sharply-bilateral-relations-sour-302144
and
with Turkey to sell missiles in 2017
2)
In the last twenty years many former Soviet satellite states have
joined NATO and the EU, at least partly (perhaps mainly) as a
guarantee of their continuing independence from Russia. This has been
seen by Russia as an aggressive act and an attempt to reduce Russia’s
sphere of influence. Early on Russia made clear its opposition to
Ukraine, Belarus and Georgia joining NATO or the EU. Russia’s
intervention in Georgia in 2008, in support of the break-away
republics of South Ossetia and Abkhazia, is a good example of the
dangers raised by the question of further NATO/EU expansion to the
east. Further real progress towards EU and NATO membership for
Ukraine and Georgia seems unlikely at present given Russia’s
opposition and the situation in the separatist regions seems to be
frozen.
Above
all, it is the evolution of events in Ukraine which have really
thrown into question all certainties about relations with the Russian
Federation. A decision in November 2013 by Ukraine's President Viktor
Yanukovych to pull out of an association deal with the European Union
and opt for closer ties with Russia sparked huge street protests and
then police violence that eventually led to his downfall and flight
in February 2014. In March Russia reacted by annexing the largely
Russian-speaking Ukrainian region of Crimea after the Crimean
parliament held a referendum and declared independence from Ukraine.
At the same time unrest began growing in eastern Ukraine, where
pro-Russian sentiment is strong. The US and NATO denounced the
Russian move as illegal and aggressively expansionist. Russia
responded by repeatedly asserting that it saw NATO and the EU’s
expansion to the East over the last 20 years as far more aggressive
and a violation of a promise made in 1990 that in exchange for
Russian agreement to German reunification NATO agreed not to expand
towards the East.
A
Brief Summary of Events in Ukraine -
Relations between the West and Moscow worsened dramatically as the
risk of civil conflict grew and the status of Crimea remained
unresolved. In March 2014 the EU and US imposed travel bans and asset
freezes on several officials from Russia and Ukraine over the Crimea
referendum. A ban on financial transactions was introduced the
following month.
(Time
line of EU sanctions:
https://eeas.europa.eu/sites/eeas/files/eu_restrictive_measures_in_response_to_crisis_in_ukraine_en_0.pdf
)
Washington
put military cooperation with Russia on hold and ended negotiations
on the NATO missile defense program. Also in April NATO suspended all
cooperation with Russia, and in June the G7 met without Russia (G8).
A UN General Assembly resolution described the Crimea referendum as
illegal but Russia blocked a similar resolution on the Security
Council (some countries such as Cuba, Afghanistan, Syria, Venezuela,
Bolivia recognized the validity of the referendum in Ukraine).
Meanwhile Russia, Ukraine,
the US and the EU held talks in Geneva on steps
to "de-escalate" the crisis in eastern Ukraine,
but were later unable to halt the violence between pro-Russian
separatists and Ukrainian government forces.
Protests
in Donetsk
and Luhansk
escalated into an armed
separatist insurgency.
In May pro-Russian separatists in Donetsk and Luhansk declared
independence after referendums which were not recognized by Kiev or
the West. In the same month elections were held in Ukraine and in
June Russian President Vladimir Putin and Ukrainian President-elect
Petro Poroshenko called
for a quick end to the bloodshed in eastern Ukraine.
On June 16th
Russia cut
off all gas supplies to Ukraine,
with Gazprom saying Ukraine had failed to settle its debts. On 25th
June
Russia's
parliament canceled
a parliamentary resolution authorizing the use of Russian forces in
Ukraine.
EU leaders welcomed the move but warned of more sanctions if Russia
did not do more to de-escalate tensions in Ukraine. On 27th
June the
EU signed an association
agreement
with Ukraine, along with Georgia and Moldova, in what President Petro
Poroshenko described as the
most important day in the country's history since independence in
1991. On
July 1st
Poroshenko
ended a tentative ceasefire and launched military operations against
pro-Russia rebels, saying "we will attack and liberate our
land."
On
July 17th
Malaysian
Airlines flight MH17 was shot down in eastern Ukraine, killing all
298 people on board. An adviser to Ukraine's interior ministry stated
the plane was hit by a missile from a Buk surface-to-air launcher.
Kiev later accused rebel forces of tampering with evidence at the
crash site, saying the armed groups were moving bodies and destroying
evidence. Other reports indicated the OSCE monitoring group sent to
the site was only granted limited access. Several EU leaders
threatened to impose further sanctions on Russia if the Kremlin did
not pressure rebels thought to have shot down the MH17 passenger
plane to grant more access to the crash site. On
July 21st
fighting
broke out in Donetsk as Ukrainian forces tried to regain control of
the city. On the 23rd
US intelligence officials said they believed the plane was shot down
by pro-Russian separatists "by mistake." On 5 August Russia
began a build-up of forces on the Ukrainian border, and continued a
series
of training exercises that had been held on and off since the start
of the conflict. On 22 August A
Russian aid convoy of more than 100 lorries
entered eastern Ukraine and made a drop in rebel-controlled Luhansk
without government permission, sparking allegations of a “direct
violation of international law”. On 29
August
NATO
released satellite images appearing to show Russian soldiers,
artillery and armored vehicles engaged in military operations in
eastern Ukraine. Russia’s alleged military involvement to back the
rebels was seen as a major escalation in the crisis, which was
described as a full-blown civil war. Vladimir Putin was also accused
of hostility towards Kiev, telling the outgoing president of the
European Commission that he could take the city “in two weeks” if
he wanted. However, by the start of September most of the Donetsk
region, apart from the city itself and a small area around it, was
under the control of the Ukrainian armed forces.
On 5 September 2014 Ukraine's government and separatist leaders signed a ceasefire deal, the Minsk Protocol, after talks in Belarus, raising hopes of an end to the nearly five-month conflict in eastern Ukraine. It included provisions for a release of prisoners, withdrawal of forces and the establishment of a buffer zone and the decentralization of power from Kiev to the eastern region. The cease-fire seemed fragile and in danger of collapse. However, on 16 Sept. Ukraine, as agreed, voted to give the east of the country limited self-rule as part of proposals aimed at ending the separatist fighting. President Poroshenko said these measures would pave the way for decentralisation while guaranteeing the 'territorial integrity and independence' of Ukraine.
The United Nations' refugee agency, UNHCR, said that the number of people displaced in Ukraine by the fighting, particularly around Donetsk and Luhansk, as of 1 September 2014, was 260,000. A UN report published on 29 August 29, said 2,220 people died and about 6,000 were injured in the Ukrainian crisis between mid-April and August 17 2014.
On 5 September 2014 Ukraine's government and separatist leaders signed a ceasefire deal, the Minsk Protocol, after talks in Belarus, raising hopes of an end to the nearly five-month conflict in eastern Ukraine. It included provisions for a release of prisoners, withdrawal of forces and the establishment of a buffer zone and the decentralization of power from Kiev to the eastern region. The cease-fire seemed fragile and in danger of collapse. However, on 16 Sept. Ukraine, as agreed, voted to give the east of the country limited self-rule as part of proposals aimed at ending the separatist fighting. President Poroshenko said these measures would pave the way for decentralisation while guaranteeing the 'territorial integrity and independence' of Ukraine.
The United Nations' refugee agency, UNHCR, said that the number of people displaced in Ukraine by the fighting, particularly around Donetsk and Luhansk, as of 1 September 2014, was 260,000. A UN report published on 29 August 29, said 2,220 people died and about 6,000 were injured in the Ukrainian crisis between mid-April and August 17 2014.
As
the conflict continued a new round of sanctions was imposed, by the
US, the EU, and others like Canada, Japan Australia, Switzerland
during the summer and autumn of 2014 to deter Russia from supporting
the insurrectionist movement in the Donbass area. These sanctions
involve banking and financial facilities and transactions, trade
restrictions on military and technological exports (particularly to
the Russian energy sector) and investment in and exports to the
Crimea. The US also banned the export to Russia of technology with
potential
military applications, suspended cooperation on civilian nuclear
energy projects and cut off NASA’s contacts with its Russian
counterparts. President Putin defended Russia’s annexation of
Crimea by saying that Washington and its European allies were guided
by “the rule of the gun” rather than international law and
respect for the principle of state sovereignty.
Russia,
meanwhile, made a resolution of the impasse over NATO’s missile
defense system a precondition to further strategic arms control talks
(although in 2019 President Putin indicated that he would welcome a
resumption of arms talks). It moved forward with plans for a Eurasian
Economic Union and a stronger Collective Security Treaty Organization
with partners such as Armenia, Belarus, Kazakhstan, Kyrgyzstan and
Tajikistan. Some Russian commentators have even argued that its
authoritarian model is a viable alternative to Western liberal
democracy and one which will gain support in the Caucasus and Central
Asia, where some Western ideas are seen as going against tradition
and religion. In August 2014 Russia responded to Western sanctions
with counter-measures, its own sanctions on the import of
agricultural products from the US, the EU and the other countries
which imposed sanctions on Russia.
The
economic sanctions weakened the Russian economy and intensified the
challenges that Russia was already facing after the dramatic fall in
global oil prices in 2014, a decline in the value of the ruble
(usually dependent on the price of oil) and the flight of
international capital.
Data
confirms Russia entered a recession, with negative GDP growth of
-3.7% in 2015 and -0.4% in 2016 but returned to moderate growth in
2017-18, which has weakened in 2019.
So
the sanctions had the economic effect intended (although the fall in
oil prices was more important for Russia's economy). However, they
have not forced Russia into a change of policy in Ukraine. In
September 2019 the EU renewed sanctions on Russia till March 2020.
The
US imposed new sanctions on Russia in August 2017 (partly in response
to Russian interference in US elections). The EU expressed concern
about further costs to its trade with Russia.
The
Trump administration imposed more sanctions on Russia under a
chemical and biological warfare law following the poisoning of a
former Russian agent and his daughter in the UK
The
Gentiloni government said it wanted to continue to work closely with
Russia and had doubts about the long-term viability of anti-Russian
sanctions.
the
first Conte
government wanted
to lift the sanctions
In
2017 sanctions on Russia cost the economy of the European Union $3.2
billion a month, while the Russian economy lost $55 billion because
of the sanctions over three years, according to a report (September
2017) of the UN Special Rapporteur on the negative impact of the
unilateral coercive measures.
and
a more rcent update on the effects
Many
European leaders might like to change policy on the sanctions but
this politically difficult with Russia's continued occupation of
Crimea and the tensions about cyber-attacks.
At
the NATO summit in Wales in September 2014, the military alliance
approved plans for a new "spearhead" force (a rapid
deployment force of 4,000 soldiers able go into action in 48 hours)
as a response to growing concern about the Ukraine crisis and the
advance of Islamic State militants in the Middle East. Despite calls
from eastern European members (Poland and the Baltic states), NATO
did not at that time approve the proposal to create new permanent
bases in these member states. Germany in particular wished to avoid
further antagonizing Russia by such an action. President Obama,
however, assured them of NATO and US commitment to their protection.
In February 2015, as a result of the failure of the original Minsk Protocol, a new agreement was reached, Minsk II, which involved an immediate ceasefire on Feb. 15th, the withdrawal of heavy weapons and the restoration of social and economic links. Total casualties stood at 4,291 deaths (4,150 identified and 141 unidentified) in June 2019. https://en.wikipedia.org/wiki/Casualties_of_the_Ukrainian_crisis Current situation in eastern Ukraine: After triumphing in Ukraine's presidential election in April 2019, Mr Zelensky said his main goal was to bring peace. On 1 October, Ukraine, Russia and the separatists agreed in principle to hold local elections in the separatist-held east and then - if the poll is seen as free - Ukraine would grant special status to the region. Then, on 29 October, Ukrainian troops and separatists began withdrawing from the frontline town of Zolote. https://www.bbc.com/news/world-europe-49986007
In February 2015, as a result of the failure of the original Minsk Protocol, a new agreement was reached, Minsk II, which involved an immediate ceasefire on Feb. 15th, the withdrawal of heavy weapons and the restoration of social and economic links. Total casualties stood at 4,291 deaths (4,150 identified and 141 unidentified) in June 2019. https://en.wikipedia.org/wiki/Casualties_of_the_Ukrainian_crisis Current situation in eastern Ukraine: After triumphing in Ukraine's presidential election in April 2019, Mr Zelensky said his main goal was to bring peace. On 1 October, Ukraine, Russia and the separatists agreed in principle to hold local elections in the separatist-held east and then - if the poll is seen as free - Ukraine would grant special status to the region. Then, on 29 October, Ukrainian troops and separatists began withdrawing from the frontline town of Zolote. https://www.bbc.com/news/world-europe-49986007
At
the NATO Warsaw summit in July 2016 NATO repeated its determination
to maintain and repair the dialogue with Russia while continuing to
support Ukraine's independence. It agreed to deploy multi-lateral
forces to Estonia, Latvia, Lithuania and Poland. At the NATO
Brussels summit in May 2017 NATO repeated its position. This led to
NATO's
Enhanced Forward Presence strategy
The EU-Ukraine Association Agreement entered into force on 1 September 2017 and Ukraine is
determined
to join NATO. On
the 10th of March 2018, NATO added Ukraine to
the list of NATO aspiring members (others including Bosnia
and Herzegovina, Georgia and the Macedonia)
but any definitive moves towards the accession of the Ukraine into
the EU and NATO still seem unlikely, given the situation there today
and the West's desire not to further antagonize Russia. However, NATO
continues to take a hard line on Russia aggression.
Extract
from a speech by NATO Secretary General Jens Stoltenberg, 12 November
2019
He
said that currently 'we
continue to combine meaningful dialogue with credible deterrence and
defence. Including when it comes to dealing with Russia. We see
a more assertive Russia. Illegally annexing Crimea.
Destabilising
Ukraine. Meddling in our political processes. And investing in modern
military equipment, including in new intermediate-range missiles
which led to the demise of the INF treaty.
In
these difficult times, we must avoid miscalculations and
misunderstandings. And we need to rebuild trust where possible. We
aspire for a more constructive relationship with Russia. All of this
is why we keep our diplomatic channels to Moscow open. But our
diplomatic efforts can only be effective if we engage Russia from a
position of credible deterrence and credible defence.
In
recent years, we have implemented the largest reinforcement of our
collective defence since the end of the Cold War. We have
strengthened our military posture from the Baltic Sea to the Black
Sea. And increased the readiness of our forces. For the first time in
our history we have combat-ready troops in the eastern part of our
Alliance. And American forces are there too.
We
are also responding in a defensive and measured way to Russia’s
violation of the INF treaty. And to the presence of new Russian
missiles in Europe. Missiles that are mobile, easy to hide and able
to reach major European cities with little warning time.
We
will not mirror what Russia is doing. We have no intention to deploy
new ground-based nuclear missiles in Europe. But we will consider our
intelligence, surveillance and reconnaissance capabilities. Our air
and missile defences. And our conventional capabilities. Because
ultimately, it is our military strength that provides the conditions
for our diplomatic achievements.'
The
election of a new President in Ukraine,
Volodymyr Zelensky, in May 2019
and an exchange of prisoners in September 2019 offers some grounds
for hope of an improvement in relations (see above).
However,
as of October 2019 the situation in Ukraine remains substantially
frozen, like that in Georgia (2008) and the Moldova/Transnistria
situation which dates back to 1990-1992.
Moreover,
as we have seen, the rapid evolution of the situation in Ukraine
intensified calls for the EU to move more rapidly towards a
diversification of energy suppliers and sources to escape
over-dependence on Russia. It has also led to a reassessment of the
whole relationship with Russia and the terms of political cooperation
between Russia and the West (the EU, the US and NATO), and a debate
about what kind of measures should be taken in dealing with Russia
and how effective or desirable the current sanctions are. After all,
although Russia is criticized for its actions in Ukraine and for its
support of the Assad regime in Syria, it remains a fundamental ally
in the fight against terrorism and for the moment an essential
trading partner.
With
Donald Trump as US President does the EU now need to take the lead in
stabilizing relations with Russia or does it need to work to anchor
the US to NATO more firmly?
https://www.cirsd.org/en/horizons/horizons-summer-2018-issue-no-12/permanent-divergence-the-evolution-of-us-russia-relations-in-the-trump-era
3)
EU members need to show more unity in dealing with Russia through EU
institutions. In the past EU members tended to negotiate bilateral
agreements with Russia and this could allow Russia to exploit
divisions between EU members. The Italian government may decide to
adopt this approach.
4)
Russia’s domestic political situation is characterized by a lack of
freedom of the press and a concentration of media power, economic
power and political power in the hands of the government, or friends
of the government (opponents call this ‘cronyism and corruption’),
repression of opposition leaders and strong critics of the government
(e.g. Aleksei A. Navalny, Garry Kasparov, Pussy Riot), restrictions
on freedom of expression and the right to demonstrate (freedom of
assembly and association), opposition to the activities of NGOs in
Russia involved in human rights issues, accusations of
state-sponsored murder regarding the death or disappearance of some
critics, (e.g. investigative journalist Anna
Politkovskaya),
accusations from many sources of massive human rights violations and
atrocities during and after the military campaigns in Chechnya, the
repression of or discrimination against other ethnic or social
groups (e.g. immigrants and gays) by the police, secret services,
military or paramilitary supporters and allies of the government. The
government, first under Putin, then under Medvedev, and now under
Putin again seems authoritarian and nationalist, determined to
maintain control over society. In fact, since his re-election Putin
has moved to undo some of Medvedev’s more liberal legislation.
Those in positions of power are often from the FSB secret service
(many like Putin originally from the KGB) or from among those who
have made money and given their support to the government. Rich
opponents have been charged with corruption and imprisoned, silenced
or driven abroad. However, the government so far seems genuinely to
have been popular and although its control of the media raises some
doubts about how far elections in Russia can be considered free
and fair, it seems likely that the government still has widespread
support (including, despite some demonstrations against intervention
in Ukraine, general support for the intervention in Crimea) and
popular legitimacy.This may be due to the fear of terrorism or of a
return to the economic chaos of the early 1990s and a resurgence of
national pride after the embarrassment of a weak and economically
helpless Russia in the early 1990s. Russia has a stable government
but the uneven distribution of wealth makes Russia much less stable
socially. It still lacks the large, independent-minded middle class
on which a functioning democracy is often said to rest. The protests
and demonstrations in 2014 on social and economic questions and the
anti-corruption protests and unrest in 2017 suggest, however, that
the middle class is growing and starting to find its voice although
the government remains firmly in control. Putin's official approval
rating dropped to 49% in June 2019 (and perhaps the unofficial level
would be lower).
In
local municipal elections in September President Putin’s United
Russia party won only a narrow victory in what are generally
recognized as ‘managed’ elections.
So
at the end of 2019 Putin’s popular legitimacy may now be weakening.
5)
Russia’s economy is too narrowly based on the export of energy
resources and other raw materials. As mentioned above, the Russian
economy in 2015 contracted (-3.7% GDP growth, -0.4% in 2016) largely
as a result of the fall in oil prices, from well over $100 a barrel
between 2011 and 2013 to around $60 a barrel in June 2015, to a low
of $27 in January 2016, to $45 in September 2016 and $55 in November
2017, $74 in 2018 and $57 in 2019.
Successful
diversification would strengthen the economy and spread the wealth.
This would help stabilize the country socially. Many experts argue
that given Russia’s interest in buying shares in western European
energy companies it must now open its economy much more to EU
investment in its own energy companies and loosen government control.
However, any move in this direction is now blocked by the Ukraine
conflict and resulting sanctions, and Russia is turning to China as a
new export market for its oil and to Iran for the export of its
nuclear expertise. There is also a need for a better business
environment in Russia, less bureaucracy and red-tape etc.. to attract
investment. Organized crime is still powerful. In August 2012 Russia
finally joined the WTO and this should have led to a real
liberalization of the economy, increased foreign investment and
significant economic expansion. All of this is now threatened by the
Ukraine sanctions and counter-sanctions, and by the business
environment (corruption and doubts about security of ownership, legal
transparency etc...) which remains poor.
Moreover, in ‘The Dying Bear’ in 2011 (http://www.foreignaffairs.com/articles/136511/nicholas-eberstadt/the-dying-bear) Nicholas Eberstadt argued that Russia is facing a demographic disaster with a population that fell from 148.8 million in 1993 to 141.9 million in 2010, an aging population, a falling rate of family formation, more deaths than births each year and an average life expectancy of 67 years (lower than in 1961). The low life expectancy is the result of high rates of alcoholism, fatal accidents and violence (violence at the level of some post-conflict African countries), a decline in the quality of the health service and a decline in education levels. Thus Eberstadt predicted a decline in the quality and quantity of human resources available to the Russian economy in the future. All this could undermine Russia’s economic prospects as one of the BRICS. The state is currently trying to raise the birth rate by rewarding families financially for having more children but it is not clear how successful this policy is. Russia also benefits from the growing presence of millions of immigrants from ex-Soviet republics, who provide cheap labor but are not well-integrated into Russian society and are often resented, and from remittances worth billions of dollars from Russians working abroad. However, there is also a general internal migration from East to West that may soon leave the Asian areas of Russia critically underpopulated. Eberstadt also argues that Russia is an economy based on the export of raw materials and that, although this can strengthen a developed economy like Norway or Canada, without a strong industrial-technological base the Russian economy remains weak. In fact, without such a developed economic base Russia’s export earnings are less than those of Belgium. According to Eberstadt all the factors listed above will tend to weaken the Russian Federation economically, politically and, in the end, also militarily. Russia’s future position and role within the international community may thus be threatened with decline and Russia may become a more difficult partner to work with due to domestic tensions. .
However, recent trends suggest at least a partial demographic recovery. Following the 2014 annexation of Crimea, over 98% of Crimea residents acquired Russian citizenship. Russia's population thus expanded by 2,294,110 people. Moreover, as of 2014, the Russian fertility rate of 1.750 children per woman was the highest in Eastern, Southern and Central Europe. In 2013, Russia experienced the first natural population growth since 1990 at 22,700 people. Taking into account immigration, the population grew by 294,500 people. According to official Russian sources Russia's population was 143.4 million in January 2016 (excluding Crimea) and 144.5 million in January 2017. We will need to see how trend continues. (143,956,000 in 2018 and 145,895,142 in 2019).
Moreover, in ‘The Dying Bear’ in 2011 (http://www.foreignaffairs.com/articles/136511/nicholas-eberstadt/the-dying-bear) Nicholas Eberstadt argued that Russia is facing a demographic disaster with a population that fell from 148.8 million in 1993 to 141.9 million in 2010, an aging population, a falling rate of family formation, more deaths than births each year and an average life expectancy of 67 years (lower than in 1961). The low life expectancy is the result of high rates of alcoholism, fatal accidents and violence (violence at the level of some post-conflict African countries), a decline in the quality of the health service and a decline in education levels. Thus Eberstadt predicted a decline in the quality and quantity of human resources available to the Russian economy in the future. All this could undermine Russia’s economic prospects as one of the BRICS. The state is currently trying to raise the birth rate by rewarding families financially for having more children but it is not clear how successful this policy is. Russia also benefits from the growing presence of millions of immigrants from ex-Soviet republics, who provide cheap labor but are not well-integrated into Russian society and are often resented, and from remittances worth billions of dollars from Russians working abroad. However, there is also a general internal migration from East to West that may soon leave the Asian areas of Russia critically underpopulated. Eberstadt also argues that Russia is an economy based on the export of raw materials and that, although this can strengthen a developed economy like Norway or Canada, without a strong industrial-technological base the Russian economy remains weak. In fact, without such a developed economic base Russia’s export earnings are less than those of Belgium. According to Eberstadt all the factors listed above will tend to weaken the Russian Federation economically, politically and, in the end, also militarily. Russia’s future position and role within the international community may thus be threatened with decline and Russia may become a more difficult partner to work with due to domestic tensions. .
However, recent trends suggest at least a partial demographic recovery. Following the 2014 annexation of Crimea, over 98% of Crimea residents acquired Russian citizenship. Russia's population thus expanded by 2,294,110 people. Moreover, as of 2014, the Russian fertility rate of 1.750 children per woman was the highest in Eastern, Southern and Central Europe. In 2013, Russia experienced the first natural population growth since 1990 at 22,700 people. Taking into account immigration, the population grew by 294,500 people. According to official Russian sources Russia's population was 143.4 million in January 2016 (excluding Crimea) and 144.5 million in January 2017. We will need to see how trend continues. (143,956,000 in 2018 and 145,895,142 in 2019).
http://www.worldometers.info/world-population/russia-population/
6)
Terrorism – Russia has been faced with separatism and Islamic
fundamentalism in some of its federated republics (Chechnya and
Dagestan are republics in the Russian Federation) and independent
allied republics (Azerbaijan and Turkmenistan are in the Commonwealth
of Independent States) in the Caucasus. The war in Chechnya was only
the most obvious example. The Russian response has been fairly
drastic in some places, milder in others, but it is not clear if
Russia has won the ‘hearts and minds’ campaign in the area. This
was both a reason for Russia to support NATO logistically in
Afghanistan, but also a reason for Russia to avoid bad publicity with
its Muslim citizens by getting too heavily involved (also because the
Soviet Union, of course, fought and lost a war there in the 1970s, so
it evokes bad memories). However, Russia and the West have cooperated
closely on major security issues, through the exchange of information
and intelligence between secret services on terrorist threats and
illegal trafficking. This also means that in order to have Russian
cooperation against al Qaeda the West said little in criticism of
Russia’s handling of the Chechen question. For the current
situation see:
7)
Syria – On Syria, initially, a clear division emerged on the UN
Security Council in 2011-12 between Russia, and to a lesser extent
China, which were against sanctions and international intervention
and argued their case in terms of the UN principle of
non-interference in the domestic affairs of an independent state, and
the West which viewed the Assad regime as delegitimized by its
involvement in massacres and massive human rights abuses. The West
attempted to support what it thought were ‘moderate’ opponents of
the regime with money and arms and called for Assad to step down.
Russia’s support for Assad may have been, in part, because they
were confident their ally could defeat the rebels and, in part, a
response to what had happened in Libya where the West convinced
Russia to allow the UNSC to authorize an intervention to protect
civilians. The Russians argued that NATO had exceeded its mandate by
helping the rebels to overthrow the Gaddafi
regime.
With
the rise of Islamic State in Syria and Iraq, Russia at first argued
that US interventionism in the Middle East since 2003 had only led to
the strengthening of radical Islamist forces and was thus a misguided
policy.
However,
despite all of the above,
in September 2015 Russia began to intervene in the Syrian civil war
directly with air strikes. Russia supported the Assad regime and
claimed it is acting legally (at the invitation of the 'legitimate'
Syrian government) against Islamic State but seems to have mainly
targeted the opposition rebels and Kurdish fighters. Russia invited
the US to form a grand alliance with it against IS (referring to
their WWII alliance) but the Obama administration, despite launching
its own air strikes and supporting those of its allies, did not want
to accept the long-term survival of the Assad regime or Russia’s
targeting of Assad’s other opponents. However, the stakes were very
high and the situation was in constant evolution. With the terrorist
attack on Paris on November 13th
2015 Russia, the EU and the US began moving towards greater
cooperation in their efforts to contain and defeat IS (Da’esh). On
21st
November 2015 the United Nations Security Council voted unanimously
in favour of a a French-sponsored resolution ‘calling on ‘Member
States that have the capacity to do so to take all necessary
measures, in compliance with international law, in particular with
the United Nations Charter, as well as international human rights,
refugee and humanitarian law, on the territory under the control of
IS(IL) also known as Da’esh, in Syria and Iraq, to redouble and
coordinate their efforts to prevent and suppress terrorist acts
committed specifically by IS(IL)’
This was interpreted by many politicians and commentators as fully
authorizing military intervention in Syria, although this is not
strictly true. By
October 2017 ISIS had been largely defeated at least for the moment.
The humanitarian cost of the civil war has been enormous.
After
President Trump decided to withdraw US troops from northern Syria and
the Turkey invaded the area saying this was necessary to secure its
border from cross-border Kurdish attacks or infiltration, Russia
accepted the Turkish move but expressed concern that it would lead to
the escape of ISIS prisoners in Kurdish hands. These pose a threat
not only to EU countries but to Russia too.
8)*
Russia
and the US negotiated and implemented significant cuts in their
nuclear arsenals and this is in theory an ongoing process. However,
there is friction over the question of NATO's
Integrated
Air
and Missile Defence
including its Ballistic Missile Defence
(not
scheduled to become fully functional before 2020 or later). In
November 2010 at the NATO summit in Lisbon, to which Russia was
invited (NATO Russia Council), Russia seemed originally to be
in favor of the plan if the cooperation offered by NATO meant
Russia’s real integration into a system of shared defense
against third parties (e.g. Iran). Russia was not willing to accept a
system based in Eastern European NATO member states from which it
would only receive information and intelligence as a courtesy. The
implication from the Russian point of view is that it could still be
used against Russia. However, NATO later rejected the idea of
Russia’s participation in the control arrangements for the Missile
Defense System and Russia threatened to deploy missiles on its
Western borders if NATO went ahead with its plans. The impasse here
led Russia to break off negotiations for further nuclear arms
reductions. In July 2016 NATO took command of the US-built missile
shield.
Talks
between Russia and the US on further nuclear arms reductions resumed
in September 2017 but experts were not optimistic about the chances
of making real progress.
The
US withdrew from the ABM Treaty in 2002 (which banned the development
of a missile defence system) and both sides now seem to be willing to
risk a new nuclear arms race.
On
Aug. 2, 2019, the United States formally withdrew from the 1987
Intermediate-Range Nuclear Forces (INF) Treaty claiming that Russia
had repeatedly violated it. The
deal banned ground-launched medium-range missiles, with a range of
between 500 and 5,500km (310-3,400 miles. e.g. Moscow to Paris).
In
summer 2019 there were a series of reports saying that NATO had
called upon Russia to destroy a new land-based missile
that
Putin had offered a moratorium on missile deployment in Europe
that
NATO had rejected this offer. Both sides claim they are still open to
dialogue on arms control and reduction.
9)
The creation of the BRICS group has given Russia a new forum in which
to exercise its influence. While this group will continue to be of
growing importance economically (see notes on the BRICS and the The
New Development Bank)
its political value is still unclear. Will authoritarian states like
Russia and China share common positions with democracies like India,
Brazil and South Africa? This may be possible in a negative sense,
e.g. restraining US and Western interventionism, bur when it comes to
democratic values and human rights violations it is difficult to
imagine these countries in full agreement. However, the growing
strength of the relationship between Russia and China was
demonstrated by the signing of a $400 billion oil supply deal in May
2014 and the start on construction of a new oil pipeline costing $5
billion on September 1st
2014. See above for more recent Russia-China deal. Russia, Brazil and
South Africa all faced economic difficulties in 2015 and 2016 and
weak or erratic growth since then. Meanwhile China and India maintain
high growth rates. This will also limit the group's influence.
10)
Russia and how international events, like the World Athletics
Championships in Moscow in August 2013 and the Winter Olympics in
2014, affected its foreign policy stance and image at the
international level.
http://www.ponarseurasia.org/memo/politics-sports-mega-events-russia-kazan-sochi-and-beyond
However, the World Anti-Doping Agency’s report on Russia’s
state-sponsored support for Russian athletes using drugs to enhance
their performance did enormous damage to the country’s sporting
image.
11)
Institutional relations between the EU and the Russian Federation and
the situation after the sanctions with the suspension of some areas
of cooperation. The NATO-Russia
council was
created in 2002 as a consultative mechanism. NATO suspended all
practical civilian and military cooperation with Russia after
the Ukraine crisis broke out in April 2014.
However, the NATO-Russia Council, which brings together all 29 NATO
Allies and Russia, met in Brussels on 5 July 2019 to discuss Ukraine,
the Intermediate-Range Nuclear Forces Treaty, and transparency and
risk reduction. This was the second meeting of the NATO-Russia
Council this year. NATO Secretary General Jens Stoltenberg, who
chaired the meeting, said: “Our discussion was frank but necessary.
The allies and Russia hold fundamentally different views but we are
committed to continuing our dialogue.”
Conclusion:
Russia appears to want to reassert its power and play a more decisive
role on the world stage and in eastern Europe. The EU and the West
should perhaps welcome or at least try to accommodate its first
ambition and try to work with Russia wherever possible, while trying
to reach a reasonable compromise as regards its second ambition. If
the EU and Russia do not have the kind of friendly relations that the
EU has with countries like the US, Brazil, Australia and Japan this
is because Russia is still not perceived as a fully democratic state.
Events in Georgia in 2008 and in Ukraine since 2014 have undermined
this relationship and suggest that there has been a return to a more
adversarial relationship. According to some experts there is even the
danger of a second Cold War, though this seems an exaggerated
reaction. Further progress on US-Russia nuclear arms reductions,
cooperation between NATO and Russia and real agreement on the future
of Ukraine and other states bordering on Russia seem unlikely for the
moment. Indeed, NATO seems destined to return, at least in part, to
its Cold War task of guaranteeing the independence of its European
members. Many diplomats on both sides see the main task as that of
‘damage control’ and trying to reduce tensions and repair
relations. After the terrorist attack on Paris, the role the evolving
situation in Syria (and the need for cooperation between Russia and
the West to deal with it) will play is uncertain.
Nonetheless,
compared with relations with the old Soviet Union and Soviet bloc,
enormous progress has been made politically and economically in the
last 25 years. Russia is clearly no longer a state that Europe
regards simply as an enemy. Europe will maintain close ties with the
US through NATO as an ultimate guarantee of its freedom from Russian
pressure, but needs at the same time to intensify its dialogue with
Russia. This may mean quiet diplomacy to encourage Russia to
implement democratic reforms with a campaign of renewed goodwill to
win the confidence of the Russian government and people. Both sides
need the relationship to return to stability and cooperation. This
will mean reaching some kind of practical compromise on the Ukrainian
question and the economic sanctions. The Minsk II agreement of
February 2015 was a clear attempt to take a first step towards
reaching such a settlement by stabilizing the situation.
The
election of Donald Trump has been welcomed by Russia and may lead to
a real change in relations. What this will be and whether this will
mean closer cooperation between the US and Russia, or US isolationism
and less support for its allies in dealing with Russia, or the risk
of a confrontation between Russia and the US, remains unclear.
The
likely involvement of Russia in attempts to manipulate voting in the
2016 US presidential election could further destabilize US-Russian
relations.
Some
Background notes:
Ukraine
Russia’s
economy
Ukraine’s
economy
See
also:
‘Managing
the New Cold War’,
in Foreign Affairs July/August 2014, by Robert Legvold
And
for the Russian position:
‘What
the Kremlin Is Thinking’,
in Foreign Affairs July/August 2014, by Alexander Lukin,
page 74
*
US and Russian Nuclear Arms Reductions
The
New
START (for Strategic Arms Reduction Treaty) is a nuclear
arms reduction
treaty
between the United
States
and the Russian
Federation.
It was signed on April 8, 2010 in Prague,
and, after ratification, entered into force on February 5, 2011. It
is expected to last at least until 2021. The New START replaced the
Treaty of Moscow (SORT),
which was due to expire in December 2012. In terms of name, it is a
follow-up to the START
I
treaty, which expired in December 2009, and to proposed START
II
and START
III
treaties that have never entered into force.
Under
terms of the treaty, the number of strategic nuclear missile
launchers will be reduced by half.
Summary
of New START Limits
Type Limit
Deployed
missiles and bombers 700
Deployed
and Non-deployed Launchers (missile tubes and bombers) 800
The
New Strategic Arms Reduction Treaty (New
START),
which entered into force in 2011, will expire on February 5, 2021,
unless the U.S. and Russian presidents decide to extend the treaty by
up to five years.
Questions
and doubts about the verification procedures
Status
of World Nuclear Forces 2019*
|
|||||
Country
|
Deployed
Strategic |
Deployed
Nonstrategic |
Reserve/
Nondeployed |
Military
Stockpilea |
Total
Inventoryb
|
Russia
|
1,600c
|
0d
|
2,730e
|
4,330
|
6,500f
|
United
States
|
1,600g
|
150h
|
2,050i
|
3,800j
|
6,185k
|
France
|
280l
|
n.a.
|
20l
|
300
|
300
|
China
|
0m
|
?
|
290
|
290
|
290m
|
United
Kingdom
|
120n
|
n.a.
|
95
|
215
|
215n
|
Israel
|
0
|
n.a.
|
80
|
80
|
80o
|
Pakistan
|
0
|
n.a.
|
140-150
|
140-150
|
140-150p
|
India
|
0
|
n.a.
|
130-140
|
130-140
|
130-140q
|
North
Korea
|
0
|
n.a.
|
?
|
20-30
|
20-30r
|
Total:s
|
~3,600
|
~150
|
~5,555
|
~9,330
|
~13,890
|
To
read the table in detail, see the link to the source here:
http://fas.org/issues/nuclear-weapons/status-world-nuclear-forces/
#
Background notes on economic relations between the EU and Russia
Russia
is the largest oil, gas, uranium and coal exporter to the EU.
Likewise, the EU is by far the largest trade partner of the Russian
Federation. Based on this mutual interdependence and common interest
in the energy sector, the EU and Russia developed a close energy
partnership and launched an EU-Russia
Energy Dialogue
in 2000. On 22 March 2013, in Moscow, the Coordinators of the
EU-Russia Energy Dialogue signed the "Roadmap EU-Russia Energy
Cooperation until 2050".
The
Trade Picture in 2019 – choose some facts and figures!
Since
1997 the EU's political and economic relations with Russia have been
based on a bilateral Partnership and Cooperation Agreement (PCA). The
trade-relevant sections of the Agreement aim to promote trade and
investment and develop mutually beneficially economic relations
between the EU and Russia. Since
2014 the illegal annexation of Crimea and the conflict in Eastern
Ukraine have seriously affected the bilateral political dialogue.
As a result, some of the policy dialogues and mechanisms of
cooperation, including in the area of trade, have been suspended.
Since
2012, when Russia joined the WTO, EU-Russia trade relations have also
been framed by WTO multilateral rules.
Russia
is the EU's fourth largest trading partner and the EU is Russia's
largest trading partner, with a two-way trade in goods value of €253
billion in 2018. Due to the large and recently increasing value of
oil and gas imports from Russia, EU’s trade deficit with Russia (€
83 billion in 2018) is only second to EU’s trade deficit with
China.
EU-Russia
bilateral trade in goods peaked in 2012, dropping by 44% between 2012
and 2016 from two-way €339 billion in 2012 to €191 billion in
2016. In 2017 trade increased by 21 %. In 2018 EU exports to Russia
remained stable, whereas EU imports from Russia increased by 16%.
Overall
EU exports to Russia were in 2018 31% lower than in 2012, agri-food
exports were 42% lower.
In
2018 Russia was the destination of 4,4% of EU global exports, down
from 7% in 2012. As for the origins of imports into Russia, the EU
accounted in 2018 for 37%, down from 43% in 2013.
As
for exports of goods from Russia, in 2018 the EU was the destination
of 46% of them, down from 54% in 2013.
Main
EU exports to Russia are in the categories of machinery, transport
equipment, medicines, chemicals and other manufactured products.
Main
EU imports from Russia are raw materials, especially - oil (crude and
refined) and gas, as well as metals (notably iron/steel, aluminium,
nickel).
As
for services, EU exports to Russia amounted in 2018 to € 27,1
billion, imports from Russia to € 13 billion EUR.
The
EU is the largest investor in Russia, with an estimated stock of €216
billion in 2017, or 55% of total FDI stock in Russia. The stock of
FDI in the EU from Russia amounted in 2017 to €83 billion, or 1,3%
of the total in the EU.
Russia
– the Union's largest energy resources supplier (2019)
39.4%
of the EU’s extra-EU gas imports originate from Russia
26.8%
of the EU's extra-EU total crude oil imports originate from Russia
The
EU as a whole is Russia's largest trading partner
The
Partnership and Cooperation Agreement was supposed to be upgraded
through the negotiation of a New EU-Russia Agreement, providing a
comprehensive framework for bilateral relations. The
negotiations, but also some of the activities in the existing
agreement, were suspended after the illegal annexation of Crimea and
the destabilization of Ukraine in 2014.
Still,
the EU remains a key trading partner for Russia, representing in 2018
€253.6 billion or
42.8%
of Russia's trade. Russia is now the 4th largest trading partner of
the EU for trade in goods, representing 6.4% of overall EU trade.
Russia is also the 4th export destination of EU goods (€85.3
billion in 2018) and the 3rd largest source of goods imports (€168.3
billion in 2018). Imports from Russia to EU increased by 16.7% in
period from 2017 to 2018 and was driven by the growth of imports of
energy products from Russia that account for about 70% of imports
from Russia to EU. In the first half of 2019 the EU-Russia trade has
to large extent remained at the same level, compared to the first
half of 2018. The same can be said on EU exports to Russia.
The
EU is by far the largest investor in Russia. According to the Central
Bank of Russia, the total stock of foreign direct investment in
Russia originating from the EU approached €235.2 billion in 2018.
Nevertheless, the share of investments originating from the EU in the
total FDI stock in Russia has been decreasing: e.g. from 73% in 2014
to 64.7% in 2018. Overall inflow of direct investments in Russia from
abroad fell to USD 8.8 billion in 2018 – a three-fold decline as
compared with figures from 2017, while outflow of investments from
Russia in the same period constituted 31.9 billion dollars (36.8
billion dollars in 2017).
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