The Future of EU-Russia economy (mid-term) perspective and EU interests 2 3 PROs (positive forces: towards cooperation) пѓј Strong economic interrelations: 80% of cumulative foreign investment to Russia, Russia is the E.U.вЂ™s 3rd most important trading partner. пѓј The E.U. provides пѓј пѓј Common security interests: Russia as a key geopolitical partner for EU. Common goals against rising India& China, world terrorism, loss of leadership in technology, illegal migration, organized crime, cyber crime, climate change, and the conflict of civilizations. пѓј Energy issue: Russia is the most important supplier to the E.U. not only of gas and oil, but also of coal and uranium. пѓј Russia as one of the largest holders of euro-denominated assets in the world. пѓј Research, education and culture: strong mutual interest in nuclear safety, education (Bologna process), exchange of know-how. Russia needs new technologies, EU needs developed Russia to continue provide resources. 42% of EU gas comes from Russia CONs (negative forces: towards conflict) пѓј Inconsistent, bi-lateral policy of EU =>Russia. EU needs to restructure and act as a Unit with a certain defined position. пѓј Russian straightforward foreign policy: пѓј Georgian conflict, пѓј unilateral recognition of Abkhazia and South Ossetia пѓј Chechnya issue пѓј Raising concerns about stability of gas supplies: Ukrainian conflict + insufficient upstream investments in the face of expanding demand. пѓј Old and out of date PCA, as a main strategic document. Need for a new document. пѓј No common strategic vision on future cooperation вЂ“ Russian and EU leaders DONвЂ™T SEE same reasons on WHY to closely cooperate Example: вЂњPartnership for modernizationвЂќ by Russia, Rostov summit 2010 EU vision: political modernization (political freedom Russian vision: technical modernization (know-how and & human rights) investments) 6 Legislative base вЂў Agreement of the USSR and EU "About trade, economic and commercial cooperationвЂњ вЂ“ 1989 вЂў the Partnership and Cooperation Agreement вЂ“ 1994(1997) вЂў 4 road maps: вЂ“ On the space of freedom, safety and justice вЂ“ On a Common Economic Space вЂ“ On a Common Space of External Security вЂ“ On the common space of science and education Exported/imported services вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў Transport Travelling Communications Constructing Insurance Financial services Computer and information services Royalty and license payments Personal and cultural services Governmental services Other business services Export of services Import of services Geographic structure of RussiaвЂ™s goods export вЂў 2000: Germany, Italy, Great Britain, The Netherlands, Finland вЂў 2001-2002: Germany, Italy, The Netherlands, Great Britain, Finland вЂў 2003: Germany, The Netherlands, Italy, Great Britain, Finland вЂў 2004: The Netherlands, Germany, Italy, Finland, Great Britain Geographic structure of RussiaвЂ™s goods export вЂў 2005: The Netherlands, Germany, Italy, Great Britain, Finland вЂў 2006-2009: The Netherlands, Italy, Germany, Poland, Great Britain Geographic structure of RussiaвЂ™s goods import вЂў 2000-2005: Germany, Italy, France, Finland, Great Britain вЂў 2006: Germany, France, Italy, Finland, Great Britain, Poland (new) вЂў 2007: Germany, Italy, France, Great Britain, Finland, Poland вЂў 2008: Germany, Italy, France, Great Britain, Poland вЂў 2009: Germany, France, Italy, Poland, Finland Geographic structure of RussiaвЂ™s services export вЂў 2000-2002: Germany, Great Britain, Finland, France, Italy вЂў 2003-2004: Germany, Great Britain, Finland, France, вЂў 2005: Germany, Great Britain, Cyprus, France, Finland вЂў 2006-2007: Germany, Great Britain, Cyprus, The Netherlands, Finland вЂў 2008-2009: Great Britain, Germany, Cyprus, The Netherlands, France Geographic structure of RussiaвЂ™s services import вЂў 2000-2002: Germany, Finland, Great Britain, France, Italy вЂў 2003-2004: Germany, Finland, Great Britain, France, The Netherlands вЂў 2005-2007: Great Britain, Germany, Finland, Cyprus, France вЂў 2008-2009: Great Britain, Germany, Finland, Cyprus, The Netherlands EU countriesвЂ™ investments to the economy of Russia (mln $ U.S.) RussiaвЂ™s investments to the economy of EU countries (mln $ U.S.) Antidumping measures вЂў According to the article VI GATT(the General agreement under tariffs and trade) the dumping is defined as a sale method for export at which В«the goods of one country are sold in another country at a price below normalВ». вЂў Now it is necessary to result some figures testifying to gravity of given not tariff restriction for Russia: вЂў For December, 31st, 2007 the Community applied concerning Russia 11 definitive antidumping measures and did not apply any time antidumping measure. Obligations have been accepted concerning 5 of these 11 cases. The total cost of the import mentioned by these measures in 2007, has made в‚¬167 million that makes only 1,3 % of all import of Russia. The size of the antidumping duties entered on Russian production in 2007, has made less в‚¬20 million. That means that the average level of the entered duty was somewhere about 12 %. вЂў For September, 30th, 2008 the Community applied antidumping measures concerning import of 12 kinds of goods from Russia. Cost of the import on which the measures were imposed during first half of 2008, has made в‚¬93 million (1,5 % of import). However the sum of the declared antidumping duties equaled only в‚¬3,4 million, i.e. the average duty was Prospects вЂў EU expansion can have for Russia a number of negative consequences in trade - economic sphere: вЂў - A mode of quantitative restrictions for import of the Russian steel to EU. вЂў - 12 measures of antidumping protection concerning export of the Russian steel products and chemical fertilizers вЂў - Quota System for the Russian export of grain to EU. вЂў - Losses in trading of fuel-energetic products вЂў - Worsening the access to specialized markets вЂў EU expansion has variety of the essential favorable aspects for economy of Russia. Especially in the long-term plan. Here are uniform rules of a competition, trade and transit, both stability of calculations and protection of the intellectual Russian property. 24 Why Partnership of Modernization? Modernization goals driven by EUвЂ™s interest to invest in and source reliably from Russia вЂ“ Russia needs know-how вЂњRussia forward!вЂќ Trade asymmetry WTO membership Asian boom Stability Modernization vs. п‚§ Focus on stability п‚§ after Gaidar-shock and crisis of 1998 Shift to modernization with the new presidency of Medvedev п‚§ EU highly dependent п‚§ on Russian primary exports (gas, oil) High-tech industry has been neglected, which results into dependence on manufactured goods. п‚§ Low level of foreign п‚§ direct investments due to unfavorable investment climate Tariffs and protectionism prolong WTO application procedure п‚§ Global markets put п‚§ Russian industries under pressure Production factors are globally mobile; modernization as local competitive advantage The Partnership of Modernization (PoM) Main goal and objectives of the Partnership вЂњto implement a concrete modernization of the most important sectors of Russian economy and society, in order to promote international multilateralism and benefit to both parts in the long runвЂќ European Union п‚§ Increase business and cooperation opportunities with Russia п‚§ increase commitment in international institutions п‚§ concrete projects with a modernized partner п‚§ improve situation of EU countries, along Russian borders Russian Federation п‚§ standard alignment (economy, bureaucracy, policy etc.) п‚§ develop internal sectors п‚§ increase commitment in international institutions п‚§ increase trade п‚§ attract western investments п‚§ improve commitment with border countries Implementation of the PoM Possibilities of implementation in the four spheres Technology п‚§ energy efficiency п‚§ energy conservation п‚§ new fuels п‚§ nuclear technologies п‚§ space technologies п‚§ telecommunication п‚§ medical technologies п‚§ pharmaceuticals п‚§ IT Six projects selected by Russian Government, with high potential of cooperation for EU. Economy п‚§ stimulate investments п‚§ stimulate growth of small and medium enterprises п‚§ attract venture capitals п‚§ reform the very large public sector (privatization) п‚§ listing of mayor companies п‚§ improve financial market п‚§ standards (IAS/IFRS) п‚§ corporate law (premium) п‚§ taxation Policy and governance п‚§ reduction of state controls п‚§ corruption п‚§ clarify tasks of public administration п‚§ transparency п‚§ reform bureaucracy п‚§ simplify registration procedures for foreign companies п‚§ visa deal (with EU) Research and education п‚§ high level research centers п‚§ new modern universities in strategic areas п‚§ cooperation with EU universities п‚§ shared research projects with EU п‚§ attract EU experts The Future of EU-Russia Energy Dialogue вЂў Russia is a major player in world energy markets вЂў Russia is reluctant to accept EU insistence on common regulatory regime in the energy area. вЂў The EU is very much concerned about being over-dependent on the Russian oil and gas imports. (The Nabucco pipeline project. transport gas from Azerbaijan, Turkmenistan and potentially Iran across the Balkans to Western Europe) вЂў Russia is moving from constructing transit pipelines to direct pipelines, mostly built offshore. Thus, it strengthens GazpromвЂ™s bargaining power visГ -vis transit countries such as Belarus, Ukraine and Moldova вЂў Russia will continue to be EuropeвЂ™s main suppliers of natural gas вЂў EUвЂ™s energy policy needs to address questions such as how to secure delivery and distribution of gas and how to provide more stable demand forecasts 28 29 Social Cooperation - 1 Quality of life Education Culture вЂў Program of Cooperation between the International Labour Organization вЂў An institutional foundation is being formed due to the absence of the Decent Work country program in Russia вЂў Several development projects funded by TACIS вЂў The cooperation axis ICT for Health was added after the open consultation campaign (January-April 2008) вЂў Three EU educational programs in Russia вЂў Innovations Center in Skolkovo вЂў The Europe 2020 Strategy for Smart, Sustainable and Inclusive growth and the concept of long-term social-economic development of Russia to 2020 вЂў Bologna process вЂў World cultural summits вЂў Cooperation between EU and Russian artists вЂў Proposal from Russia to extent PPC to the cultural sphere Social Cooperation вЂ“ 2. Goals Quality of life вЂў Sustainable and increasing quality of life healthcare вЂў The implementation of the Decent Work Agenda Education вЂў largely promoting cooperation among universities and two-way mobility of students and academic staff вЂў coordinating and synchronising actions within the EU and Russian research EU and Russian research programmes Culture вЂў improving mutual knowledge and understanding of each otherвЂ™s culture вЂў a special focus on strengthening the European identity and opportunities for synergy 32 Opportunities (what can be done to support further cooperation) вЂў Development and adoption of new PCA. Should be not a nominative document, as вЂњfour common spacesвЂќ is, but a detailed one, delivering common strategic vision for future cooperation вЂњThe EU expects the New EU-Russia Agreement to provide for a comprehensive legally binding framework to cover all main areas of the relationship based on our shared interests and the international commitments which the EU and Russia have entered into, including promoting respect for human rights and the rule of law. Moreover, in order to underpin our growing economic interdependence a Free Trade Area (FTA) would be of mutual interestвЂќ. вЂў Acceptance of Russia into WTO - enlargement and further development of economical relations (should finish by end of 2011). вЂў Creation of free travel zone with Europe вЂ“ visas as huge barrier for вЂў business and cultural cooperation of Russia-EU (in discussion). Partnership for modernization вЂ“ further development of the concept in order to arrive to the common vision. Threats (what can ruin further cooperation) вЂў EU continues to act inconsistently towards Russia вЂў Russian bi-lateral conflicts with EU countries. Example: conflict with Georgia. Georgia is opposing RussiaвЂ™s acceptance into WTO, using its memberвЂ™s veto right. вЂў US implicit or explicit intervention into Russia-EU relations вЂў New problems with gas supply вЂў Results of presidential elections of 2012 in Russia Ways to future-1 вЂў EUвЂ™s view: вЂњThe future of EU-Russia relations, a way forward in solidarity and the rule-of-lawвЂќ. February, 2009. Basis for a better EU-Russia relationship = neither confrontation, nor isolation, nor unconditional cooperation, but a policy based on solidarity and the rule of lawвЂќ. LetвЂ™s act together and influence our relationships with Russia. вЂў PutinвЂ™s view: вЂњRussia and Europe: From learning the lessons of the crisis to a new partnership agenda.вЂќ, November 2010. вЂњour joint attempt at achieving success and competitiveness in the modern world,вЂќ вЂ“ Common economic policy: free trade zone, RussiaвЂ™s WTO accession, joint projects вЂњRU resources & EU technologyвЂќ, common European energy complex (to avoid gas transit countries) вЂ“ Supporting science and education вЂ“ Removing barriers: visa-free regime for business and educational cooperation Ways to future-2 вЂў Sergey Karaganov, Chairman of the Presidium of the Council on Foreign and Defense Policy (CFDP), Dean of the School of the World Economy and International Affairs of the State UniversityвЂ“Higher School of Economics, September, 2010: way towards creation of Alliance of Europe in order to oppose 2 existing poles: Ukraine Russia China USA Turkey Kazakhstan Thank You for Attention!