When European Union leaders meet with President Dmitry Medvedev next Monday in Rostov-on-Don, it will be the first such meeting for Herman Van Rompuy, president of the European Council, and Catherine Ashton, the EU’s foreign policy chief. Although leaders will discuss the usual range of foreign policy issues such as Iran and Afghanistan, the main issue on the agenda will be the proposed “modernization partnership” between the EU and Russia.
The global financial crisis has hit Russia hard. The country’s gross domestic product declined almost 9 percent in 2009, and income from energy sales have dropped sharply. Inflation and unemployment are both rising, and the number of anti-government protests is increasing across the country.
Against this background, Medvedev has sought to highlight the need for a thorough political and economic modernization of Russia. He has described Russia as “a primitive and chronically corrupt economy based on raw materials” and fixated on the old habit of relying on the state to solve its problems.
The problem is that Medvedev appears to have little support in Russia for his modernization agenda. Nor does he have a team to implement modernization in key sectors because of a lack of qualified professionals. There is no rush of well-qualified Russians returning from abroad to help fix the economy. Furthermore, Prime Minister Vladimir Putin is resisting all but cosmetic changes. He believes that “modernization” means making the current political and economic vertical-power structure more efficient instead of fundamentally changing the model by liberalizing and diversifying it.
The European Commission has put forward its own views on what the modernization partnership should cover. Top on the list is the rule of law. This also reflects the concerns of Medvedev, who has repeatedly drawn attention to the problems of “legal nihilism” in Russia. The absence of the rule of law not only hampers the development of a modern, civil society but also discourages Western investment in Russia. The complicated business legislation, which is all too often wide open to different interpretations, is another major problem for foreign investors.
Largely through its support for programs run by the Council of Europe, the EU already makes some limited contribution to strengthening the rule of law in Russia. The EU could also assist in drafting legislation providing for the safeguard of foreign investments and private property in the country. But the main push must come from Russia itself. Change has to start at the top, and rhetoric must be followed by action. Many believe that the release of former Yukos CEO Mikhail Khodorkovsky would be a good signal of changed attitudes.
The Russian leadership has acknowledged the importance of diversifying the economy and increasing trade. But Russia has given contradictory signals about its willingness and commitment to join the World Trade Organization and introduced a number of protectionist measures, especially nontariff barriers, during the past year. To reassure the EU and other international partners, Russia needs to give a categorical assurance regarding its commitment to join the WTO as soon as possible.
One area where both sides should see added value by working together is green technology. Russia lags way behind the EU in environmental standards and is one of the worse polluters when it comes to carbon-dioxide emissions. Helping Russia achieve greater energy efficiency would be a real win-win development. Such a move would tie in with closer cooperation in science and research, where Russia is strong in a number of fields.
Another area where Russia could draw on EU experience is regional development. There are huge inequalities between Moscow and the regions, and Russia could benefit from EU experience and technology in rebuilding its outdated infrastructure in the regions.
Such an ambitious agenda requires more trust from both sides. There needs to be a vast increase in people-to-people contacts, including students, businessmen, journalists and lawyers. The process of abolishing visas should also be accelerated.
The EU should support Russia in its modernization agenda, but such support needs to be conditional on Russia agreeing to a series of concrete actions to move toward a more open and democratic society.
Fraser Cameron is director of the EU-Russia Centre.