By Vygaudas Ušackas

EU Ambassador to the Russian Federation

Dear readers of VilNews,

It’s great to see this online resource for people interested in Baltic affairs. I congratulate the editors. From my position as EU Ambassador to Russia, allow me to share some observations.

For a number of years, the EU and Russia had assumed the existence of a strategic partnership, based on the convergence of values, economic integration and increasingly open markets and a modernisation agenda for society.

Our agenda was positive and ambitious. We looked at Russia as a country ready to converge with “European values”, a country likely to embrace both the basic principles of democratic government and a liberal concept of the world order. It was believed this would bring our relations to a new level, covering the whole spectrum of the EU’s strategic relationship with Russia.

In such an environment, Europe’s security architecture, which had been built and maintained for decades – and which the Baltic States are a part of – was seriously undermined by Russia’s illegal annexation of Crimea, followed by the destabilisation of Eastern Ukraine. Our relations became a hostage to the situation in Ukraine.

Rather than coming closer and nurturing the same values, a divide gradually developed between us.

Over the last two years, the quality of EU-Russia relations has been determined neither by our strong mutual interests nor by a common vision, but mainly by our divergence over Ukraine. We have been running the very real and grave risk of falling into the trap of long-term strategic rivalry and competition. We have seen an enlarged rift in our world views and, by extension, in our relationship. This is a very dangerous development. Whether talking about the Eastern Partnership, civil society, human rights, the Maidan, economic policy or sanctions, we have been seeing things differently. It seems that we have been living in a world of misperceptions and delusions.

The Baltic States have a particularly crucial part to play. Acting as a role model and remaining open for contacts and engagements with the Russian society at large, they should reinforce the immunity of our society from political corruption and media manipulation, and keep the socio-economic model strong and attractive. So it is time for solidarity, and I’m happy that we are now enjoying the benefits of the Euro-Atlantic institutions. As the EU is of prime importance in economy, so is NATO for security. NATO and the EU mutually reinforce one another.

Areas of common interest

But of course, the EU and Russia are indispensable international actors. We are interdependent on a wide range of bilateral and multilateral issues, be they trade, energy or global matters, which remind us of the need to agree on common efforts. The Iranian nuclear talks are a good example, where diplomacy in the P5+1 format managed to produce a landmark agreement.

Regarding trade, the EU remains Russia’s main trading partner and its main customer, absorbing nearly half of Russian exports. The EU is by far the largest source of Foreign Direct Investment (FDI) in Russia – about 75% of total FDI stock comes from EU Member States. Based on historical data and the complementarity of our economies, the EU and Russia will remain major economic partners for a long time to come.

The EU and Russia are also the most natural trading partners in energy. The new EU Energy Union Strategy, while advocating diversification of supply, leaves room for continuing competitive energy trade with Russia, based on the principles of open markets, fair competition and environmental protection, to the benefit of both sides.

But currently, the focus falls on Russia’s military operation in Syria, which has recently been accompanied by political outreach. While closely following the developments on the ground, the EU maintains that the only solution for the crisis is a political one.

We have a common interest in putting an end to the bloodshed that has claimed 250,000 lives, and helping the millions of displaced people, for which the Assad regime bears the greatest responsibility. We urge all those international actors with influence over Syria to push for an inclusive political transition. To achieve this, we must bring back stability, promote peace and reconciliation, and create the necessary environment for efficient counter-terrorism efforts, all towards the sovereignty, independence, unity and territorial integrity of the Syrian State.

We depend on one another to address a number of other global and regional challenges including the Middle East Peace Process, the Libyan crisis, Iraq and Afghanistan, but also deep-rooted horizontal challenges such as climate change, international terrorism and migration.

In view of this, we need to try to gradually repair our relations and establish a revised modus vivendi or at least a modus operandi recognising our differences but seeking to work on common interests.

Ukraine – building a wall is not a solution

Constructive engagement on Ukraine, based on respecting the sovereignty and territorial integrity of our common neighbour, would be a step in the right direction. The prerequisite from the EU side for the start of the normalisation process of EU-Russia relations remains unchanged – full implementation of the Minsk Agreement.

While much remains to be done, such as the organisation of local elections in Luhansk and Donetsk according to OSCE standards; the arrangement for self-government; and Ukraine’s regaining of full control of its borders, at the same time we are registering some positive developments: the ceasefire is being largely respected, the withdrawal of heavy weaponry and smaller weapons systems has been implemented and the political process was given a further impetus in the Normandy summit on 2 October 2015.^.

The Minsk process is moving in the right direction, albeit slowly and sometimes hesitantly. This is no small thing.

The EU will continue to support the process, including via political, financial and in-kind contributions to the OSCE special monitoring mission. We have already contributed to the agreement on the winter gas price for Ukraine, and remain fully engaged on the trilateral talks on the Deep and Comprehensive Free Trade Agreement (DCFTA) implementation, with a view to addressing Russian concerns. I should note that other Eurasian Economic Union members, who also have preferential trade relations with Ukraine, have not expressed similar concerns. Nevertheless, in the spirit of cooperation, the EU is working actively with Russia and Ukraine and is willing to discuss practical arrangements to maintain free and unrestricted trade. At the next trilateral Ministerial meeting, to be held on December 1, we will discuss the way forward and we are counting on Russia to play a constructive role in this process.

Ukraine is and will remain our common neighbour, and has the full right to choose its future trajectory itself, which must be respected by all.

Economic relations and regional cooperation

Our economic relations are far from reaching their full potential because of known facts – the illegal annexation of Crimea, destabilisation in Eastern Ukraine and related EU restrictive measures. Of course, Russia’s own ban on food imports from the EU has had a direct impact on bilateral trade as well. In the case of the Baltic States, I am well aware that local producers have felt the effects directly and have been adapting their businesses to alternative markets. But the main impact is felt by Russians, due to rising food prices and a limited choice of high-quality food products.

In the first half of 2015, EU-Russia trade declined by about 38% in dollar terms, mainly as a result of exchange rate changes, lower international commodity prices and Russia’s economic recession. These factors affect the entirety of Russia’s trade with the world: Russia’s total trade turnover has declined by around 34%.

However, we invite Russia to enjoy the benefits of the EU market, which remains highly attractive for Russia’s classic export – it is low-risk, transparent, diverse and trustworthy. Simultaneously, Russian companies investing in the EU are finding partners for new development and modernisation.

The EU is also following the Eurasian integration processes. We welcome regional economic integration initiatives if they strive towards economic openness and more liberalised trade not only among their members, but also vis-a-vis other partners, in particular neighbouring countries. That would ensure that the Eastern Partnership and the Eurasian Union can coexist without tension. The idea of a free trade agreement between the EU and the Eurasian Union seems appealing given the complementarity of our respective economies. However, it remains a longer-term target which must be premised on a common and proven commitment to economic liberalisation.

Meanwhile, the traditional trade and economic ties between the EU and Russia should be maintained, on the basis of respecting international trade rules.

Science and education cooperation, tourism

In spite of anti-Western rhetoric, so harshly promoted in Russian electronic media, we appreciate the increased interest of Russia’s education and science community to participate in EU-funded programmes. This year, an unprecedented amount of 3500 individuals – staff and students, will be involved in the so-called Erasmus+ international credit mobility scheme, financed by the EU. Russian universities were awarded 45 Jean Monnet grants (university networks connecting scholars and scientists across the world with EU-based universities), the second-highest number of applications by a non-EU country globally, the first being Ukraine. We also help Russian universities develop their curricula. There were 13 joint cooperation projects focusing on curricula development and modernisation of education bringing together 63 academic institutions from Russia. Participating Russian universities span the entire country, from Petrozavodsk to Vladivostok.

The importance of Russia as a neighbour is also reflected in our Cross-Border Cooperation programme. Out of 17 EU co-funded programmes, 8 are with the Russian Federation: 7 land-border and 1 sea-basin (in the Baltic Sea Region), totalling almost €200 million. We also expect Russia will live up to its own commitments within the programmes.

Despite the current tensions, Russia remains by far the country where most Schengen visas are issued (6.9 – almost 7 million in 2013 and 5.8 million in 2014). I always try to use the occasion to invite not only Russians to the EU, but also citizens of the EU to Russia, to explore the numerous natural wonders that Russia offers.

Conclusions

Today, Russia and the West seem to have embarked on different trajectories and are moving at different speeds. We have to be honest in recognizing our differences. The current rift is likely to shape the EU-Russia relationship for some time to come.

However, despite our current difficulties and differences, the EU and Russia share a continent, a common history, our economies are interlinked, and we are our biggest neighbours respectively. We are too important – and too interdependent – to ignore the benefits of a restored relationship and trust.