The issue of potential cooperation between the European Union and the Eurasian Economic Union was one of the most important topics in the agenda of the St. Petersburg International Economic Forum that ended today.

A volunteer by the accreditation office for the participants in the St. Petersburg International Economic Forum at the Lenexpo Exhibition Hall. Photo: RIA Novosti

The St. Petersburg International Economic Forum (SPIEF), which started on June 18, is the major Russian economic conference of the year. More than 1,600 companies are participating this year. One of the most discussed issues at this year’s event is potential cooperation between the Eurasian Economic Union (EEU) and the European Union (EU). 

As the EEU is already halfway through its first year of existence and European sanctions continue to impact businesses of both the EEU and EU, there is increasing concern about missed opportunities and the time that is needed to build cooperation between the two integration structures. The overriding concern, of course, is that political tensions may dominate economic pragmatism. 

During the first two days of the forum, the issue of the EEU and its future relations with the EU was discussed by several panels, which gathered together Russian government officials, business leaders of the EEU, and representatives of international organizations and academia. The only ones missing in the discussion were EU officials.

Defining the parameters of EEU integration with the EU

Anatoly Chubais, the head of Russian Nanotechnology Corporation (RUSNANO), opened the discussion by offering his vision that, “The Eurasian Economic Union is a far-reaching project which will cause tectonic changes.” All participants agreed with this assessment, as they see the EEU integration project as a strategically important long-term market opportunity for Russia and a source of future economic growth. 

The Chairman of the Eurasian Economic Commission, Viktor Khristeko, formulated very precisely the overall trend in current global development, “Integration structures will form the model of global development, which requires effective dialogue between such structures.”

He continued by stating that, if Russia opposes this type of integration, economic development will slow down. “This is to say that the EU and the EEU have to talk to each other and cooperate on a full range of economic issues to obtain mutual benefits,” stated Khristenko.

He also proposed that one of the main issues of EU-EEU cooperation is the absence of common goals. “The EU-EEU economic cooperation needs a new model of cooperation to give birth to a fresh start,” proposed Khristenko.

On the other hand, Tatiana Valovaya, a board member at the Eurasian Economic Commission, argued that actually, “There is no EU-EEU dialogue at all and it has to be created from scratch.” This is why she echoed Khristenko, saying that there is an urgent need for an interaction model between the EU and EEU. 

However, the current international situation and the state of political relations between the EU and Russia provide almost no room for the type of political interaction that could spur economic interaction. 

Political concerns should never overweigh economic concerns

Elaborating on this topic, all panelists agreed that politics should never overweigh economic expediencies and pragmatism. Also, they argued that the EEU integration project should not be politicized. If business does not lose money it would suffer from a very low return on investment or from slow economic development. Consequently, it affects the entire economy of a country.

Representatives of European businesses also agreed that cooperation between the EU and EEU is needed. Philip Pegorier, country president for Russia, Ukraine and Belarus at Alstom, argued that, “Europe will only benefit from cooperation between the EU and EEU.” He called on leaders to stop politicizing the purely economic EEU integration project.

Ronald de Jong, executive vice president of Royal Philips, also called for closer cooperation between the two integration projects as “both sides lose potential benefits and prosperity.” As an example, he said that some most progressive medications produced and registered in the EU wait for about a year to enter the Russian market because of difficulties in procedures. Working together and eliminating such barriers through the EEU could save many lives, argued de Jong.

How can the EEU foster dialogue with the EU?

Reiner Hartmann, head of the Moscow representative office of E.ON Global Commodities SE, noted that, “Firstly, the EEU was neglected and ignored, then seen as a competitor and then acknowledged as a coming regional power, but not really trusted yet.” Therefore Mr. Hartmann said that, “It is absolutely necessary to build trust.”

Eckhard Cordes, chairman of the Committee on Eastern European Economic Relations, echoed his counterparts and argued that, “The EU will have to abandon its reluctance with respect to the EEU, in particular, due to political considerations. The EEU must become a political partner of the EU.” In his view, this will create the basis for a necessary dialogue.

According to Alexey Mordashov, the CEO of Severstal, in 2015 the share of Russian trade with the EU decreased from 50 percent to 46 percent. With Germany alone, trade dropped by 35 percent. He argued that this trend should be stopped. He stressed that with the current political situation in the world, EU-EEU dialogue is almost absent.

“Even if there is no dialogue on the political level, we need to talk and keep discussions on the business level,” offered Mordashov. He continued further, “We share one continent and we are the neighbors, this is why we are partners forever and have to cooperate for the sake of our mutual prosperous future.”