Relations between Russia and the European Union have deteriorated significantly over the past year. Although the parties may not acknowledge it openly, parallel projects of economic integration are primarily to blame.
A replica of the Reichstag with a figure depicting German Chancellor Angela Merkel against the Transatlantic Trade and Investment Partnership, TTIP, in front of the Reichstag building in Berlin, Germany, Oct. 9, 2015. Photo: AP
Relations between Moscow and Brussels may be at their lowest point in post-Soviet history. Diplomatic contacts remain intact, but the EU maintains economic sanctions against Moscow and Russian officials keep talking about import substitution models, apparently not envisioning a conceivable normalization of relations in the foreseeable future.
Mutual dissatisfaction is obvious, demonstrating that the EU and Russia view the world differently. As a result, they harbor resentment and avoid making compromises.
The crux of the matter is foreign policy. All other troubles follow from this. Moscow and Brussels keep accusing each other of unwillingness to accept the logic of their respective counterparts and both are reluctant to understand each other’s motives.
Exchange of accusations is not new in the history of relations between the EU and Russia. Reciprocal grievances used to taint the relationship during and after the Soviet era. Today, Moscow periodically accuses the West of attempts to expand NATO eastward; in turn, the West responds with criticism of the Kremlin’s foreign and domestic policies.
This track record makes it even more interesting why 2015 became a milestone in Moscow-Brussels mutual resentment. Even earlier crises had not damaged the relations between the two partners irretrievably, even though 2008 was a dreadful year for Moscow-Brussels relations by all standards.
Naturally, the Ukraine crisis may account for thecurrent intransigent suspicion that the EU has about Moscow. But the Ukraine and Georgian crises are not as fundamentally different as they may appear - in both cases events unfolded in the post-Soviet space that Russia considers vital for its national interests. Ukraine and Georgia had leaned away from Russia toward the West, and both countries had lost parts of their territory as a result.
However, while Russia managed to minimize post-Georgian harm and had even secured WTO membership after the crisis, it failed to regain control over European attitudes after the Ukraine crisis. One aspect of their respective regional policies may shed light on this apparent inconsistency: parallel economic integration projects. For Moscow it is the Eurasian Economic Union (EAEU); for Brussels it is the Transatlantic Trade and Investment Partnership (TTIP).
Two economic integration projects square off against each other
Moscow assented to the idea of Eurasian economic integration only in 1996. Eurasianist views gained supporters only after attempts by Russian President Boris Yeltsin to integrate with the West failed to yield practical benefits for Russia. Yet, the Eurasian economic integration process made a decisive leap forward only in 2008.
It remains unclear whether the renewed development of the economic bloc was genuinely related to the desire of its member states to soften the impact of the financial crisis of 2008 or whether it was related to the Kremlin’s desire to boost its own economic power by integrating the industrial potential and financial flows of Eurasia.
Still, the fact is that the member states revitalized the negotiation process in 2008. The EAEU was launched on January 1, 2015. Most significantly, it aimed at uniting the electricity, oil, and gas markets of Eurasia.
The West followed the suit with its own initiative—TTIP—roughly within the same timeframe. U.S. President Barack Obama announced the start of the relevant negotiation process in his annual State of the Union address in 2013. Soon thereafter, JoséManuel Barroso, then the President of the European Commission, voiced the EU’s desire to launch the trade and investment bloc with the U.S.
The designers of the two trading blocs brag about the scopes of their projects in a peculiarly similar manner. The TTIP can potentially account for one-third of the world’s trade flows and constitute half of the world’s economic output. The EAEU already embraces a space of more than 20 million square kilometers and produces oil, gas, coal, ore, and metal on an unmatched scale.
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The two economic blocs saw their respective finish lines approaching fast in 2015. The EAEU began functioning on January 1, 2015; the U.S. and the EU rushed into the TTIP negotiations the same year.
By now, tensions mounting between the two blocs begin to gradually appear from the surface. Suffice it to recall that the geopolitical crisis in Ukraine began with an economic tug of war between Russia and the EU and, consequently, between the respective economic integration projects.
It shouldn’t surprise anyone that Russian officials criticized the TTIP during the latest Gaidar forum in Moscow, while Vygaudas Ušackas, the EU’s representative in Russia, voiced skepticism about prospects of the EAEU.
How economic might transforms into a geopolitical threat
Apart from the current confrontation, Moscow and Brussels historically had plenty of reasons to distrust each other. British Prime Minister Winston Churchill, famous for his shrewd tongue, once defended his decision to help Stalin in his fight with Nazi Germany by saying: “If Hitler invaded hell I would make at least a favorable reference to the devil in the House of Commons.”
Even during the critical years of World War II, the European powers remained critically suspicious towards the Kremlin’s intentions. The eventual capitulation of the common enemy immediately aggravated mistrust between the former allies, promptly bringing them into the Cold War.
The collapse of the Soviet Union neither resulted in the so-called “end of history,”nor did it change the geopolitical environment of the European continent substantially. And although the ideological rivalry had formally ended, the underlying geopolitical foundation of the Cold War remained intact.
The countries of Eastern Europe remain militarily and economically (in terms of GDP) inferior to Russia and their Western neighbors. This inevitably created a geopolitical vacuum in the heart of the European continent. Hence, NATO’s desire to expand eastward and Russia’s desire to halt these advancements.
Naturally, nuclear deterrence does not allow the competing sides to clash in a direct military confrontation. Economics is where the sides compensate for this self-restrain. Here Russia and the EU readily demonstrate riskier and more confrontational behavior.
The problem is that what starts as an economic issue may instantly transform into a geopolitical problem. At the very minimum, the military power of states directly depends on their economic strength. Even though states may not necessarily prefer to transform their economic potential into crude military power all the time, all states are traditionally suspicious of profound changes in the economic power of their peers. Russia and the EU are not an exception to this rule.
The very fact that a neighbor develops its own economic bloc of unmatched proportions is bound to alarm Brussels and Moscow alike. In addition, every economic union necessarily forms a wall of protectionism to shield its newly formed internal market from dangers of the global liberal economy.
Given that the EU is the main economic partner for Moscow and Russia is the third-largest trade partner for Brussels, the transformation of one side into a closed economic bloc is bound to harm the other.
The TTIP threatens to undermine access to the European market for Russia’s mineral resources. This already menacing prospect for Moscow is being further aggravated by the U.S. Senate’s decision to lift a ban on crude oil exports in 2015. Mineral fuel and related products constitute some 70 percent of Russia’s exports to the EU. The TTIP directly threatens Russia’s source of hard currency by an ability to restrict the flow of its products to the EU. Economic stress at home and low oil prices make the prospect especially intimidating for Russia.
In a similar fashion, restricted access to the markets of the EAEU member states is certain to harm some of the EU’s producers and businesses. Already in 2007, the share of EU exports heading to the Russian market constituted 7 percent of the Union’s export flow. Russia remains one of the main consumers of the European transport and chemical industries.
Curiously enough, Ukraine’s exports to Russia structurally resembled the exports of the EU. Naturally, the loss of Kiev to a competing economic bloc could have seriously harmed Moscow as well as Brussels.
All in all, development of competing economic blocs—the TTIP and EAEU—will continue to undermine the economic, military and political positions of Russia and the EU. This is where experts and politicians must look for roots of the current European crisis.
How the Syrian crisis may help to regulate the European crisis
The Ukraine crisis once more demonstrates how natural it is for an economic confrontation to transcend into geopolitical and even military spheres. This transformation is rather a rule, not an exception. The system always utilizes local or global conflicts as a tool to release excess of internal pressure. The problem is that the current level of pressure between Moscow and the EU is at a critical point.
Ironically, the Islamic State of Iraq and the Greater Syria (ISIS) threat and the Syrian conflict serve as a necessary valve, providingMoscow and Brussels with an opportunity to release a certain amount of pressure away from the European system. The Syrian battleground is a conveniently localized and limited struggle that does not affect Europe in a direct way, save for the refugee crisis, which still falls beyond conventional geopolitical categories.
In addition, Syria is a place where Russia and the West have a realistic potential to find a common ground. In spite of a widespread but misleading belief, Russia is not as adamant in its effort to preserve Assad in power and the West is not as uncompromising in its desire to see him gone.
It is necessary to remember, though, that the Syrian conflict, however it ends, is not capable of shifting the geopolitical balance on the European continent. It will neither change the European balance of power nor fill the vacuum in Europe’s eastern frontiers. Syria can only provide Moscow and Brussels with a temporary and necessary pause to let both sides reorient on their own—European—geopolitical and geoeconomic playground.
Russia and the EU must utilize the Syrian conflict to think hard about how to rebalance the geopolitical and geoeconomic environment in Europe without resorting to arms. Unless Russia and the EU are able to do so, the end of the Syrian conflict may gradually mark a beginning of a conflict much more tragic in a classic Eurocentric sense. In this light, finding a solution to the conflict between the two economic integration projects—TTIP and EAEU—must drive the agenda of Moscow and Brussels.
The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.