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Russia: Moscow Wakes Up To The EU's Importance

By Bill Echikson

Brussels, 15 September 1997 (RFE/RL) -- There's an anecdote circulating in Brussels about a visit to Moscow by officials of the European Commission soon after the collapse of the Soviet Union. Russian President Boris Yeltsin is supposed to have called in his advisors at the time for urgent consultations.

"What is this EC?," he asked. His advisors patiently explained the basics about the Brussels-based body, which is now the European Union. The Russian president grew annoyed. "If this EC is so important, then why aren't we members?," he asked.

The story, told by a Brussels-based Western diplomat, may be apocryphal. But it tells an important truth about Russian relations with the European Union. After years of ignorance and indifference, Moscow is waking up to the importance of Brussels. Although Russia doesn't want to become an EU member, it does want to improve relations.

"Before, the Russians saw everything in bilateral relations, first with the U.S., then with Germany and afterwards with France," the diplomat recalls. "Now they've realized that the EU is their most important economic partner."

A series of high-level meetings highlight the new EU-Russian activism. In July, Russian Prime Minister Viktor Chernomyrdin visited Brussels and met European Commission President Jacques Santer. Then at the end of August Commissioner Hans van den Broek went to Moscow. A summit between President Yeltsin and the EU Presidency now looks on the cards for autumn.

"We realize that European integration is a fact and will continue to deepen," explains one Russian diplomat here in Brussels. "And we have to respond."

Admittedly, this realization doesn't translate into a smooth ride. The EU and the Russians remain at loggerheads on fundamental trade issues. Moscow wants to obtain the EU rating as a "market economy" so its exports are no longer penalized. Instead, the EU has launched 14 anti-dumping suits on Russian companies.

Russian steel producers, who export material worth some $30 million a year to the EU, are particularly fuming. Since last May, hot rolled and seamless Russian steel pipes have faced a 32 percent duty. The duty could be raised again this month another 26 percent.

The EU's rationale is that Russia keeps its energy prices artificially low.

"Yes, energy costs less than the world market price in Russia, but energy is our natural advantage and prices are going up fast," says the Russian diplomat. The Russians believe that pure protectionism represents the real reason for the EU complaints and they have threatened to retaliate by imposing quotas on EU products, starting with carpets.

The EU's planned Eastern expansion could also cause tensions. Estonian sources complain that the Russian diplomats have issued private warnings in Bonn and Paris against letting in any Baltic country. During Commissioner Van den Broek's visit to Moscow, Russian Foreign Minister Yevgeny Primakov expressed concern about the treatment of the large Russian minority in Estonia.

The Commission and the Estonians don't agree with Moscow. "We have identified no cases of discrimination," says EU spokeswoman Lousewies van der Laan. On a visit to Brussels this month, Estonian Foreign Minister Toomas Hendrik Ilves went further, saying the Russian minority raises "no problems" and accusing Moscow of suffering from "post-colonial stress."

"If Estonia joins the EU, our political dialogue will become much more difficult," the Russian diplomat said. "Our bilateral tensions with Estonia will spill over." And yet, despite this, Commissioner Van den Broek returned from Moscow with several agreements that should lower commercial tensions. The Russians agreed not to impose a labeling requirement on EU agricultural exports before next July, giving the EU food industry enough time to make the changeover. EU food exports to Russia total some $4.4 billion yearly.

In other fields, too, the Russians committed themselves to offering a six month breathing space before adapting any further legislation affecting bilateral trade. EU industry had been concerned about complicated Russian standards and certification rules involving time-consuming and expensive retesting of goods.

Finally, the Russians agreed to discuss for the first time Siberian overflight charges. EU airlines currently pay more than $220 million, while American airlines pay nothing. The funds subsidize the Russian airline Aeroflot. Van den Broek suggested a compromise of using these funds to modernize Russia's aging air traffic control system.

The long-term goal for easing commercial tensions is Russian membership in the World Trade Organization. Russian officials promised Van den Broek that they would not increase tariffs, so as to improve their negotiating position during entry talks.

An operating EU-Russian partnership and cooperation accord would represent another step forward. The Russian Parliament already has okayed the agreement, but five EU members states still must ratify it. Van den Broek says he hopes ratification could be completed before the end of the year. That agreement provides an arbitration mechanism to settle commercial disputes. But unlike the Central European partnership agreements, it does not call for eventual entry into the EU.

"We're just too big to join," admits the Russian diplomat.

(Bill Echikson, who contributes regularly to RFE/RL, edits the "East-West Newsletter" in Brussels.)