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Russia and the European Union: The Sources and Limits of "Special Relationships"

Authored by Dr. Cynthia A Roberts. | February 2007

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More than 15 years after the collapse of the Soviet Union and two decades after the last Soviet President, Mikhail Gorbachev, raised hopes that Russia would liberalize and join a common European home, Moscow again resorts to authoritarian means amid the continuing absence of a mutual agenda for Russia?s integration into Western institutions. Since the end of the Cold War, Russia and the West have averted renewed confrontation but managed only to craft a series of half-formed, suboptimal partnerships?with the European Union (EU), the North Atlantic Treaty Organization (NATO), and the Group of 71 in which Russia is neither anchored by democratic rules nor fully excluded by Western institutions. These ?special relationships,? which have been often turbulent, are now seriously strained by Russia?s stronger geopolitical position, boosted by sustained high economic growth and market power in energy, and newly-emboldened rulers, who seek to renegotiate terms.

Why did ?special relationships? materialize between Russia and the dominant Euro-Atlantic institutions instead of a Concert of Europe, a Cold Peace, full integration into Western institutions, direct confrontation, or a different outcome? How durable is the present, second best equilibrium? Which factors would increase the prospects for a mutually-beneficial agenda for integration? What are the risks that a more authoritarian and nationalist Russia will grow defiant and revanchist over its unfavorable terms of engagement, leading not to closer cooperation but a reemergence of two Europes, one led by the EU and NATO as the core and the other centered on Russia, relegated to the periphery and tempted to act as a spoiler and a closer ally of rogue regimes in Eurasia and elsewhere?

This monograph, which focuses on Russia and the EU, explains why such special relationships tend to produce shallow collaboration, symbolic summitry, and costly standoffs. It underscores the bargaining problems which block closer cooperation in areas of mutual interest, from managing energy interdependence, instability in the Balkans, and nuclear proliferation in the Middle East, to negotiating a new partnership and cooperation agreement. The ongoing disputes are over terms, not just enforcement, and rooted in asymmetries in power, uncertainty about the distributional costs and benefits of engagement, and mistrust generated by Russia?s continued unwillingness or inability to lock-in the liberal domestic structures necessary to make credible commitments or converge to European norms.

Domestic interests and political veto players further work against deep cooperation. Russia?s autocrats and dominant elites who gain phenomenal wealth from their positions of power have a stake in a nontransparent, illiberal Russian state and eschew international agreements requiring strict conditionality and accountability. Russia even has shown its willingness to cut the flow of energy supplies to two key transit states, Ukraine and Belarus, over price disputes, notwithstanding the disruptions to its EU customers farther west. For its part, the EU often is unable to impose discipline on the national politics and domestic interests of 27 member states, making it easier for Moscow to cut myopic, bilateral deals such as the German-Russian energy cartel which is building a gas pipeline under the Baltic Sea, bypassing Ukraine and Poland, which depend heavily on Russia for energy. Warsaw, in turn, has been willing to use its EU veto to block the start of negotiations on a new EU-Russia partnership and cooperation treaty, underscoring political and economic disputes with Moscow. For both the Europeans and Russians, mistrust persists, and both sides are profoundly ambivalent about the desirability of deepening their relationship. Thus, it remains to be seen whether Russia?s special relationships with the EU and other Euro-Atlantic institutions will succumb to the negative pressures or persist in their present imperfect form for lack of a realistic, superior alternative.


European and Russian ambivalence about the nature and scope of their relations presently do not favor an optimal bargain in which Russia consolidates a liberal transformation and is integrated into European and Western institutions. Despite positive developments in broadening the scope of Russia?s participation in the NATO-Russia Council, Washington is even more pessimistic about the political trend line in Russia, and American politics are likely to further dampen the outlook for deepening cooperation.190 However, Europeans and Americans alike should avoid excessive swings in attitudes and approaches and instead adapt to the realities of the current paradigm until and unless its underlying conditions change. European gravitas can counterbalance the psychological temptation in Russia to become enamored with a concept, such as a Russia-dominated regional association that would somehow ?integrate? with the EU, not because it has a basis in reality or sound strategy but because it represents a symbol of hope that Russia is again in the game of competitive great power politics.191

In war, ?the first, the supreme, the most far-reaching act of judgment that the statesman? has to make is to establish ?the kind of war on which he is embarking.? This insight from Clausewitz applies equally well to understanding the framework in which the EuroAtlantic community and Russia interact. To pretend to be engaged in a historic struggle to integrate post-communist Russia into Western institutions and the international order while actually pursuing a limited liability strategy is as senseless as it is to rush to the barricades and proclaim a new era of Cold Peace when Russia behaves like a typical monopolist in energy deals while simultaneously weakening its future economic prospects, tolerating an unreformed military, and accepting a level of political openness greater than what prevails in China. Since the end of the Cold War, Russia and the West have forged a basis for interaction which favors shallow agreements rather than Pareto optimal outcomes. The resulting special relationships endure because, for the foreseeable future, they are capable of producing second-best outcomes that meet base-line levels of acceptability to all parties?from limited cooperation to stabilize the Balkans and limited collaboration to delay Iran?s development of nuclear weapons, to expansion of trade short of the creation of a free-trade area, and deals for new pipelines and asset swaps to fuel European consumption absent open competition in energy and rule-based commercial contracts.

The West has a stake in Russia?s transition to a peaceful, market democracy but needs to recognize that after 15 years of turbulent transition, neither dialogue and annual summits nor self-righteous lectures will help unfreeze Russia?s domestic political status quo run by a corrupt clique motivated as much by murky concentrated interests as a dysfunctional urge to out-compete the West. Radical internal reforms, if and when they come, will be more a matter of necessity, decided by a new set of rulers, than an outgrowth of a spreading European normative structure. Moreover, although the realistic opportunity for accession has had demonstrable positive effects on domestic politics and economics in other post-communist countries, at this juncture Europe lacks the consensus and the capacity to consider even in theoretical terms the possibility of membership for Russia. If Russia undergoes its own color revolution and if a new democratic government follows up with liberal political and economic reforms, then, like Ukraine, European support for deeper cooperation will accelerate. Such a hypothetical sce- nario for Russia borders on fantasy at a time when the leaders of the Orange Revolution are faltering in the swamp of Ukrainian politics and Russian meddling. Nonetheless, 1989 is a lesson that the impossible sometimes materializes, and in such conditions, if Russians start pressing aspirations to join the EU, Brussels? closed door policy could become unsustainable. For now, Europe and the United States should be candid about the origins and limits of existing arrangements and resist politicizing the special relationships with Russia so long as more optimal solutions remain out of reach.

The December 2007 deadline to renegotiate or renew the PCA presents an opportunity to undertake a systematic review of the respective stakes, benefits, and limitations of the current arrangements. Using 2007 as a stimulus, forward thinkers in Brussels and the national capitals should form working groups with their Russian counterparts in and outside of government to consider the conditions that would be necessary to shift to points along the continuum of deeper cooperation, including a new bargain which would link positive incentives to conditionality requirements. The agenda should include lessons learned from 15 years of comparative post-communist transitions and policy analysis which highlight the serious obstacles presented by the partial reform trap. As part of the nongovernment work, academics, journalists, and other independent researchers should examine the political and societal implications of perverse corruption, racketeering, and theft of assets, not only by reviled oligarchs like Khodorkovskii, but also by top government leaders and officials throughout the bureaucracy. There is also value in systematic analysis drawing on empirical comparisons of alternative frameworks for interaction in Europe?Europe Agreements for EU accession countries, European Neighborhood Action Plans, and Partnership Agreements (i.e., Special Relationships) such as between the EU and Russia. Ongoing engagement on these issues cannot be expected to promote immediate changes in policy but will provide more realistic assessments of tradeoffs and an analytical base for future decision makers.

In the interim, the United States should continue to support its transatlantic partners in the EU?s engagement with Russia on resolving ?frozen conflicts? in their new neighborhood. Propinquity favors a division of labor in which Europe takes the lead, although more will be gained from a consistent transatlantic line which shows resolve in promoting outcomes consistent with Western and European values and interests. An important part of the work involves encouraging Moscow to resist becoming attached to the falacy that outcomes in Montenegro and Kosovo are universal precedents applicable to places like Transdnistria, Abkhazia, and South Ossetia, trumping alternative peaceful solutions to problems involving separatist struggles and minority rights as evidenced for example in Quebec, the Basque region of Spain, and, even more recently, in Northern Ireland.

A second convergence of transatlantic interests concerns the vital matter of energy security. With oil breaking $70 per barrel and higher gas prices, the energy factor is no longer underestimated in relations with Russia. Even at $60 a barrel, the United States will spend about $4,320 billion on oil imports annually, and in 25 years the world will need 50 percent more energy than it does now.192 Europe and the United States have a common interest not only in energy conservation, but also in diversification of supply, given most of the world?s energy is concentrated in places that are politically antagonistic or unstable, vulnerable to terrorism, or, like Russia, lacking secure property rights and unable to make credible commitments as suppliers.

In advance of the G-8 Summit in St. Petersburg, European Commission President Jose Manuel Barroso called for the EU and the United States to work together to press Moscow to open its energy market and create transparency and legal guarantees to ensure predictable energy supplies. Warning about the frequent ?use of energy resources as an instrument of political coercion,? Barroso argued that ? [t]ogether, the EU and the United States must send a clear signal on the need for a paradigm shift on energy.?193 Unfortunately, the status quo is not likely to be dislodged by diplomacy alone. The EU, as energy commissioner Piebalgs has emphasized, must achieve greater unity and a coherent strategy to promote Europe?s energy security.194 Second, Europeans, with U.S. support, need to send a credible signal to Russia that they are prepared to underwrite the costs of greater energy diversification. Only a united front and concerted action are likely to prod Moscow towards accepting greater transparency and international rules of commerce.

Mesmerized by extraordinarily high energy prices, Russia?s rulers are consumed by the politics of controlling the distribution of rents rather than problems related to production and investment.195 But the energy bubble will not last forever, and when the end comes, Russia likely will face serious economic and political crises if it has not yet created secure property rights. Economic shocks of this order can create openings for progressive political change or for destabilizing aggressive nationalism that will positively or negatively impact Russia?s relations with the West. Europe and the United States need to be prepared to support opportunities to promote deeper cooperation or contain the damage and, to the extent possible, to limit the ability of hostile nationalist groups to exploit the international situation to further their domestic political ambitions.

If the argument developed in this monograph is correct, progressive movement away from the special relationships that now underpin the partial integration equilibrium presupposes a narrowing of the asymmetries and distributional disputes which divide the two sides, a positive resolution of Russia?s commitment problem, and a stronger consensus in both Russia and Europe on the value of Russian integration. Without discounting the long-term prospects, those who expect near-term forward movement in any of these dimensions are just whistling in the dark.


1. The ?Group of 7? (G-7) industrialized democratic powers was subsequently renamed the ?Group of 8? (G-8) to include Russia in its political but not its core economic deliberations. When Russia was invited by President Bill Clinton to become a regular participant, then Treasury Secretary Robert Rubin made it clear that the G-7 would have to reconstitute itself to do its important financial business outside of the new G-8 process.

190. For representative examples of how Russia will be a subject of contention in American electoral politics, see Vice President Cheney?s Speech at the 2006 Vilnius Conference, May 4, 2006, available at www.whitehouse.gov/news/releases/2006/05/20060504-1.html; and Independent Task Force report on Russia?s Wrong Direction: What the United States Can and Should Do, New York: Council on Foreign Relations, March 2006.

191. This point was inspired in part by Arnold Wolf ers? insight about the contradiction between the feasibility and psychology of collective security. See his Discord and Collaboration, Baltimore: Johns Hopkins University Press, 1962, p. 197.

192. Senator Richard Lugar, transcript of remarks at The Brookings Institution, March 13, 2006.

193. ?EU Asks US to Help Pressure Russia on Energy,? International Herald Tribune, April 30, 2006.

194. Andris Piebalgs, ?Recent EU Developments on Energy Policy,? Speech to the International Energy Agency Governing Board members, Paris, June 13, 2006.

195. Clifford G. Gaddy and Barry W. Ickes, ?Resource Rents and the Russian Economy,? Eurasian Geography and Economics, Vol. 46, No. 8, 2005, pp. 559-583.