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June 20, 2016 No.
6485

Russian President Putin At SPIEF Plenary Session: The 'Greater Eurasia' Project Is Open To Europe - Part I

On June 17, President Vladimir Putin addressed the plenary session of the St. Petersburg International Economic Forum. The plenary session was followed by Q&As, moderated by CNN host Fareed Zakaria. Putin's speech tackled the following topics: Eurasian integration, Russia's economic growth, Russia's investment in research and development (R&D). The Q&As tackled issues that were more political such as: NATO, Russia-U.S. relations, and the U.S. elections.[1]  

The first part of Putin's speech was dedicated to the Kremlin's pet Eurasian Economic Union (EAEU) project, which was established in 2015. It was therefore no coincidence that Kazakhstan's president, Nursultan Nazarbayev and Italy's prime minister, Matteo Renzi, were the only two leaders participating in the forum's plenary session aside from Putin. Nazarbayev is the EAEU's initiator, as he originally proposed the idea of forming a "Eurasian Union" back in 1994. Renzi, who has been critical of the EU sanctions against Russia,[2] represented Europe, a continent that Russia' would like to integrate in the EAEU. As Putin put it in the closing session, the presence of Kazakhstan, Russia's closest partner, and of Italy is "indicative", because "we must focus on joining forces", an invitation to Europe to integrate its economy with the EAEU. It is worth noting that the same day the plenary session convened, the Council of the European Union decided to extend the restrictive measures in response to the annexation of Crimea and Sevastopol by Russia, until June 23, 2017. The measures apply to EU persons and EU based companies. They are limited to the territory of Crimea and Sevastopol. [3]  

In the speech,  Putin brushed off the sanctions by advocating that the EAEU should become a center for a "greater emergent integration area." He added that this June, Russia plans to start official talks on the formation of comprehensive trade and economic partnership in Eurasia in which EU member states and China will participate. In conclusion, Putin stressed that the EAEU should create an expanded Eurasian Partnership encompassing China, India, Pakistan, Iran, the Commonwealth of Independent States (CIS) and other countries.

First of all these remarks disclose Putin's design to transform the EAEU into a bloc that will form a counterweight to the American Transatlantic Trade Investment Partnership (TTIP),[4] by becoming one of the "greater emergent integration area". This organization will also engage countries traditionally  hostile to the U.S. such as Iran. Second, Putin reiterated Russia's friendship with China, hinting, albeit not explicitly, that Beijing prefers joining forces with Moscow in the EAEU rather than engage in a possible G2 with the U.S. Putin also wants to bring India under Russian influence. India is an emergent economy that already takes part in BRICS (the association including Brazil, Russia, India, China and South Africa). Third, Putin tried to demonstrate that some EU members seek cooperation with Russia instead of joining the U.S. in imposing Anti-Russian sanctions over the Crimea' annexation.

In his speech, Putin stressed that the "greater Eurasia" project is open to Europe, given his conviction that such cooperation may be mutually beneficial. In an article published in Izvestia back in 2011, titled "A New Integration Project for Eurasia: The future in the Making", Putin, who was then officially prime minister wrote that the EAEU should become "one of the poles in the modern world and serve as an efficient bridge between Europe and the dynamic Asia-Pacific region".[5] He also explained that some of Russia's neighbors then lacked interest in joining integration projects in the post-Soviet space by protesting that these projects contradicted their pro-European stance. ""I believe that this is a false antithesis", Putin wrote, "We do not intend to cut ourselves off, nor do we plan to stand in opposition to anyone. The Eurasian Union will be based on universal integration principles as an essential part of Greater Europe united by shared values of freedom, democracy, and market laws." Putin then stressed that in line with this idea, Russia proposed setting up a "harmonized" (a word that Putin often uses in the context of Eurasian integration) community of economies and a free trade zone stretching from "Lisbon to Vladivostok." According to Putin, a partnership between the EAEU and the EU would "prompt changes in the geopolitical and geo-economic setup of the continent as a whole with a guaranteed global effect."[6]

However, in his St Petersburg speech, Putin underlined that if Europe does not want to integrate with the Kremlin's Eurasian project and prefers to be part only of the TTIP, or in other words, if Europe wants to align itself economically with the U.S., then Europe will "narrow its opportunities" and will not "preserve space for a gainful maneuver," implying that the TTIP only favors U.S. interests. In Russian eyes, the TTIP and its companion Trans-Pacific Partnership (TPP) agreement are considered U.S. tools for expanding its global leadership . On the Russian pro-Kremlin think tank Valdai Discussion Club website, Dmitry Suslov, Director of the Valdai Club's program "Globalization and Regionalization: General State of the World Economy and Global Governance" explains the rationale behind TTIP as follows: "In recent years the aspirations of the U.S. to revive and strengthen its leadership have been inseparable from economic, military and political consolidation of its allies and the creation of two gigantic political and economic communities in the Atlantic and Asia-Pacific, each based on rules and norms written by and benefiting Washington. TTIP and the TPP are expected to provide an economic foundation for these communities, while beefed-up NATO and Asian alliances involving the U.S. would provide a political framework."[7]

Despite the outstanding controversial issues separating Europe form Russia, Putin said that Europe should cooperate in the restoration of Russian-European relations, arguing that the "current breakdown" was not initiated by Russia. In the Q&As, Putin also stated that sanctions against Russia are counterproductive for Europe and are merely pushed by the U.S., since sanctions leave the American economy unaffected. Putin said: "How are the sanctions that you have mentioned affecting the United States? In no way whatsoever. It could not care less about these sanctions, because the consequences of our actions in response have no impact on it. They impact Europe but not the United States. Zero effect. However, the Americans are telling their partners: 'Be patient.' Why should they? I do not understand."

Below are excerpts from the first part of Putin's speech at the plenary session. In the following days, analyses on the second part of Putin's speech and on the Q&As will be published. Emphases in the text are added.


Putin at the plenary session with the President of Kazakhstan, Nursultan Nazarbayev and Italian Prime Minister Matteo Renzi (Source: Kremlin.ru, June 17, 2016)

Our Partners And We Think That The Eurasian Economic Union Can Become One Of The Centers Of A Greater Emergent Integration Area

"The St. Petersburg Forum has traditionally served as a venue for discussing strategic issues. Such conversation is all the more important now that the world is undergoing a serious transformation, when deep changes are affecting practically all areas of life.

"I would like to take this opportunity to share with you my assessments and thoughts, to tell you how we view Russia in a changing world. And I would like to start with the systemic problems that are besetting the global economy and practically all countries.

"True, after the 2008-2009 crisis, we managed to partially balance our financial accounts, limit but not overcome the debt increase problem and make cash flow more transparent and manageable.

"However, the structural problems accumulated by the global economy still persist, and we have not yet put our economy on the growth trajectory.

"Incidentally, current geopolitical tensions are related, to some extent, to economic uncertainty and the exhausting of the old sources of growth. There is a risk it may increase or even be artificially provoked. It is our common interest to find a creative and constructive way out of this situation.

"... The scale of technological, economic problems and the objective situation we are in - their scale and nature suggest that we can develop effectively only together, by building cooperation. We believe that such cooperation can be effectively built as part of a flexible and open integration environment that encourages competition in scientific research, a variety of technological solutions that allow the participating countries to fully employ their competence and their potential. In 2011, with Belarus and Kazakhstan, and relying on the dense network of cooperative relationships we inherited from the Soviet Union, we formed a common customs space, and then upgraded it to the Eurasian Economic Union [which was officially established in 2015]. The initiator of this project is here with us today, on this very panel. It is President of Kazakhstan Nursultan Nazarbayev.

"We are deepening our [Eurasian] integration gradually, and are removing obstacles to commerce and the movement of investment, technology and workforce. We are implementing an industrial and technological cooperation program already, and are forming a common service market incrementally. Common energy, oil and gas and financial markets will emerge by 2025.

"We are aware of the impressive prospects of cooperation between the EAEU and other countries and integration associations. Over 40 states and international organizations have expressed the desire to establish a free trade zone with the Eurasian Economic Union. Our partners and we think that the EAEU can become one of the centers of a greater emergent integration area. Among other benefits, we can address ambitious technological problems within its framework, promote technological progress and attract new members. We discussed this in Astana quite recently. Now we propose considering the prospects for more extensive Eurasian partnership involving the EAEU and countries with which we already have close partnership - China, India, Pakistan and Iran - and certainly our CIS partners, and other interested countries and associations.

"To start, we might streamline and unify the regulation of departmental cooperation and investment, nontariff measures of technology and phytosanitary control, customs administration and protection of intellectual property. Further on, we should move gradually to the reduction and eventual abolition of tariff restrictions.

"We might proceed from a network of bilateral and multilateral trade agreements that envisage a varying pace, extent and level of interaction and the extent of market openness, depending on specific national economies' readiness for teamwork, with understandings on joint research, educational and high-tech projects. All these agreements should be future-oriented and provide the basis for harmonious joint development resting on equal and effective cooperation.

"As early as June we, along with our Chinese colleagues, are planning to start official talks on the formation of comprehensive trade and economic partnership in Eurasia with the participation of the European Union states and China. I expect that this will become one of the first steps toward the formation of a major Eurasian partnership. We will certainly resume the discussion of this major project at the Eastern Economic Forum in Vladivostok in early September...

The 'Greater Eurasia' Project Is Open For Europe

"Friends, the project I have just mentioned - the 'Greater Eurasia' project - is, of course, open for Europe, and I am convinced that such cooperation may be mutually beneficial. Despite all of the well-known problems in our relations, the European Union remains Russia's key trade and economic partner. It is our next-door neighbor and we are not indifferent to what is happening in the lives of our neighbors, European countries and the European economy.

"The challenge of the technological revolution and structural changes are no less urgent for the EU than for Russia. I also understand our European partners when they talk about the complicated decisions for Europe that were made at the talks on the formation of the Trans-Atlantic partnership. Obviously, [when] Europe has a vast potential and a stake in just one regional association [this] clearly narrows its opportunities. Under the circumstances, it is difficult for Europe to maintain balance and preserve space for a gainful maneuver.

"As the recent meetings with representatives of the German and French business circles have showed, European business is willing and ready to cooperate with this country. Politicians should meet businesses halfway by displaying wisdom, and a far-sighted and flexible approach. We must return trust to Russian-European relations and restore the level of our cooperation.

"We remember how it all started. Russia did not initiate the current breakdown, disruption, problems and sanctions. All our actions have been exclusively reciprocal. But we don't hold a grudge, as they say, and are ready to meet our European partners halfway. However, this can by no means be a one-way street.

"Let me repeat that we are interested in Europeans joining the project for a major Eurasian partnership. In this context we welcome the initiative of the President of Kazakhstan on holding consultations between the Eurasian Economic Union and the EU. Yesterday we discussed this issue at the meeting with the President of the European Commission [Jean Claude Juncker].[8]

"In addition, it would be possible to resume dialogue between experts at the technical level on a broad range of issues, such as trade, investment, technical regulation and customs administration. In this way we could create the groundwork for further cooperation and partnership.

"Naturally, we consider it important to continue cooperation on major research projects, such as the ITER thermonuclear plant and the x-ray free electron laser, to name a few. Joint efforts will allow us to seriously increase the technological competitiveness of both Europe and Russia. It is enough to note that in 2015 Russia invested 1.2 billion Euros in high-tech joint projects with Europe..."

 

Endnotes:

 

[1] Kremlin.ru, June 17, 2016.

[2] Putin met with Italian Prime Minister Matteo Renzi on the sidelines of the St. Petersburg International Economic Forum. A package of documents has been signed between Russia and Italy, including a memorandum of understanding between the Roscosmos State Corporation for Space Activities and the Italian Space Agency on cooperation in remote probing of the Earth's surface; an agreement on basic conditions of cooperation between Russia's oil company Rosneft and Italy's multinational oil and gas company ENI, and an agreement on the development of strategic partnership between Rosneft, Russian Helicopters and the Italian multinational aerospace, defense and security company Leonardo-Finmeccanica. Around $1.3 billion Euros worth of contracts have been signed with Italian businesses on the sidelines of the forum. Kremlin.ru, June 17, 2016.

Renzi also expressed his disappointment over the extension of EU sanctions against Russia by saying: "The Italian position is simple: sanctions should not be renewed in an automatic way." Repubblica.it, June 17, 2016.

[4] The TTIP is a proposed free trade and investment agreement between the European Union and the United States. The TTIP is considered to be a companion agreement to the Trans-Pacific Partnership (TPP), which is a trade agreement among twelve Pacific countries.

[5] Russianmission.eu, October 10, 2011.

[7] Valdaiclub.com, June 17, 2016.