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Pragmatism prevails at EU-Russia summit

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Russian President Dmitry Medvedev (R) talks to EU Commission chief Jose Manuel Barroso prior to EU-Russia talks in the town of Rostov-on-Don on June 1, 2010.

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June 1,  2010

Russian President Dmitry Medvedev is hosting EU leaders today (1 June) for a summit aimed at putting aside past differences and focusing on reviving trade and boosting troubled economies.

Background

EU-Russia relations went through a difficult period after Russia and Georgia fought a five-day war in August 2008. The conflict saw Russian troops repel an assault on the breakaway pro-Russian region of South Ossetia, which broke free from Tbilisi’s rule in the early 1990s.

Russia later recognised South Ossetia and Georgia’s second breakaway region of Abkhazia as independent states. Russia has thousands of troops stationed in both regions.

On the energy side, Russian gas giant Gazprom is drawing up long-term plans to strengthen its grip on Europe with pipeline projects backed by the Kremlin (see EurActiv LinksDossier on Pipeline politics).

Last year, Moscow lashed out at a European Commission initiative to modernise Ukraine’s gas pipeline system (EurActiv 24/03/09). In Moscow’s eyes, the EU executive should have better coordinated this plan with Russia, which is Europe’s main gas supplier.

Russia also dislikes the EU’s ‘Eastern Partnership’ initiative (EurActiv 08/05/09), a plan to foster closer political and economic ties with six former Soviet republics, suspecting that it is designed to substitute the Moscow-centred Commonwealth of Independent States (CIS) with a Brussels-centred alternative.

However, Russia remains a key EU partner. It is its third largest trading partner and an important exporter of oil and gas. Current cooperation is based on four policy areas: economic and environmental issues; freedom, security and justice; external security; and research and education.

A new EU-Russia basic treaty is under negotiation.

The Kremlin leader has put a warmer face on ties with the West in recent months, and the summit in the southern city of Rostov-on-Don was expected to demonstrate new-found pragmatism in relations between Moscow and the European Union.

Previous summits under former President Vladimir Putin were often marred by rows over thorny issues such as human rights.

“For once, there is no significant dispute outstanding, either political or economic, between Russia and any of the EU member countries,” said Chris Weafer, chief strategist at investment bank Uralsib.

During the summit, EU leaders hope to get Kremlin assurances on the ailing euro, which accounts for nearly half of Russia’s currency reserves. Moscow, for its part, needs more technology and investment as part of Medvedev’s modernisation drive.

Two decades after the fall of the Iron Curtain, Russian officials said they would also press for visa-free travel to Europe for Russian citizens.

Human rights could still overshadow the meeting

On the eve of the summit, as Medvedev sat down for dinner with EU President Herman Van Rompuy and European Commission President José Manuel Barroso, police used force to disperse anti-Kremlin rallies in Moscow and St Petersburg.

Washington, not part of the summit, criticised the crackdown. “The United States regrets the detention of peaceful protesters in Moscow and St Petersburg,” White House spokesman Mike Hammer said in a statement.

“The reports of beatings by people associated with law enforcement, the rough handling of those detained and deplorable conditions of detention do not correspond to universal norms assuring citizens’ freedoms of expression and assembly,” he said.

In a letter published on Monday in The Moscow Times newspaper, prominent figures including former Czech President Vaclav Havel and Nobel Peace laureate Desmond Tutu questioned Kremlin pledges to improve the human rights situation.

“We ask Medvedev and urge the Russian government to protect people in danger and to ensure quick and effective investigations into the murders of human rights activists, journalists and independent-minded jurists,” said the letter.

Warmer ties

Yet officials from both sides said they expected a good-humoured meeting focused on brass-tacks issues, reflecting warmer relations between Moscow and Poland, and a leaked Russian Foreign Ministry memo calling for a more pragmatic policy.

After rising for nearly a decade, EU exports to Russia fell sharply during the financial crisis, dropping to 66 billion euros last year from 105 billion euros in 2008.

Foreign direct investment in Russia from the EU fell from 25 billion euros in 2008 into negative territory last year, EU figures show.

Analysts said EU leaders were likely to ask for assurances that Russia would avoid actions that could undermine confidence in the euro. Russia’s Central Bank chairman said on Thursday that, “for now,” he did not see the need to sell any of the 41% of some $450 billion of currency reserves held in euros.

On the visa front, Moscow has been pressing for years for an end to visa requirements for Russians traveling to Europe.

The Kremlin has watched in frustration as, despite the post-Soviet economic recovery, Brussels scrapped visas for poorer states such as Bosnia and Albania, but not for Russia.

EU officials fear scrapping visas could spark a backlash among voters in Western Europe, where high levels of migration from the ex-Communist east have become increasingly sensitive.

Medvedev, who has made modernisation and innovation watchwords of his presidency, also seeks EU help in weaning the Russian economy off its dependence on energy exports, which contributed to a 7.9% collapse in Russian GDP last year.

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