The European Union and Russia - European Union External

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The European Union and Russia - European Union External

Transcript Of The European Union and Russia - European Union External

European Commission
The European Union and Russia:
Close Neighbours, Global Players, Strategic Partners

European Commission Directorate-General for External Relations B–1049 Brussels Tel. (+32) 2 299 11 11 Fax (+32) 2 299 39 41 Website: For weekly news by e-mail from the Directorate-General for External Relations, please visit:
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More information on the European Union is available on the internet ( Cataloguing data can be found at the end of this publication. Luxembourg: Office for Official Publications of the European Communities, 2007 ISBN: 978-92-79-06390-9 © European Communities, 2007 Reproduction is authorised provided the source is acknowledged. Printed in Belgium PRINTED ON WHITE CHLORINE-FREE PAPER

The European Union and Russia: Close Neighbours, Global Players, Strategic Partners


I. Europe and Russia: Building a Strategic Partnership


II. Trade and Economic Cooperation


III. Energy, Climate Change and Environment


VI. Freedom, Security, Justice and Human Rights


V. Foreign Policy Cooperation and External Security


VI. Research, Education and Culture


VII. EU Cooperation Programmes and Projects


VIII. Cooperation with Russia’s Regions


Annex – Facts and Figures



I. Europe and Russia: Building a Strategic Partnership

The Russian Federation is one of the most important partners for the European Union. A key priority of the European Union is to build a strong strategic partnership with Russia based on a solid foundation of mutual respect. Russia is the largest neighbour of the EU, brought even closer by the Union’s 2004 and 2007 enlargements. The 2003 EU Security Strategy highlights Russia as a key player in geo-political and security terms at both the global and regional level. Russia is a key actor in the UN Security Council and, due to history, geographic proximity and cultural links, is one of the key players in the common European neighbourhood. Russia’s contribution to Europe’s cultural heritage is an important element of our common ties. Russia is also a major supplier of energy products to the EU. Russia is a large, dynamic market for EU goods and services, with considerable economic growth. The EU’s market, on the other hand, is by far the most important destination for Russian exports. Companies from the EU are the main investors in Russia.1

Russia and the EU Member States are all members of the United Nations,

the Organisation for Security and Cooperation in Europe (OSCE) and the

Council of Europe. They are all committed to upholding and respecting

the fundamental values and principles of democracy, human rights, the

rule of law and the market economy. These values underpin the EU-Russia

bilateral relationship and its legal basis, the Partnership and Cooperation

European flags flying in front of St. Basil’s Cathedral on Red Square

Agreement. The EU has a strong interest in working together with Russia to foster political, social and economic stability, in the region and world-

wide. Russia and the EU need to work together to combat new threats to

security, as terrorism, crime, illegal migration and trafficking in people as well as drugs.

The Russian Federation is also a crucial partner in combating climate change.

The EU and Russia are already cooperating in many ways, including the modernisation of Russia’s economy and its integration into the world economy, security, international issues and cooperation in the common neighbourhood of Eastern Europe.

The EU and Russia have an extensive dialogue on political issues around the world, including the resolution of conflicts such as those in the Middle East, Afghanistan, the Western Balkans and Sudan and preventing the proliferation of weapons of mass destruction and the relevant technologies, as in the cases of Iran and North Korea.

1 See the Facts and Figures’ section at the end of this document.

“I strongly believe the full unity of our continent can never be achieved until Russia, as the largest European state, becomes an integral part of the European process. (…)Today, building a sovereign democratic state, we share the values and principles of the vast majority of Europeans. (…) A stable, prosperous and united Europe is in our interest. (…) The development of multifaceted ties with the EU is Russia’s principled choice.”
Russian President Vladimir Putin’s in a letter to commemorate the 50th anniversary of the European Union, 25 March 2007


Policy Framework

The Partnership and Cooperation Agreement (PCA)

The legal basis for EU relations with Russia is the Partnership and Cooperation Agreement which came into force on 1 December 1997 for an initial duration of 10 years, which will be automatically extended beyond 2007 on an annual basis - unless either side withdraws from the agreement. It sets the principal common objectives, establishes the institutional framework for bilateral contacts, and calls for activities and dialogue in a number of areas.

The Partnership and Cooperation Agreement is based upon the following principles and objectives: the promotion of international peace and security; support for democratic norms as well as for political and economic freedoms. It is based on the idea of mutual partnership - one aimed at strengthening political, commercial, economic, and cultural ties.

President Barroso shakes hands with President Putin

The provisions of the PCA cover a wide range of policy areas including political dialogue; trade in goods and services; business and investment; financial and legislative cooperation; science and technology; education and training; energy, cooperation in nuclear and space technology; environment, transport; culture; and on the prevention of illegal activities.

The PCA establishes an institutional framework for regular consultations between the European Union and the Russian Federation as follows:
• At Summits of Heads of State/Heads of Government, which take place twice a year
and define the strategic direction for the development of EU-Russia relations.
• At Ministerial level in the Permanent Partnership Council (PPC), to allow Ministers
responsible for various policy areas to meet as often as necessary and to discuss specific issues. PPCs have so far been held with the participation of Foreign Ministers, Justice and Home Affairs Ministers, Energy, Transport and Environment Ministers.
• At senior officials and expert level.
• Political dialogue takes place at regular Foreign Ministers meetings, meetings of
senior EU officials with their Russian counterparts, monthly meetings of the Russian Ambassador to the EU with the troika of the Political and Security Committee and at expert level on a wide range of topical international issues.2
• Since 2005, regular consultations on human rights matters (see Human Rights sec-
tion) are held.

2 The EU Troika includes officials from the EU Member State that holds the EU Presidency, the incoming EU Presidency, the European Commission and the EU Council Secretariat. Experts from around 10 particular Council ( working groups also meet with their Russian counterparts twice a year. These expert working groups cover common issues of concern of a regional (Eastern Europe and Central Asia, Western Balkans, Asia, North Africa/Middle East/Mediterranean, Latin America and the EU candidate countries) and sectoral (OSCE and Council of Europe, UN, Terrorism, Disarmament and Non-proliferation) nature.


• Between the European Parliament and the Russian Parliament (State Duma and
Federation Council) in the EU-Russia Parliamentary Cooperation Committee. Members from both Parliaments meet on a regular basis and exchange views on current issues. To complement the provisions of the PCA, a number of sectoral and international agreements exist, as well as other mechanisms for cooperation (see section below). Steel and textiles are the main sectors covered by bilateral trade agreements. The latest Steel Agreement covers the years 2007 to 2008. The agreement will end on the day Russia becomes a member of the WTO.
• In November 2002, recognising the great efforts that Russia has made in its transi-
tion to a fully-fledged market economy, the EU granted “market economy status” to Russian exporters. It should be noted that anti-dumping is not a major aspect in EU-Russia trade at present, as only 10 anti-dumping measures are currently in force, representing less than 0.5 % of EU imports from Russia.
• Bilateral EU-Russia negotiations for Russia’s accession to the WTO were concluded in
2004 and negotiations at multilateral level are still ongoing. The EU is currently working with Russia on a new agreement for post-2007 to replace the existing Partnership and Cooperation Agreement (PCA). Both the EU and Russia have experienced many political, economic and social changes since the entry into force of the PCA in 1997, thus the new agreement must reflect these changes. The aim of the new agreement will be to provide a durable and comprehensive framework for EU-Russia relations based on respect for common values and will provide the basis for the relationship in the coming years.
Commissioner Benita Ferrero-Waldner and Russian Foreign Minister Sergei Lavrov opening the European Studies Institute in Moscow, September 2006

The Common Spaces
At the St. Petersburg Summit in May 2003, the EU and Russia agreed to reinforce their cooperation by creating in the long term four ‘common spaces’ in the framework of the Partnership and Cooperation Agreement and on the basis of common values and shared interests. These common spaces are as follows
1. The Common Economic Space, covering economic issues and the environment;
2. The Common Space of Freedom, Security and Justice;
3. The Common Space of External Security, including crisis management and non-proliferation;
4. The Common Space of Research and Education, including Cultural Aspects.
The Moscow Summit in May 2005 adopted Road Maps to act as the short and mediumterm instruments for the implementation of the four Common Spaces. These build on the on-going cooperation as described above, set out further specific objectives, and specify the actions necessary to make the common spaces a reality. They thereby determine the agenda for cooperation between the EU and Russia for the medium-term.
The Northern Dimension and Cooperation with the Baltic Sea Region
The Northern Dimension (ND) covers a broad geographic area from the European Arctic and Sub-Artic areas to the southern shores of the Baltic Sea, including the countries in its vicinity and from North-West Russia in the east, to Iceland and Greenland in the west. In its scope, the ND is increasingly focusing on North-West Russia, forming the largest territory covered by this policy. The Baltic Sea, the Kaliningrad Oblast with its opportunities for development given its particular geographical situation, as well as the extensive Arctic and sub-Arctic areas including the Barents Region, are priority areas for the Northern Dimension policy. It will help to ensure that no dividing lines are established in the North of Europe. The ND partners are the European Union, Iceland, Norway, and the Russian Federation; others, notably the regional organisations, participate.3 For more information on the Northern Dimension, see
Black Sea Cooperation
With the accession of two Black Sea littoral states, Bulgaria and Romania, to the EU on January 1, 2007, the prosperity, stability and security of our neighbours has become even more important. The European Commission, therefore, proposes to complement existing policies at a regional level, such as the European Neighbourhood Policy (ENP), the pre-accession process with Turkey and the Strategic Partnership with Russia, with a Black Sea cooperation initiative. Cooperation will, where possible, take place within existing regional cooperation mechanisms (such as the Commission for the Protection of the Black Sea aiming at environmental protection). Structural cooperation with the Black Sea Economic Community (BSEC) will be strengthened.
3 The regional organisations are: the Council of Baltic Sea States (CBSS) (, the Barents Euro-Arctic Council (BEAC) ((, the Arctic Council (AC) (, and the Nordic Council of Ministers (NCM) (,

II. Trade and Economic Cooperation

Between 2000 and 2006, EU exports of goods to Russia more than tripled in value, from 22.7 billion Euro to 72.4 bn, while EU imports from Russia more than doubled, from 63.8 bn to 140.6 bn. The share of Russia in the EU’s total external trade in goods has nearly doubled between 2000 and 2006. In 2006, Russia accounted for just over 6% of EU exports and 10% of EU imports, and was the EU’s third most important trading partner, after the USA and China.

In 2006, the EU25 exported 13.1 bn Euro of services to Russia, while imports of services from Russia amounted to 9.9 bn, meaning that the EU25 had a surplus of 3.2 bn in trade in services with Russia.

The EU and Russia agreed at the St. Petersburg Summit in May 2003 to create in the long-term a ‘Common Economic Space’. A road map agreed in 2005 sets out objectives and areas for cooperation for the short and mediumterm. Fourteen dialogues between the EU and Russia covering most economic sectors have so far been established. They include a number of regulatory dialogues which aim at promoting the gradual approximation of legislation. Three meetings of the EU-Russia Permanent Partnership Councils at ministerial level have been held on environment, transport and energy in 2006. This framework is complemented by sectoral agreements between both sides.

Port of Kaliningrad

EU Policy Aims
The overall objective of the Common Economic Space is the creation of an open and integrated market between the EU and Russia. The aim is to put in place conditions which will:
• increase opportunities for economic operators, • promote trade and investment, • facilitate the establishment and operation of companies on a reciprocal basis, • strengthen cooperation in many sectors such as energy, transport, information and com-
munication technologies, agriculture, space, aeronautics, research and development, macroeconomic policy, financial services, intellectual property rights, procurement, investment, standards and environment,
• reinforce overall economic cooperation and reforms, • enhance the competitiveness of the EU and the Russian Federation.
It also aims at reinforcing the EU and Russian economies, based on the principles of nondiscrimination, transparency and good governance, taking into account the business dialogue conducted within the EU-Russia Industrialists’ Round Table (IRT). For more information


on the IRT, see the weblink at russiaoverview.htm.
The EU: a staunch supporter of Russia’s WTO accession
Cooperation in this area aims at further integration of Russia into the world economy and at preparation for Russia’s accession to the World Trade Organisation (WTO). The EU recognises the fundamental role that WTO membership plays in integrating Russia into the world economy and in anchoring and consolidating Russia’s economic reforms. Advantages stemming from Russia’s accession to the WTO will be reciprocal. It will provide more stability and predictability, better terms of access, increased legal security for EU investments in Russia. Russian exporters will have guaranteed channels of exports to all EU markets and to other WTO members.
In May 2004, EU Trade Commissioner Pascal Lamy and Russian Economy Development and Trade Minister German Gref signed an agreement concluding the bilateral market access negotiations for the accession of the Russian Federation to the WTO. The EU being Russia’s largest trading partner, the EU-Russia bilateral agreement was regarded as major step in the process of Russia’s WTO membership. It is the Russian Government’s declared aim to join the WTO in the course of 2007.
Facilitating the Russian economic success story
Russia needs continued strong economic growth to achieve President Putin’s 2003 goal of doubling GDP in ten years, to attract new technology, to diversify the economic base and to develop the production of high-value and knowledge intensive goods and services. These elements form the foundation of Russian competitiveness in international markets.
The EU has a vital interest in promoting prosperity in its largest neighbour. The European and Russian markets are fundamentally complementary: both the EU and Russia each have strengths that could be shared to mutual benefit. The EU is a knowledge-based economy that, simultaneously, needs to lift its long-term growth prospects; while Russia is a high-growth emerging economy necessitating a knowledge base able to exploit its historic strengths in advanced science and technology.
Trade and investment flows between the EU and Russia are already significant but they tend to be concentrated in sectors where barriers are low and regulatory systems are compatible. However, Russian companies can come up against problems in meeting EU norms and standards. Or service providers may not be able to meet prudential or legislative requirements. For their part EU companies wanting to invest in Russia have often been held back by legislative and bureaucratic obstacles, as well as by high tariffs, for example on imported components. Such barriers reduce our shared competitiveness.
Russia has experienced a strong reversal of its traditional capital outflows. Foreign direct investment (FDI) more than doubled between 2005 and 2006, from USD 14.6 to approximately 30 billion. FDI yearly inflows are now higher than 3% GDP. The investment share of GDP is now at roughly the OECD average of 22% which is rather low compared to other emerging economies like China. Most of these investments go into manufacturing and services and not the energy sector any more.
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