EU-RUSSIA FORUM: Modernization partnership and consolidating the energy relations between the EU and Russia

The fifteenth EU-Russia Forum entitled `Reciprocity in the modernization partnership Russia - EU' was held today. Two high-ranking expert panels discussed the prospects for European-Russian cooperation after the EU-Russia Summit in Rostov-on-Don and bilateral summits between Germany Russia and France-Russia. These were followed by a keynote speech from former Polish President, Aleksander Kwa sniewski, on the opportunities for improving relations.
The EU-Russia Forum provides a platform for constructive dialogue between the EU and Russia. The respective discussion events are for more than 10 years held by the German Council on Foreign Relations (DGAP) in cooperation with other renowned think tanks. In Brussels, the Forum's imple- mentation partners were the Institute of Contemporary Development (INSOR) from Moscow and the Institute Francais des Relations Internationales (IFRI).
The first panel focussed on the current state of the modernization partnership - in particular in regard to the latest EU-Russia Summit in Rostov on-Don. The discussion was opened with short presentations from Mikhail Evdokimov, from the Foreign Ministry of the Russian Federation, Sven-Olov Carlsson from the DG RELEX, and Hans-Dieter Lucas, the German Representative on the EU's Political and Security Committee. Several panellists recalled that ten years ago, former Russian President Vladimir Putin proposed wide-reaching cooperation in regard to economic, security and energy policy issues, which should be based on mutual reciprocity. "Today, Russia is interested more than ever before in a modernization partnership with the West," declared Igor Yurgens,
Chairman of the Management Board of INSOR, "since Russia will hardly be in a position to rebuild its industry without support from Western partners. President Dmitry Medvedev would like to go even further and reform the political system. Such a comprehensive modernization is necessary if Russia is to achieve real progress."
According to the panellists, although in the past two decades significant improvements have been achieved in the relations between the EU and Russia, the process of rapprochement has repeatedly stalled for political reasons. For example, Dominique David, Executive Vice-President of IFRI, felt that the outcome of the recently concluded EU-Russia Summit in Rostov was rather meagre: "Both sides failed to reach a consensus regarding the visa issue. There were also no concrete discussions about Russia's entry to the WTO. The EU as such is probably not in a position to forge a strategic modernization partnership with Russia. The modernization partnership will be individually negotiated between Russia and interested EU countries."
The second panel debated the likely success and prospects for European-Russian economic cooperation projects. In addition to an introduction by Igor Yurgens, food for thought for the subsequent discussion was provided by short presentations from Lcio Mauro Vinhas de Souza from the DG-ECFIN, Sergey Komlev, Head of Contract Structuring and Price Formation at Gazprom export, and Gerhard Knig, Chairman of the German Russian joint venture WINGAS.
The panellists agreed that, despite the transit disputes with Ukraine since 2006, there is no reason to reject the ecologically clean natural gas from Russia. However, they felt that the energy partner- ship with Russia required corrections and a new legal basis. The Russian side emphasised that Russia has already improved the economic legal situation for investors from the EU. Furthermore, the joint construction of pipelines such as Nord Stream and South Stream offers additional opportunities for western companies in the Russian upstream sector - a form of cooperation that is already being successfully practised, for example, by Germany's Wintershall company and Gazprom with the Achimgaz joint venture. The panel also discussed the liberalisation of the European energy market and examined the opportunities for Russian energy companies in the EU market, particularly in view of new developments in the global energy markets (such as shale gas, LNG expansion, reduction in demand). There was general consensus that any Russian re-orientation towards Asia would not be in the EU's interest, as this would weaken Europe's energy supply security.
In summing up, Alexander Rahr, Director of the Russia/Eurasia Center at the DGAP, underlined the fundamental importance of the energy partnership for relations between the EU and Russia: "The energy policy provides the foundation tying the EU to Russia in terms of a long-term strategic partnership. In the same way that 60 years ago, after the end of the Second World War, former enemies Germany and France developed the `European Community for Coal and Steel' in order to create an economic basis for overall European integration based on pragmatic economic interests, the EU should conceive a similarly promising European integration project by founding an energy alliance with Russia." He pointed out that once the energy partnership is consolidated, cooperation in other areas can also be improved, such as in the armament, nuclear and automotive industries.
As emphasised by Alexander Rahr it would be practical to consolidate the energy relations by (1) revising the out-dated Energy Charter to demonstrably take into account the interests of the producers, (2) founding a trilateral gas consortium, comprising Ukraine, Russia and the EU, to modernise and provide greater jurisdiction for the Ukrainian transit system and (3) conducting joint projects to develop new gas storage facilities, LNG terminals and extraction sites such as the Shtokman Field.
The overall conclusion of many of those participating in the Forum was that individual partnership between EU member states and Russia should be encouraged, but not to the expense of the overall strategic partnership EU-Russia, which must be developed and improved in order to achieve
considerably greater reciprocity.