The bear watches the dragon. The Russian debate on China. OSW Point of View Number 31, February 2013

Most participants in the Russian public debate seem to agree in their evaluation of the present condition of Russian-Chinese relations. There is awareness of increasing inequality between these two powers and Russia’s weakening position as compared to China.Those who share the optimistic view see co-operation with China as an opportunity for the Russian economy and a key element of Russia’s multi-directional foreign policy, an opportunity for Russia to avoid unilateral dependence on the West. The pessimists view the deepening co-operation with China through the prism of threats resulting from the increasing imbalance in bilateral relations. The greatest source of concern is the model of economic relations, which is often referred to as neo-colonial, where Russia’s role is reduced to that of a supplier of raw materials to China. The possible consequences are evaluated in different ways, ranging from the political subordination of Russian interests the Chinese ones to real loss of control over the Russian Far East. Those who share such views believe that Moscow should slow down its rapprochement with China and search for other partners in Eastern Asia, relations with whom could counterbalance the Chinese influence.

Estonia in the eurozone - a strategic success. OSW Commentary No. 53, 2011-06-20

The adoption of the euro in January 2011 topped off Estonia’s integration policy. In the opinion of Estonian politicians, this country has never been so secure and stable in its history. Tallinn sees the introduction of the euro primarily in the political context as an entrenchment of the Estonian presence in Europe. The process of establishing increasingly close relations with Western European countries, which the country has consistently implemented since it restored independence in 1991, has been aimed at severing itself its Soviet past and at a gradual reduction of the gap existing between Estonia and the best-developed European economies. The Estonian government also prioritises the enhancement of co-operation as part of the EU and NATO as well as its principled fulfilment of the country’s undertakings. It sees these as important elements for building the country’s international prestige. The meeting of the Maastricht criteria at the time of an economic slump and the adoption of the euro during the eurozone crisis proved the determination and efficiency of the government in Tallinn. Its success has been based on strong support from the Estonian public for the pro-European (integrationist) policy of Estonia: according to public opinion polls, approximately 80% of the country’s residents declare their satisfaction with EU membership, while support for the euro ranges between 50% and 60%. Since Estonia joined the OECD in 2010 and adopted the euro at the beginning of 2011, it has become the leader of integration processes among the Baltic states. The introduction of the euro has reinforced Estonia’s international image and made it more attractive to foreign investors. The positive example of this country may be used as a strong argument by the governments in Lithuania and Latvia when they take action to meet the Maastricht criteria. Vilnius and Riga claim they want to adopt the euro in 2014. The improving economic situation in the Baltic states will contribute to the achievement of this goal, while an excessively high inflation rate, as in 2007, may be the main impediment1.

Belarus-Russia: Whither Integration? OSW Point of View (unspecified), May 2003

Of the re-integration processes currently taking place in the former Soviet Union, the formation of a Russian-Belarusian so-called 'Union State' is one of the most advanced. A customs union was formally announced between the two countries as early as 1995 and the process of constructing the Union State itself was launched in December 1999. However, both events were largely driven by the perceived need to match societal demands, without much concrete action and the Union State remained largely 'virtual'. Only in the last few years has the Russian initiative allowed for moving from symbolic gestures to political action and since late 2002 debate and policy have intensified on specific issues of economic and political co-operation. However, despite such advances in the integration process, its objectives remain vague and there is little or no agreement on the principles that should govern the process. Furthermore, current bilateral relations questions still dominate the dialogue. The project seems at present to be driven mainly by the political interests of both countries' presidents and also, to a lesser extent, by the interests of business, political, military and security elites, each apparently motivated by self- and group-interest in the emerging dialogue of integration. In contrast to EU integration, the societies of the two countries involved appear to have had little or no say in the process. Thus, several questions naturally arise. What is the real nature of such integration? What motivates the parties involved? What stage has the process reached? What likely future course will it take? What might be the consequences of it for Belarusian independence? Answers to these questions should ultimately determine the stance and policies of the enlarged EU in this area.

Bulgarian-Russian games in the energy sector: an outcome is getting closer. OSW Commentary No. 61, 2011-10-5

Bulgaria and Russia are entering the final phase of setting the conditions of their co-operation in the energy sector. A new gas contract is being negotiated because the currently applicable agreements will have expired by the end of 2012. The fate of two major energy projects – whose implementation depends on good co-operation between Sofia and Moscow: the Burgas– –Alexandroupolis oil pipeline and the construction of a Bulgarian nuclear power plant in Belene with Russian participation – is currently being decided. Another issue ever-present on the agenda is the future of the South Stream gas pipeline promoted by Russia, which is to run through Bulgarian territory. The outcome of all the aforementioned discussions and negotiations will determine for years the model of Bulgarian-Russian relations and may strongly affect the shape of the oil, gas and electricity markets in South-Eastern Europe.

Russia's development assistance. OSW Commentary No. 62, 2011-10-10

In its attempts to catch up with the global trend, Russia began granting development assistance in 2004. From the onset of Russia’s commitment, the aid delivered has increased fivefold and reached approximately US$ 500 million in 2010. Russian aid, albeit distributed nearly exclusively via international organisations, has been granted above all to members of the Commonwealth of Independent States (CIS). In recent months work on the establishment of the Russian development assistance system has been accelerated (a national strategy is being prepared and a specialised agency is to be established). This move proves that the Kremlin attaches weight to activity in this area which is an element of soft power politics, the foundations of which Moscow is currently attempting to lay. In its commitment to development co-operation Russia has sought on the one hand to increase its prestige on the international stage and on the other hand to gain another instrument of exerting its ascendancy in the CIS. The scale of aid and the way of delivering it have not made Russia an important global actor. Over the last five years Russia increased the funding allocated to development assistance several times, however, compared to other donors its aid does not appear impressive. The resources dedicated to this end stand at a mere 0.035% of Russian GDP. Unlike other non-Western superpowers such as China or India, Russia is not a competitor for Western countries in this area on the global scale. Nevertheless, within the CIS, Russia’s aid is building the country’s position as a donor. The long-term results of this aid are however being counteracted by the fact that Russia is expecting measurable and direct political and economic benefits in return. Although this policy helps Moscow achieve its objectives in the CIS, it does not develop Russian potential in the sphere of soft power or create a positive image of the country.

Ukraine - Romania: a sustained deadlock. OSW Commentary No. 68, 2011-12-29

The decision passed by the International Court of Justice in The Hague in February 2009, which finally determined the status of the Snake Island and the delimitation of the borders of Ukraine’s and Romania’s exclusive economic zones on the Black Sea’s continental shelf removed the major dispute from the agenda of relations between the two countries but it failed to reduce their mutual distrust. The sources of this distrust include the difficult history of Ukrainian-Romanian relations in the 20th century which is still adversely affecting political and economic co-operation between these two countries and preventing them from being free from resentments. Romania is the only EU member state and neighbour with which Ukraine has strained relations, which have been seriously deadlocked for years. There are a few political and economic reasons for this. Bucharest’s actions taken with regard to the Romanian and Moldovan national minorities in Ukraine are interpreted in Kyiv as a threat to Ukraine’s national security, and Romania’s political and economic activity in the Black Sea basin is perceived as contrary to Ukrainian interests in this region. In effect, although Romania supports Ukraine’s efforts to build closer relations with the Western structures in the international arena, it cannot be ruled out that Romania’s support will depend on the resolution of bilateral disputes in a way which is favourable to Romania.

The EU Strategy for the Baltic Sea Region from Germany’s perspective. OSW Commentary No. 69, 2011-01-10

Germany is one of the eight EU member states which participate in the EU Strategy for the Baltic Sea Region along with Denmark, Estonia, Finland, Latvia, Lithuania, Poland and Sweden. Germany had a positive approach to the EUSBSR strategy (see Appendix 1) right from planning stage. This project contributed to the continuation of Germany’s co-operation with the countries in this region, which has been conducted since the mid 1980s mainly by German federal states. Germany is playing a major role as part of this strategy because it is the coordinator of its three priority areas.However, the German federal government sees the EUSBSR as a project to be implemented at the level of federal states. This has been proven by the great activity of three German federal states participating in the strategy (Hamburg, Mecklenburg-Vorpommern and Schleswig-Holstein) and at the same time the low level of engagement from the Bundestag, the federal government and expert circles. Furthermore, federal states more often formulate evaluations of the effects of co-operation achieved so far as part of the EUSBSR. Still, the relatively low level of Berlin’s engagement does not mean that it is not interested in co-operation in the Baltic region as such. Germany actively participates in the work of such bodies as the Council of the Baltic Sea States or the Baltic Marine Environment Protection Commission (HELCOM). All German entities engaged in the strategy make its future attractiveness and the success of individual projects as part of it dependent on including Russia in the EUSBSR. As long as Germany has the opportunity of regional co-operation with Russia at other forums (for example, the Council of the Baltic Sea States), it is unlikely to become more engaged in developing the strategy and enhancing co-operation as part of this project.

Natural resources on the Russian continental shelf: Foreign investors sought... on Russian terms. OSW Commentary No. 76, 2012-05-09

In recent weeks, Rosneft, a Russian state-owned oil company, has signed co-operation agreements with three Western corporations: America’s ExxonMobil, Italy’s Eni, and Norway’s Statoil. In exchange for access to Russian oil fields on the continental shelf as minority shareholders, these Western investors will finance and carry out exploration there. They will also offer to Rosnieft technology transfer, staff exchange and the purchase of shares in their assets outside Russia (for example in the North Sea or in South America). Rosneft’s deals with Western energy companies prove that the Russian government is resuming the policy of a controlled opening-up of the Russian energy sectors to foreign investors which it initiated in 2006. So far, investors have been given access to the Russian electric energy sector and some onshore gas fields. The agreements which have been signed so far also allow them to work on the Russian continental shelf. This process is being closely supervised by the Russian government, which has enabled the Kremlin to maintain full control of this sector. The primary goal of this policy is to attract modern technologies and capital to Russia and to gain access to foreign assets since this will help Russian corporations to reinforce their positions in international markets. The signing of the above agreements does not guarantee that production will commence. These are a high-risk projects. It remains uncertain whether crude can be extracted from those fields and whether its development will be cost-effective. According to estimates, the Russian Arctic shelf holds approximately 113 billion tonnes of hydrocarbons. The development of these fields, including building any necessary infrastructure, may consume over US$500 billion within 30 years. Furthermore, the legal regulations currently in force in Russia do not guarantee that foreign investors will have a share in the output from these fields. Without foreign support, Russian companies are unlikely to cope with such technologically complicated and extremely expensive investments. In the most optimistic scenario, the oil production in the Russian Arctic may commence in fifteen to twenty years at the earliest.

Ukraine, Belarus and Moldova and the Chinese economic expansion in Eastern Europe. OSW Commentary No. 79, 2012-05-28

The countries of Eastern European and China have been increasingly interested in deepening bilateral contacts over the past few years. In the case of Ukraine, Belarus and Moldova this has been caused by the bad economic situation which was in part caused by the consequences of the global economic crisis of 2008 and the desire to establish closer political relations with a country whose significance on the international arena is continually growing. Each of these countries has different expectations regarding the scale and the nature of co-operation with China. Chisinau wishes only to boost trade, whereas in Minsk and Kyiv, Beijing is also presented as a strategic partner whose investments may not only help the indebted economies recover but also strengthen the position of these countries in their dealings with the EU, and especially with Russia. Beijing sees co-operation with these countries in differently, and its offer is much more modest than Belarus and Ukraine are expecting. Eastern Europe is one of the last parts of the world with which China is activating its co-operation. This is not a priority region for Beijing. China wants to derive economic benefits and to diversify the markets on which it invests its financial surplus, and it does not intend to extend its political dialogue with Ukraine, Belarus and Moldova beyond the framework which determines its economic interests. The main reason for this is the nature of relations between Russia and China. Beijing sees its partnership with Moscow as more beneficial, and will not offer these countries support in their relations with Russia since in its opinion they belong to Russia’s sphere of influence. Minsk and Kyiv are pinning too much hope on their co-operation with Beijing, while China offers no real counterbalance to the Russian and EU influences in these countries. Nevertheless, it should be expected that China will capitalise on the beneficial political climate in Ukraine, Belarus and Moldova to reinforce its influence in a region whose location will facilitate its expansion to the EU and the Customs Union markets. In the medium term, Beijing may become a major economic player in Eastern Europe. In a decade’s time this may translate into political influence. Meanwhile, in the short term, China’s financial engagement in Ukraine, Belarus and Moldova will contribute to increasing the debts and deepening the foreign trade deficits of these countries.

Cyprus presidency and Turkey's relations with the European Union. OSW Commentary No. 82, 2012-06-26

Turkey’s intention to boycott Cyprus presidency of the EU Council in the second half of 2012 is a logical consequence of Ankara’s policy of not recognising the Republic of Cyprus. The boycott will have a negative but limited impact on Turkey-EU relations, and will not in practice significantly affect their intensity in the second half-year. The so-called positive agenda, a new co-operation mechanism between the EU and Turkey, offers a provisional way for the two sides to circumvent the formal obstacle for mutual contacts created by the Cyprus conflict. In itself, however, the launch of the positive agenda is not a breakthrough for Turkey’s integration with the EU. Any such breakthrough is unlikely to occur until progress is made in regulating the Cyprus conflict, and some member states change their attitude towards Turkey’s accession to the EU.

The Failure of Integration: The CIS and other international organisations in the post-Soviet era, 1991-2006. OSW Study 26/2007

Institutional integration processes in the post-Soviet area have ended in failure. It proved impossible to transform the Commonwealth of Independent States into an instrument of real co-operation, even though Russia, which was the most interested in integrating the post-Soviet space, made repeated efforts to this end. The CIS never managed to accomplish its declared objectives and, from this point of view, it does not exist as an integration organisation and de facto never did.

The Eurasian Economic Union – more political, less economic. OSW Commentary Number 157/20.01.2015

The Eurasian Economic Union is undoubtedly the most comprehensive form of economic integration of the post-Soviet countries since the break-up of the Soviet Union. However, the way in which the integration process has been unfolding, as well as Russia’s aggressive policy over the last year, are indications that the EEU has become primarily a political project, and the importance of its economic aspects has eroded. This has triggered a change in the way Kazakhstan and Belarus treat the EEU. Initially, the two countries viewed integration as an opportunity for the development of genuine economic co-operation. However, Russia’s annexation of Crimea and the conflict in Ukraine have revealed the real significance of the EEU project – as a tool to reinforce Russian influence in the post-Soviet area and isolate the post-Soviet countries from the West and China. While the Kremlin presents the EEU as the Eurasian equivalent of the European Union, the project is in reality an imitation of integration. The reasons for this include the nature of the political systems in the participating countries, which are authoritarian, prone to instrumentalise law, and affected by systemic corruption; the aggressive policy that Russia has been pursuing over the last year; and Russia’s dominant role in defining the shape of the EEU. The EEU appears to be based on forceful integration, and is becoming less and less economically attractive for its member countries other than Russia. Moreover, it is clearly assuming a political dimension that those other member countries perceive as dangerous. For these reasons, its functioning will depend on the power and position of Russia. In the longer term it is likely that the other member states will try to ‘sham’ and delay closer integration within the EEU. This means that if Russia becomes politically and economically weaker, the EEU may evolve into an increasingly dysfunctional organisation – a development that will be reinforced by the low standards of legal culture in its member states and their reluctance to integrate. Should Russia’s power increase, the EEU will become an effective instrument of Russian dominance in the area of the former USSR.

Germany's stance on the TTIP. Background, interests and concerns. OSW Studies 52, March 2015

Co-operation between the United States and Germany has for many years been a subject of disputes. In addition to the differences over the US engagement in the resolution of international conflicts, bilateral relations have been strained as a consequence of the so-called Snowden scandal and the unproved allegations that Chancellor Angela Merkel’s telephone was wiretapped. The Transatlantic Trade and Investment Partnership offers a chance for improving relations between Germany and the USA for the first time in many years. Companies from the two countries may benefit from the lifting of some barriers to transatlantic economic co-operation. Furthermore, the emergence of in fact an internal EU and US market, with reduced customs tariffs and harmonised legal and economic rules, will pressure the emerging economies to make their markets more open. The TTIP may create conditions for exporting US raw materials from unconventional sources to the European Union; and this will be a benefit of geopolitical significance for Germany. The German government is aware of the fact that diversification of supplies of fossil fuels will make Europe less dependent on pressure from Moscow.

The Schengen Governance Package-another missed opportunity?. IES Policy Brief Issue 2015/1, February 2015

The Schengen Area of free movement is considered to be one of the most substantial and, in the eyes of many, most successful achievements of European integration. In 2014, the ‘Schengen Governance Package’, which alters the rules of the Schengen co-operation, came into force. It is a response to conflict among Member States in maintaining the common zone of freedom of movement. This Policy Brief aims to analyse how this package was developed and to assess whether it represents a suitable response to the conflict and difficulties within the Schengen agreement. The Brief argues that the Governance Package only touches on one part of the problem, namely border controls, whereas it does not deal with solidarity and burden-sharing and hence represents another missed opportunity to improve cooperation in the Schengen Area.

The OSCE marks 40 years since the Helsinki Final Act: Its principles are more valid than ever. CEPS Essay No. 19, 24 July 2015

Forty years after world leaders from Vancouver to Vladivostok signed up to the ten principles of the Helsinki Final Act, in this CEPS Essay Erwan Fouéré considers the historic significance of the agreement that laid the foundations for today’s Organization for Security and Co-operation in Europe. The author concludes with a number of recommendations that recall the principles of the Helsinki Final Act of 1975 and argues that, if participating states are willing to uphold them, these principles have even greater relevance today for the resolution of Europe’s complex and protracted conflicts.