Russia's interest in the Mistral: the political and military aspects. OSW Commentary No. 41, 2010-10-11

The negotiations over Russia’s purchase of French Mistral-class multipurpose assault ships, which were intensified in 2010, have gained a significant political dimension. The prospects of such a spectacular acquisition of large and expensive assault ships from one of NATO’s member states are being used by Russia to demonstrate that it has opened a new stage of relations with Western Europe. Paris has welcomed Russia’s desire to embark on military cooperation; for France, the Mistral deal has become a convenient tool to prove that relations with Russia are becoming increasingly normal, and that Russia poses no threat to the European security.

Lukashenka has to choose: reforms or concessions to Russia. OSW Commentary No. 42, 2010-10-27

The most serious crisis in the history of Russian-Belarusian relations has been taking place over the past few months. In 2007 Russia started the process of depriving Belarus of subsidies in the form of supplies of fuels at low prices, which have for more than a decade guaranteed the stability of the Belarusian economic model, and is continuing this process now at an accelerated rate. At the same time, the Russian media started attacks on Alyaksandr Lukashenka from the middle of this year. This toughening up of Russia’s measures indicates that the Kremlin is determined to implement its goals regarding Belarus, including first of all taking over its strategic economic assets, which would result in a significant weakening of Lukashenka’s position. The Belarusian government has been consistently avoiding meeting Russian demands, while at the same time insisting on the reinstatement of preferential conditions of co-operation. If the Belarusian leader continues resisting Russian demands, the crisis in Russian- -Belarusian relations will be aggravated, and a conflict over energy issues around the turn of 2011 cannot be ruled out. The reduction in preferences offered by Russia in the energy sector has significantly impaired the condition of the Belarusian economy, and may lead to its breakdown in a year or two. As his country comes under increasing pressure from Russia, Alyaksandr Lukashenka will soon have to make a strategic choice between yielding to the Kremlin’s demands and embarking upon an at least partial restructuring of the economy.

The Western Balkans: deadlock in the EU enlargement process. OSW Commentary No. 43, 2010-11-24

On 9 November the European Commission presented the annual reports assessing the progress of the Balkans states in their preparations for EU membership, the enlargement strategy up to autumn 2011, and the assessment of the EU membership applications submitted by Albania and Macedonia. All these documents show that the reform process in the Balkan states has slowed down in comparison to previous years. The main reason for this slowdown is the negative consequences of the global economic crisis for these countries. Nonetheless, the transformation process is continuing, despite these difficulties. Another increasingly serious challenge for integrating the Balkan states is the EU's growing reluctance to enlarge any further. Among other measures, the EU states have blocked the formal acknowledgement of the integration progress (objections have been raised to the submission of membership applications by Albania, Serbia and Montenegro, and to granting Albania candidate status), which has significantly prolonged the accession process. In fact, this illustrates the lack of political will to accept new members. The European Commission is aware that the integration process may be blocked, and so in the coming year it is planning to focus on fostering the idea of enlargement among the EU member states. It will also focus on persuading the Balkan states to move on with reforms, especially those designed to strengthen state institutions (administration, the judiciary), even if their progress will not be formally considered during the integration process. The Commission assumes that by the end of next year, the reforms implemented by the Balkan states will be comprehensive enough to persuade the EU states to step up the integration process in subsequent years. However, if the EU member states' standpoint on the enlargement process does not change, the Commission's efforts will not bring about the expected results. Considering that their prospects for EU membership are receding, the Balkan states may not have sufficient motivation to go on with long-term reform efforts. As a result, the transformation process may become impeded, and in the longer perspective, the situation in the entire region may be destabilised.

Ukraine and Russia: a hindered rapprochement. OSW Commentary No. 44, 2010-12-15

The policy of rapprochement with Russia that President Victor Yanukovych and his entourage had been actively promoting in the first months of his presidency has slowed down notably. One of the reasons for this lowered pace is that current talks between Russia and Ukraine concern the spheres in which Kyiv is not ready to make concessions to Russia. Despite numerous top-level meetings, recent months have failed to bring a breakthrough in energy issues of key importance. First of all, no compromise was reached in gas issues where the divergence of interests is particularly large and where Ukraine has adopted a tough stance to negotiate the best conditions possible. Even though some agreements were signed during the October session of the inter-governmental committee presided over by the prime ministers (the agreement on linking the two states’ aircraft production and on the joint construction of a nuclear fuel production plant), these resulted from prior agreements. Economic negotiations will continue in the coming months but the observed deadlock is not likely to be broken any time soon. The results of these talks are likely to reflect the interests of both Russia and Ukraine, as well as the competition among Ukrainian business groups, some of which opt for closer cooperation with their Eastern neighbour. Ukraine’s consent to send oil to Belarus along the Odessa-Brody pipeline shows that the government in Kyiv is ready to engage in projects they consider profitable, even those that run counter to Russian interests. Ukraine’s adoption of this stance may trigger irritation in Moscow and lead to a cooling in bilateral relations.

The EU-Ukraine Action Plan on Visa Liberalisation: an assessment of Ukraine's readiness. OSW Commentary No. 45, 2011-01-17

The Action Plan on visas adopted during the recent EU-Ukraine summit is a success for Ukraine. It is the first time that Kyiv has succeeded in obtaining a definition of the conditions and criteria whose fulfilment will enable Ukraine to apply for the lifting of EU visas for its citizens. Ukraine's strong point has been its political will; the lifting of this visa regime has been a priority for all Ukrainian governments since 2005. Since Viktor Yanukovych became president, Ukraine has adopted or prepared key legal acts that brought it nearer to European standards in the area of border and migration management. One of Kyiv's strengths is also its relatively well reformed and efficiently managed border service. Moreover, illegal transit migration via Ukraine is decreasing, and fewer Ukrainians are trying to enter or stay in the EU illegally. Also, Kyiv has efficiently implemented the EU-Ukraine readmission agreement. The hardest task for Ukraine will be to meet the EU’s expectations concerning values, the condition of Ukrainian democracy, and the rule of law. Corruption remains the main barrier to Ukraine's development and modernisation; the courts are weak and the judicial system inefficient. The main undertaking of the new migration service that is being formed at the moment will be to create a civil system of registration, monitoring and regulating the stays of foreign nationals. This may prove difficult, as the supervisory authority (the Ministry of the Interior) remains an unreformed, police-type bureaucratic institution. Ukraine is lagging behind countries such as Russia, Belarus and Moldova when it comes to the introduction of biometric documents. Another problem is the lack of an electronic information system on foreign nationals, visas and border crossings which would be accessible to all the relevant services and institutions. For these reasons, the complete abolition of visas seems to be a longterm perspective, especially considering that many EU countries, which themselves are faced with the problem of migrants’ integration, are rather sceptical about the further liberalisation of movement of people with their eastern neighbours. In the immediate future, if Ukraine meets some of the requirements set by the EU, it will be able to seek the extension of the visa facilitations that have been in operation since 2008.

The natural resources deficit: the implications for German politics. OSW Commentary No. 46, 2011-02-08

Falling amounts of natural resources and the ‘peak oil’ question, i.e. the point in time when the maximum rate of extraction of easily-accessible oil reserves is reached, have been among the key issues in public debate in Germany on all levels: expert, business and – most crucially – the government level. The alarming assessments of German analysts anticipate a rapid shrinkage of oil reserves and a sharp rise in oil prices, which in the longer term will affect the economic and political systems of importer countries. Concerns about the consequences of the projected resource deficit, especially among representatives of German industry, are also fuelled by the stance of those countries which export raw materials. China, which meets 97% of global demand for minerals crucial for the production of new technologies, cut its exports by 40% in summer 2010 (compared to 2009), arguing that it had to protect its reserves from overexploitation. In 2009 the value of natural resources Germany imported reached €84 billion, of which €62 billion were spent on energy carriers, and €22 billion on metals. For Germany, the shrinkage of resources is a political problem of the utmost importance, since the country is poor in mineral resources and has to acquire petroleum and other necessary raw materials abroad1. In autumn 2010, the German minister of economy initiated the establishment of a Resources Agency designed to support companies in their search for natural resources, and the government prepared and adopted a national Raw Material Strategy. In the next decade the policy of the German government, including foreign policy, will be affected by the consequences of the decreasing availability of natural resources. It can be expected that the mission of the Bundeswehr will be redefined, and the importance of African states and current exporter countries such as Russia and China for German policies will increase. At the same time, Germany will seek to strengthen cooperation among importer countries, which should make pressure on resource-exporting states more effective. In this context, it can be expected that the efforts taken to develop an EU resource strategy or even a ‘comprehensive resource policy’ will be intensified; or at least, the EU’s energy policy will permanently include the issue of sourcing raw materials.

The Ukrainian government's strategy towards the opposition. OSW Commentary No. 47, 2011-09-02

In recent months in Ukraine, there has been a toughening of measures targeted at opposition leaders, in particular the former Prime Minister Yulia Tymoshenko and the former interior minister Yuri Lutsenko. These two have been charged with abuses of office when in power. The way in which the criminal investigations are being conducted shows that these measures are actually meant to prevent the two politicians from conducting regular political activities, or at least to make this practically impossible for them. These actions are an element of the Party of Regions’ long-term strategy, as it tries during the pre-election period to eliminate Yulia Tymoshenko from political life and weaken or even destroy her powerbase. Similar measures, although to a more limited extent, are being taken against other opposition groups. These actions are leading to the lowering of democratic standards in Ukraine, although these are still much higher than in Belarus or Russia; this has been proved, among other things, by the militia’s more restrained behaviour towards the protesters, and the fact that abuses of the law during the current investigations have not yet slipped into actual violations. The Ukrainian opposition is fragmented and disorganised; even the Yulia Tymoshenko Bloc is unable to stage a major campaign in defence of its leader. This allows the authorities to feel free to tighten their policy towards the opposition.

Croatia: accession negotiations with the EU overshadowed by parliamentary elections. OSW Commentary No. 48, 2011-02-29

In 2011 Croatia entered the final stage of its accession negotiations with the EU. The completion of these negotiations will probably coincide with the parliamentary elections which should be held in November or December this year. The elections are likely to bring about a change of government, as public support for Jadranka Kosor's cabinet and her party, the Croatian Democratic Union (HDZ) has been declining; the left-wing opposition is likely to take power. Therefore, the government’s main goal is to complete the accession negotiations in the first half of the year, in order to sign the accession treaty and hold the EU membership referendum before the parliamentary elections. The HDZ believes that only the successful completion of the accession negotiations could increase its chances of a good result in the upcoming elections. At the same time, fearing a further fall in support, the government will avoid any decisions and reforms that would be controversial for the public, especially in the sphere of the economy; such decisions could also increase Euroscepticism among the Croatian public, and result in the rejection of EU accession in the referendum. The government in Zagreb hopes that the currently implemented anti-corruption strategy and reform of the judiciary, as well as the advanced process of adaptation to EU conditions, will be enough to complete the negotiations. This strategy has a serious chance of success, considering that there is considerable support for Croatia's membership among the EU countries and institutions. Another reason is that further prolongation of the negotiations could aggravate hostility towards the EU among the Croatian public, and would be a bad sign for other Balkan states with membership aspirations. However, subordinating Croatian policies to the completion of negotiations in the first half of the year could prove to be adverse for Croatia itself in the longer term, as it would put off the necessary structural reforms.

Tug-of-war over EU's policy towards its neighbours. OSW Commentary No. 49, 2011-03-09

The revolutions in North Africa, the approaching end of the ‘strategic review’ of the European Neighbourhood Policy (ENP) initiated by the European Commission, and the beginning of negotiations on the European Union’s new financial perspective, have intensified the debate among the member states and EU institutions on what policy the EU will adopt towards its neighbourhood in the future. The discussion concerns not only the shape of the ENP but also non-ENPI foreign policy instruments which Brussels applies towards neighbouring countries, such as the thematic instruments and loan support. Serious differences of opinion have emerged among the member states. The countries located in the southern part of the EU want Brussels to boost its policy towards North Africa, even at the expense of engagement in Eastern Europe and the Southern Caucasus. Meanwhile Central European countries, including Germany, favour a more balanced approach towards both directions. The future shape of the ENP, as well as the EU’s other foreign policy instruments, will have a strong impact on the approach the EU adopts towards its Eastern neighbourhood. If some of the proposals are realised, especially the southern member states’ request to transfer some of the funds from the Eastern to the Southern neighbourhood, the chances of meeting the Eastern Partnership goals, such as the association of the partner countries with the EU and the creation of deep and comprehensive free trade areas, could be reduced.

"Creeping" civil war in the North Caucasus. OSW Commentary No. 50, 2011-03-15

Over the last year, the situation in Russia’s North Caucasus has become further destabilised. Attacks and armed clashes happen daily, and destabilisation is spreading to an increasingly large area. The extent of violence in the region is so great that it can already be stated that a de facto civil war is taking place, the warring parties being the Islamic armed underground movement which operates under the banner of the so-called Emirate of the North Caucasus, and the secular governments of the individual republics, who are supported by local and federal branches of the Russian Federation’s Interior Ministry and Federal Security Service. Moscow has no idea how to successfully tackle the Caucasus rebellion. Force has proved to be costly and unproductive, while the attempts made since early 2010 to integrate the region with the rest of Russia by implementing development programmes have not brought the desired results, because of widespread corruption and faint interest from businessmen who are afraid to invest in such an unsafe region. A growing problem for Moscow, particularly for the prestige of the state, is attacks by militants on areas near Sochi, where the 2014 Winter Olympics is to take place. It must be assumed that over the next 3 years before the Olympics, Moscow’s priority in the region will be to ensure the safety of Olympic preparations, and then the games themselves. It cannot be ruled out that the North Caucasus Federal District with its ‘troubled republics’ will be surrounded by a kind of cordon sanitaire (Sochi is situated in the neighbouring Southern Federal District). This could in turn strengthen these republics’ isolation, maintain the state of permanent instability, and postpone the prospects of solving the region’s acute economic and social problems.

On the verge of crisis? Mounting economic problems in Belarus. OSW Commentary No. 51, 2011-04-06

Belarus’s financial condition has visibly worsened since the beginning of this year. The severe falls in the country’s foreign currency reserves and its shortage of foreign currency on the international market pose an increasing threat to the stability of the Belarusian economy. Fearing an outbreak of public dissatisfaction, The government has so far been trying to avoid devaluing the rouble or structural economic reforms. Maintaining full control inside the country and the stability of the authoritarian regime are still the main concerns for President Alyaksandr Lukashenka. For this reason, the actions taken by the Belarusian government have been limited to imposing short-term administrative restrictions on the foreign currency market and obtaining external support in the form of loans. Given Belarus’s falling creditworthiness, Minsk is only able to ask Russia for financial support, thus offering the Kremlin more opportunities to realise its desire to take over strategic industrial plants in Belarus. However, the present economic problems of Belarus are so serious that no loan will be able to safeguard its government from the need of carrying out serious economic reforms.

Ukraine's cooperation with the IMF - unfulfilled hopes for deeper reforms. OSW Commentary No. 52, 2011-06-15

The Party of Regions took power in early 2010, after Ukraine had been plunged deep in economic crisis. Over the next year, with the external markets recovering, the country’s economic situation started to improve gradually. Ukraine’s economic stabilisation was also strengthened by its resumed cooperation with the International Monetary Fund, which provided for a loan worth $15.1 billion. The issuing of successive tranches of the loan was made dependent on the implementation of a comprehensive reform programme. The cooperation went quite smoothly at first; however, as the economic situation in Ukraine improved, the reformist zeal of the Ukrainian government started to fade, and obstacles began piling up. As a result, Ukraine was refused the third tranche, scheduled for this March, and for the moment the credit line remains frozen. Even though the IMF has numerous reservations about the Ukrainian government’s economic policy, the fundamental condition for resuming cooperation is reform of the pension system, which the parliament should adopt. The difficulties with fulfilling the obligations made to the IMF reflect the wider problem with implementing reforms in Ukraine, as the Party of Regions promised after taking power. Changes which do not affect the interests of influential lobbies are quite easy to carry out. Often, however, these changes are not conducive to the economy’s liberalisation; moreover, the influential lobbies are successful in blocking reforms that could harm their businesses. Another impediment to the changes is that some reforms are likely to bring about painful social consequences, and that can affect public support for the ruling group. Even though theoretically possible, it does not seem likely that Ukraine’s cooperation with the IMF will be terminated. But even if this cooperation is continued, deeper reforms in Ukraine are likely to be postponed until after the parliamentary elections in autumn 2012.

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.

The EU internal market - a stake or a tool in European-Russian gas relations. OSW Commentary No. 54, 2011-06-24

Since 2010 we have observed a new quality in EU energy policy. It is related to the European Commission’s more or less direct engagement in the bilateral gas relations of a part of the new member states – Poland, Bulgaria and Lithuania – with Russia. Although the long term outcome of this activity of the EC is as yet unclear it seems to be important for several reasons. Firstly it might increase the possibilities of the enforcement of the EU’s directives liberalising the internal gas market and specifically their implementation in individual gas agreements with suppliers from third countries (Gazprom). The consistency and determination of the EC in this field may be decisive for the future direction and depth of the liberalisation of the EU gas market. Furthermore, present developments may lead to an increase in EU and specifically EC competence in the field of energy policy, especially its external dimension. So what lessons can we draw from recent Commission activities on the following issues: – Implementing EU gas market 2nd and 3rd liberalisation packages and their main provisions – EU energy policy and its external dimension – recent developments and the EU’s role – EU-Russia gas relations – where Russian and EU interests diverge.

Ordnung muss nicht sein. Developments on the German political scene. OSW Commentary No. 55, 2011-06-27

The results of parliamentary elections in seven German federal states, ongoing since early 2011, show the collapse of the existing order on the German political scene, both on a national level and on the level of the individual federal states. So far, the federal states have been governed by one of the catch-all parties1 – i.e. the Christian Democrats or Social Democrats – in coalitions with smaller partners – the FDP and the Greens, respectively2. This year’s elections have fully revealed the extent of social transformation in Germany and its impact on voting preferences and the hitherto stable party system in this country. The largest and most popular parties so far – the CDU and the SPD – are losing the voters’ confidence and support, whereas the parties associated with protest movements (such as the Greens) are gaining prominence. Moreover, the German political scene is undergoing increasing fragmentation, as new small, local groups are appearing who have no political aspirations at the federal level but who are attractive to voters acting as successful groups of common cause. The changes in the existing balance of power on the German political scene are being sped up by the specific features of the federal system. Elections to the parliaments of the federal states are held at regular intervals which increasingly affects policies on the national level. The key decisions that concern domestic and foreign affairs are made under the pressure of constant election campaigns.