Address by Prime Minister Dmitry Medvedev at the international conference \"Russia and the European Union: Partnership and Its Potential\"

Submitted on Wed, 03/20/2013 - 23:00

Mr Barroso (José Manuel Durão Barroso –President of the European Commission), colleagues, ladies and gentlemen, conference participants, welcome to Moscow and thanks for attending our conference, Russia and the European Union: Partnership and Its Potential. Mr Ivanov (Igor Ivanov –President of the Russian International Affairs Council) has already discussed the events of the past ten years. I will also dwell on some aspects of our relations.

Ten years ago in St Petersburg, politicians, diplomats, and other experts agreed to establish four common spaces between Russia and the European Union. The road maps that were adopted later, in 2005, were a tool for realizing that plan and determining the agenda for cooperation. Now we should understand what has changed in our relationship, and not just from a historical point of view – where we have succeeded, where we have failed, what conclusions we can draw, and how we can proceed in future. I’m happy to see participants from the 2003 St Petersburg summit in this hall and on stage. Each of us has an assessment of what has been done. I’ll talk about mine.

You must know what discussions on the relevance of the European approach for Russia’s modernisation are traditionally like in this country. These discussions have become national sport by now.

We have our own euro-sceptics and euro-pessimists who suggest we think of what is more important for the country at this point: economic integration in Europe or our presence in Asia and China. I’d like to suggest that geographic location no longer determines an economy, a lifestyle or a professional future. I think countries are now divided in terms of how well they adapt to world trends and how successful they are in using their advantages in a changing world.

It is no secret that the eurozone crisis has convinced many sceptics that in the 21st century, Europe will face a decline while Asia rises, that the centre of global economic activity is moving from the Atlantic to the Pacific Ocean, that the European project turned out to be too unwieldy and Europe was not ready for globalisation. They conclude that the future of our country points to the Pacific. I believe this kind of thinking lacks sophistication and I just can’t go along with it. But there is one obvious fact: Europe and Asia need each other. The European and Asian models will complement each other in economics, technology and culture; their interdependence will continue to grow. From this point of view, currently widespread sentiments of regional egoism are dangerous, and it is dangerous to think that one region is able to solve absolutely all of its problems by itself.

The problems are many. What is everyone concerned about now? The situation in Cyprus. I want to talk about this now because these issues need to be discussed anyway: we believe that the proposals made for settling the financial problems are, to say the least, unpredictable and inconsistent, and have been reconsidered several times already. Today, I saw plans B and C on the internet. But the promoters of these plans must understand that confiscating personal property, something that affects the interests of depositors and the Cypriots themselves, will not be popular. Regardless of the final solution, we need to look ahead and have a broader perspective.

I will remind you that the International Monetary Fund and other international organisations have said many times that the main threat to the current financial world order is lack of trust. I myself have heard the word “trust” many times at both the G8 and G20 meetings. Trust, trust and trust again! This word can be heard in the statements of every major global forum. A crisis in trust has ruined the system of financial mediation, represented in part by depositors and commercial organisations of G20 countries. The forum’s European participants have put great effort into overcoming the crisis, and we appreciate that fact.

Following the proposals of the Financial Stability Board, certain measures to develop national deposit insurance systems have been taken. In this view, the plan now being discussed concerning Cyprus doesn’t make any sense. And I believe this is something all of us should consider. I believe that in any case, the Eurogroup could invite all interested parties, including Russia, to discuss further plans for Cyprus.

What else do I want to say? Of course, it is generally possible to survive on your own, but you can’t find prosperity in the today’s world this way. Now, certain more important notes.

First. For Russia, developing further cooperation with the European Union is an absolute and long-term priority. Not only in terms of economic relations, but also because Russia has always been, and will be, a part of Europe, both geographically and, I want to emphasise this, culturally and in terms of civilisation. Russia is a European country, which stretches far to the East, to the Pacific coast, to the borders of China and Korea. We have become close in the last 20 years, unprecedentedly for the 20th century. Russia has become a respected participant in many important European bodies, including the Council of Europe. Since the four common spaces were developed, our cooperation has seen a boost.

More opportunities appeared after we joined the WTO. The European Union provided us with serious support in this action, and we know that and appreciate it.
Of course, the Russian Government will have to implement a package of measures to adapt our economy to the WTO recommendations. But we can already say investors and Russian and European companies have become much more active in each other’s markets. Our trade continues to grow and has reached a historical high of $410 billion. The EU is maintaining its position as the main investor in the Russian economy, with a total accumulated investment of over $260 billion. Russian businesses have invested substantial funds – nearly $75 billion – in EU economies.

However, it must be said that most European countries still see Russia as something alien, rather than as a part of Europe. You know as well as I do that the coordination of positions within the EU is proceeding extremely slowly and with major difficulties. Honestly, it is sometimes easier for us to come to terms with individual European countries. This is not good at all, and I believe that we should try to change this.

We have our problems too. We do not always understand our partners’ logic and sometimes overlook important details that are part and parcel of the European political culture, which has developed over centuries. In other words, we have a lot to learn fromour partners. Otherwise the most important elements – human and business relationships – will suffer. And this definitely has a detrimental effect on business.

Take the perennial issue of the EU’s Third Energy Package. I told journalists yesterday that we never said that the Third Package is a bad thing. The EU is free to regulate its energy flows as it wants. But we don’t think that they should impose their unilateral decisions on other partners. Rather, they should listen to their partners’ arguments.

We are working with utmost consideration on a new basic agreement between Russia and the EU. We believe that it is a very important document that should promote cooperation in various fields, especially since our relations have long outgrown the boundaries of the current agreement. I’d like to remind you that it was signed nearly 20 years ago, in 1994.

The second issue I’d like to mention is this: Can we postpone the development of our cooperation until better days, for example, until finances stabilise? I don’t think that would be wise. Slowing down is dangerous for both sides, because all countries and regions are facing the challenge of modernisation, and not only in the economy but also in all other areas.

Our starting positions were different, but we are using the same design for the engines that put our mechanisms into motion and we are moving on the same track. The competition is certainly tough, and there are many problems, but we need to find solutions for them. For Russia, being behind on this track means turning into a raw materials appendage, becoming permanently dependent on energy prices and dooming ourselves to the degradation of our science and educational system. For the European Union, the consequences may be less dramatic but no less serious: chronic stagnation in the economy, social conflict and the loss of competitive opportunities in many promising global markets. The inability to cope with the challenge of modernisation may eventually threaten the whole European project.

The third point I’d like to make is very important. What are we in this process – rivals or partners? I’ve already said that in Russia and other countries, commentators and analysts often say: Europe has lost the modernisation race and is slowly but steadily turning into an industrial museum, and it is necessary to orient itself toward the leaders – either current (North America) or potential (East Asia). Likewise, there is an opinion in Europe that Russia is unable to offer anything substantial for modernisation.

If we follow this logic, it would be easy to predict that we will continue drifting in opposite directions. Is there an alternative to this? Of course, there is. Current modernisation processes are based not only and not so much on resources, production capacities and currency and financial positions, but on human capital. The latter is created in the relevant cultural environment, the educational system and research centres. European countries and Russia can rightfully be proud of their achievements here – they have the infrastructure and scientific schools that encourage the development of human capital. They have something to offer each other.

This is why the joint initiative – partnership for modernisation – has been made. I think this is a very good initiative. Importantly, the priorities we have announced largely coincide. We have achieved some results, but for the time being they are not so impressive. This is why all departments concerned should be more active in overcoming their inertia. They should define their priorities and focus on several major areas.

There is one more issue I am compelled to talk about. Regrettably, this is a permanent issue as well. We are unable to resolve the visa issue, and it is one of the main barriers to the development of our human capital. This issue is impeding business activity and human contact, as well as scientific and cultural ties. Visa-free travel would be a real change now that people in the modern world are highly mobile, especially business and young people.

Fourth, economic modernisation in the modern world is inseparable from social modernisation. We are often told that in Russia, just like in the rest of Europe, the social burden on the state is too heavy; social costs are preventing the economy from being effective and social commitments must be curtailed. But this is dangerous. How can we talk about raising the efficiency of social institutions if we reduce their funding? That said, nobody has extra money, so these issues are equally topical for Russia and Europe, and we should step up our cooperation in science, education, culture, healthcare and, of course, in developing the institutes of civil society and local government and in handling migration processes. We can and should discuss any problems with each other (and we are open to this), such as the judiciary, political freedoms and human rights both in Russia and the EU countries.

The fifth point I’d like to make is that I know the agenda of the conference includes the relationship between Russia-EU cooperation and integration processes in the post-Soviet space, primarily the Customs Union. We think that Russia’s successes in Europe should become an additional catalyst for Eurasian integration. We believe development of cooperation between the EU and the Eurasian Economic Union that is being set up would be a proper, far-sighted and mutually beneficial step. Our tasks are similar – to remove barriers and create a transparent and comfortable business environment. This is what we are doing under the WTO regulations and on the basis of the EU's experience. Our goal is to establish the Eurasian Economic Union on universal integration principles and make it open to cooperation with other countries. I will be straight with you – we are closely watching the processes in the EU with a view to borrowing the best of your practices.

The leading positions in the world are not guaranteed by anything, be it one’s wealth or challenging plans. This is true of people, countries and entire continents. Both Russia and the EU and the post-crisis international development stand to gain if we build our partnership on a stable basis and create in perspective a common economic space from the Atlantic to the Pacific. This is a super-ambitious project but we all know that without ambitious goals it is impossible to move forward.

I’m confident that this conference and our work in the Russian Government-European Commission format in general will become a new step along this road.

Thank you for your attention.