Address by Ambassador Chizhov at the Economist Conference “Cyprus-EU Presidency Summit”. Nicosia, 8 October 2012

Ladies and Gentlemen,

Allow me to begin by commending the valuable work that Cyprus is doing at the helm of the half-year EU Council Presidency. Your country, admittedly a small one, has taken on the momentous responsibility of leading the EU at a pivotal moment in the evolution of the European project, as the acute pangs of the sovereign debt crisis are being loudly felt in the streets of Athens, Madrid and other European cities.

It is in these circumstances of hardship and distress that one recognizes the true value of one’s friends. So, when President Christofias came to Brussels and Strasbourg in July to present the Cyprus Presidency Programme I found it quite pertinent that its foreign policy section was titled “Europe in the world, closer to its neighbours”.

Indeed, the goal of constructing a closer, safer and more prosperous regional environment together with the EU is one Russia genuinely shares. And my country has been and will remain a trustworthy neighbour and a staunch helping hand for the EU throughout the crisis, and certainly beyond. 

Even as the global economy pivots to the Asia-Pacific region, EU member states still account for over half of Russia’s total trade volume, having collectively soared to a record-breaking high of 307 billion euros in 2011, securing Russia’s place as the third largest economic partner of the EU, preceded only by China and the US. Moreover, approximately 40 percent of Russia’s foreign currency reserves, again the 3rd largest in the world, is nominated in the single European currency. Russia is Europe’s leading supplier of energy, known for its reliability and commitment. The launch in November 2011 of the “North Stream” gas pipeline across the Baltic Sea as well as the planned construction of the “South Stream” will certainly bolster EU energy security for decades to come. 

Russia is actively involved in framing the international community’s response to the Eurozone crisis in the G-8, the G-20 and the IMF. In spite of current calamities in the Eurozone, we are convinced that the European Union will pull through and, at the end of the day, may emerge even stronger and more integrated than before. This assumption is not vindicated solely by the logic of European integration, which seems to thrive on crises. Actually, the reason I sometimes compare - occasionally to the astonishment of my interlocutors – the EU to a crocodile is not because of the number and sharpness of its teeth, but rather because however difficult and curved the path of European integration may be, it has never switched into reverse – just as the famous reptile is unable to.

Over the last years we watched with interest as the EU reinforced its macroeconomic governance, set up hefty financial support mechanisms “from scratch” and delegated unprecedented supervisory powers to its communitary institutions. At the coming European Council a new package of reform measures will be debated. And a feeling of a potential “federal leap” in EU integration, albeit encompassing the so-called “hard core” of member states at this stage, is in the air. These encouraging signals, in my view, represent ample proof of EU’s persistence and vitality.

Moreover, our belief in the vast potential of regional integration, of which the European Union is a prime example, is best revealed by observing a similar process unfolding across the post-Soviet space. On January 1st of this year the Single Economic Space between Russia, Belarus and Kazakhstan came into existence based on the previously established Customs Union of the three countries, and a joint Eurasian Economic Commission was created, a process which broadly follows in the footsteps of the EU communitary tradition. Let me reiterate that the processes of European and Eurasian integration are natural, inclusive and mutually reinforcing. Most importantly, they are both based on WTO rules and norms. 

We believe, just as the Presidency has outlined in its Programme, that the current pivotal moment in the development of the European Union also represents a unique opportunity for augmenting our strategic partnership and incrementally progressing towards a common space of economic enterprise, human contacts and regional security. Allow me to briefly outline just a number of key joint initiatives that, we feel, need to be actively seized without delay in this regard. 

Securing a Russia-EU visa-free regime remains a primary goal and a yardstick that will amply attest to the maturity of our relations. And let me make it clear: this is by no means a one-way street. EU citizens – the more then 1,5 million who are annually applying for Russian visas and hopefully many more – will benefit as much as my compatriots will from progress on this important track, which will promptly translate into tangible economic yields and facilitate exchange of ideas and knowledge across Europe.

An important step was made at the Russia-EU summit in December 2011 in Brussels with the adoption of a list of technical Common Steps. We expect their on-going implementation to be followed up without delay by negotiations on a bilateral visa-waiver agreement. Neither artificial linkages nor unfounded fears of a mass migrant incursion should stand in the way of this important deal that will – for the first time in European history – establish freedom of movement in the wider Europe from Lisbon (or even Reykjavik) to Vladivostok as envisaged 37 years ago by the authors and signatories of the CSCE Helsinki Final Act. Let me reiterate that, in my view, the Sochi Winter Olympic Games in 2014 represent a realistic timeline for introducing visa-free travel.

Meanwhile, negotiations on adapting the existing Russia-EU visa facilitation agreement of 2006 are well underway. Nevertheless, we expect to see more progress from EU partners on the practically last remaining issue of extending its provisions to holders of service passports. The record of five EU member states, including Cyprus, that have enjoyed this facilitated regime with Russia for years should serve as a clear indication – and, hopefully, an incentive, for the others. 

Russia’s accession to the WTO has galvanized our joint efforts to modernize the legal basis of the Russia-EU relationship through the conclusion of a New Basic Agreement, which will replace the partially outdated 1994 Partnership and Cooperation Agreement.

In my capacity as head of the Russian negotiating team I can say with confidence that the main stumbling block revolving around the trade and investment chapter of the document can be rapidly overcome, once two simple truths are acknowledged.

First, the newly hammered-out parameters of WTO participation will naturally take time for the Russian economy to fully digest and adjust to before it is ready for further steps in the direction of liberalizing trade. 

Secondly, since the launch of negotiations in 2008 a number of key sectors in the areas of trade, competition policies, public procurement, as well as technical regulations have become subsumed by supranational bodies of Eurasian integration. It is thus essential that a pattern is established ensuring practical interface with the Eurasian Economic Commission in the course of negotiations.

Coming to grips with these plain facts would greatly expedite the elaboration of a mutually beneficial and forward-looking institutional framework that will serve the needs of our peoples in the 21st century.

The daunting political, economic and demographic challenges afflicting our common neighbourhood are creating new avenues for enhancing Russia-EU cooperation in the area of foreign and security policy, including crisis management. Much is already being done in practice. Whether in the Middle East Peace Process, the Transdniestrian settlement or the Iranian nuclear issue, Russia and the EU are joining forces to advance the goals of regional peace and security. More than a dozen regular consultation formats under the auspices of the Permanent Partnership Council at Foreign Ministers’ level are instrumental in maintaining a high degree of communication on just about every international topic. Thanks in part to our concerted anti-piracy action off the coast of Somalia the number of boarded vessels plunged dramatically from 65 in 2010 to just 5 this year. More joint missions are in the pipeline. 

However, I must admit that our work in this notable area has at times been spontaneous, episodic and reactive in nature. As an example I can refer to the fairly recent EU-led peace-keeping mission in Chad and the Central African Republic. The relevant agreement on Russia’s participation was signed when the mission was already in full swing, and was eventually ratified when it was over. This is certainly not the best way to do business together.

That is why we favour institutionalizing our important crisis management partnership by swiftly elaborating a relevant framework agreement in the spirit of equality.

We are also keen on introducing a permanent Russia-EU strategic decision-making and planning capacity. A German proposal to that effect, called the Meseberg initiative is on the table awaiting for other EU member states to muster the necessary political will. We hope its time will come soon.

Certainly, by mentioning these priorities I am in no way negating the significance of other topics that have evolved over the past years within the overall framework of the four Russia-EU Common Spaces. Among these, the Russia-EU Partnership for Modernisation deserves special mention. Later this week, coordinators of this project will meet in Moscow to take stock of progress achieved so far and outline practical ways to further promote it.

Let me touch upon one more point. The highly interdependent and symbiotic nature of the Russia-EU relationship that sets it apart from others should not be taken for granted. Just as in the case of the European Union, this is a result of Russia’s conscious strategic choice, dictated by economic links, a shared historical heritage as well as cultural and moral affinity with European countries. And while Russia and the EU are bound, as two distinct centres of gravity, to have certain differences, a pragmatic and responsible attitude must prevail.

It is in this vein that I wish to highlight certain symptomatic issues, which, in my view, go against the very grain of our cooperation.

The overall smooth Russia-EU cooperation in the human rights area, for example, is becoming increasingly tainted by instances of blatantly selective and politicized treatment of human rights cases in my country. I find it puzzling, to say the least, that a group of convicted felons whose actions caused deep offence to the Russian Orthodox community and the broader public opinion of the country, is being nominated for a Sakharov Prize, ostensibly for expression of freedom of thought. I can hardly believe that blasphemy, combined with their previous record of publicly burning effigies of a Jew, a homosexual and an immigrant worker and engaging in a group sex act in a zoological museum qualifies as an expression of freedom of thought. Meanwhile in an EU member state a monument commemorating the Waffen-SS, which fought in the ranks of the Wehrmacht under an oath of allegiance to Hitler, is being consecrated in cynical defiance of the conclusions of the Nuremberg Tribunal and the memory of millions who perished at the hands of the Nazis. So let’s be serious and not allow our human rights dialogue to degenerate into a highly politicised and emotional affair. 

There are other unfortunate examples, including in the energy sphere. A prime one is the so-called EU Third Energy Package that under the euphemistic label of “unbundling” requires separation of energy production, transportation and sales in EU markets, including – as is the case in some EU member-states – through forcible expropriation of assets. This piece of legislation clearly infringes upon provisions of the Russia-EU Partnership and Cooperation Agreement as well as several bilateral arrangements. In our view, it is detrimental to long-term EU energy security as well as interests of European consumers. 

We also feel that the EU rushed headlong into negotiating the projected Transcaspian gas pipeline without really taking stock of the unresolved issue of the legal status of the Caspian Sea as well as potential hazards for the fragile Caspian biosystem. 

Regarding the most recent decision by the EU Commission to open antitrust proceedings against Gazprom, let me state for the record that we regret this move. The gas price formulas underpinning long-term contracts between Gazprom and its partners in EU member states are clearly market-based. Nor is Gazprom the only company in Europe to use them. Consequently it is hardly imaginable that the company could “impose unfair prices on its customers”, as the EU Commission alleges, or be responsible for deliberate “fragmentation of the single EU energy market” (which, as the Commission itself admits, does not yet exist anyway). I expect the forthcoming dialogue between the two entities to be fair and depoliticized and a mutually acceptable solution to be found that does not jeopardize the interests of EU consumers as well as Gazprom’s time-honoured standing in EU energy markets.

Concluding on a positive note, let me emphasize that these divergences in the Russia-EU relationship are on the whole overwhelmed by a positive strategic agenda. But we cannot and should not remain idle. It is imperative that we resume movement on key issues in a decided and focused manner. This, I am sure, will guide the leaders of both Russia and the EU when they meet again for their summit, already the 30th, in Brussels at the end of the year.

I wish to conclude by conveying President Vladimir Putin’s remarks in Moscow last July at the biennial convention of Russian Ambassadors and Permanent Representatives, where I was present. He spoke of the need for Russia and the EU to strive towards far more ambitious goals than we do today. In particular by setting the strategic target of forming a single continental market from the Atlantic to the Pacific Ocean with a total volume of trillions of euros. This, he said, would not only be in line with our common civilizational destiny but would effectively shield our countries against intense global economic turbulence.

I wish to impart to you this sense of scale and ambition, which I hope will guide Russia-EU relationship in the years to come.