Russia & EU prepare to bargain

After a difficult summer, Russia and the EU are returning to the negotiating table. France in hosting the 22nd Russia-EU summit in the Riviera resort of Nice. But hopes of progress will be complicated by divisions over the war in South Ossetia and Russia'

On Thursday, Russian President Dmitry Medvedev held talks with industrialists in Cannes on the French Riviera.

Nikolas Sarkozy of France, which currently holds the EU's rotating presidency, is expected to announce new talks on a partnership deal on Friday.

The old Partnership and Cooperation Agreement (PCA) between EU and Russia expired at the end of 2007. In June, at the Russia-EU summit at Khanty-Mansiysk, it was agreed that talks would be resumed. The first round of talks was held on July 4 and the second was scheduled for September 16, but it was suspended due to the conflict in the Caucasus.

Europe called Russia's actions during the Georgia-South Ossetia conflict disproportionate, while recognition of South Ossetia and Abkhazia as independent states made things even worse between the two sides.

The European Commissioner, Benita Ferrero-Waldner said that dialogue with Russia had merely been postponed rather than permanently suspended. She added that developing the bilateral relationship would be difficult, but was unavoidable, as the EU and Russia are dependent on one another.

At the moment Russia is third (after the US and China) on the list EU imports and fourth on the list of importers of EU products. The EU accounts for over 50 per cent of Russian foreign trade, and about 70 per cent of accumulated foreign capital in the Russian economy.

Apart from Caucasus, there’s likely to be another major issue on the table. Addressing the Federal Assembly last week, President Medvedev announced a plan to counter the US missile defence system in Europe. Russia intends to deploy Iskander missiles in its western Baltic region of Kaliningrad if the Americans continue with their plans. Moscow's initiative was not welcomed by the EU.

Still, despite many disagreements, the sides seem to be ready for dialogue.

“I don't know if we've had any such opportunity since the Second World War to change the way the world is governed and Russia is an absolutely essential partner for all kinds of reasons. As a permanent member of the Security Council when it comes to political matters, but also when it comes to economic matters and matters related to energy as well,” said Jose Manuel Barroso, the European Commission President.

Russia, however, has taken a firm stance ahead of the talks. The country’s representative at the EU, Vladimir Chizhov, has said Russia shouldn’t make any concessions just because the EU has decided to resume negotiations.

The only European country against the talks is Lithuania, but its opposition has been overruled because, technically, earlier talks were frozen rather than concluded. They are to be resumed on Friday.

The summit is expected to announce that discussions on a new Russia-EU partnership agreement will begin on November 25.

Crisis cost world economy $US 1.5 trillion – Medvedev

Speaking earlier at the 10th EU-Russia Industrialists' Round Table in Cannes, Mevedev said that the financial crisis had cost the global economy US $ 1.5 trillion. He added that “these are calculations. The real losses are even greater. Counting them is an unpleasant but essential business.”

Dmitry Medvedev also proposed reforms to the world’s main financial institutions – the International Monetary Fund (IMF) and the World Bank. He said these institutions were unable to tackle the financial crisis. He added that Russia is ready to take an active part in this process.

He once again assured Russia’s European partners that Moscow will remain a responsible and predictable energy supplier. 

Another important issue up for discussion on Thursday was Russia's accession to the World Trade Organisation. Medvedev said it should happen as soon as possible. “Enough negotiations, it's time to make decisions,” he said.

He has also played down hopes for a breakthrough at the upcoming G20 meeting in Washington, called to deal with the global financial crisis.

“There should not be any excessive expectations. The key value of this meeting is that it will take place, that it will focus on the most complicated and most difficult issues and that it will look at mechanisms to overcome the crisis,” he said.

In conclusion he talked about the state of Russia’s economy. Dmitry Medvedev said gross domestic product will go up by seven per cent in 2008, but that the rate of increase would slow in 2009.

“By and large we have managed to maintain macroeconomic stability. The seven per cent growth of GDP we expect was achieved mostly at the expense of domestic demand. However, next year the rates will be lower. Also, there are problems with inflation,” the Russian president said. 

Related links

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Future of Kaliningrad missiles in US hands – Medvedev