Friday

20th Oct 2017

Putin proposes Russia-EU union

Ahead of his two-day visit to Germany, Russian Prime Minister Vladimir Putin has projected a vision of a 'harmonious economic community stretching from Lisbon to Vladivostok' in reaction to the economic crisis. Chancellor Angela Merkel, however, said she will "pour some cold water" on the idea.

Writing in German daily Sueddeutsche Zeitung on Thursday (25 November), Mr Putin argued that more integration between Russia and the EU and even a "common contintental market" would allow them to overcome the effects of the crisis and prevent a new one from emerging.

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  • Angela Merkel is not enthusiastic about Mr Putin's proposal (Photo: kremlin.ru)

"We should be frank about it: The global economic crisis has revealed both Russia and the EU to be economically very vulnerable," Mr Putin wrote.

Russia is still too dependent on its oil and gas exports, he argued, while the EU has lost its competitive edge in the world through its de-industrialisation policy.

A "harmonious economic community stretching from Lisbon to Vladivostok" would imply strategic alliances in key industries, such as shipbuilding, car manufacturing, space exploration and the pharmaceutical industry.

"In my view, we need to address the question as to how we can trigger a new wave of industrialisation across the European continent," he wrote.

In the field of oil and gas, Russia's main exports to the EU, Mr Putin argued that the co-operation needs to be de-politicised and have European and Russian firms working together "from exploration and exploitation of energy resources all the way to the delivery to consumers."

"Politicisation" of Russia's energy exports has however so far been the trademark of Mr Putin's leadership, first as president and now as premier of his country. The former KGB officer famously wrote his PhD on how a state should make best use of its natural resources, although the paper was later on proved to have partly plagiarised US academics. He has been constantly criticised for sanctioning pro-democratic changes in countries such as Georgia and Ukraine with pricing disputes and even cut offs, while awarding more favourable regimes with lucrative gas deals.

In one such incident, back in January 2009, EU member states Bulgaria and Slovakia were left in the cold after Gazprom turned the tap off to Ukraine, then led by the "Orange Revolution" leader Viktor Yushchenko. A more Russia-friendly regime change in Kiev has since sealed a 20-year gas deal at favourable prices in return for an extension of Russia's naval presence in a Ukrainian port.

Speaking at a press conference in Berlin on Thursday, German Chancellor Angela Merkel said she had to "pour some cold water" on the ideas floated by Mr Putin.

"Of course we support the idea of a free trade zone between the EU and Russia but I have to pour a bit of cold water on it," she said.

"The steps that Russia has taken recently do not point in that direction," Ms Merkel added, in reference to plans championed by Mr Putin on withdrawing Russia's bid to join the World Trade Organisation and establish a customs union with Kazakhstan and Belarus instead.

The customs union came into force in July, but later on, Russian President Dmitry Medvedev said it is not really working and has re-energised the WTO bid.

On Wednesday in Brussels, for instance, Russian negotiators agreed to phase out its tarriffs on raw materials such as timber, thus allowing the EU to lift its objections to the WTO bid. The move followed a similar endorsement from Washington, in September this year.

Macron puts trade policy on summit table

France's president wants a "political discussion" on EU trade policies at Thursday's summit, amid domestic concerns over Canada and South America deals. But his colleagues are likely to avoid a lengthy debate.

Analysis

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The EU Commission chief hopes that as Emmanuel Macron pushes for euro area countries to integrate further creating a multi-speed Europe, central European members will be more inclined to join the single currency. Are they?

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