Stability the prize if Europe can help

Date: 24/10/02

Elena Prokhorova assesses the issues likely to be high on the agenda at the upcoming EU-Russia summit

WITH enlargement now on a fast track, Brussels and Moscow are waking up to the new reality: they will soon be sharing a significantly large common ménage, with all the ensuing advantages and inconveniences, as is amply illustrated by the case of Kaliningrad, Russia's future enclave within the EU.

The search for a mutually acceptable solution short of a visa-free regime will hopefully succeed and the Kaliningrad file will be closed. Some contours of a deal might even emerge in the course of the EU-Russia summit on 11 November.

What next? Diplomats and politicians on both sides will probably have to take a deep breath and admit that there are no large convincing projects to embark upon. The Partnership and Cooperation Agreement (PCA), in force till 2007, is perceived as not being in full correlation with evolving realities.

Some analysts even point out that at the time of its signature in 1994 the PCA was morally obsolete. The EU Common Strategy towards Russia expires next June with no obvious successor in view. The idea of creating a common economic space remains largely the focus of academic debate. Yet the destination is well known: sustainable partnership. But how does one get there?

To proceed, the EU and Russia could single out issues of vital interest or concern and focus on them. There are three likely candidates. The first headline would be tackling common threats, which includes numerous forms of terrorism and environmental hazards.

Coping with the former presently boils down to a possible war in Iraq, where the US is carrying the ball. As regards the latter, Russia's concerns about such indigenous threats as nuclear waste in the Arctic find more sympathy with its European neighbours than across the Atlantic.

A source in the Russian atomic ministry, Minatom, admitted recently that the US would rather fund the decommissioning of Russia's more modern submarines, which could still operate, than pay for removing the old rusted ones, which pose the main environmental threat.

The US-sponsored non-proliferation assistance to Russia, known as 'Nunn-Lugar programme', has an impressive record: since its launch in 1991 the US government has spent roughly &036;1 billion per year to help deactivate and eliminate WMD (weapons of mass destruction), down-size Russia's nuclear weapons and secure stocks of fissile materials, sought-after by terrorists for the production of 'dirty bombs'.

Despite the visible success of the programme, the challenge that lies ahead is still enormous. Senator Richard Lugar told The Washington Post last June that 'at the current rate of progress, it will take another 27 years before some Russian facilities are secure'.

Unlike the Americans, Nordic countries cannot afford the luxury of being philosophical over the issue. They are sitting on the time bomb, which might blow up any moment with devastating effects for the immediate environment. Finland, Sweden, Denmark and Norway took the lead within the European Union in what is now known as the NDEP - Northern Dimension Environmental Programme. Of the commitment of €110million, €62m is allocated for cleaning up nuclear waste in the Arctic/Barents region.

In June 2002 the international com-munity also pledged its commitment to the cause of non-proliferation through the G8 initiative to combat the spread of WMD and clean up nuclear waste, mainly in Russia. This project is known as 'ten-plus-ten-over-ten' (&036;1bn per annum from the US, plus &036;1bn per year from the rest of the G7 countries, over ten years).

Neither initiative has really taken off pending the conclusion of a multilateral agreement between Russia and the donor countries regulating legal and financial issues, such as the liability in case of accident or exemption from taxation for the equipment used in Russia (European Voice, 10-16 October).

Belgian MEP Bart Staes, chairman of the delegation to the EU-Russia parliamentary cooperation committee, hopes that this agreement might be finalised at next month's EU-Russia summit. He admits that his recent trip to the Russian Arctic made him a passionate activist. 'Of course you prepare yourself, read a lot, but you have to see it once in order to grasp what a potential nuclear disaster is awaiting there,' says the MEP. Staes now hopes to persuade the Belgian government to join the list of the NDEP countries.

He is particularly worried that 'Russia's Minatom has opted for reprocessing SNF (spent nuclear fuel), which is a highly dangerous operation, because you have to ship the fuel to the processing plant in Siberia, over 2000 kilometres away from the Kola Peninsular'. Besides, the equipment there is known to be oldand rusted, which creates further environmental risks.

'And you cannot do this over the heads of the people, who already live in difficult conditions,' he adds (latest opinion polls in Russia show that around 90% of the population opposes the Minatom plans to process domestic and imported SNF).

While the G8 initiative is focused on the military component, the NDEP also has a broad environmental aspect. Staes believes that the two programmes could complement each other.

The second issue for the EU-Russia prospective agenda is common energy security. For the EU it means diversification of energy resources; for Russia, secure investments and safe transit to external markets. In September 2000 western Europe briefly plunged into a mini-energy crisis following an increase in world oil prices, which encouraged Commission President Romano Prodi to propose an 'energy dialogue' with Russia. The headline implies a political motivation, as well as reliance on support from the government.

This initiative seeks to ensure investment in strategic transit infrastructures and promotes production-sharing agreements, seen as the most effective mechanism to divide oil and gas fields and lease them to investment companies. It also helps identify major projects aimed at increasing energy efficiency in Russia.

But Andrei Konoplyanik, deputy secretary general of the European Energy Charter secretariat in Brussels, argues that energy dialogue services a few pilot projects and does not lead to massive private investment. As in the case of NDEP and the G8 initiative, the rules of the game are not yet properly defined in legal terms.

'In order to engage businesses we should upgrade our relations [in the energy field] and put them on a sustainable predictable basis,' said Konoplyanik.

Which means, inter alia, that Russia is expected to eventually liberalise energy prices and ratify the European Energy Charter, which it signed as early as 1994.

The Russian Duma blocked ratification, pending the conclusion of a protocol on transit. Russia is known to suffer considerable losses on transit of its gas and oil through Ukraine, and is also unhappy with high transit costs through the Baltic countries.

Russia's lawmakers say it is not worth playing by common rules unless the country's concerns are taken into account.

The energy charter member states have now entered the final stage of negotiating the transit protocol. Konoplyanik hopes it will be finalised by the end of this year. However, he describes the Russian position at the talks as 'counteraction through inaction'.

Many in Russia believe that the country's oil and gas reserves are richer than generally estimated.

That might well be true. Last summer Cambridge Energy Research Associates released a controversial report, which estimates the combined oil output by Russia and Kazakhstan in 2020 will twice exceed the earlier forecasted level.

If considered credible, this projection alone might persuade oil companies to reconsider their strategy towards Russia. However, security concerns remain acute. Unresolved conflicts in the southern Caucasus make the prospects of predictable energy supplies from the Black Sea/Caspian region rather bleak.

In a recent research brief issued by the European Parliament, Andrei Bely, the Russian author of the paper, points out that 'energy cooperation in the region remains highly dependent on hard security issues, which mainly depend on Russia'.

However, he adds, 'the priority aim of energy geopolitics is pipeline diversification for both Russia and Europe'. In any case, stability and peace in the region is certainly a matter of mutual interest for both the EU and Russia. Which leads on to the third item for the proposed EU-Russia agenda. It could be defined as joint responsibility for the common 'near abroads'. Up until recently, the EU viewed the south Caucasus as an almost irrelevant periphery.

However, perceptions seem to be changing in Brussels and some member states. Sources in Athens indicate that the future Greek presidency will propose a role for the EU in resolving conflicts and promoting stability in the Caucasus.

In the European Parliament a link is now made in policy planning between strategy towards Russia and the near abroads. Two parliamentary delegations, one for Russia and the other for Belarus/Moldova/Caucasus, have scheduled their first joint-session early next year. One might even think about a possible joint EU-Russia initiative over Chechnya - to seek a lasting solution short of secession.

The time for such an initiative seems ripe now. In six months it might be too late, as Russia enters into a volatile period of parliamentary elections in 2003, followed by presidential elections in 2004.

• Elena Prokhorova is a broadcaster on the BBC's World Russian Service. elena.prokhorova@euronet.be.