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Sep 4, 2013 | 15:20 GMT

3 mins read

Russia's Response to the EU's Eastern Partnership Efforts

Russia's Response to the EU's Eastern Partnership Efforts
(MAXIM SHIPENKOV/AFP/Getty Images)
Summary

After Armenia's decision Sept. 3 to join the Customs Union, a Russian-led trade bloc, a number of European politicians said Armenia will not be able to have a free trade agreement with the European Union because the two blocs are incompatible. Lithuania, which currently holds the EU presidency, is leading efforts to bring six former Soviet states — Moldova, Georgia, Armenia, Ukraine, Belarus and Azerbaijan — closer to the European Union through political and trade agreements under the EU's Eastern Partnership program, initiated by Poland and Sweden in 2008.

Russia has been using its strong economic and energy ties to these countries to block Brussels' efforts, with varying degrees of success. Moscow will likely intensify pressure leading up to the Eastern Partnership summit in Vilnius in November, during which numerous Eastern Partnership countries are expected to decide whether to deepen political and trade ties with the European Union through new agreements. Considering the economic weakness of the European Union and its focus on resolving internal structural problems, Russia — despite internal challenges of its own — can expect some success in influencing peripheral states.

The Nov. 28-29 Eastern Partnership summit is one of the main events during Lithuania's six-month EU presidency. The European Union's aim is to initial association agreements with Armenia, Moldova and Georgia, sign such an agreement with Ukraine during this summit and deepen free trade negotiations.

However, as Armenia's decision to join the Customs Union shows, Russia is likely to thwart some of the European Union's plans. Moscow has recently stepped up its efforts to discourage Eastern Partnership countries from aligning more closely with the West, promising greater economic cooperation and investment and threatening to destabilize economies by blocking trade.

As Armenia's largest trade partner and foreign investor and as owner of many of the country's strategic assets, Russia is crucial to Armenia's stability. Russian President Vladimir Putin recently indicated that Russian Railways would invest heavily in Armenia's railway system, and further investment is likely by Rosneft and Rosatom to upgrade Armenian chemical plants and the nuclear sector. Because of the distance separating them and its deep political and economic crisis, the European Union does not have the same opportunities as Russia to become a sustainable economic and investment partner for Armenia and other countries in the region.

Russia's Customs Union

Russia's Customs Union

In the case of Moldova and Ukraine, Russian officials have warned the countries about the consequences if they sign the agreements with the European Union. Russian Deputy Prime Minister Dmitri Rogozin in an interview warned Moldovans that they could face trouble working in Russia if the agreement is signed. Moscow also hinted that it would withhold natural gas exports to Moldova, and the Russian sanitary authority reportedly warned that it might ban the import of alcoholic beverages from Moldova due to health and safety concerns — a damaging prospect for Moldova given the importance of the wine industry for its economy. Wine exports account for about 10 percent of Moldova's exports, and the industry makes up about 2.3 percent of Moldova's gross domestic product, according to a 2010 U.S. Agency for International Development report.

For Ukraine, Moscow is offering lower natural gas prices and to abolish tariffs on oil and natural gas as incentives to join the Customs Union. But Russia has also implemented measures to remind Ukraine of its economic dependence on Russia. For example, in August Russia banned imports of Ukrainian chocolate and extra customs controls were temporarily placed on a number of Ukrainian exports to Russia recently, likely to hurt Ukraine's ties with the European Union.

Kiev has already initialed the association agreement with Brussels. However, Ukraine has so far not signed the agreement because of tensions between the EU and Ukrainian leadership over the jailing of Ukrainian opposition leader Yulia Timoshenko and out of fear of an economic crisis with Moscow. Russia has long tried to gain additional influence in Ukraine, particularly over its natural gas network, which is vital to Russia's natural gas exports to Europe. Over the coming months Kiev will try to strike the difficult balance of borderland countries, not aligning fully with either Russia or the European Union.

If any Eastern Partnership countries choose to sign agreements with the European Union, it would be important because it would signify the strategic choice to align politically and economically with the West. However, Moscow will continue to try to use economic ties to its advantage while simultaneously using pressure to dissuade these countries from further integration with the European Union. 

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