House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Third Report

III. ACHIEVING THE UK'S OBJECTIVES THROUGH MULTILATERAL ORGANISATIONS

66. We now turn to the means available to the United Kingdom to achieve its objectives in relation to Russia. We first examine the multilateral forums through which much of the United Kingdom's relationship with Russia is now conducted. We then consider the United Kingdom's bilateral relationship with Russia.

The European Union

EUROPEAN AND US INTERESTS IN RUSSIA

67. The EU is Russia's largest trading partner, taking about 40 per cent of Russia's exports,[172] and is also its largest provider of inward investment and aid. From the Russian point of view, according to John Lloyd, ten years ago "incomparably the most important" relationship was with the USA, yet for today's Russia "Europe is by far the most important relationship, leaving aside the strategic nuclear element..."[173] During the Cold War, the Soviet Union saw the EU as a tool of American hegemony in Europe, and diplomatic recognition was not exchanged until 1991. Since then Russia has on the whole viewed the EU as a benign organisation, in contrast to its view of a USA-dominated NATO. The EU and USA have distinct interests, which, as Dr Pravda argued, "are not in conflict with each other," but which are different "in terms of geographical proximity, economic links, human links, border problems."[174] Professor White informed us that Russians had a "positive though rather 'fuzzy' opinion" of the EU.[175] This view was confirmed during our visit. Russians tend to see the EU as a commercial opportunity, and, given their support for a pan-European security organisation which does not include the USA, tend to see EU security initiatives in a more positive light than NATO led ones. Dr Pravda told us that, had the Kosovo operation been led by Europe, it would have been better received in Russia.[176]

ENLARGEMENT OF EU

68. Russia's generally positive attitude towards the EU has entailed a similarly positive attitude towards the enlargement of the EU. Xan Smiley told us that although "up to the mid 1990s the Russians were extremely hostile to the idea of the Baltic States joining the EU. They have come to accept it now."[177] Indeed, some Russian politicians have spoken of a long term aim of Russia joining the EU[178]; however, this is "accepted as unrealistic in the medium term."[179] There are some advantages for Russia in having borders with EU member states: rather than trading via third countries, trade can be conducted directly with the EU as a whole, providing a "channel for Russian exports and Russian business."[180] In terms of the movement of people rather than goods, as we have noted previously in our Report on EU Enlargement,[181] there are risks that enlargement may create new and unwelcome divisions, including between Russia and Russian ethnic minorities in Estonia and Latvia. Dr Pravda told us of the danger that the EU was building "walls" on its borders, which he believed presented problems both for the EU and for the countries strengthening their borders.[182] Against this, Estonia and Latvia already require citizens of the Russian Federation to obtain visas, and entry into the European Union will not alter this.

TECHNICAL ASSISTANCE TO THE COMMONWEALTH OF INDEPENDENT STATES (TACIS)

69. The EU's TACIS programme is a major element of the EU's relationship with Russia. The programme has in the past had several priority areas for assistance, such as re-training former military officers, promoting nuclear safety, and encouraging private sector development. TACIS has allocated _139.7 million in 1998, and _1200.5 million since 1991,[183] 15 per cent of which has been contributed by the UK.[184] As we discuss below, the Helsinki Council called for a review of TACIS in the light of Chechnya.[185] Nonetheless, the Council of Ministers agreed on 29 December 1999 to extend TACIS from January 2000 until the end of 2006, with _3,138.59 million to be spent over this period. The programme will now focus on fewer but larger projects, with a narrower range of priorities: regional cooperation, help for small and medium enterprises, environmental protection and nuclear safety.[186] The General Affairs Council of 25 January invited the Commission to focus TACIS on "core areas directly promoting democratic values."[187] This was described by the Foreign Secretary as the suspension by the EU of its next programme of financial and technical aid.[188] It is not yet clear what will be meant in practice for TACIS.

70. There have been serious criticisms of TACIS's operation since its inception, including by the European Court of Auditors. In a report produced in 1998, the Court identified unrealistic planning, inertia in many projects, and "bad operating rules" although also drew attention to the unstable political and legal environment in Russia, which is as problematic for aid projects as it is for businesses.[189] We heard a number of criticisms of TACIS during our visit to Russia, and Professor Hanson noted in evidence to us that the Know How Fund had been more responsive than TACIS, and said that "a lot of EU programmes....are a boondoggle for quite a lot of people both on the EU side and on the Russian side."[190] We did find in our report on the South Caucasus and Central Asia that the EU had been working to re-focus TACIS and tighten procedures.[191] It is important that this effort continues: not least because of the expense which TACIS represents, which might, as we discuss below[192] be allocated to the more effective Know How Fund. We conclude that there continue to be serious criticisms of the EU TACIS programme, in contrast to the well-regarded Know How Fund, and that, if clear improvements are not identified in the performance of TACIS, consideration should be given to investigating how funds can be transferred from TACIS to better run programmes. We commend this issue to our colleagues on the International Development Committee.

NORTHERN DIMENSION

71. During its Presidency of the European Union in the last six months of 1999, Finland was keen to promote the "Northern Dimension" of EU policy, relating to the Baltic region. A significant element of this has been to strengthen the EU's relationship with Russia, as the largest and poorest littoral state of the Baltic. Finland has a border of 1300 km with Russia, across which there is a 70:1 income differential, a potential source of instability. Our interlocutors in St Petersburg spoke positively about the Northern Dimension, and St Peterburg's role in it as the largest city in the Baltic region. Finland also has a number of bilateral interests in Russia—for example, the safety of the four nuclear reactors in St Petersburg—which are also interests of the EU. One of the unstated objectives of Finland's promotion of the Northern Dimension has been to encourage the EU to devote more attention to these interests (just as the Mediterranean littoral states have promoted interest in their region through the Barcelona process).

172 3 per cent of the EU's exports go to Russia. Press conference by Mr Patten on 16 December 1999, available on europa.eu.int/comm/external_relations/speeches/patten/memo_99_71.htm. Back

173 Q133. Back

174 Q108. Back

175 Ev. p. 165, Appendix 7. Back

176 Q112. Back

177 Q135. Back

178 e.g. President Yeltsin, speaking at the Helsinki Summit with President Clinton in March 1997 said "Russia is aiming to be recognised finally as a full European state and we are also prepared to join the European Union." St Petersburg Times, April 21-27, 1997 "Why beg to join EU? Russia should look to the East" by Richard Dion. Back

179 Ev. p. 162, Appendix 5. Back

180 Q110. Back

181 Third Report, Session 1998-99, European Union Enlargement, HC 8, para. 79, available on Committee web page: www.publications.parliament.uk/pa/cm/cmfaff.htm. Back