Communication from the Commission to the Council - Review of EU-Russia relations {SEC(2008) 2786}
Date: 2008-11-05
Institutions: European Commission
Subjects: EU relations, Russia, cooperation agreement, international security, international trade

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.11.2008 
COM(2008) 740 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

Review of EU-Russia relations 

{SEC(2008) 2786} 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 

Review of EU-Russia relations  

The Extraordinary European Council of September 1, 2008, requested the Council, with the 
Commission, to conduct a careful, in-depth examination of the various aspects of EU-Russia 
relations. This review is to be conducted in the run-up to the EU-Russia Summit scheduled for 
14  November  2008,  and  will  be  discussed  at  the  GAERC  of  10-11  November  with  the 
GAERC of 13-14 October 2008 having taken stock of developments in the Georgian-Russian 
conflict.  

The current reflection takes place against a backdrop of developments that have cast a serious 
shadow  over  the  EU  Russia  relationship:  the  violation  of  Georgia's  territorial  integrity  with 
the  use  of  force,  and  Russia's  unilateral  recognition  of  Abkhazia  and  South  Ossetia  remain 
unacceptable,  while  the  principles  of  foreign  policy  recently  articulated  including  the 
resurgence of spheres of influence, is a cause for concern. 

The  EU  can  approach  its  relationship  with  Russia  with  a  certain  confidence.  Economically, 
Russia needs the EU. The EU is an important market for its exports of raw materials, notably 
energy, and Russia would like to improve the conditions for trade in nuclear materials. The 
recent financial crisis has underlined how acutely Russia needs to modernize and diversify its 
economy. The EU is the natural partner for this process, and is the main source of its foreign 
investments.  Russia  desires  engagement  with  the  EU  for  its  own  purposes,  for  example  to 
achieve visa abolition or association to the EC R&D Framework Programme. 

In  the  light  of  the  above,  the    aim  of  this  review  is  to  consider  the  complex  web  of 
overlapping  and  shared  interests  in  the  EU-Russia  relationship,  and  to  make  a  sober 
assessment  of  where  the  EU's  own  interests  now  lie.  The  scope  for  pursuing  and  widening 
these interests has been established in the recently-agreed mandate to open negotiations on a 
successor  agreement  to  the  Partnership  and  Co-operation  Agreement  (PCA),  and,  once  the 
conditions are met, negotiation of a Free Trade agreement.  

The  attached  working  document  details  the  development  of  the  EU  Russia  partnership  over 
the last few years, and the opportunities and challenges we face in the future.  

EU-Russia relations are based on the Partnership and Cooperation Agreement (PCA) in force 
since  1997,  which  was  further  complemented  by  the  Four  Common  Spaces  in  2005.  This 
results  in  an  institutional  framework  which  in  many  respects  works  well,  particularly  at 
political  level  through  the  Cooperation  Council  (now  Permanent  Partnership  Council  in 
Foreign Ministers' format).  

Brief review of EU-Russia relations 

Trade and investment between the EU and Russia are  substantial and growing and it is in our 
mutual  interest  that  this  trend  should  continue.  Russia  is  our  third  most  important  trading 
partner  and  we  see  growth  rates  of  up  to  20%  every  year.  Energy  is  a  major  factor,  but 
impressive  growth  figures  have  also  been  seen  in  services.  With  its  sustained  high  growth 
rates and emerging middle class, Russia is an important emerging market on our doorstep that 
offers opportunities to EU enterprises. The EU is the major investor in Russia, accounting for 
80%  of  cumulative  foreign  investment,  giving  us  an  important  interest  in  the  continuing 
development  of  the  economy,  which  will  need  European  investment  even  more  in  future, 
given Russia's quest for diversification and modernisation. This in turn will depend on Russia 
guaranteeing  the  rule  of  law,  with  a  truly  independent  judiciary,  able  to  ensure  the 

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enforcement  of  contracts.  A  significant  share  of  the  Russian  foreign  exchange  reserves  are 
held  in  euro,  making  Russia  one  of  the  largest  holders  of  euro-denominated  assets  in  the 
world.  Russia  has  not  been  immune  to  the  global  financial  crisis,  and  given  our  economic 
interdependence  it  is  important  to  maintain  an  EU  dialogue  with  Russia  on  unfolding 
developments.  

The  considerations  noted  above  have  led  the  EU  to  firmly  support  Russia's  bid  to  join  the 
World  Trade  Organisation.  The  case  for  early  WTO  accession  on  viable  commercial  terms 
remains strong not least because of signs, in the agricultural and natural resource sectors, of 
greater  protectionism.  Certain  ongoing  trade  disputes  like  those  concerning  Russia’s  export 
restrictions on wood require urgent solutions to avoid deterioration of already difficult trading 
conditions. 

Despite  the  boom  in  EU/Russia  trade  and  investment  and  the  many  sectoral  dialogues 
established under the Common Economic Space, there have been difficulties in several areas, 
from  problematic  customs  procedures  to  Siberian  Over-flights  as  well  as  the  inconsistent 
implementation of international sanitary and phytosanitary standards by Russia.  

EU-Russia  interdependence  in  the  Energy  sector  is  a  core  element  of  the  relationship.  EU 
Member States are major buyers of energy products, and this is unlikely to change in the short 
term to medium term. The relationship is one of interdependence not dependence. Exports to 
the EU have made a major contribution to Russian growth rates. However, the EU and Russia 
interpret  energy  security  and  reciprocal  market  access  differently.  While  Russia  has  been  a 
reliable  supplier  of  energy  products,  disputes  with  transit  states,  as  well  as  insufficient 
upstream investment in the face of expanding demand, raise concern about future supply. A 
great  deal  of  work  is  still  needed  to  build  up  a  genuine  energy  partnership  based  on  the 
principles  of  the  Energy  Charter  Treaty  and  notably  transparency,  reciprocity  and  non-
discrimination. Cooperation is taking place under the Energy Dialogue and covers such broad 
issues  as  energy  scenarios  and  strategies,  market  developments  and  energy  efficiency. 
Important tools, such as the energy early warning mechanism could be further developed.  

In the Common Space on External Security, political dialogue is frequent and takes place at 
many levels. The EU engages with Russia on Iran, the Middle East, Afghanistan, the Balkans 
and elsewhere as well as in international settings like the UN and the OSCE, with the aim of 
developing  common  views  and  approaches.  Cooperation  in  the  Middle  East  Peace  Process 
and  on  non-proliferation  in  Iran  has  been  positive.  The  EU  and  Russia  have  a  common 
interest in the non-proliferation of WMD. Russia has recently contributed to the EU’s ESDP 
mission  in  Chad/Central  African  Republic.  Positions  on  Kosovo  and  the  Common 
Neighbourhood remain farther apart, in particular after the events in Georgia. The EU should 
develop a common position on Russia's proposal for a new European security order. The EU 
has a strong interest in continued efforts to improve co-operation in these areas in the years 
ahead.  Russia  is  a  key  geopolitical  actor,  whose  constructive  involvement  in  international 
affairs is a necessary precondition for an effective international community.  

There is an EU-Russia dialogue on regional policy; in the Kaliningrad region the Facilitated 
Transit  Scheme  between  the  region  and  the  mainland  has  worked  positively.  Moreover, 
Russia  has  shown  new  interest  in  the  revised  Northern  Dimension,  where  the  Ministerial 
meeting of 27 October saw important advances and there is scope for including Arctic issues 
in the regular dialogue between the EU and Russia. 

Human  rights  are  an  area  of  concern.  There  is  a  general  sense  that  there  is  a  growing  gap 
with regard to common commitments in the Council of Europe and the OSCE.  

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The  EU  underlines  to  Russia  the  commitments  it  has  entered  into  including  in  the  PCA. 
Human rights consultations with Russia take place twice a year; while their impact remains 
relatively  limited,  the  latest  round  took  place  in  an  open  and  constructive  atmosphere.  It  is 
important to build on what has been achieved. 

EU  and  Russian  interests  in  the  Common  Space  on  Justice,  Freedom,  and  Security  often 
coincide. This is shown by: the EC-Russia Agreements on Visa Facilitation and Readmission 
(in force since June 1, 2007); the joint co-operation plan for 2007-2010 between FRONTEX 
and Russia’s Border Guard Service; cooperation between the European Monitoring Centre on 
Drugs  and  Drugs  Addiction  and  the  Russian  Federal  Drugs  Control  Service  and  between 
Europol and Russian law enforcement authorities.  

The  EU/Russia  Visa  Facilitation  Agreement,  the  first  concluded  by  the  EU  and  a  third 
country,  was  designed  to  make  life  easier  for  travellers,  including  those  from  the  EU  itself. 
The  Readmission  Agreement  makes  an  important  contribution  to  fighting  illegal  migration. 
Greater cooperation in the area of Freedom, Security, and Justice is helping to tackle threats 
posed  by  challenges  such  as  terrorism  and  organised  crime.  More  generally,  it  is  important 
that  this  cooperation  is  based  on  respect  for  human  rights  and  the  promotion  of  the  rule  of 
law. 

Contacts  between  the  citizens  of  EU  and  Russia  are  increasing.  EU  education  exchange 
programmes  have  expanded,  as  has  research  collaboration  between  scientists.  Work  should 
continue on expanding people-to-people contacts across the board. An expansion in contacts, 
as  well  as  meeting  specific  goals  in  defined  policy  fields,  contributes  to  improving  mutual 
understanding and trust. 

The  Common  Space  on  Research,  Education,  Culture  is  characterised  by  a  strong  mutual 
interest.  Research  co-operation  is  governed  by  the  EC-Russia  Science  and  Technology 
Cooperation  Agreement  (in  force  since  2004)  which  expires  in  2009  –  renewal  is  under 
preparation.  Entities  from  the  Russian  Federation  participate  in  all  thematic  and  sub-
programmes  of  the  7th  Framework  Programme  on  Research  and  Development  (FP7)  with  a 
Community contribution of some € 29 million. Fu rther co-operation includes the Agreements 
for  co-operation  between  Euratom  and  Russia  in  the  fields  of  nuclear  safety  and  controlled 
nuclear fusion, both concluded in 2002 for an initial period of 10 years. Russia has signalled 
its interest in associate status to the FP7. In the field of education Russia is committed to the 
Bologna process and participates in several EU-funded programmes. An important project is 
the European Studies Institute (ESI) in Moscow – co-financed by Russia and the EC. Cultural 
co-operation has started with the Kajaani process launched in 2006 with the first Culture PPC 
in October 2007. Follow-up since then has been relatively disappointing, with little progress 
on the Cultural Action Plan. 

Russia receives Financial Assistance from a range of EC financial instruments. The ENPI is 
aimed at supporting the implementation of the road maps of the Four Common Spaces and the 
Kaliningrad region. In a new and positive development, Russia has committed to contribute 
funding for seven European Neighbourhood Instrument (ENPI) programmes on cross border 
co-operation  over  the  period  2007-2013.  However  it  has  been  more  difficult  to  arrive  at  an 
agreed basis for the implementation of financial assistance. 

Next steps 

The  EU  and  Russia  should  be  able  to  discuss  areas  of  disagreement  in  an  open  and 
constructive manner. This is essential to a confident and mature partnership. We should strive 
to  improve  our  capacity  to  manage  differences  while  advancing  our  common  goals.  The 
European  Council  has  condemned  Russia’s  unilateral  decision  to  recognise  the  breakaway 

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regions of Georgia and expressed grave concern about the disproportionate Russian reaction 
in the conflict. While remaining firm on our principles, and rejecting all use of force, it is in 
the EU's interest to engage with Russia in renewed efforts for the resolution of conflicts in our 
common  neighbourhood.  This  requires  the  will  and  the  capacity  of  the  EU  to  act  as  one, 
combining both Community instruments as well as those of CFSP/ESDP. The management of 
the conflict this summer and its aftermath is encouraging in this respect, as is the withdrawal 
of  the  Russian  forces  from  the  areas  adjacent  to  South  Ossetia  and  Abkhazia,  while  more 
remains to be done. 

The  EU  expects  the  New  EU-Russia  Agreement  to  provide  for  a  comprehensive  legally 
binding framework to cover all main areas of the relationship based on our mutual interests 
and  the  international  commitments  which  the  EU  and  Russia  have  entered  into,  including 
promoting respect for human rights and the rule of law. Moreover, in order to underpin our 
growing economic interdependence a Free Trade Area (FTA) would be of mutual interest.  

These negotiations should continue, first because this would allow the EU to pursue its own 
interests with Russia, and secondly because this is the best way to engage with Russia on the 
basis of a unified position. When the EU speaks with one voice, and acts as one, Russia takes 
notice and the EU is able to influence the course of events. The unanimously agreed mandate 
for  the  negotiations  for  the  New  EU-Russia  Agreement  provides  us  with  an  important 
instrument to pursue our objectives in a united way.  

For these reasons it is the view of the Commission that the next negotiating sessions should be 
scheduled now. The GAERC of 10 November is an opportunity for Member States to reach a 
common understanding on the basis for the negotiations to proceed, against the background of 
the conclusions of the European Council of 1 September which postponed the negotiations.  

It  remains  clear  that  in  line  with  European  Council  conclusions  the  EU  does  not  accept  the 
status quo in Georgia. The Geneva process should continue its important work on the basis of 
the 12 August and 8 September Agreements addressing security and stability in the region as 
well as the return of Internally Displaced Persons and refugees, and the territorial integrity of 
Georgia should be restored. The review of EU/Russia relations should be an ongoing process. 
As  already  agreed  the  Commission  and  the  Council  should  continue  to  discuss  the  general 
context of EU/Russia relations as the negotiations are pursued. 

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