Article by Prime Minister Vladimir Putin “Russia and Europe: From an Analysis of Crisis Lessons to a New Partnership Agenda” published in the Süddeutsche Zeitung newspaper. The publication has been timed to coincide with Mr Putin’s participation in the IV annual economic forum of CEOs and top managers of leading German companies, organised by the newspaper
Article in the Süddeutsche Zeitung newspaper
Russia and Europe: From an Analysis of Crisis Lessons to a New Partnership Agenda
This week, Berlin will be the venue of the forum of leading German companies organised by Süddeutsche Zeitung. It gave me great pleasure to accept the invitation to take part in its work. I would also like to share my views on cooperation prospects between Russia and the European Union, above all in the context of post-crisis realities.
Today it is evident that the outbreak of the global economic crisis in 2008 was not triggered only by the inflated bubbles and mistakes in financial regulations. It was structural in nature and its problems were rooted in the piling up of global imbalances. It was the collapse of a model based on one regional centre rampantly accumulating debts and consuming goods and another producing cheap goods and buying up debts.
In addition, the distribution of generated wealth was highly uneven, both between various countries and among various population groups. That, too, undermined the stability of the global economy, fueled the flaring up of local conflicts and detracted from the international community's ability to reach consensus on key issues.
The crisis has forced us to rethink many issues. It made us reassess risks and future development strategies, ones based on real rather than virtual values. All leading centres are currently designing such post-crisis strategies, including the United States and China.
Europe needs its own vision of the future. We propose to shape it together, through a Russia-EU partnership. It would be our joint bid for success and competitiveness in the modern world.
Let us be frank: both Russia and the EU have proved to be economically vulnerable. The crisis made it abundantly clear. Russia is still heavily dependent on commodity markets. The European Union, reaping the fruits of years of deindustrialisation, has confronted a real threat of losing its positions on the markets of industrial and high tech products. One cannot fail to notice that we have a lag in some areas of education, research and development.
In addition, today's level of coordination between Russia and the EU is clearly not capable of tackling the challenges facing us.
To alter the situation, we should exploit the advantages and opportunities available to both Russia and the EU. This could be a truly organic synergy of two economies – a classic and established EU model, and Russia's developing and new economy, with growth factors that complement each other well.
We have modern technology, natural resources and capital for investment. Above all, we have unique human potential. Finally, Russia and the EU have ample cooperation experience . And I am happy to say that Germany, the engine of European integration, is setting an example of leadership in this area.
What do we propose?
First, a harmonised community of economies from Lisbon to Vladivostok. And in the future, perhaps free trade areas and even the more advanced forms of economic integration. In effect, we will get a common continental market with a capacity of trillions of euros.
Obviously, we should start by clearing up all remaining barriers to Russia's WTO entry. Next, we should unify legislation, customs regulations and technical standards and implement projects aimed at removing bottlenecks in Europe's transport infrastructure.
Second, a common industrial policy based on the synergy of Russia's and EU technological and resource potentials. Implementation of shared programmes for support of small and medium-sized production companies.
Trademarks such as "Made in Germany" and "Made in EU" are worth a lot. We should show most respect for these high standards of technological culture. They must not be lost. Russia does not have too many recognised brands as yet but it is our intention to consistently upgrade our production facilities. We hope to draw extensively on European technologies that best suit our production practices and traditions.
I believe that our agenda should include launching a fresh wave of industrialisation on the European continent. This can be achieved by creating strategic alliances in such industries as shipbuilding, the automobile industry, aviation industry, space technology, medical and pharmaceutical industries, nuclear power and logistics.
Do not misunderstand me: this is not a call to turn Europe into one large production site again, a giant factory so familiar from photographs taken in the late 19th and early 20th centuries.
This will be a high tech industry of the post-industrial age. New production processes must be environmentally friendly and comply with strict environmental standards. More generally, everything relating to the environment, careful nature management and climate control should be at the focus of out attention. Russia and the EU have accumulated very positive experience here. An example of such cooperation is our joint efforts to restore and protect the ecosystem of the Baltic Sea.
Third. The idea of creating a common energy complex in Europe is literally knocking on the door.
Over the last few years, energy cooperation between Russia and the EU has been attracting increased attention and – let us be frank – has been overly politicised. It went so far as to accuse Russia of using oil and gas supplies to meet some of its political objectives. This, of course, had nothing to do with reality.
The truth is that following the breakdown of the Soviet Union, Russia lost direct access to its largest export markets. This created the problem of transit countries, which have sought to profit from their monopoly position by obtaining unilateral advantages. This was the root of the well-known conflicts.
Naturally, such a situation did not meet Russia's interests, nor those of our energy consumers. That was why the key European energy companies and governments of many European countries, including Germany, backed Russia's plans to build gas pipelines under the Baltic Sea (Nord Stream) and under the Black Sea (South Stream).
With these routes in place, the European continent will have a diversified and flexible system of gas supplies. I am confident that all the far-fetched problems in the energy sector will be left in the past.
The bottom line is we must learn to respect each other's strategic interests and to prove it with actions rather than words. This cannot be said of the EU Third Energy Package. For all its good intentions, it generates serious risks for Europe's energy economy. It undermines the investors' desire to inject funds into new projects. As a result, in a few years' time, in place of a competitive market we may have an outdated infrastructure, shortage of energy resources, and, as a consequence, high prices for European consumers.
Let us not forget that it was the ill-advised liberalisation of financial markets that largely provoked the financial crisis. I would not like to see the regulatory gaps in the gas industry leading to a new catastrophe – this time, an energy crisis.
It is my belief that there will be objective reasons that will force suppliers, consumers and transit countries to return to equal and balanced relations. In fact, that is the essence of the new energy agreement Russia is proposing.
By combining our efforts, we will be able to do much more than to trade in energy resources: we will have the opportunity to share assets and work jointly at all phases of the production chain, from energy exploration and production to delivery to end consumers. We also urge everyone to cooperate in personnel training for the energy sector, establishing engineering centres and implementing projects concerned with energy efficiency, energy saving and use of renewable energy sources.
Fourth. Without a developed industry, any progress in European science and education is impossible.
Even now, far fewer gifted young people, both in the EU and Russia, are seeking to become engineering professionals. They see no prospects for themselves as engineers or technicians and choose other occupations, sometimes ones that require lower qualifications. And I fear that design agencies and engineering companies may follow production facilities and flee our continent.
European science and education should secure their leadership positions. We can do this through close partnership as well.
Russia will continue investing in European research projects. Such as the construction of an X-ray laser in Hamburg or an acceleration centre in Darmstadt.
We are ready to offer research opportunities to our EU colleagues at Russian universities and scientific centres, including, as part of special funding programmes. There are also good opportunities in Russia to work at unique experimental facilities. For example, we will soon commission a mega facility for neutron research based on a reactor outside St Petersburg.
In return, we hope for reciprocal investments in Russian science and innovation infrastructure.
An inspiring example of such cooperation is Siemens Group, which has agreed to set up a Competence Centre at the Skolkovo Innovation Centre near Moscow.
We should certainly support academic exchanges for students and professors, as well as contacts between young researchers and specialists. We want students from Russia to enrol at European universities, and we are ready to open more widely the doors of our universities to young people from European countries. Another reason why academic mobility and exchange and other programmes are so important is that they help to shape a shared technological and corporate culture.
Fifth. A true partnership on our continent is impossible as long as there are barriers in the way of personal and business contacts.
The most important of these is the visa regime between Russia and the EU. We believe that the abolition of visas should come at the beginning of hands-on integration between Russia and the EU, rather than its completion.
Freedom to travel will benefit young people above all, school and university students. They will have more opportunities to go abroad, study and get to know unique cultures of different countries.
By abolishing visas, we also will remove a serious obstacle to the expansion of business. Visas create no problems for large companies today, but for small and mid-sized businesses and innovation companies they pose a serious obstacle. In effect, they artificially freeze the current structure of our economic ties, which is far from perfect.
Finally, deadlines and schedules for abolishing visas will re-energise cooperation between law enforcement agencies of our countries. It will allow them to deal more effectively with illegal migration, drug trafficking, organised crime and terrorism.
So far, the prospects for this initiative remain uncertain since law enforcement bodies lack sufficient incentive to resolve the technical issues involved in going over to a visa-free environment.
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I have outlined here the plan for expanding real partnership between Russia and the EU only in general terms.
The central issue now is whether the EU is prepared to get down to work on such a practical agenda. I think, despite any doubts, the proposed approach is winning an increasing following in the European Union.
The road to this goal will be phased and lengthy. As equal partners, Russia and the EU should each cover a portion of the road to meet half-way. But it is also clear that we must not put off this work or waste time on endless diplomatic formalities.
I want to emphasise that Russia is not interested in a weak or divided European Union. Indirectly that would decrease Russia's international weight and limit our ability to rely on a partner with similar and often identical interests. Closer contacts between Russia and the EU cannot be directed against third parties, nor does it require a weakening of ties with traditional partners and allies.
We could anchor the renewed cooperation principles in the basic treaty between Russia and the EU, which is currently being drafted. This document should be approached strategically, thinking 20, 30 or 50 years ahead.
To conclude, I would like to remind you of the bold decision German Chancellor Helmut Kohl took in 1990: not to wait until the GDR is ready to become part of a united Germany but to unify the nation immediately so that later, in the process of mutual adaptation and addressing common challenges East and West Germany could learn to coexist again. History has proved the truth of this decisive step.
Today under new historical circumstances we have a chance to build a unified and prosperous Europe. If we set this goal, it will become easier to reach compromises on specific issues.
Perhaps someone will call the ideas outlined in this article overly ambitious. In the modern world, however, the seemingly unimaginable is possible. We have witnessed the truth of this many times together. What we need to do is roll up our sleeves and get down to business.
I would like to use this opportunity to convey my warmest wishes to all readers of the Süddeutsche Zeitung.
