The Berlin-Paris-Moscow Axis

[vector7]

The Berlin-Paris-Moscow Axis

Source:Ria Novosti

For most of the last decade, Western European politicians have been staring down their wrinkled noses at Russia, complaining about its poor record on democracy, human rights and corporate governance. But over the last year, French and German politicians have beaten a path to the country to make sure they get a piece of what is soon to become the largest consumer market on the continent and one of the few that is sure to grow over the coming years.

Europe has done an abrupt about-face in its attitude to Russia, and a Berlin-Paris-Moscow triangle has appeared in European politics. The change is remarkable. Russian President Dmitry Medvedev will be in Munich in the coming weeks to deliver a speech that is bound to be full of flowery phrases on cooperation and partnership. But only three years ago, then-President Vladimir Putin used the same venue to deliver what amounted to an ultimatum: stop interfering in Russian internal affairs or the Kremlin will look for new friends.

The economic crisis has changed everything. Rich countries could afford high-minded ideals before the financial firestorm swept the globe in Fall 2008, but now faced with impossible debt loads and crushing deficits, the key goal is to get economies moving – and Russia is one of the few places in Europe where companies can make any money.

Germany was the exception to this EU conceit. Former chancellor Gerhard Schroeder spent most of the last decade wooing Russia. As a result, Schroeder won a nice job for himself – he now works for Russian state-owned gas giant Gazprom as head of the Nord Stream gas pipeline project. But this project should also prove a boon for his country, as the pipeline terminates on the German Baltic coast, making Berlin a lynchpin in European energy politics.

When Angela Merkel took over as chancellor in 2005, she pointedly gave Moscow the cold shoulder, choosing to visit Poland on her first foreign visit. More recently, relations have improved, as the chancellor follows Germany's leading companies to this increasingly important European market. The rest of the German elite have taken her lead. "In Germany, we have an old saying that goes like this: 'When Russia seems strong, it is not as strong as it seems. When Russia seems weak, it is not as weak as it seems'," wrote Wolfgang Clement, a former German economy minister, in an op-ed in The Moscow Times in October. "The relations between Germany, the European Union and Russia can be summed up in five words: We depend on one another."

Reaching the summits

German President Christian Wulff was in Moscow for a state visit in the middle of October, complete with military honors and gala dinners, and gushed about the growing ties between the two countries. "About 6,500 German companies are working in Russia, and many of them plan to enlarge their business,” Wulff said in one of his many speeches.

The Kremlin, on a modernization drive that needs foreign investors, returned the compliment. "We have a large amount of cumulative German investments in the Russian economy. This is almost $23 billion. The growth in the first half-year equalled nearly $6 billion," said Prime Minister Vladimir Putin at his meeting with the German president. That means Germany already accounts for just over a sixth of all Russian investment on its own.

France has been slower to follow, but over the last year, it has been impossible to attend any high-level investment conference without running into the impressive French finance minister, Christine Lagarde, who was in Moscow again in October for VTB’s second investment summit, her third visit this year. Speaking on the eve of the IMF annual meeting and just ahead of the start of France’s chairmanship of the G7, she came bearing gifts. "There is a new monetary policy in the world. It is not unilateral, not bilateral, but multilateral—we need to be multilateral in all areas," said Lagarde at the event, echoing Russia’s decade-old position that was widely ignored while the United States was still the only superpower in the world. Lagarde crowed in the same speech that French investment into the Russia economy has just overtaken that of the U.S.

If there were any doubts over France and Germany’s commitment to pleasing the Kremlin, then the Deauville summit between Medvedev, Merkel and French President Nicolas Sarkozy in the third week of October should have put them to rest.

The German and French leaders promised to nix visa restrictions on Russian travelers to their respective countries (although not anytime soon). The Kremlin has aggressively been pushing for the end of visa restrictions, as it is the top item on the population’s wish list for Russia’s foreign policy – and both Russian leaders face elections over the next two years.

Sarkozy's office spilled the beans during the Deauville talks saying, "Russia wants the EU to relax visa requirements, while EU nations want clearer access to Russian gas and its economy." Merkel said the same thing, calling for an acceleration of a treaty with Russia that could address plans to abolish visas between Russia and the EU, even at a time when both Germany and France have taken a radical lurch to the right and clamped down hard on immigration.

[vector7]

Merkel calls for close NATO-Russia ties

2010-10-17 12:54

• Sarkozy 'misunderstood' Merkel
• Germany, Russia do deals

Berlin - German Chancellor Angela Merkel called on Saturday for closer ties between Moscow and Nato, ahead of a summit on Monday with Russian President Dimitry Medvedev and French President Nicolas Sarkozy.

"We will discuss whether it is possible for Russia and Nato to co-operate better, because the era of the Cold War is definitely over," she said in her weekly video message.

During the two-day summit, the three leaders will also discuss increased cooperation between the EU and Russia, Merkel said.

"The Russian president has proposed a common security architecture. He is working step-by-step to define this architecture - of course in a spirit of partnership of all European countries with Russia," she said.

The three leaders will meet in the French Channel resort of Deauville on Monday, aiming to bind Moscow more closely into a partnership with the West.

Nato will unveil its new security concept next month at its summit in Lisbon, and Western leaders hope Medvedev will confirm in Deauville that he will attend the meeting and give his support to their vision.

Meanwhile, Merkel welcomed Germany's selection as one of five new non-permanent members of the UN's Security Council.

"This will allow us to assume more international responsibilities over the next two years," she said.

- AFP

[vector7]

Bullish on the Bear

25 October 2010
By Richard Lourie

Russian policy is now driven by two factors: the imperative to modernize and the fear of China. Both dictate a move to the West, which is now well under way.



On Oct. 18, President Dmitry Medvedev met with German Chancellor Angela Merkel and French President Nicolas Sarkozy in France to formalize Russia’s relations with the European Union in security matters.

Medvedev will also attend the NATO summit in Lisbon on Nov. 19 to 20.

That was only possible because Russia had announced it was withdrawing its troops from Perevia, a Georgian town it had occupied in the 2008 war that had become a sticking point in negotiations with NATO. This comes after a significant concession by the Kremlin when it canceled the sale of S-300 anti-aircraft missiles to Iran.

Of course, none of this means that Russia is about to become the West’s lackey. For example, on Oct. 15 Medvedev and Venezuelan President Hugo Chavez signed a deal for Russia to build Venezuela’s first nuclear power plant. Russia has also sold Venezuela more than $4 billion in weaponry over the past five years. None of these transactions were designed to curry favor with Washington. Medvedev, however, termed the nuclear power plant deal strictly business. The little matter of Chernobyl aside, Russia offers a very good value proposition on nuclear energy. It will build the reactors, supply the energy at an attractive price and dispose of the waste — a decision, as one commentator remarked with mock wistfulness, that could not have been made quite so easily in a more democratic country.

But Russia has been losing ground in some of its traditional core competencies, including arms sales. Though still second to the United States, Russian sales have been hurt by Chinese “knockoffs at bargain prices.”

China became more assertive the moment it passed Japan to become the world’s No. 2 economy. This was displayed in its recent clash with Japan over a Chinese trawler captain held by Japanese authorities, its reaction to the Nobel Peace Prize being awarded to dissident Liu Xiaobo and in the recent embargo of rare earth minerals both to Japan and to the United States. Russia’s economy would not, of course, be much affected by an embargo of this sort, but many Russians will see these as the opening salvos in what former Mayor Yury Luzhkov once told me would be “the resource wars of the future.”

Coincidentally, the coming world water shortage was the cover story — “The New Oil” — of Newsweek’s Oct. 18 issue. It calls Russia, along with Canada and Alaska, one of the “winners” in the world of the “new oil,” seeing Siberian entrepreneurs selling water to an increasingly parched China. But those same resources also make Russia more attractive for a takeover, especially since the eastern reaches of the country are sparsely populated — 7 million Russians compared with 100 million Chinese on the other side of the border. Territorial disputes, although quiet for the time being, can always come back to life. Historically, China has always considered itself the injured party, its territory seized by “unequal treaties.”

Russia is interested in Western capital, know-how and security pacts but not Western values. A few concessions might be made, like a reduced sentence for former Yukos CEO Mikhail Khodorkovsky. But Russia will definitely improve economic and legal conditions to attract capital. The coming decade should be good for investment in Russia. For the first time in quite a while, I am bullish on the bear.