Select Committee on European Union Third Report


PART 6: COMMON CHALLENGES

Crime and Corruption

61.  An area that was more dormant than active under the PCA was co-operation on combating crime and corruption. Not least, this was because the Russian Ministry of the Interior, in contrast to the office of the Prosecutor-General, steadfastly resisted efforts at engagement. It would be an exaggeration to claim that since 9/11 all has changed for the better. Minister for Europe Peter Hain acknowledged even now that "the Russian interior ministry is perhaps not the most progressive and efficient operator" in collaboration. (Q187)

62.  There has, however, been evident progress in the sharing of intelligence with the West against sources of terrorism. This has brought Russia and the EU closer in sharing information on international white-collar crime. Mr. Thomas Firestone, Assistant US Attorney and Resident Legal Adviser at the US embassy in Moscow, explained to the Committee that organised crime arose as an extension of the corrupt privatisation of state assets that began to occur even under President Mikhail Gorbachev. The absence of an appropriate legal framework for business led directly to the emergence of "a system of private dispute resolution "razborki" and private armies protecting certain private interests." (Q215) He distinguished sharply between this and the traditional Mafia hierarchy in Italy and the United States, in that Russian gangs formed themselves for specific tasks rather than permanent operations and then mysteriously disbanded. Whereas in the West "it is very clear who is in government, who is in business, and who are the leaders of the criminal community, and the three do not overlap", in Russia these were frequently "one and the same." (Q220)

63.  In the 1990's joint efforts by the FBI and its German counterpart the Bundeskriminalamt (BKA) to collaborate with the Russian authorities against money-laundering broke down when President Yeltsin refused to sign the appropriate legislation. The EU pressed onwards, however, and on 13 April 2000 it established an 'Action Plan in Support of the Fight Against Organised Crime in Russia.' A Committee of the Russian Federation on Financial Monitoring was finally set up in November 2001, and anti-money laundering legislation at last took effect from 1 February 2002. This enabled Russia to have itself removed from the list of countries failing to co-operate[44]. There was further movement on 25 September 2002, when an agreement was reached with Washington allocating $1,900,000 to Russia to fight the drugs traffic and organised crime in general. This has been paralleled in Europe by direct discussions between Justice and Home Ministers of the 15 and their Russian counterparts, focusing on specific operational measures not just on organised crime but also on administrative and judicial reform in the Federation itself.

The Problem of Kaliningrad

64.  The manner in which President Putin has handled the delicate and potentially explosive issue of Kaliningrad indicates just how seriously he weighs the EU in this new balance, just as the position finally taken on Iraq will indicate the limits and extent of Russia's alignment with the United States. EU enlargement to encompass Poland and the Baltic States further complicates the anomalous situation of the Kaliningrad region. Formerly Königsberg, the city had been a major German port in East Prussia. After annexation by the Soviet Union (with Allied consent) in 1945, the German population was largely driven out and replaced by Soviet citizens. The region encompasses some 5,830 square miles. To the south stands Poland and, to the East, Lithuania. Kaliningrad lies 200 miles distant from the body of Russia.

"The Problem of Kaliningrad"—(Map)


65.  To travel to Kaliningrad from north-western Russia by land or direct air route requires passage across Latvia or Belarus and then through Lithuania. Polish and Lithuanian implementation of the EU common tariff and the Schengen accord will mean that Kaliningrad will be cut off, for trade and, more important, for population movements, by land (though not by sea) from the body of Russia. For the Russians this has symbolic as well as material consequences. For the EU, however, there can be no question of making decisions that affect the vital interests of an acceding state without that country's wholehearted consent. The European Commission has been wrestling with this problem at least since January 2001, when it issued its first communication on the subject. The issue featured prominently in discussions at the EU-Russia summit in Moscow on 29 May 2002, when the Russians were handed proposals on "EU-Russia Co-operation on Kaliningrad: 2002 and beyond."

66.  Kaliningrad can only benefit from increased EU attention. GDP is 35 per cent below the Russian average. Industrial production has dropped by 60 per cent since 1990. It is estimated that nearly one third of the population lives below subsistence levels. In addition, the problems of disease (notably AIDS), environmental pollution, crime and corruption are here even more serious than in Russia as a whole. Since these ills are not easily confined to Kaliningrad by even the most stringent border controls, the EU has long recognised the need to raise Kaliningrad to a position where its circumstances are comparable with those of the surrounding acceding states.

67.  Accordingly, the EU has committed some €40 million for resolution of the problem to date. Of this amount a significant proportion (over 25 per cent) has been allocated to the construction and renovation of border crossings. There are currently 23 crossing points with Poland and Lithuania. Estimated movement across frontiers in 2001 is of 960,000 crossings by train and 620,000 by car, from a population totalled at 947,000. Of these journeys the greater part go via Lithuania (some 1,500,000). Up to now €14 million has been dispensed to underpin business, trade and technological development, plus €3 million allocated to the energy sector.

68.  On 11 November 2002 the European Union and Russian Federation issued a joint statement on "Transit between the Kaliningrad region and the rest of the Russian Federation"

The joint statement includes (i) The provision of a Facilitated Transport Document (FTD) Scheme from 1 July 2003 for Russian citizens travelling between Kaliningrad and other parts of Russia by land. To be reviewed by the EU no later than 2005. (ii) A Facilitated Rail Travel Document (FRTD) for Russian citizens intending to make a return trip by train through the territory of the Republic of Lithuania without alighting in Lithuania. (iii) A feasibility study in 2003 considering the Russian proposal for visa free transit by high speed non-stop train. (iv) An agreement to continue discussions between the Russian Federation and the EU on the transit of goods, within the PCA framework. The Committee welcomes this agreement.

69.  These measures effectively delay matters to allow further time to reach a solution satisfactory to all parties and in so doing they defuse existing tensions for the short-term. Nevertheless, problems still lie ahead, not least since there are no suitable high-speed trains of the kind envisaged. Furthermore, the Commission still insists on the Schengen provisions. By way of compensation, however, it is willing to co-operate more fully on organised crime, environmental hazards and economic development. The Committee note the electoral significance of the timing of the agreement. The Kaliningrad issue is one of great sensitivity within Russia and the election season does not end until the summer of 2004. This effectively leaves six months for a final agreement to be made by a Russian government bolstered by a clear mandate from its electorate.

70.  Lithuanian worries arise from anxiety that, as a result of inadequate policing of the borders with Kaliningrad, the frontiers between themselves and the rest of the EU are subject to continuing controls even after accession. They are therefore seeking written guarantees to ensure that this does not happen. The burden of a solution to the problem of Kaliningrad is thus effectively shifted towards Brussels. The Committee favour such a move.

71.  Kaliningrad has benefited from external support for environmental improvement. This falls within the Action Plan for the Northern Dimension agreed at Feira on 13 June 2000. The Plan treats environmental problems common to the littoral states of the Baltic Sea and touches on an issue of critical importance since the disaster at Chernobyl in the Ukraine.

The Environment

72.  The improvement in the environment falls logically within the process of reform within Russia, in the sense that any improvement would raise the standard of living and life expectancy of the population and hence contribute to greater political stability and economic prosperity. Yet progress can only be at the expense of diverting economic resources that are as yet in short supply. In short, it would be unreasonable to expect President Putin, facing an agenda of change that already tests the tolerance of the population, to grasp this particularly unpleasant nettle with enthusiasm in current conditions. The problem is complicated by the decay of nuclear facilities and by the military, who resist encroachment into their own domain. It is for this reason that the EU's role can only be one which looks to the medium, or even the long, term.

73.  Although environmental conditions within Russia have improved since the early 1990's, even Russian government scientists admit that 15 per cent of the country is unfit for human habitation and that nearly one third of the population suffers from pollution at levels which are far higher than any which are generally accepted internationally.[45] One third of all water pipes and 17 per cent of sewage pipes urgently require replacement. 1.8 billion tons of toxic waste has been accumulated and is further accumulating at a rate of 108 million tons per annum. Air pollution from heavy vehicles and factory emission is dangerously high. As a measure of the effects of environmental pollution life expectancy is now estimated for men at between 58 and 60 years as opposed to 75 years in the United Kingdom.[46]

74.  The EU has contributed to what effort there has been since the signature of the PCA. Areas receiving attention have included wasteful use of energy resources, disease arising from pollution, management of waste (including radioactive material) biodiversity and pollution of inland and partly closed seas (the Baltic, Barents, Caspian and Black Seas).[47] But the problems are far from going away. For instance, it is reported that there still exist 200 reactors in 110 decommissioned nuclear submarines in Barents Sea naval bases.[48]

75.  Between 1991 and 2000 the EU provided some €774 million to the Commonwealth of Independent States as a whole. Yet only €25 million in the past five years has gone to Russia itself.

76.  It is freely accepted that more could and should be done. The then Minister for Europe Peter Hain regretfully acknowledged that "we do need a much better partnership with the Russian authorities on environmental matters." Nevertheless "it is not really a shared priority between the European Union and the Russians." (Q199) Yet by the Russians this priority has in fact been downgraded rather than upgraded or even maintained. The State Committee on Environmental Protection has been swallowed up by the Ministry of Natural Resources—only to be demoted and reduced in size. The consequence of this is, as the Department for International Development told the Committee on a previous occasion, that "powerful commercial interests and other Ministries can ignore environmental regulations."[49]

77.  If it is difficult to sustain Russian government attention to the general problem of environmental improvement, it is almost impossible to engage in serious debate on the most dangerous problem of all—fissionable material[50]. The problem is complicated by the Russian military. In areas where the military have been unable to influence events, they have had to accept new realities with sullen passivity. In areas where they can resist by inertia—as in this instance—they have done so and show every sign of continuing to do so. Thus Russia has dragged its feet in signing up to a legal framework under which nuclear clean-up programmes can sensibly proceed.[51] Indeed, where the EU has been active, lack of co-operation has been raised repeatedly as an obstacle to progress.[52]

78.  The EU here, as elsewhere, is not alone. The United States has taken the lead in a programme to improve the security of installations holding or producing weapons-usable and weapons-grade isotopes. But, by contrast, cuts in military expenditure in Russia have made matters worse. Results have therefore been mixed. Security upgrades have to date extended to only 21 per cent of Russian weapons-usable materials. "Progress is most advanced at civilian institutes and Russian navy sites, and lags at Minatom [Ministry of Atomic Energy] facilities within the nuclear weapons complex—which contain most of the material of proliferation interest—because Russian security concerns prevent direct access to sensitive materials."[53] Clearly, more must be done by the EU, but equally clearly, in close co-operation with the United States. We note, perhaps somewhat ominously, that Minatom has been working with Iran on nuclear matters.

79.  In less sensitive areas the problem may be so great and any solution potentially so costly that this is unlikely to command anything near a high priority in Moscow. Nevertheless it was suggested that the best way to proceed might be to link aid for environmental clean-up with business profitability. If entrepreneurs could be shown that it was in their monetary interest, for instance, to invest in "clean" technology, the argument might be more persuasive. This is particularly true at local rather than national level, not least through the agency of local government.

80.  In summary, Russia has over a decade engaged in a process of fundamental reform. The transformation of a command economy and political dictatorship into a market economy and a presidential democracy has no historical precedent. It is therefore not surprising that the road to reform has been hard and uneven. Initially political uncertainty clouded the prospects for economic change. The accession of President Putin finally brought political stability, albeit at the price of reduction of media freedom. Combined with the restoration of Russia as a major energy exporter, this has enabled economic reform to accelerate. The emerging rapprochement with the United States and Member States of the EU promises a further and more ambitious advance, once the elections scheduled in Russia for 2003-2004 are over.

Russia - Declared Chemical Weapons Storage Facilities -Map


81.  The EU here, as elsewhere, is not alone. The United States has taken the lead in a programme to improve the security of installations holding or producing weapons-usable and weapons-grade isotopes. But, by contrast, cuts in military expenditure in Russia have made matters worse. Results have therefore been mixed. Security upgrades have to date extended to only 21 per cent of Russian weapons-usable materials. "Progress is most advanced at civilian institutes and Russian navy sites, and lags at Minatom [Ministry of Atomic Energy] facilities within the nuclear weapons complex—which contain most of the material of proliferation interest—because Russian security concerns prevent direct access to sensitive materials."[54] Clearly, more must be done by the EU, but equally clearly, in close co-operation with the United States. We note, perhaps somewhat ominously, that Minatom has been working with Iran on nuclear matters.

82.  In less sensitive areas the problem may be so great and any solution potentially so costly that this is unlikely to command anything near a high priority in Moscow. Nevertheless it was suggested that the best way to proceed might be to link aid for environmental clean-up with business profitability. If entrepreneurs could be shown that it was in their monetary interest, for instance, to invest in "clean" technology, the argument might be more persuasive. This is particularly true at local rather than national level, not least through the agency of local government.

83  In summary, Russia has over a decade engaged in a process of fundamental reform. The transformation of a command economy and political dictatorship into a market economy and a presidential democracy has no historical precedent. It is therefore not surprising that the road to reform has been hard and uneven. Initially political uncertainty clouded the prospects for economic change. The accession of President Putin finally brought political stability, albeit at the price of reduction of media freedom. Combined with the restoration of Russia as a major energy exporter, this has enabled economic reform to accelerate. The emerging rapprochement with the United States and Member States of the EU promises a further and more ambitious advance, once the elections scheduled in Russia for 2003-2004 are over.

PART 7: CONCLUSIONS AND RECOMMENDATIONS

84.  The institutional framework for dealing with Russia would benefit from renovation. The division of views and competences between the Council of Ministers and the Commission, and differing responsibilities within creates problems for EU/Russian relations. A single office within the Commission, at high level, co-ordinating all matters relevant to Russia would be a sensible way forward. (paras 13 and 32)

85.  The PCA has several years to run. Its current structure no longer fully meets demand and in practice is effectively circumvented. It was created to match the needs of the immediate post-Soviet period, when Russian reform had barely started. (para 32)

86.  The Common European Economic Space is not a substitute for the PCA. It both promises too much and offers too little. It promises too much in appearing to Russia to offer the benefits of participating in the EU without the costs and obligations normally entailed. On the other hand, it offers too little in confining the EU-Russia relationship to questions of commerce. (paras 20 and 42)

87.  The Committee believes it is time to consider ways which would hasten institutional reform, help Russia prepare for entry into the WTO, prevent damaging energy dependence for the EU, provide foreign and security policy co-ordination and the wider prospect of a greater convergence of values. (para 21)

88.  The Committee recommends that the EU should consider a major programme of educational assistance that focuses on training the rising generation of Russians (especially officials, and not merely in the field of foreign affairs) in European universities on all matters related to the EU. It also proposes that EU officials dealing with Russian issues receive appropriate additional training. Sharing opportunities between European and Russian youth would secure a better mutual understanding in the long term. (para 45)

89.  The EU may also wish to consider a more active role on behalf of Member States in seeking to lock in Russia as a major supplier of oil as well as gas over the next two decades, given uncertainties in the Middle East. (paras 26 and 28)

90.  Since Chernobyl all Europeans have become more aware of the fact that pollution knows no political frontiers. To the extent that the EU can offer assistance, it has to draw Russia's attention to the fact that environmental concerns are a vital and not a secondary interest and that closer co-operation, particularly in the area of radiological protection, would be warmly welcomed. (para 77)

91.  As for the enclave of Kaliningrad, the Committee recognised that the solution to its impending isolation will require considerable ingenuity, but is encouraged by the progress which has recently been made. The EU now stands firm by the Schengen agreement. A mixture of non-stop trains with what would amount to free passage, low-priced air transportation and with multiple entrance visas for local traffic by road may well provide a long-term solution. Lithuania, on accession, has to be assured that its borders will be fully open to the remainder of the EU. The task of ensuring the security of its frontiers beyond thus lies with the EU. (para 70)

92.  If co-operation in CFSP is to extend substantially beyond anti-terrorism, there must be thorough reform of the Russian armed forces over the next decade. Such reform first of all requires a clear definition of the purpose of these forces. It would be to the EU's advantage to indicate where and how co-operation is envisaged in the longer term. Although it will be to Europe's advantage to promote links that lock Russia into a stable European security system, it will be no less important to avoid any dissonance between NATO's links with Russia and Russia's association with the CFSP. The greatest possible co-ordination will need to be maintained by the EU. (paras 58 and 60)

93.  The Committee's overall conclusion is to warn that most of the changes advocated with respect to Russia itself, though immediately desirable, are unlikely to be fulfilled in anything closer than the medium-term (within a decade, not less). Unreasonable expectations of a dramatic transformation—perhaps raised by the rapid strategic shift made by President Putin after 9/11—will only undermine the sustained and steady progress towards solutions that benefit both the EU and Russia. (para 80)

94.  The transformation of Russia will ultimately be completed primarily from within, from below as much as from above, and through a change in outlook as well as of institutions. The EU does, however, have a measure of responsibility. Where it can move effectively, it has the capacity to act more promptly in reordering its priorities and building the foundations for a more profitable future relationship. The advantages are self-evident. Her Majesty's Government should therefore press the EU to adopt a longer-term strategy towards Russia, one that will enable Europe to encourage this transformation and to develop a more systematic and productive relationship with Russia in the decades ahead.

  1. For these reasons, the Committee considers that the question of EU relations with Russia raises significant issues to which the attention of the House should be drawn. We accordingly make this Report for debate.



44   The list of non-co-operative countries in the fight against money laundering drawn up by The Financial Action Task Force (FATF). Information can be found at www.oecd.org/fatf. Back

45   "Environment Problems in the Russian Federation", Research & Analytical Papers, Eastern Research Group, Foreign and Commonwealth Office, October 2000. Back

46   Communication from the Commission-"EU-Russia Environmental Co-operation", Brussels, 8 January 2002. COM (2001) 772 final.  Back

47   Communication from the Commission-"EU-Russia Environmental Co-operation", Brussels, 17 December 2001. Back

48   European Voice, 10/11 October 2002. Back

49   Memorandum from the Department, 3 June 1998: House of Lords, Select Committee on the European Communities, Partnership and Trust: The Tacis Programme. The Environment of Russia and The New Independent States, HL Paper 157. Session 1997-1998. 33rd Report (HMSO London 1998) p45.  Back

50   Fissionable materials are materials which are capable of undergoing nuclear fission (Oxford English Dictionary). Nuclear Safety Management 59 FR 15851 (April 5th 1994) defines fissionable material as a nuclide capable of sustaining a neutron-induced fission chain reaction (e.g. uranium-233, 235, plutonium-238, 239, 241, neptunium-237, americium-241 and curium-244). Back

51   See map on page 24. Back

52   From the European Commission: Tacis Nuclear Safety-Indicative Programme 2002-2003Back

53   Annual Report to Congress on the Safety and Security of Russian Nuclear Facilities and Military Forces FY 2000Back

54   Annual Report to Congress on the Safety and Security of Russian Nuclear Facilities and Military Forces FY 2000Back


 
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