greater market access for US businessesand more opportunities for US FDI inthe Russian market. 21 Nonetheless, theRussian market remains a legitimatesource of concern. Rampant corruption,poor business practices, and the lack of arule of law continue to hamper economicdevelopment. Recent controversies,particularly the case of murdered lawyerSergei Magnitsky demonstrate thatsignificant pitfalls to doing business inRussia remain. 22Therefore, in lockstep with PNTR, the newadministration should consider pursuinga broader modernization partnership withRussia in conjunction with the EuropeanUnion that emphasizes Western businessnorms and works towards strengtheningthe rule of law in Russia. Many Russiacritics point out that Putin has shownlittle, if any interest in pursuing genuinewidespread economic reforms. However,events may dictate a more concerted efforttowards modernization and economicdiversification. Russia’s failure tomodernize means it will fall increasinglyfarther behind the US, Europe and China.Additionally, Russia’s heavy reliance onhydrocarbons means that the Russianeconomy will continue to be susceptibleto fluctuations in oil and gas prices. GivenRussia’s dependency on the Europeanmarket, an exacerbation of the eurozonecrisis or a precipitous drop of oil and gasprices could impact the economy in a waysimilar to the 2008 global economic crisis.in millions of USDUS-Russia Bilateral Trade & Investment Relationship40,00035,00030,00025,00020,00015,00010,0005,00002004 2005 2006 2007 2008 2009 2010 2011US exports to RussiaUS FDI in RussiaRussian exports to USRussian FDI in USEU-Russia Bilateral Trade & Investment Relationship300,000250,000Sources: US Census Bureau; Foreign Trade; BEA: Foreign Direct InvestmentThe US and Russia have previouslypledged to work together on PrimeMinister Medvedev’s ModernizationInitiative, as evidenced by the “JointStatement on a Strategic Partnershipin Innovation” released during the US-Russia Business Summit in 2010. Thefocal point of US support has been the“Skolkovo Innovation Center” intended toserve as a Silicon Valley-like communityjust outside Moscow. The Center ispromising, and several US companieshave already pledged to invest in theproject, but the venture represents atop-down approach to modernizationthat does not address the broader needto reduce corruption, strengthen rule oflaw, and protect intellectual property. 23in millions of USD200,000150,000100,00050,00002004 2005 2006 2007 2008 2009 2010 2011EU exports to RussiaRussian exports to EUEU FDI in RussiaRussian FDI in EUSources: Eurostat, International Trade; Eurostat, Balance of Payments*2011 Eu-Russia FDI data not yet published as this went to print6 8Russia
The US should instead focus on effortsthat seek to broaden the scope ofmodernization and move cooperationaway from the political level and towardsa bottom-up, grassroots approach.It can also utilize the knowledgeand experiences gained through theEU’s ‘Partnership for Modernization’including those countries with vestedbusiness interests inside Russia. Trilateralcooperation can work towardsstrengthening Western business normsand creating a vibrant market economyin Russia. But perhaps more importantly,an improved investment climate andexpanded US economic trade with Russiacould lead to economic growth in sectorsoutside of the extractive industriesaffiliated with or controlled by theRussian government. This in turn wouldstrengthen the growing middle class ofmoderates and reformers that constitutethe most significant constituency forlong-term change in Russia.5. Expect Russia to make a “pivot”of its own to Asia:The clear message from the recentAPEC Summit in Vladivostok is thatRussia increasingly sees its futurein Asia. Moscow’s need to reduce itssusceptibility to a major economiccrisis in Europe and the growing roleof the US and China in the region willnecessitate a move eastward. TheObama administration should thereforeprepare for a Russian “pivot” of its ownto Asia that will bring challenges in theAsia/Pacific region and along the post-Soviet periphery.Since Putin’s return to office, the Russiangovernment has placed expandingeconomic ties in the region at the top ofits agenda. A major priority at the APECSummit was touting the developmentof the Eurasian Customs Union, whichPutin declared would “play an active partin shaping the regional and internationalagenda”. 24 The union, based largelyon the EU model, creates a commoncustoms market for three states (Russia,Kazakhstan and Belarus) with hopes ofeventually bringing most of the formerSoviet Union into the fold.The ECU will be especially importantas Russia increasingly faces stiffcompetition in the Central Asia region.The EU’s pursuit of the so-calledSouthern Gas Corridor has turned its gazeincreasingly towards Central Asia, whilethe US and NATO continue to maintainan active interest in the region thanksto operations in Afghanistan. China isalso taking a more active interest in theregion. Central Asia currently supplies10 percent of China’s energy needs, andtrade with the five Central Asian statestotaled $23 billion in 2010. 25 Navigatingrelations with Beijing is tricky. On onehand, China has replaced Germany asRussia’s top bilateral trade partner,totaling $80 billion in 2011, and Russiais eager to build the infrastructurenecessary to export its hydrocarbonseastward. 26 Yet both countries areincreasingly in competition forresources and influence in CentralAsia. Russia’s economic struggles haveweakened its influence in Central Asia,and the financing of oil and gas fieldsand infrastructure in Turkmenistan,Kazakhstan and Uzbekistan threatensto upset Moscow’s dominance of theregion’s energy transport network andreduce Russian leverage. 276. Forge a common trans-Atlanticposition on Europe’s periphery:Both the US and European states willwant to continue bilateral engagementswith Russia, but the Obamaadministration should also stronglyconsider pursuing a common trans-Atlantic position on Europe’s easternperiphery, particularly with countriessuch as Ukraine and Georgia. The EUhas pushed its Eastern Partnershiptowards these states and other countrieson the European periphery with theaim of acculturating them to EU normsand standards.But Europe’s efforts to integrateUkraine and Georgia have been slowand uncoordinated, as EU memberstates are split between those seekinginclusion in Euro-Atlantic institutionsand those reluctant to do so due toissues such as visa liberalization or fearof harming relations with Russia. WhileUkraine has professed that its destinylies in Europe, its weak institutions,widespread corruption, and PresidentViktor Yanukovych’s more pro-Russianforeign policy has make it difficult tomeet EU standards. Georgia’s prospectshave likewise dimmed considerablyfollowing the 2008 war with Russia. Thelonger the Association Agreement andDeep and Comprehensive Free TradeAgreement (DCFTA) negotiations dragon, the more difficult it may be for thesegovernments (particularly Ukraine’s) tobuild the political support necessaryto ratify them. And apprehension insome European capitals, particularlyBerlin, has stalled Georgia’s efforts tojoin NATO.The stalling of negotiations presentsan opportunity for Russia and the ECU,into which Moscow has campaignedheavily for Ukraine’s inclusion. While aDCFTA with Europe would force Ukraineto adopt EU rules without having a sayin them, the ECU would offer Ukrainefull membership rights and allow it tomaintain access to the Russian market. 28Georgia has maintained a strident pro-West attitude, but it also has a sizabletrade relationship with Russia. Theother factor is that while the ECU is sofar relatively weak, further developmentcould see it end the EU’s role as the“only game in town”. Therefore, the USand Europe must together to find acommon position on the region thatmaintains the attractiveness of Euro-Atlantic institutions and pushes fordemocratic reforms.Russia6 9
- Page 3:
Field Manual to EuropeIntroduction
- Page 6:
multilateral channels. Europeanshav
- Page 9 and 10:
JuneBritish presidency of UNSCJune
- Page 12 and 13:
US-EU Investment vs. Global Nationa
- Page 14 and 15:
economic conditions in the eurozone
- Page 17 and 18: MEMO ONTHE EUROZONE CRISISThe State
- Page 19 and 20: attitude toward moral hazard. Withw
- Page 21 and 22: Greece: 2010 Bailout BreakdownGreec
- Page 23 and 24: the deficit from 4.5 percent to thr
- Page 27 and 28: NATO thus faces an uncertain future
- Page 29 and 30: 1. Consider NATO’s defensespendin
- Page 31 and 32: of-area operations and worldwidepar
- Page 33 and 34: concurrent terrorist attack in Beng
- Page 35: 2. Strengthen regionalpartnerships
- Page 38 and 39: MEMO ONCOUNTERTERRORISM ANDHOMELAND
- Page 40 and 41: home affairs (JHA), particularly in
- Page 43 and 44: Status of EU Countries in the US Vi
- Page 45 and 46: offensive capability centered at NA
- Page 47 and 48: socialized, i.e. there is a tacit e
- Page 49 and 50: such technology, such as deep packe
- Page 51 and 52: MEMO ONENERGY & CLIMATE CHANGEThe S
- Page 54 and 55: identifying the agents most qualifi
- Page 56 and 57: MEMO ONTURKEYThe State of PlayTurke
- Page 58 and 59: as a rising regional and internatio
- Page 60 and 61: CASE STUDY: TURKEY’S ENERGY ROLE:
- Page 62 and 63: 22%12%Turkey’s Main Trading Partn
- Page 64 and 65: MEMO ONRUSSIAThe State of PlayIn Pr
- Page 66 and 67: EU-Russia security apparatus. Themo
- Page 70 and 71: MEMO ONCHINAThe State of PlayIn 201
- Page 72 and 73: But China’s competitive meridian
- Page 74 and 75: in millions of USDUS-China Bilatera
- Page 76 and 77: 7 6Acknowledgements
- Page 78 and 79: CITATIONSINTRODUCTION1See “Confid
- Page 80 and 81: 20Castle, S. (17 September, 2011).
- Page 82 and 83: ARAB UPRISING1Koch, C. (summer 2011
- Page 84 and 85: COUNTERTERRORISM & HOMELAND SECURIT
- Page 86 and 87: 21Healey, J. (January 2012). Beyond
- Page 88 and 89: 20Berlemont, I. (25 July, 2012). Fr
- Page 90 and 91: 24Putin, V. (6 September, 2012). An
- Page 92: Bertelsmann Foundation1101 New York
Change language