Russia and EU join forces

Regular visits to Moscow by George Robertson, NATO's secretary-general, would have been regarded only a few years ago as an improbable dream. Its reality today is symptomatic of the pace of change in relations between Russia and the West.

This same urgency is driving Russia's relations with the European Union as both sides start working together on a common European economic space, an initiative to develop closer economic ties. There are strong reasons for both sides to make progress.

First, the September 11th attacks in the US have laid to rest the last ghosts of the cold war. President Vladimir Putin's commitment to the coalition against terrorism and Russia's willingness to facilitate the international humanitarian effort have surprised many.

Second, as some of the countries of the former Soviet bloc prepare for EU membership, there are undeniable political, economic and practical consequences for Russia that need to be discussed.

On trade, the EU is already Russia's main partner, accounting for 35 per cent of the country's exports. Enlargement is likely to increase that figure to 50 per cent.

Third, Russia is making progress with economic and political reform. Important new laws have been adopted. In other areas, such as administrative and judicial reform, change is slower and there are still several trade issues and other bilateral concerns that need to be dealt with. However, the EU welcomes the progress so far and is supporting the reform process with financial and technical assistance.

In this respect, Russia's ambitions for membership of the World Trade Organisation should be a priority for both sides. This must be realised not on the basis of a political quick fix but because Russia meets all the necessary conditions. By the end of this year, Russia will have a full picture of what is required of it, bringing renewed impetus to the negotiations.

Russia has a lot to gain from closer economic relations with the EU. With a population 10 times as big, Russia's gross domestic product is similar to that of the Netherlands.

But the prospect of enlargement offers opportunities for both sides. Central to realising those opportunities is the common European economic space. Confirmed in October, this initiative should help to build a privileged relationship between the EU and Russia. The changes being made as part of Russia's economic reform programme pave the way.

Of course, we are not talking about preparing Russia for EU membership or seeking to have Russia take on the whole body of EU legislation. But Russian companies will be able to compete more effectively in the European single market if the legislative and regulatory framework is similar.

On a practical level, using technical standards similar to the EU's will enable Russian goods to find new outlets in a single market that will soon number 470 million consumers. The wider application of the principles of good governance will help stem the flight of capital, which currently stands at €20 billion to €25 billion a year, and attract foreign and Russian investment, bringing jobs, and transfers of technology and know-how.

Investment may be on the rise but there is still a long way to go. Russia needs to press on with reforms to make its legal framework more stable, more predictable and more transparent, and to strengthen its economy and competitiveness.

An important component of the future common economic space is our energy dialogue, which can become a blueprint for wider relations with Russia. Energy is a crucial sector for the world's third-largest producer of oil and gas; it accounts for more than 40 per cent of Russia's budget revenue.

It also important to the EU, both as an investor and a consumer, because it has to secure its supply.

The EU is determined to make a success of the common economic space. With the strong backing of Mr Putin, we can build a new relationship that spans our continent.

The writers are, respectively, European commissioner for external relations and European commissioner for trade