Europe should not follow US line on Russia

WorldView/Patrick Smyth: As an opening gambit it would not be recommended by a marketing man

WorldView/Patrick Smyth: As an opening gambit it would not be recommended by a marketing man. Russia in January assumed the presidency of the Group of Eight, the club of the world's richest nations, and immediately flexed its muscles in a very un-PC way by cutting off gas supplies to its neighbour, Ukraine.

Then there was more unwelcome attention as President Putin tried to curb the role of foreign NGOs. And protests from human rights groups about Chechnya, control of state television and the abolition of elections for regional governors.

In the Kremlin there was a growing realisation that perhaps they were off-message. A rebranding exercise was needed and, in the spirit of these free enterprise times, Moscow partially privatised its diplomatic/media effort by calling in experts from the land of advertising. US public relations firm Ketchum - clients include Pepsi - has been trying to burnish the country's image as a "reliable and responsible partner" ahead of next week's G8 summit in St Petersburg. Above all the exercise is about projecting Russia as having returned to the ranks of superpower - if not first division, then at least second.

Even if Russia is technically a full member of the G8, there are still some who feel it is not yet really one of the boys. Capitalism has certainly taken root, but the gangster variety. The OECD this week welcomed Russia's relaxation of currency controls on July 1st as an important facilitation of international business. But the organisation also warned bluntly about continued rampant corruption and the lack of adequate supervision of the financial sector.

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The US continues to block Russian membership of the World Trade Organisation, largely over access to the financial services market and video piracy. And the EU has been trying to tempt Russia to liberalise its energy sector with offers of access to the single market.

The summit will discuss all the current international crises from Iran to North Korea and Iraq among others, with bland joint statements likely to emerge that paper over the cracks of not insubstantial differences. Perhaps most importantly, however, for both Russia on one side of the argument and the rest on the other, will be the issue of "energy security" so embarrassingly highlighted by the Russian "blackmail" of Ukraine, as the blunt Dick Cheney put it last month.

With oil consumption likely to rise globally by 1.5 per cent this year and supply sources getting tighter, European members of the G8 are particularly vulnerable. The EU spent $69 billion last year on Russian oil and gas, with Germany particularly exposed - 41 per cent of its gas and a third of its oil came from Russia.

That has led to talk of trying to get Russia and other suppliers to sign up to a "code of conduct" on energy supplies to guarantee continuity, which purchasers argue is essential to stimulating the huge investment needed, notably in Russia's vast untapped reserves. Capital will also flow, Putin will be told next week, if Western firms have access to the market and Gazprom shows a willingness to share its pipelines with other firms. How much progress is made on these issues next week will be particularly significant to a thawing of underlying tensions between the G8's president and its partners.

Energy is at the core not only of Russia's relationship with the rest of the world, but critical to its own internal development. High prices in recent years have fuelled the annual 6 to 7 per cent growth in the economy and the booming stock market. But it has been a desperately uneven process - the country remains critically underdeveloped and the chasm between rich and poor - some two-thirds of people live on or below the poverty line - is potentially explosive. The tiny but massively rich oligopoly is deeply despised.

Against this background of potential for serious instability, compounded by spillover from the Chechnya war, the weakening of state institutions like the army, and the sense of threatening encirclement many Russians perceive in US encouragement of anti-Russian movements in former republics both in Europe and the south, there are important questions for the West about how to handle Russia.

In the US cold warriors are re-emerging, playing on Putin's undoubted authoritarianism, and they increasingly dominate official thinking. Some have spoken of the need for regime change. Cheney last month in Lithuania denounced Russia and made clear it is not "a strategic partner and a trusted friend", despite the outward rhetoric of US friendship of the last 15 years.

The influential Council on Foreign Relations has recently rejected partnership with Russia, calling for "selected co-operation" and "selected opposition" to Moscow.

In effect, says Stephen Cohen, professor of Russian studies at New York University, this is a policy of "Soviet era containment" and a recipe for exacerbating the instability inside Russia, a new one-sided cold war being waged by the administration and backed by many liberals. On the Russian side, he warns, the sense of repeated betrayal is understandable. Bush withdrew the US from the Anti-Ballistic Missile Treaty, Nato expanded, US bases were established in former Soviet republics.

Snubbed, Russia may turn to other allies from China to India, Iran and Venezuela, all powers in their own right, and its new oil wealth has given Moscow real influence over neighbouring countries like Georgia, Ukraine, Moldova, to mention but a few.

Europe should hasten slowly down the US road. Without supporting Putin's anti-democratic methods or his economic protectionism, constructive, reforming engagement is still possible, and must be in the interests of economies so much more closely entwined with and dependent on Russia. No to a new cold war, and yes to a new Ostpolitik! And we don't need a US PR company to tell us so.

Patrick Smyth is Foreign Editor of The Irish Times