The collapse of the rouble and the unstable economic and political situation in Russia were in everyone's mind in Strasbourg this month. They prompted MEPs to call on the new government to introduce measures to encourage Russians to make best use of the estimated $150 billion investment in the local economy. European Parliamentarians do not want to see more EU money poured down what many saw as a bottomless pit, unless there are more stringent controls and strict monitoring.
Commission President Santer told the House, in a debate that took place in the presence of members of the Russian Duma, that some ECU 2 billion had been allocated to Russia under the TACIS programme since 1991. Now the aim was to back projects geared towards reform, although Mr Santer admitted that the programmes were very much dependent on co-operation with local administrative authorities. Nevertheless, the Commission was in the process of preparing a whole series of measures specifically geared towards tackling the present economic crisis. European experts in the fields of public finance and taxation were on hand to give advice.
Political direction
He singled out co-operation in the customs field as an area where EU expertise was proving particularly helpful, especially as customs fraud in Russia amounted to an incredible $6 billion. Intense co-operation with the Russian authorities was also taking place with a view to tackling money laundering. Other fruitful areas of co-operation covered science and technology, transport and energy and training Russian businessmen, where an EU programme will enable 2000 young Russians to learn western management practices next year.
But the Commission President emphasised that what was missing was political direction and close co-operation between the various Russian authorities. It was vital that a member of the government was charged with organising this co-operation, he said, expressing his desire to work directly with local and regional bodies.
Council President-in-Office, Austria's Mrs Benita Ferrero-Waldner, told MEPs that Austrian Foreign Minister Schussel was leading a foreign policy troika to meet the new Russian Prime Minister Primakov. She stressed the need to continue with the ratification of SALT II disarmament treaty and to stop the proliferation of nuclear materials. Mrs Ferrero also stressed the need for political and economic stability to go hand in hand for Russia to be integrated into the world economy. She emphasised that there could be no return to the command economy, although she recognised there could be problems on the way to the social market economy.
Trade
Although trade with Russia only accounted for 3.5 per cent of the EU's exports, many MEPs were worried about the knock-on effect and the threat to stability on Europe's frontiers. One member raised the subject of starving Russians swamping Finland's borders, while others were concerned about the impact on Eastern European states. The lesson for the EU was that this crisis should speed up the accession process to ensure stability on the continent, argued John Cushnahan (Munster, EPP), pointing out that even a small country like Ireland was adversely affected by the crisis as Irish beef and pork exports to Russia had slumped.
Another concern was the EU's human rights and democracy programme which James Elles (Buckinghamshire and Oxfordshire East, EPP) reminded MEPs had made an enormous contribution in helping young Russians to appreciate western democratic values.
Mark Hendrick (Lancashire Central, PES) felt that Russia's experience with economic reforms showed that the present approach had in fact failed, based as it was on the free market and investment in emerging markets, at little expense to western finances. He called for a new approach with the EU playing a leading role backed up with the launch of a strong currency - the euro.
Parliament's joint committee with members of the Russian parliament was also meeting at the same time. It agreed a joint declaration that endorsed the appointment of the new prime minister and recognised that the current economic and financial crisis in Russia was caused both by an internal Russian political crisis which prevented any consistent legislative activity, and by the unstable situation on world financial markets and by the decline in oil prices.
The committee felt the crisis was also aggravated by the shortcomings of existing social and economic infrastructure. Other structural problems contributed, including a heavy budget deficit, serious shortcomings of the tax system, an acute lack of proper tax collection, large volumes of illegal transactions, low level of management quality in industry and banking, non-transparency of budgetary relations, and a lack of favourable conditions for attracting direct foreign investments.