COOPERATION NEEDED BETWEEN BUSINESS AND POLITICIANS FOR THE CREATION OF A COMMON ECONOMIC SPACE

While there are a growing number of successful, constructive and mutually beneficial business relations between Russia and the EU, the uncertainties in global financial markets and the recent tensions in the EU-Russia relationship have affected potential investors’ willingness to commit to new projects.

Political leaders on both sides need to reassure the business communities that they are strongly committed to constructive multilateral and bilateral negotiations on strengthening the trade and investment relationship. Political leaders on both sides are called upon to demonstrate the benefits that would be derived from the creation of a Common Economic Space between Russia and the EU and later to even closer integration. Inevitably, the governments on both sides will have a final word in this matter. But the ideas of business can only be fruitful if supported by political consent. Major initiatives in business have to be approved at the highest political level. General modernisation of Russia cannot move independently from government policy, nor can it contradict such a policy. Business people on both sides indicate that they long for an efficient economic partnership between Russia and Europe. The creation of a Common Economic Space would help remove the problems of export imbalances and “energy security”. French President Nicolas Sarkozy came up with the idea of creating such a Common Economic Space between Russia and the EU in order to forge a new relationship with Russia based on trust and tighter integration. “I don't see Russia as a determined rival to the European Union," Sarkozy told the Parliament. "I think, on the contrary, that it is necessary, in the future, to lay the basis of a Common Economic Space between Russia and the EU.” He added that Europe and Russia needed each other, with Russia possessing the energy resources and Europe the technology that Moscow needs. For her part Ferrero Waldner Commissioner for External Relations stressed that economic and trade relations between the EU and Russia were getting stronger, explaining that Russia was the EU's third most important trading partner and growth rates were up to 20% per year. Energy is a major factor, but there is impressive growth in services too, she revealed.

With its recent high growth rates and emerging middle class, Russia is an important emerging market right on EU’s doorstep that offers opportunities, notwithstanding the effects of the present financial crisis, Ferreo-Waldner said. She added that the EU was a major investor in Russia, accounting for 80% of cumulative foreign investment, while a significant share of Russian foreign reserves are in euro, making Russia one of the largest holders of euro-denominated assets in the world.

The EU and Russia should set an example and work together on the creation of such Common Economic Space and the business communities should be invited to participate in these discussions.