The Members of the European Parliament's International Trade Committee have highlighted an agreement with Moscow covering different areas that should help increase European trade with Russia. Yet small successes like this do not hide the underlying reality, that like Washington, Moscow also has switched its focus to Asia.
The European Parliament's committee highlighted success in four sectors, which despite Russian accession to the World Trade Organisation, give better terms to EU companies than are needed under WTO rules. The sectors of favour are for wood exports, car parts, raw material duties and for the service sector.
The EU in 2010 as a whole made up 47.1% of Russia's overall trade turnover, whilst Russia was the EU's third largest partner after the US and China. Yet, dig deeper, and the statistics become murkier. In 2010 Germany itself, without the rest of the EU, was Russia's main trade partner, a position since usurped by China. In the first two months of 2012, China took the top place and projections are for Russian-Chinese trade volumes to reach $70 billion in this year alone. Current trends point toward the achievement of $100 billion by 2015.
Just as Leon Panetta, the US defence secretary, issued strategic guidance in January 2012 on America's pivot to Asia, so Putin's regime knows that, as the EU falls apart, the future is East. Members of the European Parliament may trump up agreements with Russia that apparently favour the EU as diplomatic triumphs, but the reality is that Moscow takes care of Russian interests first and foremost.
For the wood deal, the EU has been recognised as a stable source of demand for Russian exports. Yet China and the US are the world's largest wood importers, with Chinese demand doubling in 2005-2010. In contrast, the value of exports to Europe had fallen, even before the financial crisis.
For the car parts market, Russia has rules that encourage manufacturers to relocate to Russia, by placing tariffs on the import of foreign-made car parts. The new agreement means that if EU exports of car parts fall, Russian import duties for the EU car parts will also fall. Hardly a great triumph for the EU, but in reality recognition that many large car companies have strong roots in the member states of the EU, making the EU, for now, a key source of car manufacturing.
For essential raw materials, Russia agreed only to discuss tariff increases two months before planned increases in export duties on materials which are key to European industries, meaning essentially that Moscow can judge whether it goes ahead with increases according to the political and economic conditions and strengths of that particular moment in time.
The last part in the agreement also reflected Russian self-interest, with preferential access being granted to Europeans working in professional services companies, who seek to start businesses. This clearly aims to bring expertise and wealth from Europe to Moscow via selective immigration, to promote faster development and to put Russia onto the global map as a major financial services centre faster than would happen organically.
The self-interested nature of all Moscow's decisions clearly shines through and aligns not only with Russian policy but also with Chinese interests. When Putin met Wu Bangguo, the Chairman of the Standing Committee of China's National People's Congress, Mr Bangguo said very clearly that Russian success is part of Chinese policy, in building a multi-polar world and in "bringing more democracy into international relations".
As such, the MEP's triumphant negotiations would appear to reflect in reality the keen submission of a weakened ‘state’ to the will and whim of a greater authority. The EU presents itself as relevant, but with a currency in crisis and an increasingly ageing and declining population, the facts beg to differ. Moscow meanwhile, like America, is under no such illusions. The future is Asian.
