Following on the visit of the EU High Representative to Moscow (April 24; see Review, April 2017), there were major Russian interactions with Germany (May 2), Italy (May 17) and France (May 29) during the month. The emphasis in all these exchanges was on political and economic re-engagement.

Though Western economic sanctions and financing restrictions on Russia remain in place, all three countries noted significant increase in bilateral trade and investment. Russia’s bilateral trade with Germany grew by 43% in January-February 2017. Germany is Russia’s largest foreign investor with FDI of over US$ 16 billion. Similarly, Russia-France bilateral trade increased by 14% in 2016 and by 23.7% in the first quarter of 2017. About 500 French companies operate in Russia and direct French investment in Russia increased by $2.5 billion in 2016. With Italy, bilateral trade grew 28% in January-February 2017 and about 600 Italian companies operate in Russia. Over the past year and a half, European companies have increasingly found ways around trade and financing restrictions to continue business with Russia. In the past six months, they have been engaging much more openly.

Media reported that the Merkel-Putin exchanges were cold and formal. President Macron was aggressively blunt in his public statements. In contrast, the Russian-Italian exchanges were cordial – Italy has been among the strongest critics of sanctions on Russia.

However, all three EU leaders emphasized the importance of cooperation with Russia in the fight against international terrorism, supported the Astana process and advocated an intensification of bilateral educational, cultural and civil society links. France and Germany reiterated commitment to the “Normandy Four” mechanism to expedite implementation of the Minsk agreements in Ukraine. While the Italian Prime Minister was forthright in his criticism of sanctions on Russia, Chancellor Merkel said she would like them lifted “upon implementation of the Minsk agreements”.

In his listing of Russia-France bilateral issues at the joint press conference, President Macron gave top billing to the treatment of LGBTs in Chechnya and of NGOS in Russia, saying he had told President Putin “in no uncertain terms” what France expects on these issues. He went on to describe the Russian news agencies RT and Sputnik as “bodies of false propaganda”. President Putin chose not to respond to these broadsides.

The “Trump effect”, Brexit and the fallout of the West Asian conflicts may be nudging Europe to more pragmatic accommodation with Russia. Its course will depend on how the faultline between “new” and “old” Europe on this issue is addressed.

 

 May 30, 2017

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About the Author

Born in 1955, Ambassador Raghavan holds a B.Sc. (Honours) degree in Physics and a B.E. in Electronics & Communications Engineering. He joined the Indian Foreign Service in 1979. From 1979 to 2000, he had diplomatic assignments in USSR, Poland, United Kingdom, Vietnam and South Africa, interspersed with assignments in the Ministry of External Affairs (MEA) in New Delhi. From 2000 to 2004, he was Joint Secretary in the Indian Prime Minister's Office dealing with Foreign Affairs, Nuclear Energy, Space, Defence and National Security. Thereafter, he was Ambassador of India to Czech Republic (2004 - 2007) and to Ireland (2007 - 2011).

He was Chief Coordinator of the BRICS Summit in New Delhi (March 2012) and Special Envoy of the Government of India to Sudan and South Sudan (2012-13). Ambassador Raghavan conceptualized and piloted the creation of the Development Partnership Administration (DPA) in MEA, which implements and monitors India’s economic partnership programs in developing countries, with an annual budget of $1-1.5 billion. He headed DPA in 2012-13. From March 2013 to January 2014, he oversaw the functioning of the Administration, Security, Information Technology and other related Divisions of MEA. Since October 2013, he was also Secretary [Economic Relations] in MEA, steering India’s bilateral and multilateral external economic engagement. Ambassador Raghavan retired from the Indian Foreign Service in January 2016, after serving from 2014 as Ambassador of India to Russia. Since September 2016, he is Convenor of the National Security Advisory Board of the Government of India.

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