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