The Trump Administration’s announcements of tariffs on steel and aluminium imports and of US withdrawal from the multilateral nuclear deal with Iran provoked angry responses from the European Union. European Council President Donald Tusk caused a stir by remarking at an EU Summit in Bulgaria in mid-May, “looking at the latest decisions of President Trump, some could even think, ‘With friends like that, who needs enemies?’” The anger was compounded, especially in Germany and France, by President Trump’s reported demand that lifting of the tariffs would depend on a satisfactory US-EU trade deal and German withdrawal from the Russia-Germany Nordstream 2 undersea gas pipeline project, which would also attract sanctions under CAATSA (Countering America’s Adversaries Through Sanctions Act).
These developments accelerated a trend, already visible in recent months, of major European countries reaching out more decisively to Russia. There were telephone conversations of President Putin with German Chancellor Merkel and French President Macron and of Foreign Minister Lavrov with the respective Foreign Ministers. President Macron attended the high-profile St Petersburg International Economic Forum (also attended by Japanese PM Shinzo Abe, IMF MD Lagarde and an impressive collection of big Western business).
The tone and content of the Macron-Putin interaction was starkly different from their last bilateral interaction at Versailles about a year ago. There was none of the frisson that attended the earlier meeting: over hostile Russian media, cyber-interference and Syrian chemical weapons use. Even before arriving in Russia, President Macron said that he would be seeking “a strategic and historic dialogue with Vladimir Putin, to anchor Russia to Europe”. In St Petersburg, the two leaders were on first-name terms and carefully avoided discordant notes.
President Macron said France and Russia, as permanent members of the UN Security Council, should jointly protect “a multilateral approach in international relations.” He said France’s dialogue with Russia is one link in its independent policy, which includes belonging to a “democratic and sovereign Europe” and its alliance with the United States. He recognized Russia’s role in its neighbourhood and other regions like the Middle East, and its “indispensable role in solving some international issues”, though reminding that it should respect the interests of France and its partners, including on sovereignty. France, he said, would be a reliable partner of Russia “in building a common future”.
On the Iran nuclear deal, the two leaders declared an identity of views, including on President Macron’s initiative to discuss with Iran its post-2025 nuclear programme, issues of its ballistic missiles programme and regional stability, without prejudice to the existing deal. Both Presidents criticized US sanctions on Iran and President Macron said the operation of French enterprises in Iran will be protected by French law, and some “compensation mechanisms” may also be considered.
The French President side-stepped a question about Russian accountability for the 2014 Malaysian Airlines crash, by welcoming Russia’s offer to take part in the ongoing investigations. On another contentious issue – of alleged Russian cyber-attacks in France – the two leaders agreed to share information confidentially to promote mutual security.
There was also a remarkable convergence on Syria. President Macron said the Israel-Iran confrontation over Syria had reached alarming proportions. They agreed that there should be a coordination mechanism between the “small group” on Syria (US, UK, France, Saudi Arabia and Jordan) and the Astana process (Russia, Turkey, Iran) to take the Geneva process forward. Hitherto, the “small group” has pointedly ignored the role of the Astana process. President Macron explicitly stated that France has changed its views on the Syrian regime and accepts that it needs to participate in a dialogue, along with all streams of the Syrian opposition and all regional powers, to reach a political solution that preserves the sovereignty and territorial integrity of Syria.
On Ukraine, they recognized that the Minsk Agreements form the foundation for resolving its problems. This in itself is not remarkable, since Russia, Ukraine, Europe and the US have all said this, though each has a different idea of how the implementation should be sequenced. What is remarkable is the decisive manner in which France and Germany are moving to regain their roles as co-guarantors of the Minsk Agreements. The Normandy format (France, Germany, Russia and Ukraine) was the platform for monitoring progress of implementation, but was elbowed aside in May 2017, when President Trump appointed a Special US Envoy for Ukraine. There has been no progress since then, with Russia alleging that the US envoy is blatantly pro-Ukraine and the Europeans fading into the background. President Macron declared that working groups will be organised soon and that positive results could be achieved. Remarkably, Crimea or the territorial integrity of Ukraine was not mentioned, though the Russians had just a few days ago inaugurated a road bridge to Crimea from the Russian mainland – the only land access to Crimea hitherto was from the Ukrainian mainland.
The positive course of economic cooperation was noted. Bilateral trade grew by 17% in 2017 and by 25% in the first quarter of 2018. Russian investment in France is about $3 billion, while French investment in Russia is about $15 billion. Over 500 French companies operate in the Russian market, including in oil and gas extraction and other large-scale projects. Russia provides 25 percent of France’s uranium fuel needs. New projects are underway, including in high-tech manufacturing in Russia.
The visit of German Chancellor Merkel to Russia, earlier in May, was lower-key, but no less significant in content. Like President Macron, she stressed the importance of dialogue with Russia to resolve diverging views. She said that the trans-Atlantic friendship was firm and enduring, but it was equally in Germany’s strategic interests to maintain good relations with Russia.
Germany has traditionally been one of Russia’s main foreign trade partners, though bilateral trade had slumped from a peak of about $80 billion in 2014 to about half that amount. As in the case of France, trade has shown a healthy growth in 2017 and 2018. Russian investment in Germany is over $8 billion, while Germany has invested over $18 billion – about five percent of the total FDI – in Russia. About 5,000 German companies operate in Russia, with a total turnover of over $50 billion, and some 270,000 jobs. About 1,500 Russian companies operate in Germany. Mutual economic interests are, therefore, not insignificant.
The centrepiece of current Russia-German negotiations is undoubtedly the Russia-Germany Nordstream 2 gas pipeline under the Baltic Sea, in which French, Dutch and Austrian companies will also be participating, and to which the US and a number of European countries, including UK, Denmark, Poland, Ukraine and the Baltic countries, are opposed. on the ground that it would increase Europe’s dependence on Russian energy. The geopolitical concern is buttressed by an economic opportunity for the US and some parts of Europe: by restricting Russian gas supply to Germany, some Central European countries can use the under-utilized capacity in their LNG terminals to import US LNG. The US threat of invoking CAATSA against Nordstream 2 has drawn from Chancellor Merkel an explicit confirmation that Germany will go ahead with the project. In his joint press conference with Chancellor Merkel, President Putin sought to frame the issue in purely economic terms as a struggle for competitive supplies. As evidence of its determination to proceed with the project, Germany has commenced construction of pumping stations at the Nordstream 2 gas delivery point. However, further delicate negotiations would still be required with the US and key European countries to negate opposition to the project.
On Ukraine, Syria and Iran, the German Chancellor was on entirely the same page as President Macron.
Clearly, the new strains in the trans-Atlantic partnership are driving major European countries to the insurance of mending fences with Russia. However, in the current environment, achieving European unity on this matter is almost as difficult as achieving Euro-Atlantic consonance – and the two are inter-twined.
May 30, 2018