Luke, the barber working in the Danko square in Brussels, was philosophizing on transient nature of wealth by people, countries and the mankind… “When my father was young, he had a car of the same make that Hitler had, and my father was mere a brewer. That was great times… Now life is getting worse in Europe”.
The handle for reflection was a train of disturbing demonstrations of protest. The day before yesterday fishers expressed their indignation with the solar oil price rise, and they hurled fires at the police before the European Commission. Yesterday haulers stopped up the highways, and today hundreds of trucks and farming machines have blocked the capital.
Each visit to a filling station is a new disappointment. Half hundred liters ate 80 Euros at once from the plastic card account. Last year the monthly advance for gas and electricity was ˆ99 and this year this is ˆ127, and no one is able to forecast what a surprise it can be at the end of the year. Inflation rate in Belgium has exceeded 5% per year. The figure is lower for other Euro zone countries (with the exception of Slovenia), but still it’s over the established limit of 2%.
Fishers, haulers and farmers don’t care about macroeconomics, and they accuse the Eurocrats of obstinacy. And the latter are watching the market mechanism like Cerberus, executing their mandate. They can slacken a nut only in case the politicians order that. However, at the June’s summit of the EU the French President Nicolas Sarkosy, calling to reduction of VAT for petroleum products, did not receive support. His colleagues consider such a measure to be populism equal to treating the symptoms and not the disease. It is thought that the cheated market would goose the demand for energy carriers, which would promote the inflation.
Politicians find themselves to be between hammer and anvil. Everyone is going to have elections, while the “soothing set” to be applied with people is not of much option. Along with the issue of demographic aging, the new economic reality offers threats for the “social model” that Europeans are proud of and that still attracts new countries and millions of immigrants to the EU.
An observer of Le Soir newspaper wrote “The feast is over. It’s going to be for the first time in history (with the exception of short war periods), that living standards of our children will be lower than ours. They will have to share the natural resources with billions of the former starving, who sat at the computer and are willing to do same job four, ten and even hundred times cheaper than we do. We need urgent measures to be taken in the only possible direction: reduction of consuming the natural recourses”.
It’s about time we got used that the epoch of the cheap energy is over. That was announced by the energy European commissary Andris Piebalgs, when defending the project of the EU energy strategy. The project is about search for new sources, development of energy saving technologies, reduction of consuming. All that takes money. And with the exorbitant prices for gas and oil any crazy ideas and innovations may become paying.
With all saving measures and efficiency it would be impossible to go on without traditional energy carriers. This is why the second part of the strategy is about diversification of import, and development of competition. In this point the interests by Europe clash with the interests not only by the suppliers, but also by the rudiments of its own state-monopolist capitalism. Debates are going on with difficulty about separation of the extracting companies from the distribution networks. There is no need to explain, in this aspect, how difficult it is to build up relations with Gazprom.
Reports from other continents convince the Europeans it’s not only them to have crisis and that in the epoch of globalization it is impossible to solve the problems within the frames of single states or even within the frames of the united EU market with the population of half a billion people.
It’s not only about billions of Chinese and Indians who are consuming more energy. The rich with natural resources countries have accumulated huge means. And with the exception of Norway, the sovereign investment funds are in hands of not much democratic governments. Non-transparency and the threat of turning it into a political weapon make Europeans afraid so much that they are nearly ready to waive the sacred principle of the free market and to restrict selling of assets to foreign state companies.
At a seminar in Brussels the prime minister of the Gessen Land, Roland Koch, noted that “the accessibility of the German market makes it attractive…However, there are more voices heard in the discussion about sovereign investment funds, speaking for new protective barriers, in other words, for protectionism. Russian investors got interested with the stock of German-French aerospace company EADS over the 5%, already bought by the Russian bank. Many of us have realized for the first time, maybe, that along with dynamic development of the world financial markets the behavior by investors changes. We must look closely at what it might mean”.
Against this background the EU-Russia talks started in Brussels on 4 July, dedicated to the new basic agreement. Its working title “On strategic partnership” intends finding together the solutions to the global problems instead of tug-of-war of the “national interests”. The talks are not limited in time and promise to be difficult. Since the early 1990’s, when the standing agreement was concluded, the EU and Russia have changed both. This can be noticed looking at the Russian officials arriving in Brussels: smart costumes, confident gestures, rich presentations.
The global goals of Perestroika times and admiration with the European model of the early 1990’s have given way to “national interests” and “competition”. “We shall never be alike” say firmly today’s Russian politicians. “Look. You are having a crisis, while we are going uphill”.
At the Russia-EU Parliamentary Cooperation Council the Russian co-chair Andrei Klimov, the member of United Russia, gave at once the business to the partners, reminding that Europe is not the hub of the Universe anymore and that other countries and regions are strengthening and not all of them share the European values. Besides, Mr. Klimov noted that the western theories, artificially brought to the Russian soil, have caused more evil than good, like it was with Marxism in 1917 and liberal ideas at the end of the 20th century. This is why the Russian people treats with suspicion the advices from abroad.
The deputy Sergei Zheleznyak has called to separation of economic cooperation from the topic of human rights and assured the European colleagues that Russia is in the vanguard of struggle against corruption. He said it’s time to get to business and to start with freedom of movement of people, commodities, services and capitals.
That’s a good thing, and so no one argued. However, the majority of European deputies did not agree with separation of democratic values from the trade and investments. The European Union is an ideological project. Equal understanding of democracy, personality’s rights, authority of law, civil liberties, market economy – all that is the only basis, on which peoples with different languages and cultures got united.
The Finnish deputy Reino Paasilinna could not help taking a look at those values from the point of view of the country’s modernization. “For you it would be difficult to become equal partners, not just raw materials suppliers. The USSR had oil and gas, but it had no personal liberty, and this is why it collapsed. It is not enough just investing into knowledge, as only a free person may apply it. We, Finns, not only are selling the wood and can process it well. I can see you have Nokia mobile phones” and he pointed with his head at Messieurs Klimov and Zheleznyak.
Nonetheless, the consumer’s boom in Russia and the temptation of high profits attract European businessmen. Many of them make a pressure on politicians so that they not argue too much with Russians about democratic values. Fast money is more important. The lack of energy and related to it crisis phenomena in Europe are leading in same direction. Brussels has to watch with displeasure the leaders of some EU countries build up their own relations with the Kremlin.
Benita Ferrero-Waldner, the External Ties European Commissary:
“Considering the importance of energy issues in our economic relations it would be strange to sign an agreement not including energy topic! The EU has a clear position: much remains to be done along the whole chain, in all the spheres of energy branch both in Russia and the EU. Russian energy branch needs significant capital investment. After recent liberalization of the electric energy industry we see the foreign capital go to this sector. On the other hand, the investors from the EU meet difficulties in the oil and gas industry. The EU companies are trying to bring the know-how and the capital into Russia, while Russia wants to make more investments in the EU. Combination of those mutually complimentary wishes might help us come to an agreement. The decision may be based on the principles of Agreement on the energy charter, also on the principles that we arranged during Russian chairmanship in the G8.
Russia and EU have undertaken important international obligations in the field of democracy, civil liberties, authority of law. The European Convention on Human Rights and basic liberties has been ratified by all the members of the Council of Europe, including Russia. This document defines a set of democratic standards and offers a forum for settlement the arguments regarding the topic. This forum is the European Court for Human Rights.
All the EU countries share certain market principles, and the role of the state there is restricted with the law. And in Russia we see strengthening of the state’s role in the economy. I’m sure that entering WTO by Russia would help consolidating the programs for economic reforms taken by Russian authorities since 1991. The EU supports completely the efforts by Russia for entering WTO and for closer integration into the world economy.
Stability in Europe is in Russia’s interests as well as in those by the EU. This is why, when we accepted the road map of the common space of our external security, we agreed to give special attention to “frozen conflicts” at the space of common neighborhood. Movement to that goal proved to be slower than many hoped it could be, and some cases, for instance, the recent actions by Russian authorities, did not promote stability. I have insistently called both Russia and Georgia to pragmatism and complex approach in settlement of the conflicts, as we all are responsible for stability on the continent.