Russia-EU relations: a bang or a whimper?

The Russia-Georgia war continues to have repercussions: EU leaders gathered in Brussels today for an emergency summit on the state of relations with Russia. Last month, I attempted to apply a rudimentary public choice model to the major players in the conflict. At the time, for simplicity’s sake, I treated the EU as a single entity with a unified policy position. In reality this could not be further from the truth. There are hawks, such as the previous Warsaw Pact members and the UK, and there are doves, such as Germany and Italy. In determining a member nation’s stance, it is useful to look at two metrics in particular: history and energy. Specifically, has the country been pushed around by Russia in the past (pretty much all of Eastern Europe)? And how much Russian energy does the country import? Personal relationships also play a role: Vladimir Putin and Italian Prime Minister Silvio Berlusconi are close friends, for example.

Where do the Russians stand? I’m troubled by the implications of their explicit declaration of ‘spheres of interest’. However, I still think it’s possible to at least partly understand Russia’s motives through the looking-glass of its leaders’ personal incentives. This is a view that I first heard espoused by Garry Kasparov in 2007 and again last week by Richard Baldwin. It’s certainly true that Russia’s political elites are making an enormous amount of money off of the country’s economic expansion, and they’re aware that war would disrupt this trend. As a friend of mine once put it, capitalism in Russia is like the Wild West: poorly regulated, corrupt, winner-take-all, and unprotected from government intervention. In such circumstances, powerful political actors are well-positioned to get rich. While stoking the fires of nationalism will help solidify their leadership, outright war is undesirable because Russia might lose and the economy might tank. Thus, I suspect that Russia’s leaders won’t push things too far (I’m being purposefully vague), as doing so would be against their own interests. In any case, Russian stock markets have already been majorly spooked by the war and other recent events.

And where does this leave us? For the time being, I suspect that ‘pragmatism’ on all sides wins the day. The EU stopped short of applying sanctions: the last thing that leaders in flagging economies want is to be on the wrong side of high-stakes energy diplomacy. Still, the rarity of such emergency EU summits signals that they’re taking this seriously. Russia, in turn, is quite reliant on the EU for its export market (which feeds into the reasons mentioned above). Is this the right policy for the EU to be pursuing? It’s doubtful: I think the EU ought to be taking a tougher line, and it still might if it can get its own ducks in a row on the appropriate policy response. This is something to keep watching.

(photo by dbarronoss)