Moscow wary of TTIP talks
Russian Ambassador to the EU Vladimir Chizhov | John Thys/AFP via Getty Images
WASHINGTON — The effort to strike a transatlantic trade pact this year isn’t just occupying political leaders in Washington, Brussels, Paris and Berlin. It’s also being eyed warily in Moscow, where Russian officials see the potential deal as a threat.
The Russian suspicion is easy to understand: While fights over French cheese, U.S. procurement rules and environmental regulations make headlines, supporters argue that the Transatlantic Trade and Investment Partnership will strengthen the broader transatlantic relationship. Some have even taken to calling the deal an “economic NATO.”
And just as Vladimir Putin has opposed the expansion of NATO and EU influence in Russia’s backyard, Russian officials fear the pact would further isolate them from the world economy.
“We are watching the debate closely,” Vladimir Chizhov, Russia’s ambassador to the European Union, told POLITICO at the Russian mission in Brussels in late April.
Russia’s concerns about TTIP don’t get much attention in Washington and Brussels. But Moscow has been actively pushing its neighbors in the EU to strengthen ties with them, and not the United States. Moreover, Russian officials — and the country’s state-owned and state-affiliated media machine — are quick to highlight the disputes that continue to bedevil the U.S.-EU talks.
“What we do know is that the Kremlin hates this deal. That’s fact” — Anthony Gardner, U.S. ambassador to the EU
“There is no consensus [for TTIP] on both sides of the Atlantic…Here in Europe, there’s a series of concerns. But that’s not our show. So we’re watching and analyzing,” Chizhov said.
Russia’s accession to the World Trade Organization in 2012 after 18 years of negotiations was seen as a milestone in bringing Moscow into the global trade fold in terms of rules, standards and import tariff reductions. But Western sanctions imposed after the Russian annexation of Crimea have dented the Russian economy, along with low oil prices. And as the Obama administration tries to win congressional approval of a vast Pacific Rim trade pact with 11 other countries — the Trans-Pacific Partnership, or TPP — while also boosting trade and investment ties with Europe, Chizhov argues that Russia and other major economies will be left on the outside looking in.
“[TTIP and TPP] would leave important countries like mine, China, India — the well-known growing economies — outside of these arrangements that would cover two-thirds of world trade,” said Chizhov, who has held his post for the past 11 years.
Damon Wilson, the executive vice president of the Washington-based Atlantic Council and a former top Europe advisor in President George W. Bush’s White House, said he thinks the Russians “are fundamentally fearful of the [TTIP and TPP] deals” because they could change the power dynamics surrounding global trade.
The prospect of TTIP, Wilson added, “creates an inevitability over time, that the Russians will have to play by U.S. and EU rules. Rather than be at the table shaping standards, they’re going to have to react.”
Some U.S. officials are more blunt. “What we do know is that the Kremlin hates this deal. That’s fact,” Anthony Gardner, the U.S. ambassador to the EU, told POLITICO last year. “Just go onto the website of Russia Today and it’s full of misinformation about this deal for a lot of reasons.”
Public opposition in Europe remains high, particularly in Germany and Austria, creating a stormy political climate for a final deal.
As Russia’s economy has declined over the last couple of years, the country’s exports to the EU — mainly natural gas and mining products — dropped 25 percent between 2014 and 2015, from $207 billion to $154 billion, according to the European Commission. Still, EU member-states account for about 50 percent of Russia’s overall trade flows, even as the country has banned the import of European food in response to EU sanctions.
As Russia’s Chizhov notes, the U.S. and EU remain far from a TTIP deal amid disputes on many key issues, even as Angela Merkel and Barack Obama sought to breathe new life into the talks during Obama’s visit in late April to Germany.
Public opposition in Europe remains high, particularly in Germany and Austria, creating a stormy political climate for a final deal. The day before Obama’s visit last month to Hanover, Germany, tens of thousands of protesters took to the streets to rage against the potential pact. Moreover, the U.S. presidential election and looming national elections in France and Germany have made candidates increasingly sensitive to the trade skepticism running through Western electorates.
Nevertheless, Russia remains concerned, and sees these trade deals as a zero sum affair: you’re either in or you’re out.
The Russian alternative
That’s why Russia has been hawking its own trade zones, trying to get European governments to join it in a trade alliance that would reach from “Vladivostok to Lisbon,” as Putin wrote in 2010.
“There are other integration processes outside of TTIP and TPP,” Chizhov said. “One is in the form of the Eurasian Economic Union (EEU), which now includes five countries and others waiting in line.”
Last year, when Russia established the EEU, linking it with of Armenia, Belarus, Kazakhstan and Kyrgyzstan, Chizhov said the European Union should abandon TTIP and go all in with the Russians.
But countries like Georgia, Moldova and the Ukraine have spurned the EEU, instead signing association agreements with the European Union. At the same time, breakaway regions in each of these countries have expressed support for joining the Russian-led trading bloc.
“We don’t even chlorinate our chickens” — Vladimir Chizhov, Russia’s ambassador to the European Union
“Do you believe it is wise to spend so much political energy on a free trade zone with the USA while you have more natural partners at your side, closer to home?” Chizhov said at the time. “We don’t even chlorinate our chickens.”
But the Russians had particularly wanted Ukraine, which has the second largest economy in the post-Soviet region and a population of around 45 million, to join the EEU as well — partially to fend off attempts to integrate the country more into the European Union.
The Eurasian Union was meant to boost Russia’s negotiating leverage with respect to the European Union, but the institution only made sense if Ukraine was a part of the venture, notes Fiona Hill, director of the Center on the United States and Europe at the Washington-based Brookings Institution, and co-author of a biography of President Vladimir Putin.
But that didn’t work out. Indeed, history looms large in Russia’s TTIP calculus: The EU’s decision to negotiate a major association agreement, including a free trade deal, with Ukraine — and Moscow’s attempts to thwart such a deal — were a key factor leading to Ukraine’s Euromaidan movement and Russia’s subsequent 2014 invasion.
An ‘economic NATO?’
Some supporters have taken to casting TTIP in security terms, and the European Commission is pushing the U.S. to include an energy chapter in TTIP as a means to secure access to U.S. natural gas and reduce European dependence on Russian energy.
Back in 2012, none other than Secretary of State Hillary Clinton — the current Democratic presidential frontrunner — called a transatlantic trade pact an “economic NATO.”
But linking TTIP and NATO only heightens Russian anxiety about the deal. Analysts and even some supporters of TTIP are wary of annoying Russia with that description. Hill recalls moderating a panel at Brookings with former NATO Secretary General Anders Fogh Rasmussen in March of 2014, where he was asked a question that referenced TTIP as an economic NATO.
“[Rasmussen] leapt on it immediately and I could see several people in the EU delegation going, ‘oh God,’” she said. “That’s not what it’s supposed to be about, but the Russians have taken on board the idea that it’s the economic equivalent of NATO, because certain security people who know very little about economics and trade keep touting it like that.”
After the event, Hill says she told Rasmussen that the negotiators working on the trade deals wanted to emphasize that they didn’t intend to create an economic equivalent of NATO.
Some supporters have stopped framing the trade deal in security-oriented terms as the negotiations have heated up. Still, the links between NATO and the idea of a transatlantic trade deal do have historic resonance. The second clause of NATO’s charter treaty from 1949, for instance, notes that member states “eliminate conflict in their international economic policies and will encourage economic collaboration between any or all of them.”
Regardless, Brookings’ Hill notes that the Russians are leery of having to bargain with any larger bloc, and she notes that TTIP creates an air of uncertainty about their already fraught trading relationship with Europe.
“If TTIP is going to make the world even more complex in terms of the immediate markets on their doorstep, and is going to change the rules of engagement that they already thought they’ve established with Europe,” she said, the Russians “are not going to like it one little bit.”