Global Economics

Brussels Courts Moscow with Free Trade


The European Commission has offered a free trade agreement to Russia, in a bid to reach an overall deal with Moscow which should also secure the EU's future energy supplies.

Commission chief Jose Manuel Barroso stated on Monday (3 July) upon a visit to the fresh Finnish EU presidency in Helsinki that "we propose to move towards a free trade area to be completed once Russia accedes to the WTO."

Mr. Barroso's offer is part of a plan by Brussels to revamp political ties with the Russians, with the current Partnership and Cooperation Agreement between Brussels and Moscow open for re-negotiation from 2007 onwards.

He added that Brussels regards energy as another key element of the overall deal with Moscow.

"We propose a partnership approach for energy, based on mutual interests and agreed principles," said the commission chief.

The free trade offer appears particularly designed to overcome the recent energy deadlock between Brussels and Moscow.

European politicians have repeatedly questioned Russia's reliability as an energy provider since Moscow briefly cut off gas supplies in January, but Moscow is at the same time complaining that the EU fences off its energy market to Russian firms.

The EU is trying to persuade Russian president Putin to ratify the Energy Charter Treaty, which would oblige Russia to open its oil and gas pipelines to foreign companies and competition ? but Moscow is irritated by EU governments blocking its energy giant Gazprom from entering European energy markets.

Meanwhile, the new Finnish presidency of the EU has made EU-Russia ties one of its key priorities, with Finland's prime minister Matti Vanhanen saying the talks on the new trade and energy deal with Moscow would start next year.

"Our aim is that in November, when we have this EU-Russia summit, to make a decision to start official negotiations...and that negotiations would be done during 2007," he said on Monday according to media reports.

Helsinki is seeking a strengthening of the so-called Northern Dimension of the EU, referring to the specific co-operation between the EU's northern and Baltic member states - Iceland, Norway and Russia

But the new presidency is facing a tough task not to offend Russia-wary new member states such as Poland and the Baltic countries by getting too cosy with Moscow.

Apart from trade and energy, the current Partnership and Cooperation Agreement with Russia also involves cooperation in justice and home affairs and external security, with the commission saying in a statement that it hopes the new agreement will also cover this "whole range" of areas.

Meanwhile, Russia has put forward proposals that its EU enclave of Kaliningrad could act as a pilot project for integrating the two powers.


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