ISSUE 1-2013
INTERVIEW
STUDIES
Богдан Олексюк Степан Григорян
RUSSIA AND VISEGRAD GROUP
Любовь Шишелина Jakub Groszkowski
OUR ANALYSES
Дюла Свак
REVIEW
Владимир Воронов
APROPOS
Степан Григорян


Disclaimer: The views and opinions expressed in the articles and/or discussions are those of the respective authors and do not necessarily reflect the official views or positions of the publisher.

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RUSSIA AND VISEGRAD GROUP
INSTANCES OF NON-EXISTENT V4 – RUSSIA RELATIONS
By Jakub Groszkowski | Analyst at Centre for Eastern Studies, Poland | Issue 1, 2013

Russia is often perceived as a great, however absent topic in cooperation within the Visegrad Group. Among numerous meetings between the V4 and representatives from neighboring countries, there were only two V4+ Russia meetings, both on expert level. Of course, from the Moscow perspective Central European states do not have any significant position, especially when perceived as separate countries rather than a region. This can be seen in recent Foreign Policy Concept of the Russian Federation, where Central Europe is barely mentioned. The view from the Visegrad capitals is naturally different and Russia is taken as one of the major foreign policy factors. Why has it no reflection in V4 activities then?

One of the most common elements of different definitions of Central Europe says the region is situated between Russia and Germany. This should not be regarded only from geographical point of view. Any kind of Central European identity naturally is to emerge in opposition to Russian and German. Similarly, common problems, interests or goals are to be defined differently than those of Russia or Germany. These discrepancies do not exclude fields of cooperation between the V4 and its key neighbors. They help to discern and define where the region as a whole can act as one actor in relation with more powerful states.

This relation between Germany (or the West in wider sense), Central Europe, and Russia (or the East) had a crucial importance for the region in the last two decades of the 20th century. When the Visegrad cooperation was launched back in 1991 one of the first goals that kept Czechoslovakia, Hungary and Poland together was to get rid of political symbols of the Soviet domination. It was soon fulfilled: the Council for Mutual Economic Assistance was dissolved in 1991 in Budapest, the Warsaw Pact Treaty Organization the same year in Prague. And the most important, the Red Army troops left the Visegrad states in 1991-93.

Political, social and economic transition which took place both in Russia and in Central Europe has normalized relations between both sides. However some politicians in Moscow and in Central European capitals remained stuck to mental schemes of subordinated near abroad or imperial ambitions of the Kremlin, while others started to underline promising economic perspectives. Nevertheless, in this case separation between politics and economy remained only theoretical. Dependence of Central European states on Russian energy resources and Russian dependence on oil and natural gas export to Europe has made energy issues the focal point of relationship between Russia and Central European states. Especially, within the model of power that emerged in Russia under Vladimir Putin who came into power in 2000.

Energy issues

Even though signatories of the 1991 Visegrad declaration promised to „coordinate the development of their power systems” not much was done in this field for the following 20 years. The risk that crude oil and natural gas may be used as an instrument of Russian foreign policy has not been widely considered as a serious problem in Central Europe after 1989. In Central Europe only the Czech authorities decided to diversify import route of crude oil by building IKL pipeline (1990-1995), which enabled refineries to import oil from Trieste through Germany. Hungarian government invested in natural gas interconnector with Austria (HAG, 1995) this, however, diversifies route but not the source, as gas imported from the West is Russian as well.

The idea of energy security appeared in wider public debate only after the concept of Nord Stream pipeline was announced in 2005. The Russian project aiming to bypass traditional transit countries caused an alarm in Poland, especially during the Law and Justice coalition government (2005-2007). Slovakia and Hungary, with their more open attitude towards cooperation with Russia did not express serious anxiety, however, Nord Stream, and Ukrainian-Russian natural gas conflicts in 2005 and 2007 did not remain unnoticed. In the Czech Republic the attitude towards Nord Stream was different since one of the pipeline's branches has its extension going through the Czech land (pipeline Gazelle).

Not only perception of security of supply was understood differently by different Visegrad states. Also the issue of strategic energy companies privatization brought about contrasting results. Russian companies, as main suppliers of energy raw materials are naturally interested in investments in the Central European energy market. Therefore transition period in Central Europe, with its strong impact on privatization has caused some questions in relations with Moscow. Polish authorities decided to keep a significant position of the state on energy market. As a result, main energy infrastructure including natural gas and crude oil pipelines as well as refineries remained controlled by the state. The only exception is the Polish section of Yamal gas pipeline (build in the '90) owned by a Polish-Russian joint venture. The Czechs decided to create a strong state-controlled company in electricity market – CEZ – and to privatize some other strategic energy market players, but there were no Russians among the buyers. The natural gas incumbent was sold to German company RWE and the main share in refineries was bought by Polish PKN Orlen. Hungarians also did not plan to sell their major energy company to Russians. Nevertheless, Russian capital managed to enter MOL through the third party. In 2009 Surgutneftegaz bought 21.2% of MOL from Austrian ÖMV. This deal, however, was not consulted with authorities in Budapest, therefore MOL's management made efforts to halt any possible Russian attempts to gain influence on the company. Today Hungarian state is the biggest shareholder in MOL. On the other hand, in Slovakia the government did not hesitate to sell shares of main energy firms to Russians. In 2002 Gazprom was a part of consortium (together with E.ON Ruhrgas and GdF) which gained 49% and managerial control over SPP – the Slovak national gas operator. However, in the end the Russian company did not take up the shares. The same year Yukos bought 49% shares with managerial control in Transpetrol, the company which controls the transport of Russian oil through Slovakia. But today situation in Slovakia is similar to this in other V4 states. Since 2009 Slovakian state has been the sole owner of Transpetrol and SPP ownership is divided between the state and the Czech company EPH, while refinery is owned by Hungarian MOL. After all Russian presence on the energy market in the region is rather limited. It is worth to notice that creation of strong national energy companies in the Visegrad states helped to decrease the level of foreign (Western or Eastern) capital inflow to Central European energy market. On the other hand companies such us CEZ, MOL or PKN Orlen are able to expand with in the region and create ownership links before the physical interconnectors between energy grids are finished.

The change in perception of energy security in Central Europe came together with the Ukraine-Russia natural gas crisis in 2009. It was especially important to Slovakia and Hungary, which found out that good political relations with Russia do not guarantee stable supply of natural gas. All region has understood that regional cooperation is necessary in order to build inevitable system of interconnectors. The estimated cost of 13 days long import disruption in case of Slovakia reached €0,5 bn. In order to enhance the level of regional cooperation in this area the V4 High Level Energy Working Group was created the same year.

In 2010 the V4+ Energy Security Summit, held in Budapest, gathered many high ranking representatives from Central Europe and the Balkans. The main idea approved during this meeting - The North-South Gas Corridor - remains one of the flagship initiatives of the V4+ cooperation. Already finished interconnectors on the Polish-Czech and the Hungarian-Croatian borders as well as start of the project on the Slovak-Hungarian border make the plan to connect natural gas networks of the V4 states and Croatia more and more tangible. Fulfillment of this plan will make the negotiation position of Central European states stronger during talks about long-term gas contracts with Russian energy companies. In case of energy security the V4 was able to attract southern neighbors within the V4+ format, but also to convince the European Commission, which has co-financed the North-South Gas Corridor through the European Economic Recovery Plan.

Investment in the infrastructure is however not enough to solve the problem of security of natural gas supplies or to make the Russian gas in Central Europe cheaper. In order to guarantee a stable transfer of gas in case of import disruptions and to bridge the gap between the prices paid Western and Central Europeans for Russian natural gas close market integration is needed as well. If it is not possible integration of all 27 EU states, then at least within the Central European region. The number of different players engaged in the process of market integration, their discrepant interests, together with common priority of politicians to keep the gas prices on the lowest possible level makes this process very complicated. Nevertheless gas market integration seems to be the only solution. Otherwise Russia and other gas exporters will see only separate states not the region. The Czech Republic gives a good example how it works. The country has high capacity interconnectors on the border with Germany, but no single market has been established between those countries. As a result in 2011 one third of gas import came to the Czech Republic from the German spot market, but still the price of Russian natural gas for the Czech Republic was around 503 USD for one thousand of cubic meters and 319 USD for Germany.

Another possible area of the Visegrad cooperation on the field of energy is the question of nuclear projects. Moscow is intensely interested in the Central European nuclear programs, e.g. Russian companies take part in the Czech tender to expand the Temelin nuclear power plant. Rosatom may also participate in the development of Slovakian Jaslovske Bohunice plant and Hungarian atomic power plant in Paks. Poland also has ambition to develop nuclear program, these plans however remain vague. Either way, some best practices how to organize such a tender and how to communicate with the technology providers may be shared within the V4. Even though, most probably Russia will do its best to retain these talks in bilateral format.

Eastern Partnership

Another V4 specialization within the EU is the issue of relation between the EU and the Eastern Partnership states. Even though the EaP idea has been presented as a Polish-Swedish initiative, it is worth to remember that the general idea of a new EU Eastern policy was worked out in the V4 format. This is one of the reasons why the EaP was so strongly supported by the Czech EU presidency and why all the V4 countries still treat the EaP as one of its foreign policy priorities.

After the EU accession in 2004 the Visegrad Group members have often stressed, that the enlargement cannot finish at this stage, and that the EU has to remain open for new members. This idea referred first of all to the Western Balkans, but also to at least some of the EU neighbors on the East in a long-term perspective. The main idea of the EaP was to give a new momentum to the relations between the EU and the six East European states. But another important rationale of the V4 cooperation on the EaP project, was to set a niche in the EU policy, where the Central European countries can talk with one, strong voice. When looking on the EaP thematic platforms one can see it has a strong Visegrad mark. All of these four topics are of crucial importance for the V4 members. Especially energy security, but also Democracy, good governance and stability, has a lot in common with visa regime and migrations. In addition to the EU instruments in 2011 during the V4 summit in Bratislava a special grant tool called V4EaP as a part of the International Visegrad Fund was agreed. Created to support the Eastern Partnership, one million euro instrument allocated by the V4 members aims to support democratization and transformation processes and the development of regional co-operation and civil society in Eastern Partnership countries.

From the very beginning the EaP has been presented as a policy supporting modernization process in the six East European countries and therefore it is far from being anti-Russian. This has, however, no impact on the Russian perception of this EU policy. The EaP is a challenge for the Kremlin trying to led integration processes on the post-Soviet area. Current flagship idea of the Russian administration is the Customs Union formed together with Belarus and Kazakhstan. Especially in case of Ukraine, both Russian and the EU politicians are very active in promoting their different patterns of integration and modernization. Russians encourage Kyiv to join the Customs Union, while the EU offers signing the Association Agreement and a Deep and Comprehensive Free Trade Agreement (DCFTA). The leaders form the V4 countries are not passive in this situation and negotiate with the Ukrainian politicians, although, not necessarily under the V4 logo.

Conclusions

Although, Russia does not appear very often in the V4 declarations, it does not mean, that there is no common Visegrad policy on Russia. The above mentioned areas of the Central European policy: energy security and the Eastern Partnership are not addressed to Russia, but the Russian factor is an inevitable factor here. In both areas the V4 is able to influence the EU decision-making process, therefore it is no longer relation between Russia and separate Central European states, but the Russia-V4 relation. It does not mean that any successful Visegrad cooperation in the EU institutions elevates the Czech Republic, Hungary, Poland and Slovakia to the regional status in Russian eyes. Internal EU issues without any strong external dimension (for example the Multiannual Financial Framework) are of less importance for Moscow. With little exaggeration one may say that it depends on Moscow's reaction whether a certain common V4 policy will be regarded as a Visegrad's standpoint on Russia or not.

The list of V4 policies which are interesting for Russia is not too long and one should not expect that relations between two sides will start to develop rapidly. One reason for this is the specific nature of the Visegrad cooperation, mainly its flexibility and low level institutionalization. For external actors it is not easy to guess what will be the final result of the V4 talks on a certain issue, therefore for Russia and other states it is always easier to communicate with each Visegrad capital separately. Another thing is that Russia and Central European states tend to discuss businesses between them in packages which makes these negotiations very complex. This leaves no space for other partners to join the table.

The Visegrad embassies in Moscow cooperate occasionally and MFAs of respective countries have a separate list of the most important issues to take care of. It is nothing exceptional. Just as in the case of Russia, the V4 members act individually in relations with the US or China, even though Central European summits with leaders from these countries have been organized. This, however, does not mean, that the Visegrad states should not try to identify new areas where cooperation vis-à-vis Russia may bring added value.

 

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