The EU, Russia and China By Charles Grant
This article was submitted as evidence by the Centre for European Reform for the review of the balance of competences between the United Kingdom and the European Union (Foreign Policy)
Both Russia and China matter to the UK. Strategically, they are nuclear powers and P-5 countries, with diplomatic interests in many parts of the world. They are the only permanent members of the UNSC and the only BRICS countries that, being undemocratic, consistently oppose Western policies on democracy promotion, humanitarian intervention and human rights. They matter economically, too. Though British trade with these countries is less than that of some other large EU member-states, the UK could export more to both markets and is a major investor in them. One reason why Britain trades relatively little is that its chief strength is service exports, while Russia and China are relatively closed or unwelcoming to the foreign provision of services (for example China excludes foreign law firms). The EU’s policies towards Russia and China are stronger and more developed in areas where the EU has genuine competence (such as trade) and weaker in areas where it shares competence with member-states (energy) or has little authority (such as strategic foreign policy issues). With both Russia and China, the EU has the potential to add much value to what the member-states can achieve on their own. Although it fails to fulfil much of that potential value, the EU nevertheless delivers real benefits. The EU can add value because the fundamental interests of the European states in these two important countries are broadly similar. In Russia, the 27 all hope that the economy modernises and rebalances away from natural-resource dependency, that the rule of law is better respected, that the judiciary becomes more independent, that foreign direct investment is encouraged, that the political system becomes more liberal (and less Kremlin controlled) and that the media becomes freer. They all want Russia to respect the independence and integrity of its neighbouring countries, and to work constructively with Western powers in dealing with global challenges such as Iran, Syria, climate change and terrorism. In China, all the member-states want to see an economy in which private consumption – currently at very low levels vis-à-vis investment – plays a greater role and in which state-owned-enterprises are less dominant. They want China to be more open to foreign goods and investors, to respect better intellectual property rights and to give foreign firms the same treatment as domestic firms. They hope that the rule of law advances and that the political system becomes more liberal. They want
China to resolve disputes with its neighbours through peaceful means. Of course, there are some divisions among the memberstates on Russia and China. Some care more about human rights than others (the Nordics think human rights matter the most, the southern Europeans the least). On Russia, some have closer economic relationships that may discourage their governments from being critical: Germany, Italy, Hungary and Bulgaria are among those benefiting from current or future gas pipelines from Russia, while Cyprus gains from a heavy Russian involvement in its financial sector. On China, the differences of economic interest revolve more around trade policy: the southern Europeans are keener to protect EU markets from Chinese goods, and the northern Europeans less so. With both Russia and China, there is a ‘big three’ problem: Britain, France and Germany each value their own bilateral relationship with Moscow and Beijing. They sometimes see each other as competitors – as they can be, when it comes to the awarding of contracts – and do not want the EU to intrude. The problem of the EU’s internal divisions is currently more acute with China, perhaps because in EU-China relations commerce dominates while the political framework for action is as yet underdeveloped. Germany is the country that is most insistent on having a strong bilateral relationship with China. According to German officials, 47 per cent of EU exports to China are German. This makes some German industrialists and officials think that other member-states, and the EU institutions, can
THE EU, RUSSIA AND CHINA March 2013
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