|What Moscow wants forbailing out the euro zone
During the G20 meeting in Cannes on November 3–4 Russian President Dmitry Medvedev said that his country will participate in supporting the crisis-stricken euro zone countries via the International Monetary Fund (IMF). In return Russia didn’t require the EU to make concessions in the dispute on energy, but did expect recognition in international financial organizations, including the IMF. On 7 November, after the SCO (Shanhai Cooperation Organization) prime ministers’ meeting, Vladimir Putin repeated the same words, whereas the minister of foreign affairs Sergey Lavrov informed that the BRIC states are ready to provide their financial resources to help the euro zone according to the IMF rules.
So far Russian Government promised to invest up to USD 10 billion in IMF bonds. However, the country has more possibilities to credit the euro zone since has accumulated reserves of about USD 580 billion and has USD 600 billion in the cumulative funds. But the main question is: what is Moscow’s support aimed at? and how it is going to do that?
In order to answer the above question, it is necessary to define Russia’s local interests. According to the U.S. intelligence company Stratfor, Russian authorities are worried about a possible resonance of bad economic situation in Europe in their country. The Kremlin had to update forecasts for next year’s Russian economic growth. However, alongside the increasing risk of a new wave of financial crisis in Europe, Russian financial assets may drop sharply, especially in the light of falling global energy prices.
According to the news portal rbth.ru, today Russia must revise those energy and other projects implemented together with the EU Member States the funding of which has been reduced by Western partners due to the lack of funds. If Europe faces a new economic downturn, it would undermine Russia’s strategic interests. The ruling elite cannot afford that, since the Kremlin has to demonstrate multiple strategic victories abroad before the approaching presidential elections.
Moscow is against the efforts of Western countries to reduce dependence of the EU on Russian economic and energy resources, and the Kremlin tries to pursue the policy opposite to this initiative of the EU. By attracting companies and other loyal financial institutions Moscow seeks to purchase infrastructure objects for transportation of European energy resources, as well as refinery companies, banks and other strategic objects, and take part in various development projects. Such a focused Russia’s policy seems to acquire a new quality: Moscow certainly has strategic interests behind the financial support to Europe drowning in debt. For debt-ridden Europe it will be more difficult to control implementation of the above Russian policy.
Finally a card of support to euro zone is quite a good instrument for gaining political dividends. In return Russia (and China) expects not only financial benefits but also sufficient political weight in international financial organizations, first of all in the IMF. If this card is used properly, Moscow can achieve the above goals in the near future.
Moscow’s decision to help the euro zone overcome the debt crisis would bring strategic benefits to Russia. In view of this the country could try to expand the extent of support. According to Stratfor experts, a probable Russian rescue plan could be divided into several stages. The first encompasses the Kremlin’s efforts to convince euro zone states that Russia is still economically and politically stable country with large financial reserves. This would allow Moscow to be in close contact with its supporters among the EU Members States, and increase worries of the EU states skeptical toward Russia’s role in Europe. During the 2nd stage Russia is expected to purchase shares of the strategic objects (energy companies, sea air ports, banks, etc.) the prices of which have reduced due to financial euro zone problems. Consequently, Russia might find its place in the European economic and energy space and eventually make the Third Energy Package (approved on 22 April, 2009) restricting Russia’s energy expansion in Europe invalid. During the 3rd stage the Kremlin could invite the crises-stricken European energy telecommunication, transport and other companies to the Russian market and make them dependent on Moscow in the long run. Finally the Kremlin might give huge loans to international financial organizations (including the IMF) and different euro zone states and make these international policy actors more dependent on Moscow’s political will. Having in mind long-lasting Moscow’s ambitions to enhance Russia’s economic, energy and political positions in Europe, such a scenario is quite possible.
Thus, it is obvious that the euro zone crisis is a favorable context for Russia to seek own strategic goals. The Kremlin will not miss this chance. By agreeing to accept Russia’s financial support the EU takes a risk. Thus, premature economic and political decisions of the EU might have a negative effect on European states.
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