Russia

Lord Watson of Richmond Excerpts

Thursday 16th October 2014 Lords Chamber

[Lord Watson of Richmond (LD)]

My Lords, I declare a number of interests. I was an adviser to the Romanian Government when they were negotiating their membership of the European Union. I am a vice-president of the English Speaking Union and I have been involved in establishing branches of that union in Russia, particularly in St Petersburg, and eastern Europe following the collapse of the Soviet Union. I am also a visiting professor at St Petersburg State University, which, as many noble Lords will know, is Vladimir Putin’s alma mater.

I must say that I am not entirely persuaded about the popularity of Mr Putin. I know what the opinion polls say and I know about his control of the media, which reflects that judgment. However, from my own conversations, particularly with people in St Petersburg, there is deep unease among many in Russia over what is happening. Also, there is occasional derision towards Putin’s position. The ludicrous assertion that the level of voting in the Scottish referendum was North Korean was greeted with embarrassment and derision by many people I know in Russia. We should be realistic.

I was somewhat shocked by the assertion of the noble Lord, Lord Truscott, that we were in danger of—I think I have got the words right—picking a fight with Russia over Ukraine. May I remind the House that it is President Putin who has picked a fight with democratic principles and international law over Ukraine? It is not the West that has picked a fight with him. I hope that, in her reply to this debate, the Minister will reassert that. There is a very important issue of principle involved.

Because of ISIS and its present command of the headlines, the ambitions and, indeed, the ambiguities of Vladimir Putin are somewhat misunderstood and ignored. However, his activity, particularly in east Ukraine, is destabilising for very specific reasons. I shall focus on just two aspects of this destabilisation.

The first is the economic dimension. Reference has been made to the impact of western sanctions on Russia and we all know about the West’s dependence—which, at 40%, is still considerable—on Russian oil and gas. Let us look at the impact of western sanctions. It is a very complicated picture. The Russians have self-inflicted much of the impact of these sanctions. They have, for example, forbidden agricultural imports across a very wide range of products from the United States, the European Union and Norway. The result is that there are now shortages of important foods in the shops in many Russian cities and prices have risen dramatically. That is a self-imposed impact. The fourth tier of sanctions has also significantly impacted on access to capital and investment, particularly for smaller entrepreneurial companies in Russia.

At a lecture in St Petersburg, I was once asked: what is the basic economic relationship that Russia should look for with the West? I replied that to benefit trade you must have reciprocity. It has to be a two-way street. One of the problems is that the Putin Administration has viewed it as a one-way street. It has been about using the power of oil and gas—the so-called nuclear weapon—to gain what he wants. What will happen about that? There have been references, rightly, to the fall in the oil price. That has happened for all sorts of reasons, not least of which is the impact of shale in the United States. But let us not underestimate the almost total dependence of the Russian economy on oil and gas. If this fall continues it will, as the noble Lord, Lord Howell, indicated in his speech, have a very dramatic effect on Russia.

What are we doing to lessen our dependence on oil and gas from Russia? There is a lot of infrastructure investment. In particular, the new pipeline going through Albania is going to be of considerable significance. Albania, incidentally, now has candidate status. It is hoped that its President will visit this country before the end of the year, and I think that we have to really stretch out a hand in that relationship.

I end by looking at the relationship between EU enlargement and this whole issue. When Helmut Kohl, as German Chancellor, negotiated with Mr Gorbachev, he indicated to the Russians that we would not allow a situation where NATO and the EU reached the borders of Russia. I think that that was prudent and right, and we should not entertain the idea of Ukraine joining NATO. However, that is not to say that we should allow a situation in which permanent destabilisation of eastern Ukraine is permitted. Therefore, I think that we must remain committed to EU enlargement where that is applicable but, above all, we must maintain the present levels of sanctions until there is a significant change, and we may not have to wait too long.

We used to talk about an EU-Russian agreement. That may now seem a very distant prospect, but the fact that it is distant should not in any way reduce our commitment to trying to achieve it. However, to achieve it, we have to be realistic, not optimistic, about Mr Putin and contemporary Russia.