EU and Russia (EUC Report)

Lord Howell of Guildford Excerpts

Tuesday 24th March 2015 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, it is a very interesting report. I am sorry that I was not on the committee because it sounds as though it would have been rather enjoyable under the skilled chairmanship of my noble friend Lord Tugendhat.

I have four points to add. First, in trying to curb Vladimir Putin’s ambitions and mischief making and the general Russian neurosis and paranoia which seems to prevail in its public opinion, the important starting point has to be that what is going on is a world issue and not only a western issue. Nothing will change decisively unless and until China and the Asian powers are as much engaged as the West professes to be. Of course, the sanctions we have applied and are threatening to apply more of can be hurtful to both sides—indeed, they are proving quite damaging to both sides—but as long as China ignores them there will always be an eastern back door through which Russia can escape and trade.

Putin has made it clear that he relies increasingly heavily on the East. He is working hard for new customers for his gas, for allies in the East—particularly China but other countries as well—and for joint development. He and Gazprom have finalised huge future deals for gas supplies to China and he welcomes proposals from Beijing for the new Silk Road, the Beijing-Moscow high-speed rail link and for a general vast development of links between middle Asia, the Pacific and China. Putin sees Russia not as just a European player—he never did—but as a world power straddling Europe and Asia. He wants near neighbours to play that game as well and to give him the respect that he feels he is due. That is the first point I want to make.

My second point concerns energy. There is only a little about it in the report—I understand why there was not an extensive delving into the complexities of energy—but of course it is a central issue to UK-Ukraine relations and to EU-Russia relations. The dependence on Gazprom, which the report mentions, of the eastern Europeans can be reduced by interconnectors from western Europe, and the current energy union ideas from Brussels are aimed at trying to develop that. However, Europe is always going to be an important customer of Russia, even after interconnector development, greater efficiency and importing more LNG from other countries, including the United States. In any case, Russia is giving up seeing Ukraine as a major transit route. It has shrugged off the South Stream plan, which was to take gas under the Black Sea, and is now connecting into Europe via Turkey on the Asian side of the Bosphorus. Russia plans to sell its gas into Turkey, and through Turkey into Europe that way. This demonstrates that Russia thinks that the unsettled Ukrainian state will continue for a very long time.

My third point is this. Putin will, in the end, be contained—it will be gradual—by other, bigger forces than sanctions. Russian banks need to borrow, but they can no longer do so at the favourable interest rates they could get when they had access to the West. Russia needs a lot more inward investment and trade than it has. The Russian people are connected with the rest of the world as never before at every level of citizenship, from school children upwards. The rouble has collapsed, the stock market has collapsed, and the price of oil has collapsed. All those things will eventually check him, particularly as the price of oil, contrary to many people’s hopes, will stay very low and will not go back to $100 dollars a barrel for a long time.

All these things will shape and put pressure on Putin, but I am not sure that sabre rattling will do so. That is because Russia is playing a very different game on the military side. It believes in “new methods of conflict”. Incursions are never to be central or openly military—that is the new doctrine. The new technique is known as maskirovka, which is not a conventional battlefield where the results can be defined and clear victories won; it is always something that is not what it seems. Russia will stir up minorities and do deals with individual countries, as it is trying to do now with Hungary in seeking to break up the European Union from within and proposing nuclear power, and of course it will take offence at the slightest provocation, as we have seen in the papers this morning over the VE Day celebrations.

Incidentally, talk of “arms to Kiev”, which some have suggested, also raises some curious maskirovka issues. Ukraine is one of the largest manufacturers and exporters of arms in the entire world. In 2012 it was the fourth largest. Ukraine supplies most of Russia’s helicopter engines and half of its nuclear arsenal is built there. So “arms to Kiev” for those who are urging it—like the US Congress calling this morning for lethal weapons to go to Kiev—means that those arms could end up anywhere. Knowing the area, as experts do, they will probably end up in the wrong hands.

To understand Russia today, we have to position ourselves somewhere midway between Kafka and Tolkien: nothing is what it seems. I did have some personal experience of the Magnitsky case, which involved bogus police, bogus tax authorities, bogus courts, bogus judges and bogus company officials who had stolen the identity of the company of Mr Bill Browder, to whom I was an adviser at the time. He set it all out in his fascinating book, Red Notice. All that indicates that fraud, scam and murder are the norm, as we saw so tragically the other day with the murder of Mr Nemtsov just outside the Kremlin.

In the long term, as this excellent report sets out, we have to live with Russia, as do all the other Asian powers. That is probably best done on both an EU and a national bilateral basis because we have to work on both tracks. The EU on its present integrationist path is always going to be a discomfort and irritation to Russia, whereas a less centralised, relaxed and, I hope, reformed EU would obviously be less threatening. Each EU state should feel free to build its own type of relationship with the Russian state and the Russian people.

Finally, the report talks about “sleepwalking” into this situation. I am not sure that that is fair. It is good journalism because of course all the newspapers picked up the phrase, but I am not sure that it is a good analysis. All along, there has been a perfectly clear awareness that Russia was on an uncertain and unpredictable course. It was trying to be a great power again and could not understand why it had lost power, but it was not behaving like a great power. Putin changed course completely. I heard him say in his earlier presidency that he wanted to work very closely with Europe and change the political face of Russia, but the Putin who came back in the second presidency was a completely changed man. It was an event that of course surprised, but it was not a surprise that anyone could have sensibly anticipated, however expert they were and however good their knowledge of Russia. Crimea was no surprise at all. Those of us who have been there know that it is a really beautiful place, but its heart was always with Russia. It was always amazed to find itself part of Ukraine and wanted to go back to Russia.

One does not need to be too much of an expert on a country to sense where it is going. In fact, quite often great reams of experts fail to predict things accurately and get things wrong, although I do not think that the blame game is really necessary. I learnt Russian at school but I do not think it helped me understand less or more the mysteries and the total unpredictability of the Russian trajectory.

There are plenty of surprise events ahead. We heard this morning that one may be coming in Argentina, with the decision of the Russians to supply weapons to Mrs Kirchner. I point your Lordships’ eyes in the direction of Kaliningrad—the old Königsberg, of course—where a huge build-up of Russian troops is taking place as they reinforce their vast naval base there. That is an area where we should be prepared for trouble. There are many difficulties ahead, and we have to use the same subtlety as the maskirovka experts will use against us.