Navalny, Nord Stream and the EU-China investment protection agreement

Navalny, Nord Stream and the EU-China investment protection agreement

At the Carnegie Foundation Alexander Baunov claims in his contribution“Putin, Poison, and Self-Inflicted Wounds: Navalny’s Return to Russia” that Putin and the Kremlin turned Navalny from a domestic opposition figure “ into the world´s most prominent political prisoner” and new focus of international diplomacy and foreign affairs while his wife is also gaining a new role:

“The dramatic arrest of Russian opposition activist Alexei Navalny at a Moscow airport on Sunday is the latest in a series of self-inflicted wounds by the Kremlin. The most egregious was the state-backed assassination attempt against Navalny using a military-grade nerve agent. Taken together, the Kremlin has indisputably propelled him to the leadership of Russia’s beleaguered opposition, and in the process undercut one of its long-running political strategies over the past two decades: strengthening President Vladimir Putin’s standing by ensuring that the political landscape remains free of any meaningful political challengers. 

Most of the current media attention focuses on Navalny’s bravery in returning home to face almost certain arrest and confinement. That decision was fairly straightforward: had Navalny remained in Germany, he would simply have joined the ranks of Putin’s many critics living in exile.

The Kremlin’s hard-edged treatment of Navalny has backfired spectacularly. Having miraculously survived the poisoning, he has become something of a mythical hero, resurrected and given a second chance: not to live out his days peacefully abroad, but to conquer evil, defy death, and defeat his enemies.

The Russian authorities faced their own dilemma of how better to demonstrate the insignificance of their opponent: arrest him (for the Orwellian charge of allegedly breaking the terms of a 2014 suspended sentence for embezzlement), or pretend to ignore his return? The plot to kill Navalny demanded a secret operation that could be denied for all eternity. Arresting him is an open act by the state that cannot be denied: it must be explained and justified. 

Instead of trying to justify the poisoning, the state has put forward a preposterous allegation against Navalny: he is not an opposition figure, but an agent for foreign intelligence services. He is being sent to Russia by its enemies to promote regime change, which is supposed to make it impossible for patriotically minded fellow Russians to defend him. This version has been repeated at every level since the poisoning, including at the very top. Ominously, it moves Navalny from the category of enemies—whom Putin pretends to fight respectfully—to that of traitors, for whom no rules apply. 

Navalny’s position in Russia has completely changed since his poisoning and miraculous recovery in Germany. He has stopped being a figure in domestic politics and, in the eyes of the outside world, has become the most prominent and dangerous critic of Putin: the anti-Putin, and Russia’s number two politician. Accordingly, for the Russian authorities, he is no longer a domestic problem that the corrupt elites can direct against each other, but an instrument of foreign aggression.

Navalny was visited by German Chancellor Angela Merkel herself soon after he regained consciousness, and his arrest immediately upon his return from being a guest in her country doesn’t look very diplomatic. It will make it even harder to establish relations with the incoming U.S. administration. But aggression rarely leaves much room for diplomacy.

What matters is not how things look to critically minded Russians or foreigners; it’s how to stop foreign interference. Unfortunately for the authorities, this gambit has clearly failed. Instead of blackballing Navalny, the Kremlin has turned him into the world’s most famous political prisoner. By being elevated, Navalny is becoming, in the eyes of the world and potentially the Russian people, the antipode to Putin. Up until now, everything that the state has done to try to counteract Navalny has only made him into a hero, starting with Putin’s superstitious refusal to speak his name. The authorities have brought about precisely what they were seeking to avoid.

Navalny’s leadership of the Russian opposition and his authority among skeptics of the current regime have grown. Not so long ago he was bickering with independent journalists; now even some Putin loyalists are, if not on his side, then certainly not on the side of his poisoners and persecutors. 

It is harder now to criticize Navalny. Foreign politicians and journalists who were previously wary of Navalny’s former experiments with nationalism are now prepared to forget about all that, along with the fact that, judging by his comments, he is still not a typical pro-Western politician in an anti-Western country, and has not promised to change Russia’s geopolitical orientation. In other words, Navalny may be a Putin critic, but he does not fit the template of a pro-Western liberal who could easily be mocked and destroyed in the eyes of fiercely patriotic Russians. Meanwhile, Navalny’s wife Yulia is turning into an influential politician in her own right, not unlike the unexpected and dogged threat that Svetlana Tikhanovskaya has become to the Belarusian regime.“

https://carnegie.ru/commentary/83680?utm_source=ctw&utm_medium=email&utm_campaign=buttonlink&mkt_tok=eyJpIjoiWkdFMll6aGtabUZsWkRSbCIsInQiOiJDdTRjR0c3

The Navalny case is now being tied to the Nord Stream 2 project. Supporters of it claim that it is a necessary energy project from the economic and ecological point of view, wouldn´t be a geopolitical or political project and gas would be a needed bridge technology to overcome potential blackouts that could occur if you stop coal and nuclear energy in the German energy transition. The supporters also claimed that Nord Stream 2 was not just a German national project, but a European project. The USA would only want to pressure Germany and Europe to buy their expensive fracking gas, liquified natural gas which was economically and ecologically even worse. And cancellation of the project would mean the loss of billions of investment and claims for compensation. The AfD and the Left Party (Linkspartei) are the most open supporters of Nord Stream 2 and claim that this would be in the national interest of Germany and a question of Germany´s sovereignity as otherwise the nation would become an US colony. While it is no wonder that the AfD supports the project for nationalistic reasons, it is funny to see the Left Party quoting national interests and behaving like outspoken nationalists while normally supporting internationalism or European interests.

But now the European Parliament demands the stop for the NS project and claims that it was not in the interest of Europe. Berthold Kohler, chief editor of the FAZ points to this fact that the Navalny case and North Stream have become not only an issue of the USA, but also of Europe and Germany and holding to the project could be interpreted by the Kremlin as weakness and that Europe had no alternatives:

”EU Parliament calls for cancellation: neither sanctions nor poison

 Is it a sign of sovereignty that Germany is sticking to Nord Stream 2? The Kremlin could see this as evidence of no alternative dependency

Nord Stream 2 is a European project, said Bernd Westphal, the energy policy spokesman for the SPD parliamentary group, on Thursday on Deutschlandfunk. It is “very strange” to believe in the White House that you can determine energy policy in Brussels and Berlin. Linking the Navalnyj case to the pipeline is “weird”. But that is exactly what the European Parliament – in Brussels – has done. Once again, with the votes of all major factions, it called for the construction to be canceled. Does the SPD also regard the clear will of the European parliamentarians on the most controversial project of European energy policy as “weird” and “strange”? One cannot as easily accuse the European Parliament as the Americans of only wanting to promote the sale of the demonized fracking gas in Europe.

The hope that under a President Biden Washington will not remain as tough on this matter as in Trump’s time is likely to turn out to be deceptive. Biden has also long been one of the project’s critics. The completion of the pipeline, which is supposed to bring more Russian gas to Europe and more European money into the coffers of Putin’s regime, could not only cause further disputes within the EU, but also put a strain on the restart in transatlantic relations. With the Biden administration you will also be able to talk more sensibly about this dissent and possible compromises than with the Trump people.

 However, the Nord Stream chapter no longer becomes a glory of German foreign and energy policy. Putin, on the other hand, can rub his hands together: the project has sown maximum strife in the EU and in the transatlantic alliance. Neither American sanctions nor Russian poison have so far been able to get Berlin to give up. Some may see this as a sign of national sovereignty. The Kremlin, it is to be feared, sees such behavior rather as a consequence of dependency without alternative.

https://www.faz.net/aktuell/politik/ausland/eu-parlament- sucht-abbruch-weder-sanktionen-noch-gift-17158313.html

While the supporters are concentrated in the SPD, the AfD and the Left Party, the critics of the project beyond the US Democrats and Republicans and the former Trump and incoming Biden administration, are mainly the transatlantists in the CDU/CSU under the leadership of Norbert Röttgen, the Greens and the European Parliament. Merkel and Scholz as most of the German goverment until now also supported Nord Stream, while Söder declared that beyond human rights criteria and values Germany had also to take interests into account. The critics claim that the gas project would fill the Russian state budget and its military NATO then has to counter, be appeasement policy and a weakening of the West, a reward for Russian human right violations, make Europe and German more energy reliant from Russia, would be a geopolitical project as it weakened Ukraine and Poland as transit countries and middlemen economically and politically, was against the Paris Climate Accord as gas wouldn´t be a bridge technology, but only a continuation of the carbon economy.

Jürgen Trittin before the Navalny poisoning still was a supporter for Nord Stream as he opposed his Greens by pointing out that it wouldn´t need the project if the German government initiated a giant energy-saving program for houses and industries, but as this would not happen, Nord Stream 2 was the only realpolitical option to overcome the energy gap that occurs when coal and nuclear energy will be stopped. In the meantime, Trittin after the Navalny affair has changed his mind and claims that Germany and Europe didn´t need Nord Stream as they had diversified their energy deliveries. Trittin had a fierce debate with Dietmar Bartsch (Left Party) in the German parliament accusing the Left Party of ignoring Putin´s human rights violations and being biased, while Bartsch gave back the accusation by claiming that the Greens were biased against Russia and would only criticize Putin´s human rights violations, but be silent on the crimes committed by Western allies like Saudi Arabia in the case Khashoggi.

Global Review and the Vice President of the Club of Rome Germany, Frithjof Finkbeiner published a programmatic paper  “EU-Russian ecological cooperation needed despite and because of the Covid crisis” to find a bridge between Putin´s idea of a Resource Empire and ecological criteria defined by the Paris Climate accord which was published by the Russian Foreign ministry’s think tank Russian International Affairs Council (RIAC) and could have been a discussion base for a potential black-green government and the EU with Russia. However, there seemed to be no interest from both sides and especially after the Navalny case and Lawrow´s welcome for the AfD in the Kremlin, these ideas won´t have many supporters. The plan for ecological cooperation is available at the RIAC blog website:

https://russiancouncil.ru/en/blogs/ralf-ostner/eurussian-ecological-cooperation-needed-despite-and-because-of-the-cov/

But the prospects for EU-Russian ecological cooperation are next to zero as the Greens as probably coalition partner in a coming black-green government focus more on human rights and values than other parties and together with the Friday for Future deny that gas was a bridge technology and make this a precondition for any cooperation, even when during the Cold War the West and the Soviet Union had the CSCE talks, where you had 8 diplomatic baskets of topics ranging from arms reduction and control to economic cooperation to human rights while you had barters and compromises between these fields. This model could be used at an later date with ecology as a 9th basket. But now is not the time for that and the conflict between Russia and the reunited West will likely intensify.

Till now the EU Commission has not yet met any decision regarding Nord Stream 2. Before Macron- France and Poland already rejected the project, but Merkel prevented a stop of the project and came to a compromise with the EU Commission and the EU Council. But now with the European Parliament exerting pressure on the EU, the incoming Biden administration and the worsening of EU-Russian relations the constellation might be different. Trump and his supporters will also closely look at Nord Stream, US trade deficits with Germany and the EU and defense spending and voices become louder that the EU and Germany have to give Biden a diplomatic gift that would stabilize his administration and which he could sell as a foreign policy success. Maybe some Europeans and Germans also think that they could trade a stop for Nord Stream 2 with NATO defense spending. However, it remains to be seen how things develop as it will also depend on how the Kremlin reacts to the Navalny case.

A few weeks ago under Trump the focus of US foreign policy still was on China and Iran, but now under the Biden administration, the anti-Russia focus seems to reoccur. While in the outgoing Trump administration mainstream news were about the “genocide” against the Uyghurs and Trump accused China of the Coronavirus, Kung flu or the China virus and to be the source of a cyberattack against US government institutions and US companies (while Pompeo spoke of a Russian cyberattack), Russia and Navalny have become the new hot spot of the West-East conflict again while China is happy at the moment not to be the public enemy No.1 and enjoys the gains form Trump´s foreign policy, e.g. the Regional Comprehensive Economic Partnership (RCEP) and the EU-China investment protection agreement. The deal between China and the EU was met with criticism.  In an interview by the German magazine “Internationale Politik und Gesellschaft”(IPG) Bernd Lange, Chairman of the EP Trade Committee, tries to justify the agreement:

The breakthrough in the investment agreement between the European Union and the People’s Republic of China was announced shortly before New Year’s Eve. After the negotiations had been very tough for years, the agreement now seemed to come as a complete surprise. Or is this impression wrong?

 Of course we weren’t caught completely on the wrong foot. Even a few weeks in advance, however, it was not foreseeable that it would go so quickly in the end. But one should be careful, because a political agreement does not mean the conclusion of the negotiations. The texts that are before the European Parliament are not the final ones; there are still quite a few open points that need to be clarified.

What exactly is this agreement about?

 In general, the investment agreement is about market access for European investors. The Chinese market is much more restricted than the European one. For example, China will open markets in the service sector. These go beyond the General Agreement on Trade in Services (GATS) of the World Trade Organization. This is the case for financial, environmental and IT services, construction and maritime transport. There will also be openings in the production sector, for example in the automotive industry, traffic and telecommunications equipment, and in the chemical and textile sectors. Some areas are specifically excluded, such as audiovisual services.

 On the other hand, China is dependent on investments from abroad. The investment agreement with the EU sends a strong signal here. On the other hand, it is about rules that are intended to create a level playing field, a balanced playing field. It’s about rules against forced technology transfer. This includes, for example, the prohibition of various types of investment requirements that force a technology transfer: the transfer of technology to the joint venture partner or localization requirements for research institutions as well as the prohibition to interfere directly or indirectly in the contractually stipulated free allocation of technology licenses. There are regulations in place to protect confidential business information collected by government agencies. Rules are also foreseen to prevent discrimination against European investors by Chinese state-owned companies. And there is an important pillar with rules for sustainable development. This also includes obligations to ratify and implement the core labor standards established by the international labor organization, such as ILO standard 105 against forced labor.

Why did you sign the agreement now? Are there practical reasons for this or was the symbolic character in the foreground?

 After 7 years, 35 rounds of negotiations and a lot of standstill, the Chinese side has moved very strongly towards us in the past few weeks. I believe that a decision was given to the negotiators from the highest level in China. There could be several reasons for this: on the one hand, the upcoming Biden government in the USA, which has already signaled that it wants to work more with instead of against the EU. Of course, this message also reaches Beijing, where people are thinking about how China should position itself in this structure. On the other hand, China is dependent on investments from abroad. For this, the most stable and transparent environment possible must be created. The investment agreement with the EU sends a strong signal here. Despite all the difficulties we have with China, the country is an important economic and political partner. Despite all the difficulties we have with China, the country is an important economic and political partner. It is in our interest to proactively shape our bilateral relations. This is also seen in Beijing. And, of course, it was also in the interests of the German Council Presidency, which is due to expire at the end of the year, and especially of the Chancellor. Maybe that gave a boost too.

Europeans have historically urged their companies to have better access to the Chinese market, more protection for foreign investment and more workers’ rights. Are the promises made in the agreement correspondingly far-reaching or have your own demands been weakened? After all, even the European Employers’ Association is skeptical that China will actually make concessions here.

All these questions are dealt with in the agreement. However, there is still no final text, so I’m very careful with a final judgment. At first glance, I think that the result offers a lot for European investors in terms of the economic side of the coin (market access, transparency and legal security). China has for the first time ever accepted rules on workers’ rights. In the “Phase 1” agreement between the USA and China or in the new RCEP trade agreement in Asia, there are no rules on workers’ rights to be found. We in Parliament will analyze in detail whether the rules in the CAI (Comprehensive Agreement on Investment) between China and the EU go far enough, how they are implemented and whether the mechanisms provided for them really have teeth. We will take our time for this and, if necessary, make demands for improvements.

In the United States, Joe Biden is about to take office. He hoped to join forces with the Europeans to put pressure on China. With the agreement, the EU has de facto rejected him. Is Beijing now more important than Washington?

There is no way I would see the situation that way – by the way, neither do the Americans. But on the contrary. We agree that it will be extremely important to put the transatlantic relationship back on a positive agenda. I see the investment agreement as part of a common strategy, because in many cases American companies also benefit from its rules. The EU-China negotiation results were ripe for a political agreement. Many areas that Americans criticized in their recent investigation into China are addressed in the agreement.

There are a number of other points in which we can represent our interests very well together with the USA vis-à-vis China and anchor them within the framework of the WTO. There are a variety of topics, such as dealing with intellectual property or dealing with data, for which we will find solutions together. In order to implement systemic changes in China, pressure from a community of states is required. In this respect, we will also seek close contact with the Biden administration. However, the EU will very confidently define European interests and act accordingly.

 In addition to better economic relations, the European-Chinese agreement is also about closer cooperation on climate protection and sustainable development. What will that look like in practice?

A main focus is currently on the provisions to combat forced labor. At the end of last year, the European Parliament adopted a resolution on the situation in Xinjiang and pointed out the sometimes inhuman conditions there. The investment agreement must offer leverage here – even if it certainly cannot alone serve to change the political system. But I think the agreement must be seen as part of a comprehensive China strategy in which unilateral instruments such as the sanctioning instrument against human rights violations also play a role. And the planned binding law on diligence in supply chains will also have to be included here. The agreement offers starting points for joint efforts against climate change. The joint implementation of the Paris Climate Agreement is explicitly emphasized. Investments to protect the climate should be promoted and climate-friendly goods and services developed. Cooperation is particularly emphasized here. Now that China has set clear targets for climate neutrality, there are opportunities for cooperation in renewable energies, energy efficiency and climate-friendly technologies.

 The EU Parliament has yet to approve the agreement. Will it do that?

 We are at the very beginning of a long process which will end with a vote in the plenary of the European Parliament. In the coming months we will examine the agreement, consult with experts from business, science and civil society and, of course, observe further developments in China. In the end, we will make a decision based on this knowledge. A majority in the EP can only find a good agreement that opens up the Chinese market in the long term and gives us a reliable lever in hand to anchor and implement sustainability goals. The development of the human rights situation will certainly play a major role. I assume that there will be additional requirements for implementation, timing and enforcement with regard to the sustainability obligations. The text still has to be technically revised after the political agreement, which may take until February / March. Then there is a translation and legal review, so that the formal signature can certainly only be made towards the end of the year. And then the ratification process starts in the EP.”

https://www.ipg-journal.de/interviews/artikel/china-hat-zum-ersten-mal-ueberhaupt-solche-regeln-akzeptiert-4905/?utm_campaign=de_40_20210115&utm_medium=email&utm_source=newsletter

However, it remains to be seen if China really will comply with the agreement`s clauses or if this EU-China investment protection agreement is more the continuation of the old engagement in new forms as parts of the Chinese opposition and China critics claim. And what sort of binding mechanism could make China compromise. And it doesn´t really explain why the EU didn´t wait for the Biden administration when it praises the transatlantic partnership so much. The EU- China investment agreement is the first major German and EU decision after the German Indo-Pacific Strategy was released which also should become a European Indo-Pacific Strategy. But it doesn´t look like that the alleged goal to focus on ASEAN and allies and diversify the economic dependence away from China, seems the real priority. And the EU wants to show that it is a sovereign actor on its own between the USA and China, still mainly militarily and partly economically dependent on the USA which is not seen as a really reliable partner for all times anymore, even as Biden was elected.

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