Stereotypes influences on economic relations between the European Union countries and Russian Federa...
Actuality of research
The EU is the main
source of technology, know-how and investment for Russia. As regards foreign
direct investment, companies from EU Member States are the major foreign
investors in Russia. The EU has a vital interest in promoting prosperity in its
largest neighbor. The European and Russian markets are fundamentally
complementary: both the EU and Russia each have strengths that could be shared
to mutual benefit. The EU is a knowledge-based economy that, simultaneously,
needs to lift its long-term growth prospects; while Russiais a high-growth
emerging economy necessitating a knowledge base able to exploit its
historic strengths in
advanced science and technology. Trade and investment flows between the EU and
Russia are already significant but they tend to be concentrated in sectors
where barriers are low and regulatory systems are compatible. For their part EU
companies wanting to invest in Russia have often been held back by legislative
and bureaucratic obstacles, as well as by high tariffs, for example on imported
components. Such barriers reduce our shared competitiveness. Negative influence
of stereotypes on economic relations can form obstacle for economic
collaboration. Apparently both Russia and the European Union will benefit from
the increase of trade operations, investments and travel. Private capital
cannot be locked by national borders, and money tends to go to the regions that
provide more favorable conditions, including protection of capital investments,
and where profits are reputed to be the highest. Russia's primary attention,
therefore, ought to be attached to eliminating the obstacles obstructing the
development of contacts and cooperation at any level — from reducing the
duration of cargoes' and vehicles' customs clearing procedures to cutting the
«red tape» in the relations between Russia and the European Union. So the EU
and Russia are interested in definition and destroying of stereotypes for
successful business relations.
Problem of research:
Stereotypes influences on economic relations between the European Union
countries and Russian Federation.
Objects of research:
economic relations
Subject of research: The
influence of stereotypes on economic relations.
The aim of research is to
identify influence of stereotypes on economic relations between the European
Union countries and Russian Federation.
Steps to be followed:
1.To identify stereotypes
that influence economic relations between EU and Russia.
2.To find out
consequences of influence of stereotypes on economic relations between EU and
Russia.
3.To find out a possible
solutions for the problem of negative influence of stereotypes.
4.To investigate results
of the first attempts solving problem.
5.To make general
conclusion.
Research methods:
Theoretical analysis and synthesis information.
Main body.
Step 1.Stereotypes that influence on economic
relations between the European Union countries and Russia.
In spite of powerful
impulses encouraging the development of strategic partnership relations between
Russia and the European Union their future relations are largely predetermined
by the success Russia will achieve in its domestic system transformation, on
the one hand, and by
the final results of the
EU radical transformation, on the other. The uncertainty surrounding the
process of future democratic and socio-economic transformations in Russia is
viewed as the main hindrance in the relations between Russia and the European
Union. Since the 1990s
Europe has experienced
serious apprehensions about the prospects of the democratic reform in Russia.
All those apprehensions have caused many other problems in the relations
between Russia and the European Union: absence of any strategic goals in the
EU-Russia relations which may create a risk of the growing gap between the
unifying Europe and Russia.
The uncertainty with
regard to the prospects of Russian democracy seems to have been induced by the
following three factors. First, by the stereotypes juxtaposing Russian and
European values as incompatible. Second, by the Soviet syndrome. Third, by the
mistakes made by the Russian leaders in the past decade (the use of force for
resolving Russia's internal political crisis in October 1993; the warfare in
Chechnya; implementation of controlled democracy) which impelled Europe to
question Russia's adherence to democratic principles. The EU countries, as well
as Western countries as a whole, however, were not impartial observers and they
often showed neglectful and cynical attitude toward Russia's vested interests.
On the one hand, they flouted the premise that Russian democracy could only
succeed under the conditions of favorable external environment instilled by
them; on the other, they showed distrust to the future democratic
transformations in Russia giving preference to stability rather than democracy
in Russian society. The absence of any long-term concept of the relations
between Russia and the European Union and the strategic objectives determining
their current policies is viewed as the main obstacle preventing Russia and the
European Union from working out the principles of effective policy with regard
to one another. The last reasons are internal
political development in Russia and fears of its Western partners concerning
the direction in which it is moving. One of the most widely spread Western
stereotypes is that there is an unfathomable, an almost genetic, gap between
the Russian and EU values. It is said that Russians have an inbred tendency for
authoritarianism. Large-scale study on the image of Russian business abroad,
carried out by the Center of Knowledge Management (CKM) of the Mikhailov and
Partners Company bears witness to the highly skeptical relationship of the West
towards all that is happening in Russia. Undoubtedly, there is an
objective premise for this. But at the same time, the negative
perceptions of many processes and occurrences in Russian business are based
upon antiquated stereotypes, the tendencies of mass media and unavoidable
projections of the image of the country in the reputation of its corporate
citizens. The fundamental factor currently determining the perceptions of
Russian business abroad is Russia's image, which unfortunately still has a
negative influence In contrast to prominent foreign transnational
companies, Russian business is still not able to distance itself from its
country's image because it does not have an image of its own. It is
perceived in the West through the prism of many unfavorable stereotypes, some
arising from the time of the “cold war” (the KGB, the enemy of Western Democracy,
totalitarianism), some from the time of reform (criminals, corruption, the
politicization of business, imperial ambitions), and others during the
presidency of Boris Yeltsin and Vladimir Putin. A poll taken in 2003 at the
request of the Putin government highlighted the depths of the problem.
Europeans were asked to name 10 things they associate with Russia. Most
of the audience named communism, the KGB, snow and the mafia. A single
positive association - Russian art and culture - appeared last in the list.
The
"YUKOS affair", the scandal surrounding the law on NGOs and the gas
conflict between Russia and Ukraine have all had a negative impact on the image
of Russia, with state influence and totalitarian tendencies playing some part
in these events.
There is
however, a small audience that views Russia and its business differently. These
are Western businessmen working on the Russian market or directors of projects
with Western companies. They see the high lucrative ness of investing in
Russian economics and the serious economic possibilities of Russian
partners. However, this audience is limited to representatives of
prominent businesses connected to the fuel-energy and metallurgic industries
and the finance sector. They are well informed in their spheres and do
not add greatly to the public image of Russian companies in their own
countries. Besides the stereotypes of Russia and the country's image, the
negative view of Russian business in the West also stems from a lack of
information about companies, their public strategies and perspectives and, in
particular, the lack of outstanding persons (headliners). Without such
“ambassadors” and prominent public events Russian business is simply
uninteresting for mass publications and channels. The non-Russian perceptions of Russia
and the Russian culture are quite stereotype: "Russia is an unstable and
in many ways backward country that needs to develop significantly before it can
join the family of pluralistic, predictable Western states." The Western
way of responding to this view of Russia is to take upon itself to educate the
Russians, while another keep an arm’s length distance. The often highly educated
Russians are naturally offended by the one-dimensional way the Westerners view
them.
Step2. Consequences of
influence of stereotypes on economic relations between EU and Russia.
Russian
companies also underestimate the role of mass media in forming an image in the
eyes of its foreign audience. Russian business therefore, until now, has
remained “a cat in the bag” and because of this is feared. Fundamentally,
its shape is formed de-facto by three figures: YUKOS, Roman Abramovich and
Gazprom, with the latter having the greatest influence at the current time. The
effect of this is that too often Russian business is associated with the system
of political power itself in Russia. The “political” functioning of Gazprom
(for example, in the conflict with Ukraine) has a negative influence on its
image as a business-structure. Many Russian players are actually capable
of seriously competing with Western companies and because of this must build a
reputation and form an image of their own in the eyes of the Western audience.
Breathing upon Russian businessmen is not personal problem but a problem of
Russia: that is a part of struggling the process of its entering the world
economic area, that implies disruption of its prestige and the direct damaging
as excluding Russian companies from the international exchange involves
millions of dollars that will not find heir way into the Russian treasury,
reduction of production in Russia followed by unemployment and a threat of
social outbreak as a result. That is why Russia must fight the facts of
discrediting its businessmen on an official level. They in the West must know -
Russia understands the true reasons of the libel campaign and will not tolerate
it. Moreover media projects developed by Russian organs of power and directed
towards improving the image of Russia in foreign audiences are considered with
skepticism.
Step
3. Possible solutions for the problem of negative influence of stereotypes
Russian
companies should not ignore the basic questions and specific demands of the
foreign press, for it plays a key role in the formation of a reputation of
Russian business in other countries. One of the possible solution for the problem of negative
influence of stereotypes is strengthening international credibility or
establishment economic contacts .The formation of four common spaces can solve
the this problem. St. Petersburg initiative, which provides for creating four
common spaces - a common economic space; a common space of freedom, security
and justice; a space of cooperation in the field of external security; and a
space of research and education, including cultural aspects. Support for
democratic transformations and gradual extension of Europe's stability and
prosperity zone were laid in the foundation of the EU enlargement process. This
inevitable process will involve a major reform aimed at factual abolition of
national borders. The EU domestic market concomitantly envisages more
pronounced external borders, unparticular, the Schengen Treaty. This process,
however, is bound to have a bearing on Russia which lies outside the perimeter
of the EU enlargement even though the EU has taken several steps in that
direction (the program «Northern Dimension» is the only European regional
program in which Russia is a full-fledged participant).
The European Union
emphasizes that the legal norms regulating the process of integration of the
Central and Eastern European countries into the EU common market should not
obstruct the ongoing reorganization of economic relations between Russia and
the Central and Eastern
European countries nor
inflict any damage on Russian economy. Russia's general anxiety due to the
enlargement of the European Union is predicated by the fact that this process
can further augment the gap between the EU and the Central and Eastern European
countries, on the one hand, and between Russia and the European Union, on the
other.
The idea of the four
common spaces, and mainly the common economic space, is extremely important in
this respect. But the common economic space cannot be created without the
development of a free trade zone, at least in a distant future, as a
fundamental prerequisite for dynamic economic interaction. Thus Russia will be
able to enhance their economic status on the world stage show consistency and
development of the Russian economy.
Moreover Russia accession
to the WTO will help solve many problems.
Cooperation in this area
aims at further integration of Russia into the world economy and at preparation
for Russia’s accession to the World Trade Organization (WTO). The EU
recognizes the fundamental role that WTO membership plays in integrating Russia
into the world economy and in anchoring and consolidating Russia’s economic
reforms.
Advantages stemming from
Russia’s accession to the WTO will be reciprocal. It will provide more
stability and predictability, better terms of access, increased legal security
for
EU investments in Russia.
Russian exporters will have guaranteed channels of exports to all EU markets
and to other WTO members.
The other view shared by
various people both in the EU and in Russia purports that in view of widening
and deepening of the European integration and with consideration of the new
threats and challenges to European security the relations between Russia and
the EU should be brought
to a higher new level of
cooperation which the 1997 Partnership and Cooperation Agreement cannot
provide. Such new level of cooperation could be attained through an Agreement
on Establishing a Special Association between the Russian Federation and the
European Union. This goal fully meets long-term interests of both Europe and
Russia. On the one hand, such an Agreement on Association perse does not imply
Russia's aspiration to join the EU as its member. On the other hand, such an
agreement would provide solid legal basis for the relations evolving between
the EU and Russia. It would contribute to the convergence of Russian and EU
political, economic and legal systems; enhance sustainable development of their
economies; promote further development of democracy in Russia, and ensure
closer cooperation of its parties in all directions including security
measures. The «special association» implies that the EU agreement with Russia
draws a distinct line between this and other agreements on association with
consideration of Russia's importance and status, its role in the termination of
the «cold war,» as well as its input in the anti terrorist coalition.
Undoubtedly, an Agreement on Association perse won't resolve all problems in
the EU-Russia relations but together with some other measures and programs such
an agreement would bridge the existing gap between the unifying Europe and
Russia, which is likely to lead to the emergence of a new dividing line on the
European continent. The success of future partnership between Russia and the
European Union will depend on the impact which the processes of widening and
deepening of European integration, first and foremost, its institutional
transformations in the enlarged European Union will have on its viability and
its efficiency as Europe's primary international institution.
Step 4.Results of first
attempts solving problem.
Finally a
major difficulty in creating a corporate image in the West is a serious lack of
people representing Russian companies in the public sphere. The frequency of
Russian companies and their directors being mentioned in prominent foreign
press testifies to the serious scarcity of “individuals” in the public sphere.
More recently the formation of an objective economic premise to improve the
image of Russian companies has begun. This is tied to the increasing
number of foreign investors in Russia and the growing presence of Russian
business and assets in Europe .During this process businesses not only need to
deepen mutual trust and establish stable connections but Russian companies must
also more actively and openly work with foreign mass media. There needs
to be newsworthy public figures, capable of eliciting an informal interest from
Western audiences.
The
reputation of Russian businessmen is improving and this is connected with the
growing number of companies known to Western audiences, the “acclimatization”
of foreign audiences to the stream of news about Russian companies and the
favorable indices of Russian economics. Investors are ready to invest money in
the development of Russia. The Russian stock market last year grew 80%
and, in the opinion of investors, overcame risks. This fact is, for many,
more important than the image of business and the country in which it is
unfolding. But Russia's business structure and businessmen remain,
all the same, on the edge of ambiguity.
The Partnership and
Co-operation Agreement (PCA) ,economic relations between the EU and Russia. It
was signed in 1994 and entered into force on 1st December 1997. Under the terms
of the PCA, Russia receives Most- Favored -Nation (MFN) status, whereby no
quantitative limitations are applied except on exports of certain steel
products (which represent only 4% of bilateral trade). On 27 April, Russia
agreed to extend the PCA to the ten new EU Member States from 1 May 2004. The basis of the PCA is the shared principles and
objectives of the two partners: “the promotion of international peace and
security, support for democratic norms and
for political and
economic freedoms.” It covers an extensive range of policy areas from trade and
financial cooperation through science and technology and education to the
cooperation on the prevention of illegal activities.
While the PCA created a framework for political dialogue, the most important
aspect for Russia was that it created a way to gain access to the EU market.
The
Partnership and Co-operation Agreement established a complex institutional
structure for regular consultations.
This is also part of the
rationale behind the Common Economic Space, which should contribute to anchor
Russia in the European and to fully benefit from the recent EU enlargement. At
the EU-Russia Summit of May 2001, the EU and Russia launched discussions on the
establishment of a Common Economic Space. The main objective of this
initiative, which covers essentially all trade and economic issues, is the
elimination of trade barriers between the EU and Russia mostly through
regulatory convergence. Indeed, regulatory convergence would allow economic
agents to operate subject to common rules in a number of fields throughout the
enlarged EU and Russia which represent a market of around 600 Million
consumers.
The EU-Russia Summit on
21 May 2004 has discussed the next steps to develop the four Spaces launched at
the EU-Russia Summit in St. Petersburg in May 2003, and notably the need to
agree on an action plan on the Common Economic Space in the coming months.
Step
5.General conclusion
During our research we found that
throughout the entire post-Soviet period, the European Union has been Russia’s
main partner in trade and economy and will remain so at least until 2015-2020.
The further expansion of trade with the EU is necessary for Russia in
developing its entire complex of foreign-economic relations.
Apparently both Russia
and the European Union do not have the issue of Russia's accession to the EU on
their agendas because neither party is prepared to meet with such a
contingency. This issue, however, is frequently debated theoretically, and it
has its advocates and opponents both in Russia and in the EU countries,
Russia's great dimensions being one of the principal arguments against Russia's
membership in the European Union: it will «always be too large for Europe.»
The advocates of Russia's
gradual integration into European structures contend, however, that based on
its economic potential, its demographic trends and the evolution of its armed
forces Russia may soon be rated as an average European country.
Negative
perceptions of many processes and occurrences in Russian business are based
upon antiquated stereotypes, the tendencies of mass media and unavoidable
projections of the image of the country in the reputation of its corporate
citizens. The fundamental factor currently determining the perceptions of
Russian business abroad is Russia's image, which unfortunately still has a
negative influence
At the moment one of the main issues on the
EU-Russia agenda is the expiration of the Partnership and Co-operation
Agreement in 2007 and thus the need and the opportunity to rethink the basis of
EU-Russia relations. The two sides want the new agreement to reflect the
changes that have taken place in both entities and the new goals that resulted
from these changes. Currently the two sides are only in the stage of
preparatory work, while the formal EU position is expected by the end of 2006
or the beginning of 2007. The basic principles will remain embedded in the new
agreement as well.17 At the same time, the partners want to come up with a
solution that would be “capable of promoting the future evolution of relations,
including the perspective of enhanced trade and economic integration once
Russia has joined the World
Trade Organization (WTO).” As it is possible
that coming up with a new agreement may take longer than the old PCA is valid
for, the two sides agreed to allow the document to stay in force until the new
agreements comes into effect.