Can trade and energy cooperation promote peace? On December 14, an IPI Vienna meeting discussed the possibilities and limitations of peace and economic connectivity between Europe and Asia; the European Union (EU) and the Eurasian Economic Union (EaEU); and across unrecognized boundaries, for example within states where there have been “frozen” or protracted conflicts. The potential role of the Organization for Security and Cooperation in Europe (OSCE) in promoting economic connectivity was also discussed. The meeting, “Economic Connectivity,” was part of IPI’s Swiss-funded “Peace Incubator” project.
Pipelines, train tracks, roads, water lines, and power cables connect communities and states and provide the lifeblood for economic development. While their disruption for political reasons, as seen in the recent case of Crimea, can hamper living conditions, such arteries of trade can also help to promote greater understanding and improve well-being which, in turn, can contribute to stability and good-neighborly relations. That said, it was observed that economic connectivity alone is no guarantee of peace: Europe was highly integrated in terms of trade in 1914, but this did not avert a war.
Participants discussed what steps could be taken to reduce politicization of economic relations between the Euro-Atlantic and Eurasian halves of the OSCE area, in what is sometimes described as the “integration of integrations” between EU and the EaEU. It was suggested that ways should be found to help states (like Armenia, Belarus, Moldova, and Ukraine) to build bridges between the EU and EaEU rather than being forced to make a “false choice” between them. The trilateral talks between the EU, Ukraine and Russia were cited as a positive example, as was relations between Turkey and a number of partners. It was also noted that members of both unions should harmonize their rules and standards in line with commitments of the World Trade Organization. Several participants stressed the importance of a “small step” policy rather than working towards the grand design of a common pan-European economic space.
A lively discussion focused on how economic cooperation could help to de-escalate tensions in and around Ukraine, and rebuild trust and cooperation in Europe. It was noted, for example in the context of trade and energy, that there is a high level of co-dependence between Russia and many EU countries, and therefore incentives for cooperation. At the same time, the crisis is forcing traditional trade partners to diversify their products and markets. Some participants stressed the role that economic cooperation can play as part of wider efforts to enhance stability while others warned that trade cannot operate in a political vacuum or reward bad behavior.
One participant pointed out the importance of rules in the context of trade. In the same way that states need the rule of law for legitimacy at home and predictability abroad, connectivity can only work effectively if investors can operate in an environment that they trust.
There was a detailed discussion on the impact of energy on security (and vice versa), particularly Russian oil and gas. It was noted that Russia has an over-supply of gas, that demand is dropping, and that Russia is pivoting to Asia. The impact of other geo-political changes, for example in Iran, Turkey and the Gulf, and their impact on energy markets were also discussed.
Participants discussed whether or not there is a role for the OSCE in promoting economic connectivity. One participant pointed out that this has been part of the OSCE’s work since the Helsinki Final Act of 1975, and now takes on a renewed significance. It was noted that, moving forward, discussions on this topic within the OSCE should involve the business community. This will be one of Germany’s priorities during its Chairmanship of the OSCE in 2016. It was noted that the recent report by the OSCE Panel of Eminent Persons included recommendations designed to increase the OSCE’s work in the field of economic connectivity. Furthermore, it was recalled that the 2010 OSCE Astana Summit Declaration called for an intensification of energy security dialogue.
Several participants suggested that science diplomacy and energy diplomacy could build bridges at a time when traditional diplomacy faces gridlock, and gave examples of on-going initiatives.
Participants discussed economic connectivity in the context of building confidence among parties to protracted conflicts. It was noted that identifying common economic interests and facilitating or regulating trade – even among parties that do not officially recognize each other – can create mutually beneficial incentives. The cases of China/Taiwan, Serbia/Kosovo, Cyprus as well as Georgia/Abkhazia were cited. This is an area of work where IPI intends to increase its activities, potentially in Moldova.