Wednesday, April 30, 2014

Trade is not a peacemaker

German economist Hans-Werner Sinn, apparently having given up on TARGET2 Trutherism, writes in the Wall Street Journal --

How can the cost of any further annexations be raised for Russia and the chances of finding a peaceful solution be strengthened, without doing any damage to Russia, Ukraine or the EU? The answer lies in the offer of a free trade agreement with Russia and the Ukraine as part of a new international agreement on Ukraine's future. In 2010, Russian President Vladimir Putin proposed a free trade area stretching to Vladivostok from Lisbon. What happened? The EU worked on a free-trade agreement with Georgia, Moldova, Ukraine and Armenia instead. This only increased Moscow's nervousness, because it implicitly posed the threat of customs barriers for Russia.

This comes after he blames the EU and NATO for the Ukraine crisis. Anyway, what of this potentially magical free trade deal with Russia. Here's the EU description of its status:

The new EU-Russia Agreement - currently under negotiation - should provide a comprehensive framework for bilateral relations with stable, predictable and balanced rules for bilateral trade and investment relations. It will focus on improving the regulatory environment by building upon the WTO rules and strengthen bilateral trade relations. The negotiation of this New Agreement with Russia started in 2008. The negotiations have been stopped in 2010 because no progress could be made in the Trade and Investment part. Today with the deepening of the Customs Union between Russia, Kazakhstan and Belarus and the difficulties for Russia to fulfill its WTO commitments, it is not clear how further progresses can be achieved in the Trade and Investment field and in general with the New Agreement.

In other words, it was Russia which confounded the progress in 2010. Does anyone think that Vladimir Putin is a better mood now than in 2010?