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Economic Connectivity: A Basis for Rebuilding Stability and Confidence in Europe? OCTOBER 2016 Background Economic connectivity became a buzzword when talking about harmonization of the integration processes within the Eurasian Economic Union (EAEU) and the European Union (EU)—the so-called “integration of integrations.” While the expression is new, the idea is well-established. Indeed, the Helsinki Final Act of 1975 stated that “cooperation in the fields of trade, industry, science and technology, the environment and other areas of economic activity contribute to the reinforcement of peace and security in Europe and in the world as a whole.” 1 At a time when diplomatic relations between Russia and the West have deteriorated yet states remain linked by economic and energy interests, some see economic connectivity as a possible entry point for maintaining dialogue and rebuilding cooperation. While the economic (second) dimension of the Organization for Security and Co-operation in Europe (OSCE) has largely been an empty basket for the past forty years, it is regarded—unlike the politico-military (first) and human (third) dimensions of the OSCE’s work— as one of the few potential areas of cooperation between East and West. However, others have cautioned that precisely because of strained relations, states should not pursue economic cooperation in the spirit of “business as usual.” Indeed, punitive economic measures have been taken in the form of sanctions. Economic connectivity means different things to different people. In its work, the International Peace Institute (IPI) has considered economic connec- tivity at three levels: (1) economic relations between Europe and Asia (across Central Asia and Mongolia); (2) economic relations between the Euro- Atlantic and Eurasian halves of the OSCE area (between the EU and the Eurasian Economic Union); and (3) economic affairs within OSCE states, particularly how to improve economic relations across internal boundary lines, both to promote trade and as a confidence-building measure. During its chairmanship of the OSCE in 2014, Switzerland promoted the idea of economic connectivity. It is also a priority for the German chairmanship in 2016. In response to this increased interest in economic connectivity, IPI, with the support of the Federal Department of Foreign Affairs of Switzerland, organized a roundtable on this topic on December 14, 2015, in Vienna. This roundtable aimed to stimulate dialogue and exchange ideas on how energy On December 14, 2015, the International Peace Institute (IPI), with the support of the Federal Department of Foreign Affairs of Switzerland, organized a roundtable in Vienna called “Economic Connectivity: A Way of Rebuilding Bridges?” This roundtable aimed to stimulate dialogue and exchange ideas on how energy and economic cooperation can foster growth, stability, and cooperation in the area of the Organization for Security and Co-operation in Europe (OSCE). The workshop brought together representatives of OSCE partici- pating states, executive structures, the private sector, civil society, and academia. Indira Abeldinova and Walter Kemp served as rapporteurs for the roundtable. This meeting note reflects the rapporteurs’ interpreta- tion of the discussions and does not necessarily represent the views of all other participants. IPI owes a debt of gratitude to the Federal Department of Foreign Affairs of Switzerland for making this roundtable possible. 1 Conference on Security and Co-operation in Europe, Final Act, Helsinki, 1975, p. 14.
Transcript

Economic Connectivity:A Basis for Rebuilding Stabilityand Confidence in Europe?

OCTOBER 2016

Background

Economic connectivity became a buzzword when talking about harmonizationof the integration processes within the Eurasian Economic Union (EAEU) andthe European Union (EU)—the so-called “integration of integrations.” Whilethe expression is new, the idea is well-established. Indeed, the Helsinki FinalAct of 1975 stated that “cooperation in the fields of trade, industry, scienceand technology, the environment and other areas of economic activitycontribute to the reinforcement of peace and security in Europe and in theworld as a whole.”1

At a time when diplomatic relations between Russia and the West havedeteriorated yet states remain linked by economic and energy interests, somesee economic connectivity as a possible entry point for maintaining dialogueand rebuilding cooperation. While the economic (second) dimension of theOrganization for Security and Co-operation in Europe (OSCE) has largelybeen an empty basket for the past forty years, it is regarded—unlike thepolitico-military (first) and human (third) dimensions of the OSCE’s work—as one of the few potential areas of cooperation between East and West.However, others have cautioned that precisely because of strained relations,states should not pursue economic cooperation in the spirit of “business asusual.” Indeed, punitive economic measures have been taken in the form ofsanctions. Economic connectivity means different things to different people. In itswork, the International Peace Institute (IPI) has considered economic connec-tivity at three levels: (1) economic relations between Europe and Asia (acrossCentral Asia and Mongolia); (2) economic relations between the Euro-Atlantic and Eurasian halves of the OSCE area (between the EU and theEurasian Economic Union); and (3) economic affairs within OSCE states,particularly how to improve economic relations across internal boundarylines, both to promote trade and as a confidence-building measure. During itschairmanship of the OSCE in 2014, Switzerland promoted the idea ofeconomic connectivity. It is also a priority for the German chairmanship in2016. In response to this increased interest in economic connectivity, IPI, with thesupport of the Federal Department of Foreign Affairs of Switzerland,organized a roundtable on this topic on December 14, 2015, in Vienna. Thisroundtable aimed to stimulate dialogue and exchange ideas on how energy

On December 14, 2015, the

International Peace Institute (IPI),

with the support of the Federal

Department of Foreign Affairs of

Switzerland, organized a roundtable

in Vienna called “Economic

Connectivity: A Way of Rebuilding

Bridges?” This roundtable aimed to

stimulate dialogue and exchange

ideas on how energy and economic

cooperation can foster growth,

stability, and cooperation in the area

of the Organization for Security and

Co-operation in Europe (OSCE). The

workshop brought together

representatives of OSCE partici-

pating states, executive structures,

the private sector, civil society, and

academia.

Indira Abeldinova and Walter Kemp

served as rapporteurs for the

roundtable. This meeting note

reflects the rapporteurs’ interpreta-

tion of the discussions and does not

necessarily represent the views of all

other participants.

IPI owes a debt of gratitude to the

Federal Department of Foreign

Affairs of Switzerland for making this

roundtable possible.

1 Conference on Security and Co-operation in Europe, Final Act, Helsinki, 1975, p. 14.

2 MEETING NOTE

and economic cooperation can foster growth,stability, and cooperation in the OSCE area. Theworkshop brought together representatives ofOSCE participating states, executive structures, theprivate sector, civil society, and academia. Thismeeting note provides an overview of thatworkshop and offers some ideas on possible waysto further develop the idea of economic connec-tivity.

Mechanisms of EconomicConnectivity

ECONOMIC CONNECTIVTY BETWEENREGIONAL GROUPINGS

Session 1 of the roundtable looked at the structuralchallenges and asymmetric economic relationshipbetween the European Union (EU) and theEurasian Economic Union (EAEU). It also focusedon recent economic developments between Russiaand Ukraine and the OSCE’s added value inrelation to economic connectivity. It was noted that economic connectivity is not anew idea. Economic integration has long beenpromoted in different forms through differentagreements and bodies, for example throughreduction of customs duties and free tradeagreements. However, in recent years economicand political union have become more closelyentwined, for example through the EuropeanSingle Market, North American Free TradeAgreement (NAFTA), and the EAEU. This has hadan impact on institutional and governancestructures as well as trade relations. Broadly speaking, economic connectivity relatesto any form of informal economic relationshipamong states or regional groupings, includingtrade, business activities, financial relationships,human mobility, and state-sponsored economicrelations. In the OSCE area, the most significantgroupings are the EU and the EAEU. While the twogroups share some common characteristics, thereare significant differences between them in termsof the economic weight of their members as well asof the union as a whole.

On January 1, 2015, Russia, Kazakhstan, andBelarus established the EAEU. They weresubsequently joined by Armenia and Kyrgyzstan.Together, these five countries have 2.13 percent ofthe world’s total gross domestic product (GDP).The EAEU builds on earlier attempts at closeeconomic cooperation among countries of theformer Soviet Union, including the Common -wealth of Independent States (CIS, 1991), CIS FreeTrade Area (1994 and 2011), Eurasian EconomicCommunity (2000), and Eurasian Customs Union(2009). For its part, the EU has twenty-eight memberstates consisting of 510 million inhabitants (whichwould make it the most populous country afterIndia and China), with an aggregate GDP of $16trillion. This is a much larger market than the five-member EAEU, or even the nine-member CIS,which has a total of 240 million inhabitants and anaggregate GDP of less than $2 trillion. Participantsdiscussed the respective weight of certain countrieswithin the two unions. It was noted that Russiarepresents 84 percent of total GDP of the EAEU, incomparison to Germany, the EU’s largesteconomy, which represents 21 percent of the EU’stotal GDP.2

While Russia economically dominates the EAEU,its economy is heavily dependent on the energyindustry. It was noted that current low oil pricescoupled with EU sanctions are putting greatpressure on Russia’s economy. This is hamperingmodernization, interrupting business links, anddiscouraging foreign investment. That said, Russiaand the EU remain vital trade partners with amutual interest in doing business, and the EUcontinues trading with Russia, particularly in termsof imports (68 percent of which are mineral fuels).3

The fault line between the EU and the EAEUruns through countries where Russia’s “nearabroad” and the EU’s “new neighborhood” overlap.Instead of developing good relations between bothblocs (which Kazakhstan, for example, hasdemonstrated is possible), states along this faultline—like Georgia, Moldova, and Ukraine—arebeing forced to choose between the two.

2 World Bank, 2015, available at http://databank.worldbank.org/data/download/GDP.pdf .3 European Commission, “European Union, Trade in Goods with Russia,” June 21, 2016, available athttp://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113440.pdf .

Ukraine is the most dramatic example.Participants recalled that one of the triggers forinstability in 2014 was the debate around whetherUkraine would sign association and free tradeagreements with the EU or deepen economicrelations with Russia. The Ukraine conflict ishaving serious consequences in terms of casualtiesand displacement (more than 9,500 killed andmore than 1.7 million internally displaced)4 andeconomic costs (projected in 2014 to amount to 6percent of Ukraine’s GDP).5 Due to the war,Ukraine has faced higher external debt, power cuts,railway disruptions, decreased exports of goodsand services to and from Russia, price hikes, andausterity measures. Looking ahead, a number ofoptions for strengthening the Ukrainian economywere discussed. These included: (1) microeco-nomic stabilization, (2) structural reform, and (3)regional industrial infrastructure. Scenarios were also put forward for howeconomic and political relations between the Euro-Atlantic and Eurasian halves of the OSCE areacould evolve in the future:• Continued conflict: Dramatic reorientation oftrade and cross-regional production linkages inUkraine toward the West create massive transi-tion costs. Economic sanctions against Russiaover its actions in Ukraine lead Russia and theEAEU to revive the process of economicmodernization and diversification.

• Pragmatic trade arrangements: Whileremaining part of the EU Deep andComprehensive Free Trade Area (DCFTA),Ukraine maintains preferential trade agreementswith the EAEU. In the medium run, the EAEUand EU renew their trade and investmentlinkages, harmonize their standards, and gainfringe benefits in terms of technology transfersand institutional improvements.

• Eurasian integration from Lisbon toVladivostok: A long-term scenario envisageswider Eurasian integration, with a visa-freeregime and free trade zone “from Lisbon toVladivostok.” These developments would be

economically beneficial but would need to takeinto account diverse political systems and values. Participants noted that in the short term, the firstscenario is likely to persist. A number of partici-pants shared the view that the best-case scenario inthe medium term is a frozen conflict in theLuhansk and Donetsk regions. It is essential to consider economic connectivityin a broader context, not only between Eastern andWestern Europe but also between Europe and Asia.Indeed, the eastern part of the OSCE provides abridge between the two continents. Thirty-threeOSCE participating states are members of the Asia-Europe Meeting (ASEM), a platform for informaldialogue and cooperation. Both the OSCE andASEM emphasize strengthening the economic“aid-based” relationship between Europe and Asia.It was suggested that OSCE-ASEM cooperationcould promote greater connectivity between Asiaand Europe.ENERGY RELATIONS BETWEEN THE EUAND RUSSIA

Energy is one of the key factors uniting Europeanand Eurasian countries and making them highlyinterdependent, particularly due to the reliance ofWestern European countries on oil and gas fromcountries east of Vienna (like Azerbaijan,Kazakhstan, Russia, and Turkmenistan). Russiaremains Europe’s main supplier of gas. It supplied40 percent of the EU’s total gas in 2014, followed byNorway (37 percent), Algeria (7 percent), andLibya (2 percent). More than 50 percent of gasconsumed in European countries like Austria,Belgium, Bulgaria, the Czech Republic, Finland,Germany, Greece, Hungary, Poland, and Turkey isdelivered via pipelines from Russia.6

Participants recalled that in 2009 Europe adoptedenergy market legislation—the Third EnergyPackage—to secure and diversify its energysupplies. This involved unbundling energysuppliers, establishing the Agency for theCooperation of Energy Regulators (ACER), andenhancing transborder cooperation amongtransmission system operators. This also reduced

Economic Connectivity: A Basis for Rebuilding Stability and Confidence in Europe? 3

4 Office of the UN High Commissioner for Human Rights, Report on the Human Rights Situation in Ukraine: 16 May to 15 August 2016, September 15, 2016;Internal Displacement Monitoring Centre, “Global Internal Displacement Database,” August 2016, available at www.internal-displacement.org/database/# .

5 Vienna Institute for International Economic Studies, Economic Consequences of the Ukraine Conflict, November 2014, available at http://wiiw.ac.at/economic-consequences-of-the-ukraine-conflict-dlp-3381.pdf .

6 European Commission, “Quarterly Report on European Gas Markets,” Volume 9, Issue 1, fourth quarter of 2015 and first quarter of 2016, p. 10.

4 MEETING NOTE

the ability of Russian energy company Gazprom tomonopolize energy infrastructure in the Europeanmarket. It was noted that EU countries arebecoming less dependent on gas: in 2014, gasaccounted for 21.4 percent of energy consumption,which is a decline from 2006.7 Total EU gasproduction decreased by 9 percent in 2015compared with a year earlier.8

At the same time, there have also been shifts inthe energy market due to geopolitical develop-ments (e.g., in Iran, Iraq, and Libya) and increaseddeliveries of liquefied natural gas (LNG). Europe iscurrently developing LNG regasification capacitiesand started receiving its first deliveries from the USin 2016. Meanwhile, Russia is looking for newmarkets in Asia. In 2014, Russia concluded amultibillion-dollar gas deal with China, expandingpipeline grids from eastern and western Siberiadirectly to China. Participants also discussed the politics ofpipelines. Russia was entirely dependent on gastransit infrastructure in Ukraine until 1999, withthe construction of the Yamal-Europe pipeline viaBelarus and Poland to Germany (see Figure 1).This was followed by the Blue Stream pipelinelinking Russia and Turkey in 2005, and the NordStream pipeline through the Baltic Sea to Germanyin 2012. Other projects that have been discussedinclude the South Stream and Nabucco pipelineprojects (both canceled), as well as the TurkishStream pipeline. There are also plans for laying twoextra pipelines under the Baltic Sea—the so-calledNord Stream 2 pipeline. Participants also discussedthe likelihood of a Trans-Caspian pipeline and howit could link up with the Trans-Anatolian andTrans-Adriatic pipelines. It was noted that thecompletion of these pipelines will have a majorimpact on geopolitics, although recent history hasshown that geopolitics sometimes interrupt thecompletion of pipelines.LEGISLATIVE HARMONIZATIONBETWEEN THE EU AND EAEU

While it may be a stretch to imagine an “integra-tion of integrations,” as some have suggested, thereis plenty of scope for harmonizing standardsamong states and organizations. This issue was

raised in the context of enhancing compatibility ofregulations and cooperation between the EU andEAEU. Over the past twenty years, the EU has bothdeepened and widened. The EAEU is now in theprocess of doing the same. “Deepening” of thisunion is reflected in the evolution of the integrationproject from the creation of the Eurasian CustomsUnion in 2010, to the Single Economic Space in2012, and ending with the Eurasian EconomicUnion in 2015. “Widening” is reflected in steps toexpand the EAEU’s membership. This process iscomplex and takes time. The energy sector, forexample, is still not covered by the union; energydeals are made on a bilateral basis. It is planned thatthe EAEU common rules will cover energy by 2025. The EAEU faces not only the challenge ofharmonizing standards and legislation among itsmembers but also the possibility of harmonizingthese standards and legislation with the EU. Intheory, there should be no legal incompatibilitybetween Deep and Comprehensive Free TradeAreas (DCFTAs) with the EU and free tradeagreements with the EAEU. Indeed, participantsemphasized that states should seek good relationswith both integration projects. Kazakhstan wascited as a positive example of a state engagingconstructively with both the European andEurasian integration projects at the same time. Itwas noted, for example, that most food safetystandards in the OSCE area are based on WorldTrade Organization (WTO) regulations and thatthese should be the benchmark. It was also notedthat countries and companies have a self-interest inensuring that their products are of a standard thatcan give them access to new markets. Therefore, instead of a grand project of “integra-tion of integrations,” several participants urged acommon-sense approach based on raisingstandards (rather than barriers) that would, forexample, enable more countries in the post-Sovietspace to access Western European markets. It wassuggested that Russia, the EU, and Ukraine shouldwork together on small, practical steps such asharmonizing food safety standards and ensuringcompatibility with WTO rules. A concrete example

7 Eurostat, “Consumption of Energy,” July 2016, available at http://ec.europa.eu/eurostat/statistics-explained/index.php/Consumption_of_energy .8 European Comission, “Quarterly Report on European Gas Markets,” Volume 9, Issue1, fourth quarter of 2015 and first quarter of 2016, p. 8.

Economic Connectivity: A Basis for Rebuilding Stability and Confidence in Europe? 5

Figure 1. Major Russian gas pipelines to Europe

Source: Samuel Bailey/Wikimedia Commons

is the EU sanitary and phytosanitary requirements.It was explained that the norms between the EUand EAEU have been bilaterally negotiated by theEuropean Commission and each member of theEurasian Economic Commission. Thisdemonstrates a functional, needs-driven approachthat can create compatibility between the EU andEAEU.IS THERE A ROLE FOR THE OSCE?

The idea behind economic connectivity is topromote economic development and growth as away of fostering cooperation at a time when otherchannels are blocked. But it is not always the case,as Montesquieu claimed, that “the natural effect ofcommerce is to bring peace”—Europe was highlyeconomically interconnected just before the FirstWorld War. Nevertheless, trade and other forms ofeconomic connectivity can foster cooperation inother areas. Considering this, is there a role for theOSCE in promoting economic connectivity? In this session, participants discussed the OSCE’sexisting activities in promoting energy, environ-mental, and economic cooperation. They alsodiscussed possible future activities for the organiza-tion in these areas. It was noted, for example, thatthe OSCE has promoted cooperation on watermanagement issues. The OSCE has also looked atthe special needs of landlocked countries, studiedthe importance of trade corridors for regionalcooperation, and promoted anticorruption activi-ties. Some suggested that the OSCE could facilitateeconomic connectivity at the macro level as part ofefforts to foster greater trust and cooperation inEurope. Others noted the potential benefits ofeconomic confidence-building measures as part ofconflict settlement processes. Overall, it wasstressed that it is vital to demonstrate the potentialbenefits of peace dividends and the costs ofinstability. Echoing a recommendation made bythe Panel of Eminent Persons on EuropeanSecurity as a Common Project, it was alsosuggested that the OSCE look at what can be doneto prevent states from instrumentalizing traderegulations as a political weapon. While the OSCE is not part of any trading blocks,its membership encompasses all states that are part

of both the EU and the EAEU. Therefore, it wasmentioned that it could encourage more effectivedialogue on issues of economic cooperation andgreater compatibility between the integrationprocesses. In particular, it was suggested that theOSCE could play a pivotal role in promotingeconomic reconstruction and development inUkraine. On energy security, it was recalled that at the2010 OSCE Summit in Astana participating statesfor the first time agreed on the need to enhanceenergy dialogue in the OSCE area among countriesat all points on the oil and gas supply chain.9 Thiscreates a potential opening for the organization tobuild on its past work on energy diplomacy. TheOSCE has also worked on projects to enhancedialogue on protecting critical energy infrastruc-ture from terrorist attacks, reducing waste to shrinkthe environmental footprint of energy-relatedactivities, and assessing the potential of renewableenergy in Central Asia and the South Caucasus. Moreover, participants noted that the OSCE iswell-equipped and well-positioned to link thesecond (economic) and third (human) dimensionsof its work—namely, to look at economic develop-ment in the context of good governance,transparency, and the rule of law. It was also noted that economic connectivity is,by nature, an issue that requires involving a widerange of stakeholders: not only states, but also theprivate sector and civil society. It was suggestedthat the OSCE should be more proactive inreaching out to businesses to work with them oncreating incentives for peace, particularly inunstable or post-conflict environments. This couldinclude encouraging development assistance andforeign direct investment in conflict-affectedregions, as well as promoting business-to-businesscontacts across boundary lines. A representative of Germany said that involvingbusinesses in promoting economic connectivitywould be a priority of the German chairmanship.He also said that Germany would promote theOSCE as a platform for dialogue between theprivate sector and policymakers, as well as foreconomic diplomacy. It was stressed that the issueof economic connectivity would be a thread

6 MEETING NOTE

9 See www.osce.org/mc/74985?download=true .

running through the full calendar of the OSCE’seconomic and environmental activities in 2016.ECONOMIC CONFIDENCE-BUILDINGMEASURES

Economic connectivity can be part of internationalnegotiation mechanisms within states and acrossinternal boundary lines, for example under theinstitutional umbrella of the OSCE. Protractedconflicts in the OSCE area—like in Transdniestria,Nagorno-Karabakh, and South Ossetia andAbkhazia—were cited as examples. One participantdescribed this approach as “from war economies topeace economies.” A representative of International Alert describedwork they had done in the South Caucasus topromote regional economic cooperation. Using a“3 + 3 + 1” formula (involving the three recognizedstates of the South Caucasus, three unrecognizedentities, and Turkey), they identified economicneeds and sought to promote new markets. Bycanvassing business actors in the region, theydiscovered that these leaders were keen to continuetrade despite political differences. They thereforeestablished a business and development network.In turn, this network created a South Caucasusbrand and marketed local products like cheese,honey, and tea. This encouraged cooperation anddevelopment and enabled goods manufactured inunrecognized republics to be sold in the territoryof, for example, Georgia. It was noted that small-scale, non-military, illicitcommercial activity across these boundariesremains resilient and persistent, contributing toreliable, trust-based relationships. The questionwas raised of how to transform these types oftransactions into more legitimate businesspractices, and how this in turn could helpnormalize relations. Economic relations betweenChina and Taiwan, the Republic of Cyprus andNorthern Cyprus, and Kosovo and Serbia werecited as examples of how commerce can beregulated even in the absence of a political solution. It was noted that in some cases nationalismtrumps business; merchants do not want to “tradewith the enemy.” But in other cases, pragmatismprevails, and trade is possible despite failure toreach a settlement of the conflict. The challenge isto cultivate these relations in a way that canpromote confidence and mutual benefits between

the parties. Indeed, the challenge is to integrateeconomic confidence-building measures into thepolitical settlement process. It was observed that most settlement processes inthe post-Soviet space are concentrated on securityand political issues, rather than on buildingsustainable peace and development. Few economicconfidence-building measures have beenintegrated into peace processes. Even when thereare economic assistance projects designed topromote stability and development (for example inparts of the Caucasus or Moldova), they are seldomlinked to integration strategies. This runs the riskof exacerbating rather than diminishing fissiparoustendencies, since it enhances separate rather thanjoint institutions and activities. Regional initiatives were highlighted as a goodway of promoting cooperation. Railways, roads,and pipelines in the South Caucasus were cited asexamples. However, such links may not promotecooperation and mutual benefit if they bypasscertain actors. It was concluded that economic connectivity isan issue relevant to the OSCE area in terms ofreconciling competing economic and politicalunions, harmonizing standards, facilitatingfreedom of trade and movement, and buildingeconomic ties across boundary lines. Whileeconomic connectivity is hard to promote withoutpolitical will, economic motives can neverthelesssometimes create contacts and opportunities thatopen new challenges, create mutual interests, andstimulate conditions that generate political will.

Conclusions andRecommendations

OSCE participating states should continue to useeconomic connectivity as a way of bridging dividesin Europe. While economic organizations may bebetter suited to address this issue, the OSCE clearlyhas a role. Among the priorities for future action,the OSCE and its participating states may want toconsider the following:1. Economic connectivity could build on commoninterests between Russia and the West in thefields of energy, transport, customs, and trade.

2. The issue of economic connectivity cannot beseen in isolation from politics. While “business

Economic Connectivity: A Basis for Rebuilding Stability and Confidence in Europe? 7

as usual” is not politically possible, lack ofbusiness is detrimental to all sides in the longrun, and economic connectivity can createmutual interests that incentivize politicalcooperation.

3. Trade, like inter-state relations, depends onrules. Respect for a rules-based economicsystem could help rebuild neighborly relations.Conversely, lack of political trust can harmeconomic relations.

4. Greater compatibility between the EU and theEAEU should be based on pragmatic steps (e.g.,harmonization of regulations) rather than agrand bargain.

5. States that enjoy the benefits of free tradeagreements with both unions should play therole of a bridge between them. They can alsodemonstrate to other in-between countries theeconomic feasibility of such agreements withboth the EU and the EAEU.

6. Economic confidence-building measures canhelp to forge common interests and jointprojects that bring mutual benefits. They shouldnot be seen as an end in themselves, but ratheras an integral part of settlement processes. Theyshould have a more prominent place in theOSCE toolbox.

8 MEETING NOTE

9

Agenda

Monday, December 14, 2015

9:15–9:30 Opening and Welcome RemarksWalter Kemp, Vice President, IPI

9:30–11:15 Session 1: What Is Economic Connectivity?What are the possibilities and limitations of economic connectivity? What are the politics ofeconomic connectivity? How does economic connectivity work in practice? What are theprocesses of economic connectivity, and which actors are involved? Are there any lessons fromexisting and past efforts by countries and international organizations to promote economicconnectivity? How can synergies be built between the private sector and diplomatic initiatives?

SpeakersMichael Landesmann, Senior Research Associate and Scientific Director, Vienna Institute forInternational Economic Studies; Professor of Economics, Johannes Kepler UniversityKataryna Wolczuk, Reader in Politics and International Relations, Centre for Russian,European and Eurasian StudiesGerhard Mangott, Professor of Political Science, University of Innsbruck

11:15–11:30 Coffee Break

11:30–1:00 Session 2: Is There a Role for the OSCE?What is the role of the OSCE in promoting economic connectivity? How could the OSCE moreeffectively use its second (economic) dimension to rebuild trust and cooperation? How canenergy enhance cooperation?

1:00–2:00 Lunch

2:30–4:00 Session 3: Economic Connectivity as a Confidence-Building MeasureHow can economic development projects more effectively build confidence across boundaries,for example in protracted conflicts? What lessons can be learned from the implementation ofeconomic confidence-building measures? How can the OSCE add more economic confidence-building measures to its toolbox?

SpeakerNatalia Mirimanova, Senior Adviser, Eurasian Program, International Alert; Adviser, Centrefor Humanitarian Dialogue; Consultant in Ukraine, UNDP and OSCE

4:00–5:00 Wrap-up Session and Closing Remarks

10

Indira AbeldinovaPolicy Analyst, IPI

Zukhra BektepovaSecond Secretary, Economic and EnvironmentalDimension, OSCE

Peter HavlikSenior Economist and former Deputy Director,Vienna Institute for International EconomicStudies

Walter KempVice President, IPI

Daniel KroosSenior Programme Officer, Energy Security,OSCE

Michael LandesmannSenior Research Associate and Scientific Director,Vienna Institute for International EconomicStudies; Professor of Economics, Johannes KeplerUniversity

Gerhard MangottProfessor of Political Science, University ofInnsbruck

Uroš MilanovićAttaché, Permanent Mission of the Republic of Serbia to the OSCE and Other InternationalOrganizations

Natalia MirimanovaSenior Adviser, Eurasian Program, InternationalAlert; Adviser, Centre for Humanitarian Dialogue;Consultant in Ukraine, UNDP and OSCE

Philip McDonaghAmbassador and Head of Mission, PermanentMission of Ireland to the OSCE

Thomas MühlmannMission of Austria to the OSCE

Azar MusayevThird Secretary, Permanent Mission of theRepublic of Azerbaijan to the OSCE

Claus NeukirchSenior Political Adviser, Permanent Mission of Germany to the OSCE

Ihor ProkopchukPermanent Representative, Permanent Mission of Ukraine to the International Organizations in Vienna

Bernhard RomstorferDesk Officer for Economic and EnvironmentalActivities, Permanent Mission of the FederalRepublic of Germany to the OSCE

Elena RovenskayaProgram Director, Advanced Systems AnalysisProgram, International Institute for AppliedSystems Analysis

Valery VoronetskyPermanent Representative, Permanent Mission of the Republic of Belarus to the InternationalOrganizations in Vienna

Kataryna WolczukReader in Politics and International Relations,Centre for Russian, European and EurasianStudies

Halil Yurdakul YigitgüdenCo-ordinator of Economic and EnvironmentalActivities, OSCE

Stanislav ZhizninPresident, Center of Energy Diplomacy andGeopolitics

Participants

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