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Analysis & Opinion
22.08.11 Right Turns To Europe
By Svetlana Kononova

Mikhail Prokhorov, a Russian billionaire and the leader of the Right Cause party, has proposed implementing a visa-free travel regime with European countries and replacing the ruble with the euro as a part of his party’s program. Although experts say that these goals don’t seem realistic, at least in the near future, promoting such ideas will help the ambitious politician attract more votes in upcoming State Duma elections in December.

Speaking about his campaign platform at a news conference, Prokhorov said: “Russia needs to make a daring strategic step toward Europe by joining the Schengen zone and the euro zone. We need to get back to the plan to create a big Europe, from Lisbon to Vladivostok.” He also said that the Russian ruble “can never even become a regional currency because it depends on oil and gas prices. The future global economy will be based on three powerful centers – America and Latin America, greater Europe and China with the rest of Asia,” he said.

Yury Shuvalov, a deputy spokesman for the ruling United Russia party, harshly criticized the Right Cause leader’s controversial ideas. “Maybe Prokhorov has joined the euro zone himself, but nobody has invited our country to join,” he said sarcastically. “If Russia joins the euro zone, it would mean giving up economic sovereignty, and this move has doubtful prospects considering the current economic problems in the European Union.”

Mikhail Prokhorov later elaborated on his idea to join the euro zone and the Schengen zone in his personal blog, rejecting United Russia’s criticism as unpatriotic. “I want to clarify one thing. I live in Russia. My interests are in Russia. I’m for Russia. Russia is always right for me. We have held unsuccessful negotiations on a visa-free regime with Western Europe for many years. Both the people and the government want it. But this cause has stalled. Why? Because visas are a military barrier, but not a migration barrier,” he wrote. “We need working capital from Western Europe – industrial competence, technologies, knowledge, equipment, specialists. They need assurance in our oil and gas supply, and a real scenario on how to overcome the debt crisis. It needs to be a mutually beneficial bargain, and it needs to be done on time. A real economical alliance will make both us and them stronger.”

But can these ambitions plans possibly come true in the nearest future? Opinions differ. “While experiencing loaded debt problems, Europe essentially needs to expand its market outlets and gain access to cheap raw materials. Thus intensive negotiations on integrating Russia with the euro zone are possible,” said Alexander Osin, the chief economist at Finam Management. “If Russia joins the EU, the main question would be how to protect the interests of domestic producers. But the advantage of Russia joining the EU would be in creating a tax-free transport corridor between Europe and Asia that could bring significant profits for a wide range of Russian enterprises and the state.”

Anna Kotova, an economic adviser at the Territory Foundation, believes that replacing the ruble with the euro could lead to economic chaos like in the early 1990s, after the collapse of the Soviet Union. “EU countries have small territories and relatively small populations. The rules that govern their economies are not appropriate for Russia with its large territory,” she said.

Ilya Yashin, one of the leaders of the Solidarnost opposition movement, called Prokhorov’s project “constructive,” but warned that replacing the ruble with the euro would lead to a growth in petrol prices. “Petrol at Russian gas stations would cost ?1.5 [per liter], as in Europe. Prokhorov himself is unlikely to notice such price growth. But his potential voters will be surprised. When two economies ally, price formation follows market rules. If both of the GDPs are nearly equal, prices will be average. But if the GDP of one country is inferior to the GDP of the other country, prices are determined by the dominant economy. Russia’s GDP is seven times smaller than Europe’s,” he said.

Yashin also noted that the main impediments for Russia’s joining the EU are problems with human rights. “Integration requires implementing political and social standards that operate in the EU, such as democracy and the rule of law, human rights and social justice. Russia has big problems with all these things, but the authorities ascribe them to our ‘special way.’ European politicians are already trying to forbid corrupt Russian officials from entering their countries. So dreams of joining the Schengen zone are unlikely to come true,” he said.

Meanwhile, a poll conducted by the research center of the recruitment Internet portal SuperJob.ru found that about a third of economically active Russians support the idea of a “big Europe” that Prokhorov proposed. Half of the respondents are against the idea because they believe that “Russia should follow its own path.” The rest said they don’t care whether Russia joins the euro zone and the Schengen zone or not.

The poll also established an interesting trend: the younger the respondents are, the more they want to live in a “big Europe,” because “it is needed to transition to a civilized modern society and for freedom of movement and travel,” and “a global community will improve the attitude toward Russia.” But mature and elderly people are scared by such prospects. They believe that “Prokhorov’s ideas are crazy,” “every state should have its own national currency,” “such ideas are beneficial for rich people only” and “Russia doesn’t need Europe’s problems.” Alexander Zakharov, the president of SuperJob.ru, said that although Prokhorov’s ideas seem unrealistic, they have significant public support that might help the Right Cause get into the State Duma.

The Right Cause was established in 2009 by a merger of what was left of the Union of Right Forces, Civilian Power and the Democratic Party of Russia. The popularity of this non-parliamentary party started growing after Mikhail Prokhorov, the third richest man in Russia and the 39th richest man in the world according to Forbes, become its leader in May of 2011 and promised to take it up to second place in terms of representation in the State Duma. Research conducted by the Public Opinion Foundation (FOM) found that the number of Russians who have a positive attitude toward Prokhorov has grown from eight to 12 percent since May of 2011.
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