In a move that will strengthen the relationship between Russia and the European Union, the Russian prime minister signed a deal last month to exchange Russian debt for Eurobonds.
Russian news agency Interfax reported that Prime Minister Mikhail Kasyanov “signed a resolution … that opens the way for the exchange of adjusted Soviet-era commercial debt amounting to $1.1 billion for Eurobonds” (Business Report, Nov. 18).
This deal fully regulates the last part of the debt remaining from the Soviet economy’s collapse in the past decade. It has taken 10 years to finally deal with the problem. With the EU—in particular its leading economic power, Germany—already being the prime investor in Russia, this latest deal only further cements their commercial relationship.
One of the concerns of hegemonic European leaders in the past (witness Napoleon and Hitler) has been addressing the question of how to secure their eastern front while they consolidated western territorial gains. With the German-dominated EU expanding via trade and commerce, rather than Germany’s traditional method of war (for the time being), this attachment of Russian debt to Eurobonds further consolidates the diplomatic and economic nexus between Russia and the EU. As the future will confirm, this will simply help stabilize the EU’s eastern front while it builds the eastward leg of its empire, absorbing the buffer states of Eastern Europe in May 2004 (see this month’s cover story, p. 2).
Yet the burning question still remains: Where will EU eastward expansion stop? The Ukraine would be a pretty good guess. For Russia to give up the breadbasket of its old empire would be suicidal. Watch for ructions over the future drawing of the line between Russia and the EU’s eastward push.