Twenty-five years (and one week) after the fall of the Berlin wall, people in Europe are in a reflective mood about the rapid changes across the continent--especially the eastern nations--a quarter-century ago. Erik Berglöf, Chief Economist of the European Bank for Reconstruction and Development, sees lessons for today in discussion of the past. At Project Syndicate, he makes a case for looking "for new bargains where all parties stand to gain."
One area on which to focus is the Ukrainian financial sector, where both Russian and Western European banks are highly exposed – and thus have a strong incentive to work together to maintain financial stability. Since June of this year, the affected banks and key authorities, together with the international financial institutions, have met in Kyiv under the Vienna Initiative framework (the next meeting is in two weeks). The banking system is in deep crisis, but at least there is a constructive dialogue involving the Russian banks present in the country.
Common interests are also evident in the gas sector – a crucial item in the Ukrainian government’s budget and perhaps the main source of corruption in the country. All sides want greater energy security: Russia wants guaranteed demand, and Europe and Ukraine want stable prices and no supply disruptions. Last month’s agreement, brokered by the European Union, to resume supplies of Russian gas to Ukraine must now be followed by genuine reform of the sector, eventually involving an international operator of the network.
A third area is trade. The deal negotiated between Russia, Ukraine, and the EU regarding the provisional application of the EU Association Agreement offered yet another opportunity to recognize joint interests. The agreement came into force on November 1, but it remains uncertain whether everyone will abide by it. If played right, ideologically less-charged trade negotiations could be an area where all parties can find common ground.
Read the full article here.