Written Answers. - EU-Russian Relations.

Enda Kenny

Question:

12 Mr. Kenny asked the Minister for Foreign Affairs if he will make a statement on the situation in Russia; and the implications, if any, this may have for EU and Irish relations with Russia. [22066/98]

Ireland and the European Union have a particular interest in a stable Russia and in the development of a strong and dynamic partnership between Russia and Europe.

Since 17 August, when the government devalued the rouble and announced a moratorium on certain debt repayments, there has been considerable economic upheaval in Russia. As Deputies will be aware, on 11 September last, President Yeltsin's nomination of Mr. Yeveny Primakov as Prime Minister was approved by the Russian Duma. Since then, Prime Minister Primakov has completed the difficult task of assembling a new government to include representatives of a broad cross-section of political parties. He is leading the continuing efforts to address the major financial and economic issues facing the country.
Prime Minister Primakov has said that he will not abandon the reform process endeavour to give it a more human social face. This policy appears to command widespread support in Russia. Given the scale of Russia's problems, the situation there cannot be resolved instantly. Farreaching structural reforms are required to improve economic performance while at the same time benefiting the general population.
Prior to the current crisis, Ireland's economic relations with the Russian Federation had been developing well. Ireland has enjoyed strong surplus with Russia for a number of years.
It is not yet possible to quantify the effects of the crisis on our exports to Russia but there is no doubt that the second half of 1998 will show a substantial decrease in exports.
Beef is our principle export to Russia and sales have fallen sharply. In September, Russia's imports of food products overall fell to a sixth of their previous level. However, in view of Russia's heavy reliance on imported food, it may be expected that imports will pick up again.
Some Irish companies in Russia continue to trade at a reasonable level but the loss of purchasing power among middle-class customers in Moscow will have implications for the short to medium term. The banking system is in difficulties with the result that effective payments mechanisms are lacking. In the longer term, given Russia's population and natural resources, I believe that it will continue to have economic potential as a market for Ireland.
The EU's ability to influence events in Russia is limited. It is clear that the main steps to resolve the economic and financial situation will have to be taken by Russia itself. Nevertheless. it is important that the EU's links with Russia are maintained and that the partnership which has been established between the EU and Russia is preserved and enhanced. This is in the EU's interest as well as Russia's. Ireland strongly supports the Union's approach to date on targeted assistance to Russia and believes it is crucial that the EU together with other members of the international community continue to make clear that they stand ready to provide support, and assistance as appropriate.