Helping Russia Return To Its Reform Agenda

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Only a handful of countries have supported Russia's military campaign in Georgia and its recognition of South Ossetian and Abkhaz independence. The country's global isolation has been a severe blow to its reputation.

But President Dmitry Medvedev could still do a lot to restore Russia's battered image. He is aware of the danger of scaring away Western investors. He also understands the need to promote the rule of law, including transparent rules for investors, curbing the abuse of law enforcement agencies and ensuring an independent judiciary.

Most Russians are happy with the country's economic progress and the increase in their living standards, despite high inflation. But at the same time, they are aware of the economy's underlying weaknesses.

Medvedev wants to diversify the economy away from oil and gas, but he faces a whole range of systemic problems, including a demographic crisis, a failing health and education system and a lack of professional talent. The recent turmoil in the stock market and reports of investors leaving Russia demonstrate the need for urgent action.

Russia's best partner in promoting reform is the European Union. It can help diversify Russia's economy through technology transfer, financing and investment. But European investors will only engage with Russia if there is a clear, transparent and consistent legal framework.

The atmosphere at the June EU-Russia summit in Khanty-Mansiisk, which marked the opening of EU-Russia talks on a new partnership agreement, was very positive. Medvedev made a positive impression on EU leaders, who now expect him to back up his words with actions.

One of the new president's proposals at the summit was a new European security treaty. There are few details of what this might cover, and this has provoked understandable caution among Western leaders. Given the growing values gap between the EU and Russia, Medvedev now needs to provide some substance and explain the advantages of a new treaty.

Medvedev's first months in office have been difficult, but he has repeatedly expressed a commitment to a reform agenda. It is in everyone's interest to support these reforms and make sure they are instituted. The EU's hard line on Russia's flouting of international law in the Georgia, Abkhazia and South Ossetia need not prevent it from working closely with Russia and to hold Medvedev to his reform agenda.

Paddy Ashdown is the president of the EU-Russia Centre in Moscow.