The weakening of the EU gravitational pull leaves a power vacuum in SEE which Russia fills in. The Kremlin takes advantage of and exacerbates the dysfunctionality of government institutions in the region in order to expand its economic and political influence. This is one of the main conclusions from the latest analysis of the Center for the Study of Democracy on the Kremlin Playbook in Southeast Europe: Economic Influence and Sharp Power, launched at a roundtable at the Center for European Policy Analysis (CEPA) in Washington D.C. on January 22.
The discussion included the presentation of the main findings from the report by the main authors, Ruslan Stefanov, Director of the Economic Program at CSD and Martin Vladimirov, Analyst in the Economic Program followed by the comments of CEPA’s analysts, Janusz Bugajski, Senior Fellow at CEPA and Brian Whitmore, Russia Program Director.
The Kremlin Playbook report has shown that the imposition of sanctions against Russia in the aftermath of the invasion of Ukraine in combination with plummeting oil and gas prices has led to an overall decline of Russia’s economic footprint across SEE. Still, Russian companies control some strategic assets, such as all the major refineries, the wholesale fuel and natural gas supply markets. The Kremlin has also leveraged structural market deficits, the lack of independence of regulators and widespread deficits in the management of state-owned enterprises to increase its influence in the region.
To counter Russian malign influence in SEE, the analysis recommends the following set of measures:
- Design and enforce strategies to counter state capture on national level.
- Diversify foreign capital inflows away from overreliance on capital from authoritarian countries targeting structurally important sectors through non-competitive means.
- Improve their countries’ energy security through full market liberalization, regional market integration and the construction of key projects ensuring alternative gas supply to the region.
- The EU should enhance efforts to enforce anti-money laundering legislation and close loopholes in the corporate ownership and foreign direct investment regulatory frameworks.
- The United States should use the Foreign Corrupt Practices Act as well as expand the scope of the Global Magnitsky Act to investigate high-level corruption in Europe and in SEE, in particular such that furthers Russian strategic interests.