Analysis: Putin's Yalta

By ARIEL COHEN, Special to UPI

WASHINGTON, Oct. 17 (UPI) -- On September 19th, 2003, Russia and three of its trading partners -- Belarus, Ukraine, and Kazakhstan signed a common economic space agreement, called the CIS Common Economic Space (CES).

The four-way summit took place in Yalta, a highly symbolic venue, where in 1945 President Franklin D. Roosevelt and the British Prime Minister Winston Churchill have abandoned Central Europeans to the mercies of "Uncle Joe" Stalin, the then-Soviet communist dictator.


This economic zone is a new attempt at integration between Russia, Belarus, Ukraine, and Kazakhstan, countries that comprise 90 percent of Russia's trade with the Commonwealth of Independent States, a loose affiliation of the former Soviet Republics, which does not include the Baltic states.

CES is an ambitious project, which is aimed at maximizing Moscow's political and economic power.


The CES is multi-phase agreement, which proclaims that each member state will be able to control the speed of integration. However, the goal is ambitious: the free economic space should be completed in 5-7 years whereas the EU took over five decades to construct.

The first phase will coordinate customs duties and harmonize trade legislation and custom regulations. The second phase aims at lifting current trade barriers exemptions and creation of the customs union. In the third phase, "Internal customs boundaries will be liquidated, a common customs boundary will be formed and a supra-national regulating institution will start functioning through member countries' voluntary assignment of functions...", Interfax quoted the agreement.

As such, the accord will marginalize other former Soviet countries, such as Georgia, Armenia, and Kyrgyzstan, which are WTO members. It will be run by "supra-national regulatory bodies," likely to be based in Moscow, which no doubt will be Russian-dominated.

As with the EU, the Russian-led quartet is aspiring to produce a single powerhouse economic zone that would generate growth and foreign investment. However, this agreement did not come to fruition easily. Elites in Belarus and Ukraine have reservations about re-integrating with Russia and sacrifice of national sovereignty.


While the leaders of signatory nations had been meeting frequently to review the drafts, fissures have emerged even prior to the signing ceremony. A point of contention between Putin and Presidents Leonid Kuchma of Ukraine and Alexander Lukashenko of Belarus, respectively, was the juxtaposition of future membership in the EU and WTO vis-a-vis their membership in the CES. "The Ukrainian parliament will not vote on this agreement in its current form," a senior Ukrainian diplomat has told UPI.

Before the Yalta conference, the Ukrainian Justice Minister Alexander Lavrinovich, has announced that some articles of the draft agreement were in violation of the Ukrainian constitution that prohibits the assigning of any national powers to a supra-national entity.

Yet, according to Vyacheslav Nikonov, President of Politika Foundation in Moscow (and the grandson of Stalin's Prime Minister Vyacheslav Molotov), writing in Pravda Online, the general support for the Ukraine joining the free economic space was overwhelming. Both the United Social Democratic Party and the Working Ukraine Party were in full support of joining the free economic space. These two parties shared the opinion that joining this free economic zone would not deter Ukraine's chances for eventually entering the EU. On the other hand, Ukrainian national-democrats led by the former Prime Minister Viktor Yushchenko have threatened to stymie ratification of the Free Economic Space.


The opposition has been active in staging protests and rallies against the forming of a free economic zone because they claim it will counter Ukraine's aims to enter the EU. However, out of 2,000 Ukrainians polled in late August by Sotsis, 70 percent supported the free economic space. On the other hand, only 56 percent of the Ukrainians supported EU membership. It seems as if the people of Ukraine are less apprehensive about re-integrating with Russia and the other two CIS states than joining the EU.

Belarussian President Lukashenko, who is locked in a political game of chicken with Putin, has publicly expressed his pessimism about the Common Economic Space. He stated that this free economic zone agreement may fall to the wayside, as have previous free trade alliances between the CIS states. At a post-summit news conference, Lukashenko to say that he has doubts about the future of this agreement. And Nursultan Nazarbaev, the authoritarian ruler of Kazakhstan flatly stated that the "club" will be closed and should not accept any new members, while Putin would like to have open admission policy -- with himself as a gatekeeper.

Potential candidates for Putin's club were all present in Yalta. Ten out of the twelve CIS presidents were present; ailing President Heydar Aliev represented by his Prime Minister son Ilham, who is all but sure to win presidential elections of October 15. Turkmenbashi, (head of all Turkmens), the comic opera ruler of gas-rich Turkmenistan, was noticeable in his absence.


Ilham Aliev, Georgian President Eduard Shevardnadze and Armenian president Kocharian praised the economic union. They could not act otherwise: like in case of Central America and the United States, over 1 million of each: Azerbaijanis, Armenians, and Georgians, are employed in Russia as guest workers and support families back home to the tune of up to one-third of national GDP.

Further closure of borders will be a massive blow to Southern Caucasus economies. And a customs union, allowing free movement of goods, will encourage foreign investment in CES -- the market of 214 million consumers, not in small and unstable markets such as South Caucasus states.

U.S. officials expressed concern about the new body. Reportedly, last minute maneuvers by the U.S. Ambassador to Kyiv, John Herbst, caused Vladimir Putin's ire on the eve of the Camp David summit with George W. Bush. The U.S. officials have grounds for concern, as they would like to prevent the emergence of a new Russian-dominated entity in Eurasia. Their policy responses are limited, however: Washington badly needs Russian support on the U.N. Security Iraq peacekeeping resolution and in the war on terrorism. Thus, U.S. is likely to acquiesce with the emergence of the new Eurasian economic bloc.


If successful, the new entity may replace the historic Romanov and communist empires. The dreams of the czars and the commissars, of one empire stretching eleven time zones from Brest to Vladivostok, be it under a two headed eagle or under the hammer-and-sickle red flag, may be dead. A new empire, however, may be in the making. Anatoly Chubais, the controversial architect of the Russian privatization called it a "liberal empire" and even put a timeframe on its creation: 50 years. His boss, Vladimir Putin, on the eve of Spring 2004 presidential elections, may be a man in hurry, attempting to impose a more ambitious schedule.

Ariel Cohen is a Research Fellow at The Heritage Foundation and the author of Russian Imperlialism: Development and Crisis, Greenwood Praeger, 1998. Special thanks to Irene Gorelik for assistance in research of this article.

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