Another attempt to settle the gas issue – to no avail

Russia, with its incumbent and newly elected heads of state, is trying to give an impetus to the CIS integration process. The main objective (being kept top secret) is to gradually create something resembling the late Soviet empire, using the Customs Union and the Eurasian Economic Community. Will Ukraine join this ill-organized process?

There is no answer to this question, simply because no one can answer it. Ukraine has repeatedly declared its European choice, although Europe’s higher echelons are busy trying to solve their own big problems in the first place. Second, it appears that every chance of pushing Ukraine closer to Russia has been used. Ukraine is trying to keep on its European course, yet there are deviations, mostly because some “upstairs” still expect Russia to lower the gas price.

On Monday, President Viktor Yanukovych of Ukraine flew to Moscow on a working visit. He attended a session of the EAEC Interstate Council (Ukraine is an accredited observer). The Ukrainian embassy in Moscow stated that Yanukovych intended to meet with the leaders of the CIS countries. The embassy’s highfalutin statement reads that the “topicality of this visit underlines the necessity of furthering the national interests of Ukraine, while facilitating relations with the Eurasian Economic Community and bilateral relations with EAEC member countries, primarily in the economic sphere.” According to the Ukrainian diplomats, this visit would give an impetus to the business cooperation between Ukraine and EAEC member states, based on the principles of free trade, in keeping with WTO rules and standards, without discrimination, exclusions, and restrictive measures. About the same trend and as ephemeral expectations were evident in President Yanukovych’s meeting (March 20) with the incumbent Prime Minister and newly elected President of the Russian Federation, Vladimir Putin.

Rhetoric aside, Yanukovych visited Moscow to make a gas deal (one is reminded of the Argonauts who accompanied Jason to Colchis in his quest to find the Golden Fleece), precisely to persuade Moscow to lower the price.

What will be the outcome? When this feature was being prepared for publication, there was no news about the meeting at Novo-Ogaryovo, the Russian president’s suburban official residence. This author will risk to predict that the outcome will be the same as that of the previous visit: nil. Ukraine isn’t likely to receive any economic or political benefits. Europe will become even more suspicious of Ukraine’s double dealing. This will be another heavy blow to the signing of the association agreement.

One small result of this visit is the presentation of the new Deputy Prime Minister of Ukraine, Valerii Khoroshkovsky, to Moscow’s ruling elite.

Even though Russia doesn’t accept Yanukovych’s 3+1 formula of Ukraine’s Customs Union membership, Khoroshkovsky has promised a tolerant attitude to the CU member countries, and that official Kyiv won’t take any countermeasures (in response to Moscow’s cheese and other restrictions). “I believe that we must act on a bilateral basis in the first place; that we must be very cautious about antidumping investigations,” he declared after a sitting of the EAEC Interstate Council in Moscow, adding that Ukraine is showing a markedly tolerant attitude. Optimistically he assured that “ Russia and other EAEC countries’ WTO membership would mean that we’ll be working on a common economic basis.” He said Russia’s WTO membership will make its relations with Ukraine more dynamic, and that WTO rules and standards could serve to balance bilateral and multilateral business relations.

Ukraine’s activity within the EAEC was close to nil. To begin with, it transpired that no one can figure out the current EAEC objectives. This organization hasn’t even started function and now it has to be reformed or replaced by something new. Even the name wasn’t decided upon and the issue was postponed. Yanukovych is right to insist on his 3+1 formula.

COMMENTARIES

Valerii CHALY, deputy director general, Razumkov Center:

“Russia is acting proceeding from its national interest, particularly from Vladimir Putin’s standpoint. It will follow in the same venue of post-Soviet integration, even if in varying formats. Today, this is EAEC and Customs Union. The current agenda is topped by the signing of the 2015 EAEC Treaty. Russia is pressuring Ukraine to join the EAEC, at times saying out loud that otherwise Ukraine will face problem. Officially, there exists the 3+1 formula in regard to the Customs Union, allowing Ukraine to develop cooperation with the World Trade Organization without CU membership. I believe this formula won’t last long. Official Kyiv must make its stand in the matter clear: (a) Ukraine agrees to join the EAEC or (b) Ukraine proceeds in the European direction, in accordance with its legislation, by passing the first phase of economic integration, as required by the Association Agreement. Moving in two directions at the same time, getting integrated above the FTA level, is impossible. There isn’t much time left for Ukraine to determine its stand.

“Another aspect is that some of the Ukrainian politicians need the Russian factor to reach their own political targets. Ukraine-Russia relations are often regarded in precisely this context. Also, some politicians have business interests in mind when discussing these bilateral relations. Ukraine’s official stand in the matter will remain vague unless such business interests are deleted from the rules of the game. Obviously, the talks with the Russian Federation serve to upgrade the Ukrainian administration.”

Oleksandr PASKHAVER, president, Economic Development Center:

“One has to know the EAEC status and whether its members can join other alliances. If they can, if there are no supranational bodies, why shouldn’t Ukraine join it? On the other hand, even if this organization acts like the European Union, this visit is simply part of the power play, considering that Yanukovych once again said Ukraine isn’t going to join the EAEC. A reconnaissance mission? Probably. In that case political analysts will explain what’s actually happening. I have stated on several occasions that, if Ukraine is headed for Europe, it has no right, including moral reasons for making a U-turn, let alone endless hot-air sessions about which direction is better. Seeking an answer to this question makes no sense. The first condition of a good economic alliance is to level out the non-economic parameters — in other words playing the game on equal terms. Comparing the benefits of Ukraine in the EAEC or EU is a badly wrong method. There is no way to determine such benefits without being on equal terms. As it is, countries that choose Russia or Europe’s direction will have markedly different destinies, on a very broad range. No one can guess what will happen to Ukraine if and when it makes the Russian or European choice. In each case any forecasts for the next 5-10 years, especially in non-economic terms, make no sense.”