Between Two Integrations
This week Ukraine is going to make a choice of what it wants to integrate with. Tomorrow Moscow will host the third session of the task force to discuss the establishment of a single economic space for four CIS member-states: Ukraine, Kazakhstan, Belarus, and Russia. Russian sources claim that it will lay down the specific goals and purposes of the single economic space. According to Russian Vice Premier Viktor Khristenko, these talks will signal the establishment of an international economic organization. He is convinced that previous task force sessions looked more like an everyday debate. Mr. Khristenko announced the single economic space concept would be drawn up for this meeting and all subsequent talks. The Russian side insists that the single economic space be interpreted as free movement of not only capital but also of commodities and manpower. Moreover, the new organization should be a supranational, rather than international, body. Mr. Khristenko also spoke about the introduction of a common currency. The Ukrainian vision of the situation is different: Kyiv has so far favored the establishment of a free trade area and the common principles of WTO membership.
On the same day Athens will host the European Conference on the Future of Europe to be attended by a Ukrainian delegation. The Athens forum will discuss among other things the concept of a broader Europe recently mapped out by the European Commission. In brief, the concept says that in the next ten years Ukraine, Belarus, Moldova, and the countries of Northern Africa will be offered the status of a neighbors, which promises closer relations without any prospects of integration. In spite of this, the Ukrainian Foreign Ministry and Presidential Advisor Volodymyr Horbulin emphasize that this country has elected a course toward European integration, and two integrations at the same time are impossible.
Addressing the round table, Ukraine’s Integration Strategy, on April 11 presidential advisor Anatoly Halchynsky, director of the National Institute of Strategic Studies, tried to prove that a single economic space would be beneficial to the four states. In particular, he argued, “the logic of our relations with the CIS should be viewed as one subordinate to the course toward Ukraine’s European integration strategy.” He also added that a closer regional integration fits in with the functional principles of the European Union itself. Yet, Mr. Halchynsky admitted that Russia lays claim to the central role in the Eurasian space.
It is interesting in this connection to see the way Russia pictures this single economic space (SES). Mr. Halchynsky thinks there are two models of establishing it. The first one reflects the Russian attitude and suggest that the post- Soviet space be guided by the same principles that govern the European Union: in other words, a free trade area, a customs union, and a currency union. “Strong pressure is building to implement precisely this model,” he said. In his opinion, this is an attempt to apply the principles of the Eurasian Economic Community, which Russia considers “a not so much economic as geopolitical project.” Mr. Halchynsky also quoted Russian President Putin as saying, “Russia will either be great or perish.” Mr. Halchynsky is convinced that if this model is implemented, “it will mean changing the strategic paradigm of our state... Although the Eastern vector is very important for our economic interests, we should not exaggerate it” and weigh its pluses and minuses. In his words, “We should, on the one hand, develop economic relations along the Eastern vector and, on the other, see the political risks.” The presidential advisor believes we must take a cautious approach to bringing Ukrainian laws into conformity with Russian ones because a large number of them have already been brought into line with EU requirements.
According to Mr. Halchynsky, the most suitable model will be a SES functioning according to the principles of a free trade area and the World Trade Organization. He stressed, “This is an upper limit that should not be overstepped... This country cannot be in two customs unions at the same time,” repeating a thesis that Kyiv has stated more than once. Ukraine’s entry into the WTO will raise the level of trade and economic cooperation with the EU, which will mean establishing a free trade area, as stipulated by the Partnership and Cooperation Agreement. This would in turn lay the groundwork for Ukraine’s associate membership in the EU.
Advocates of the Eastern vector in Ukraine’s foreign policy very often explain their attitude by arguing the need to strengthen the relations that took disintegrated along with the Soviet Union. Many took the recent decline in trade turnover between Ukraine and Russia as a signal for action. Russian Ambassador to Ukraine Viktor Chernomyrdin is one of those who has voiced concern over this matter. Also on the decline are, incidentally, Ukrainian exports to CIS states as a whole. While in 1996 CIS countries accounted for 48.6% of Ukrainian exports, last year it fell to 22.4%. Quite a different tendency is evident in the Western direction. The percentage of Ukrainian exports to EU full and prospective members reached 40.8% in 2002 against 23.9% in 1996. For some reason, many officials are worried about such dynamics, although it should be considered quite natural, taking into account Ukraine’s announced European and Euro-Atlantic course. What should really be a matter of concern is the substantial share of shadow capital in Russia and Ukraine, which Halchynsky admitted was coming in via offshore areas.
The very existence of this dilemma about integration clearly does not serve the maturity of Ukrainian elites.
