Eurasianism and Its Price
President Leonid Kuchma declared, after a loose-tie meeting with Russian President Vladimir Putin, that Ukraine had made “the first step” toward becoming an observer with the Eurasian Economic Community, and that “other bigger steps will be taken in that direction before long” (more on this in “Eurasian EC under Surveillance,” p. 3). Interfax Ukraine quotes the head of state as saying that Ukraine needs cooperation with the Eurasian EC more than any other member country; that it could win a large market there. On his part, President Putin noted that “Ukraine’s entrance in Eurasian EC is essentially a free trade zone.” He stressed that, if and when Ukraine joins, the main Russian exports (primarily oil and natural gas) will be taxed at the point of destination, thus saving Ukraine $400-450 million. Mr. Putin had all the calculations ready: Ukraine’s accession would increase its GDP by 1.5%, adding that the Eurasian EC is a purely economic, rather than political organization. No official comments have been forthcoming since the Sochi summit. Informed sources told The Day that this information can be relied upon but declined comment. Nor has there been any news from the Ukrainian Foreign Ministry (heretofore repeatedly stating that Ukraine’s European integration course remains unchanged and that one cannot be a member of two customs unions at the same time — e.g., the EU and Eurasian EC). In fact, its State Secretary Oleksandr Chaly reaffirmed the this stand in an interview with The Day prior to Leonid Kuchma’s trip to Sochi. Actually, everything possible was said when Russian Premier Kasianov proposed Eurasian EC membership to Ukraine and Ukrainian Premier Kinakh replied that a decision in the matter would made proceeding from the nation’s interests.
Talking about “other bigger steps” toward Eurasia in Sochi, Leonid Kuchma made no mention of Eurasian EC membership. In other words, it is safe to assume that Ukraine’s political vectors officially remain the same. Yet there are some nuances heretofore absent: specifically, the fact that Ukraine’s status as an observer was first announced by Kazakh President Nursultan Nazarbayev (current Eurasian EC chairman). Logically, Kyiv ought to have been the first to break the news. Now the impression is that Ukraine’s opinion was simply ignored.
Also, the value of Ukraine’s membership is now somewhat higher. Russian Premier Kasianov mentioned $170 million and now it is $400-450 million (informed sources point to even bigger money discussed in Moscow this winter). This alone prompts the inference that Moscow will be the main beneficiary from Ukraine’s membership. Actually, the Russians make no secret of this. Moreover, in seeking WTO membership, Russia will have to bring its trade policy into conformity with WTO standards (including taxation), which means that Eurasian EC membership will not give Ukraine any advantages, the more so that Ukraine’s WTO membership, given competent policy, would provide access to not only Russian markets, but also those in the five-sixths of the world.
Yet WTO membership requires serious changes in the laws by the parliament and in everyday practice. Presumably, there are forces in Ukraine interested in lower oil and gas delivery costs and easier access to the Russian market; these forces do not seem to consider the existence of other markets elsewhere in the world.
As for free trade, Ukraine’s membership of the CIS Customs Union (subsequently transforming into the Eurasian EC) was not in any way made conditional when signing the Ukrainian-Russian free trade agreement or when discussing the introduction of a CIS free trade zone. This automatically negates Mr. Putin’s statement that Eurasian EC is a purely economic, not political organization, not to speak of the fact that Ukraine, should it join the Eurasian alliance, would cease to exist as an independent entity in terms of economic, customs, financial, even currency policy: the main decisions would be made in Moscow. There is sure to be integration backward rather than forward with the EU. On the other hand, observer status imposes no special obligations, just as no one is going to object that Ukraine must not lose any of its Russian and other CIS markets. Deepening relationships can be normal and positive only if based on purely economic interests. After all, Germany, Turkey, China, and other countries show no intention of joining the Eurasian EC.
Most likely, representatives of the Russian Establishment have reason to speak as they do and put forward proposals that cannot reasonably be denied. This reason is to be found backstage, away from public politics, which is something Moscow and Kyiv have still to get used to. Last but not least, Eurasian affiliation does not call for deep-going transformations and conformity to the European standard in all things.
