Prospects and obstacles on the way towards the Eurasian Economic Union
Valdaiclub.com interview with Mikhail Pogrebinsky, Director of the Kiev Center for Political and Conflict Studies.
Russia has made certain exemptions in the treaty on the creation of a free trade zone. Will these become an obstacle to the formation of the Eurasian Economic Union? Why does Ukraine consider them objectionable?
There's no doubt that these exemptions are a sensitive issue for Ukraine. Some experts even believe they may call into doubt Ukraine’s participation in the FTZ within the framework of the CIS. The issue has to do with key positions in trade with Russia – gas, oil and sugar (and perhaps spirits and vodka). Russia has not ratified the agreement on the CIS FTZ because of its reluctance to abandon these exemptions.
Nonetheless, the agreement signed on October 18 will provide Ukraine with tangible benefits as a result of the lifting of restrictions on other commodities.
The FTZ allows Ukraine to export to its members metal products (including pipes), foods (including confectionary, meat and dairy products, the supply of which has been problematic in the past), as well as chemicals and machines. It is clear that Ukraine will receive billions of grivnas from this agreement in the first year of its operation alone. Meanwhile, an FTZ with the European Union would spell considerable economic losses rather than any economic gains.
An FTZ with the EU will cost Ukraine 5% of its budget revenues, as Mr Philippe Cuisson, Deputy Head of Unit, Europe (non-EU) and Central Asia, DG Trade, said in October 2010. Reports about certain EU concessions have appeared since then but they were not specific. The structure of the Ukrainian economy, labor productivity and several other factors make it clear that Ukraine will be competitive in the CIS but not in the EU.
Moreover, Moscow has announced that its exemptions will be temporary. The formation of the gas transportation consortium may help Ukraine purchase energy at reasonable prices.
How can a system of new CIS relations influence Kiev’s desire to join the EU?
Faster coordination and signing of different cooperation agreements between Ukraine and Russia (as well as other CIS countries) may create tensions in the economic integration talks with the EU. Europe will interpret these actions as a refusal on our part to view the European choice as the only alternative. At the same time, the formation of the FTZ in the CIS is unlikely to bother European politicians or Brussels bureaucrats. They have already reacted to this quite calmly. Simultaneous participation in several free trade zones is standard international practice, a fact that the EU has made a statement about. European Commission representative John Clancy said in Brussels that “CIS countries, including Ukraine, are free to conclude trade agreements in accordance with their economic priorities, including other agreements on the free trade area.”
It is also clear that Ukraine will not become a fully-fledged EU member, even in a medium-term perspective. The future of the EU is vague. At the same time, intensified economic integration in the territory of the former U.S.S.R. may bring about tangible benefits (no information exists on potential losses, except for political statements). This is why Ukraine may revise the thesis on Europe being its only alternative, but I don’t think it will replace this thesis with the opposite, no-alternative option.
What explains the uncertain reaction of Uzbekistan, Turkmenistan and Azerbaijan?
I’m not an expert on Central Asia, but I think these countries have always occupied a special position with regard to the CIS (Turkmenistan has refused to sign any CIS agreements whatsoever). Unlike Ukraine and Belarus, Central Asian countries are self-sufficient with energy; their economies are more autarchic and they don't have as much to gain from post-Soviet integration. However, I don’t think they will reject an FTZ in the CIS, because this represents a mild form of integration that does not contradict the special economic relations between Azerbaijan and Turkey or between Turkmenistan and China.
A number of experts have already mentioned a trend towards the restoration of the Soviet space in a new form. Will the formation of the Eurasian Union stimulate a return to a confrontational mentality in international relations?
I don’t think so. Of course, American politicians like John McCain or European intellectuals like Andre Glucksman who are haunted by “the hand of Moscow” (ideas about the restoration of the Russian empire are basically all the same) will grab any opportunity (including this one) to make anti-Russian statements. However, a return to a confrontational mentality is hardly possible in the mainstream of big-time politics. Common problems are more likely to encourage the Euro-Atlantic world and Russia to seek cooperative decisions. This is not so much my prediction as my desire to see events unfold in this direction, although I cannot be certain that they will.