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Analysis & Opinion

2010 a milestone for CIS

Analysis & Opinion
(updated 18:27 28.10.2014)
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The year 2010 has been arguably the most important year for the member states of the Commonwealth of Independent States (CIS) since gaining independence following the collapse of the Soviet Union in 1991.

The year 2010 has been arguably the most important year for the member states of the Commonwealth of Independent States (CIS) since gaining independence following the collapse of the Soviet Union in 1991. Some of this year’s events are bound to set new trends within the CIS for 2011 and beyond.

The arrival of Viktor Yanukovych

The policies pursued by the former Ukrainian president, Viktor Yushchenko, brought Russian-Ukrainian relations to a low point. Ukraine did not have enough cash to pay for gas already supplied from Russia, and the ensuing gas conflict threatened Russia’s gas supplies to Europe once again. Bilateral trade plummeted, and Ukraine found itself on the brink of default.

Yanukovych, the leader of the Party of Regions, was elected president in the second round of voting on February 7, 2010, giving the country hope for a change of course and economic recovery.

In April 2010, Russian President Dmitry Medvedev and Viktor Yanukovych signed the landmark Kharkov Agreements, extending Russia’s lease of the Sevastopol base for its Black Sea Fleet for another 25 years, starting from May 2017. In return, Ukraine was exempted from Russia’s gas export tax, which represents a 30% discount.

Predictably, the newfound cooperation between the countries revived trade, which is expected to exceed $35 billion this year, a nearly 100% increase over 2009, according to the Ukrainian leadership.

Recently, Yanukovych said that Ukraine may join the Common Economic Space. So next year could very well mark the start of Ukraine’s integration in EurAsEC projects, such as the mentioned Common Economic Space and the Customs Union.

That being said, Ukraine’s economy and finances will hit a roadblock in 2011. Loan payments will be due, and the country will have to contend with a large budget deficit. This year its sovereign debt reached 32.1% of GDP. Next year the Ukrainian government will probably have to introduce some unpopular policies, such as steep price hikes on housing and utilities, freezing retirement benefits and salaries of public sector employees, and increasing the tax burden on small and medium-sized businesses. The Ukrainian hryvnia may begin to depreciate. Some observers are even predicting that the current government will collapse.

Economic problems could spell trouble for Prime Minister Mykola Azarov and his Cabinet. However, Ukraine’s newfound openness to the prospect of integrating with its CIS partners – primarily Russia, Kazakhstan and Belarus – may provide it with a life line: Ukrainian products would have unfettered access to a market of 170 million people; the country would be hooked in to Russia’s gas pipeline system, which would allow Ukraine to export gas from Kazakhstan and possibly Turkmenistan; Ukrainian companies could raise capital on financial markets in Russia and Kazakhstan. But as Yanukovych moves Ukraine closer to the Customs Union and Common Economic Space, there is bound to be strong resistance from the Ukrainian opposition and criticism from the EU and the United States.

The irreplaceable Lukashenko

As expected, Alexander Lukashenko was reelected president of Belarus with 80% of the vote. Although OSCE observers have not recognized the December 19 elections as fully democratic, citing “a lack of transparency in vote counting” and “the use of excessive force to disperse protesters,” the West has not severed ties with Belarus and will probably continue to maintain a cautious dialogue with Lukashenko in 2011.

The West may use its desire for amnesty for Belarusian opposition leaders arrested on December 19 as the formal pretext for continuing contacts.
The Belarusian opposition, which was far from united, has been utterly defeated. Observers anticipate the rise of a new generation of opposition leaders whose formative years came after the collapse of the Soviet Union. It is critical that Russia cultivate ties with these new leaders. This may provoke criticism from Belarusian officials, but Russia’s relations with its closest neighbor must extend beyond a single politician.

The year 2010 saw tensions emerge between Russia and Belarus. Their mutual recriminations peaked in summer, and it appeared that the countries had entered a period of systemic crisis in relations. Analysts were quick to predict the impending collapse of the Union State and the Customs Union. However, in July Belarus announced plans to fully integrate into the Customs Union and to cooperate with its partners in the Common Economic Space. Cooperation within both groups has allowed Russia and Belarus to overcome their main disagreements. Russia cancelled oil export duties, while Belarus agreed to pay over to Russia all revenues from duties on refined products made of Russian crude.

Belarus will most likely continue jockeying between Russia and the West to secure economic benefits from both. At the same time, as the Common Economic Space takes shape, the “irreplaceable” Lukashenko will find it harder to prevent the influx of Russian capital to key sectors of the Belarusian economy.

Common Economic Space: Who will join next?

Efforts to set up the Common Economic Space plan will begin in earnest in 2011. The presidents of Russia, Belarus and Kazakhstan, the three trailblazers of integration, confirmed after a meeting of the supreme body of the Customs Union on December 9 that the Common Economic Space will be fully operational as of January 1, 2012.

The three presidents said that the Customs Union and the Common Economic Space are open to new members, particularly Tajikistan and Kyrgyzstan. “By developing the Common Economic Space, we are moving toward a Eurasian economic union,” they said in a joint declaration.
The Customs Union – the first phase on the way to the Common Economic Space – has proven its effectiveness in less than six months. Trade between its members has surged, the cost of goods has declined, and the three member states have agreed on the contours of a supranational body, the Customs Union Commission. The legal framework for the Common Economic Space was drafted incredibly fast. As a result, the three economies, which account for over 80% of the CIS’s GDP, will begin operating as a unified whole next year.

The potential new members, Kyrgyzstan and Tajikistan, are unlikely to add anything but economic problems and political instability to the situation. Low incomes, skyrocketing unemployment and corruption make these countries very vulnerable to extremism.

A new security doctrine

Unfortunately, the CIS is not empowered to take action to prevent and respond to ethnic violence of the kind that occurred in south Kyrgyzstan last summer. In response to the tragedy in Osh, the Collective Security Treaty Organization (CSTO) members adopted on December 9, 2010 a new concept for the CSTO as the main international group responsible for security in the post-Soviet space.

The CSTO heads of state met in Moscow to make changes to the Collective Security Treaty, the organization’s Charter and other procedural documents in an effort “to improve crisis response.”

They formulated a new document, the CSTO statute on crisis response, which governs the work of permanent bodies and provides for emergency consultations and the adoption of decisions to prevent (or settle) crisis situations.

The CSTO received an international mandate from the UN to conduct law enforcement operations to prevent an escalation of violence in its zone of responsibility. This new authority could prove especially useful in 2011, given the deteriorating situation in Afghanistan and the growing tensions in Central Asia.

The CIS turns 20

The Commonwealth of Independent States will turn 20 in 2011. How will economic and political processes develop in this area with over 280 million people? Will the post-Soviet economies fully recover from the worst economic downturn in years? Next year will hold some of the answers. We’re almost there.

Innokenty Adyasov is a member of the expert analysis council on the Russian State Duma’s CIS affairs committee.

The views expressed in this article are the author's and do not necessarily represent those of RIA Novosti.