16:27 GMT +311 December 2017
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    Opinion

    Russia between CIS and EU

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    Leonid Vardomsky, head of the Center of the CIS and the Baltic States at the Institute of Economics of the Russian Academy of Sciences, member of the RIA Novosti Expert Council

    The members of the Commonwealth have drifted too far apart. Market reforms are carried out at a various pace. The differences between the political systems are also big. Having restored its power vertical, Russia is trying to implement its project of controlled democracy. Kazakhstan and Azerbaijan have similar models. Armenia and Kyrgyzstan are also leaning towards it, but the latter has a very weak centre. Ukraine, Moldova, and Georgia have proclaimed their intention to follow European values, and want to build a European-style democracy. However, they are not stable politically, and will not be able to follow this line without outside support. The remaining countries give priority to a strong central government with an inclusion of certain democratic elements.

    Different principles of government and economic management are objectively making economies less compatible. Integration is not likely to develop when the heads of state are the main factors of cooperation. The current stagnation in CIS cooperation shows that to a certain extent it has reached its limit. In addition, economic cooperation is based on traditional technologies, and the industries of almost all CIS countries have degenerated. Fuel, raw materials and metals exceed half of CIS trade. Dwindling exports of the processing and hi-tech industries are objectively narrowing the opportunities for multilateral cooperation. The fuel and raw materials sector does not have enough energy for developing integration. Exports of one and the same products, oil, metals, fertilizer and textiles, are causing competition, and inflicting serious losses on CIS members.

    Some of them are trying to gain a foothold on neighboring markets by offering poor quality goods at dumping prices. Others have to impose restrictions on trade with partners in order to protect their producers. Such measures are incompatible with integration at all.

    One more disuniting factor is polarization in terms of income. Russia and Kazakhstan have reached an average level of development, whereas Kyrgyzstan and Tajikistan are among the poorest in the world. Social and regional differences are growing against the background of ethnic, political and cultural conflicts, threatening some CIS members with internal destabilization. All these factors are making it difficult to elaborate a common agenda, and choose an acceptable model of interstate cooperation. In effect, the practical activities of the CIS as an organization bear this out.

    In the meantime, its geopolitical space is important for Russia if it wants to restore its position of a world power. Russia is striving to preserve control over the CIS space in the military and foreign policy spheres. It declares this space a zone of its vital interests, and resents the intrusion of third countries there. But Russia's main economic interests are outside the CIS. In fact, Russia stands to gain much less from post-Soviet regional associations than other members.

    The CIS countries account for 15% of our foreign trade, whereas the relevant figure for the EU is more than 50%. In addition, its CIS partners have a limited investment potential, and Russia needs money to modernize its economy. The prevalent share of investment comes to Russia from the EU. To sum up, the imbalance between Russia's political and economic interests in the CIS is perfectly obvious.

    Russia continues being the main player, which determines the CIS as a geopolitical fact. After the Soviet Union's disintegration, Russia has pursued its policy towards new independent republics on a case-to-case basis. But price preferences, particularly on natural gas, have always been an important factor there. In 2003-2004, Russia changed its strategy, and started taking into account the foreign policy orientation of its partners.

    Russia would like to adopt WTO standards for regional trade groups. But its policy of charging CIS members market prices on gas is actually undermining one of the organization's major premises.

    Visa-free travel (except for Georgia and Turkmenistan) is probably the most important, and the only instrument, which is still keeping the CIS space around Russia. In experts' estimates, the number of migrants in Russia, mostly from the CIS, fluctuates between three and seven million in peak seasons. The shadow earnings of foreign workers are about eight billion dollars, and no less than half of that amount is exported from Russia.

    There is no doubt that the significance of regional cooperation for the economic advance of independent states will increase in the next ten years. CIS countries have launched economic modernization, which may step up integration. This factor makes each other's markets more appealing. It is important to note the strengthening of pro-integration trends in Russia's policy as well. They are linked both with the consolidation of its political and economic positions in the world community, and with the ongoing changes in the world order.

    Today, Russia, the EU, China, Japan, India, Iran, and Brazil are forming new global centers, which are challenging U.S. domination in world politics, and simultaneously competing with each other for more influence. Being between North America, the EU, and the Islamic world, Russia is a growing centre, and simultaneously an arena of rivalry for its resources, innovation potential and market.

    Under the circumstances, the will of the partners to achieve their goals is of primary importance. Russia and Kazakhstan have already chosen integration in the CIS framework. They are actively investing their national capitals in each other's economies. They are very close in terms of systemic transformations and per capita GDP. Moreover, their relations are not tarred by transit problems and gas prices. They have the world's longest surface border. Kazakhstan borders on Central Asia, whereas Russia's neighbors are CIS members in Europe and the Caucasus.

    On the whole, the Commonwealth will perform its consultative and coordinating functions both for its Eurasian-oriented members, and the countries leaning towards the Euro-Atlantic community. Meanwhile, the development of their joint infrastructure projects will help them consolidate their own positions.

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