Following a lull of ten years, the problems concerning the post-Soviet countries have now – at this new historical stage – come into the foreground once again. Russia’s policy in the Commonwealth of Independent States (CIS) is likely to remain the focus of future discussions and a source of heightened tensions with the West until the end of 2004. Apart from electoral considerations (presidential elections in Russia, Ukraine and the United States, as well as parliamentary elections in Georgia), the increased focus on Russia’s CIS policy derives from changes now taking place in relations between Russia and the West, and in their views on the role of the CIS countries in the new system of global security and economy.

The development of a realistic national strategy with regard to the CIS in general, and the European CIS countries (Ukraine, Belarus, Moldova) in particular, is still a problem for Moscow; the way this problem is solved will determine Russia-West relations and the future development of the political and economic picture in Russia. Obviously, Moscow will have to take a clear stand in this field. It will have to assess the entire arsenal of its instruments and capabilities, set down priorities and formulate its objectives.

WHY THE CIS AGAIN?

Under the impact of internal and external factors, the post-Soviet space is entering the next phase in its development.

The most important external factor is the eastward shift of the border with the West. The integration of Central and Southeastern European countries and the Baltic States into traditional institutions (above all, the European Union and NATO) is nearing its completion. The difficulties of their adaptation are becoming a largely institutional, intra-European problem. Nevertheless, the outcome of this process seems predictable. In contrast, the future of the CIS is not yet clear. Although the CIS may no longer fear such horrible scenarios as revolutions and civil wars, the West still views the post-Soviet space per se as a ‘zone of uncertainty’ in the 21st century.

The next 10 to 15 years will be marked by the United States’ absolute leadership, above all, in the security sphere. Therefore, Russia and other CIS countries may be repeatedly forced to face problems of transatlantic differences, similar to those over the Iraqi crisis. The CIS may become divided into pro-American countries (for instance, Georgia) and pro-European states (Moldova). Ukraine, like Poland, gives priority in the security field to the U.S., while in economic matters it is more oriented toward Europe. If the crack in transatlantic relations grows any deeper, the U.S.-European global rivalry may involve the post-Soviet space, as well.

In the security sphere, the threat of international terrorism will persist. The degradation of international law, international security institutions (e.g. the United Nations and the Organization for Security and Cooperation in Europe) and the arms control system is continuing, while double-standard policy, unilateral actions and the ‘might is right’ attitude are now being implemented on an ever increasing scale. Within the CIS, where several conflicts remain unsettled (Abkhazia and South Ossetia in Georgia, Nagorno-Karabakh in Azerbaijan, Transdniestria in Moldova and Chechnya in Russia), these tendencies are creating a dangerous precedent, aggravating the existing differences (the Russian-Georgian conflict concerning the withdrawal of Russian military bases) and/or provoking the use of pressure (the territorial dispute between Russia and Ukraine over the Kerch Strait). In all of these conflicts the West has been taking sides with Russia’s opponents.

Inside the post-Soviet space, the newly independent states have passed the first and most difficult stage in their development. Outstanding problems of statehood – like those existing in Georgia – do not call into question, however, the status of these countries as credible sovereign states.

Russia and CIS countries are now in the stage of economic growth. Today, integration has been made a priority in Russia’s CIS policy; it is aimed at establishing new integration structures – the Eurasian Economic Community (EurAsEC) and the Common Economic Space – and strengthening old ones (the Collective Security Treaty Organization).

Yet, cooperation within the CIS has been proceeding largely on a bilateral basis. The 1998 financial default in Russia was followed by economic growth and the expansion of Russian private business into the CIS, above all, in Ukraine. Occasional trade conflicts (e.g. the pipe exports conflict, the “caramel war”) were settled, more or less successfully, at ministerial and top level meetings. Russia’s Gazprom gas company and the Unified Energy Systems (UES) were effective levers in Moscow’s political and economic disputes with Minsk, Kiev and even Tbilisi. Formally, the disputes were about integration, its format and scale, but actually they were about Russia’s participation in privatization projects in the CIS, its role and influence on the economies and, to a lesser degree, the policies of the CIS countries. Russia and Belarus, which have formally established a ‘union state,’ have for years been engaged in a difficult dispute, which seems quite hopeless under the Alexander Lukashenko regime.

At the same time, President Putin’s fundamental orientation toward integration into the Western community, into Europe, and toward the creation of a Common Economic Space with the European Union, has shaped a new ideology of post-Soviet integration efforts – “together into Europe” – into a civilized, democratic market-economy future. However, few people heeded well-grounded arguments about the low compatibility of economic integration projects between Europe and the CIS, not to mention their membership in international organizations (suffice it to mention the multispeed accession to the WTO). In the foreseeable future, any chances for the European CIS countries  to join the EU are very low, while large multilateral integration projects in the CIS would hardly go beyond the declarative, protocol phase.

The September 11 terrorist attacks changed the context. Russia made the most of the unique opportunity it received at that moment and returned to the coalition of responsible states, into the ‘Western club,’ as an essential member. Russia made its first pro-Western moves in the former Soviet Union, namely in Central Asia where the U.S. deployed its troops. Once it became a member of the antiterrorist coalition, the Kremlin finally gave up its criticism of NATO enlargement, as well as its criticism of the Baltic States joining the organization. The broadening of the Russia-EU dialog, and the establishment of the new Russia-NATO Council removed barriers that impeded the aspirations, ambitions and political vectors of the CIS countries, and most importantly of all, Ukraine and Georgia.

At that period, the U.S. and the European Union were provided with increasing proof of the Kremlin’s new line. (The withdrawal of Russian military bases from Vietnam and Cuba came as a sincere demonstration of Moscow’s intention to establish long-term cooperation with the West.) Also, the persistent weakness of the Russian economy, despite its increased growth, and the continuing degradation of Russia’s army, put to rest any lasting suspicions about its alleged neo-imperial ambitions in the CIS. In the period from September 2001 to the end of 2002, Russia’s relations with the West were a veritable honeymoon.

However, by mid-2003 the honeymoon was over. After ‘rallying’ to the cause of a war on terrorism, countries are returning back to ‘normal’ in their international policies. The global community was sobered up by the Iraqi crisis and the differences over the ways to resolve the crisis; this debate involved, amongst others, Moscow. Russia did not become an indisputable partner – junior partner – of the United States. Russia was no longer viewed as an ideological ally in the antiterrorist coalition, but as a partner in ad hoc coalitions. In Iraq, America once again demonstrated to the world its military might and its ability to defeat an enemy on its own. At the same time, it showed that it can depend upon – should the need arise – the traditional instruments (the UN Security Council, NATO, bilateral relations, pressure, etc.) in a post-conflict phase.

Eventually, the U.S., and to a larger degree, Europe, no longer had grounds for an exclusive relationship with Russia – temporary conditions were lifted. And if Chechnya, as the main target of criticism, moved into the background (keeping with the spirit of the times and owing to circumstances proving the actual existence of international terrorists), other elements of Russia’s foreign and domestic policies – primarily Russia’s CIS policy – were again viewed from positions prior to Sept. 11th. Domestic developments in Russia – the YUKOS affair and the outcome of the December elections of the State Duma – provided an incentive for the West to return to its former attitude.

In terms of reciprocal approaches between Russia and the West, there exists a gap, a lack of concurrence and imbalance. During the period of ‘exclusive’ relationships, Moscow understood that, as an equal partner – a member of the Western club and a state that was finally awarded the status of a market economy – it was granted freedom in its traditional zones of influence. However, for a long time the Kremlin did not take avail of this freedom. (There arises the question: “Why?” Did it have no capabilities, no levers as such? Or did a new, pragmatic, economic approach prevail, as was the case with Turkmenistan where cooperation in the gas sector eclipsed the issue of ethnic Russians’ rights there? Perhaps, Russia simply had no time for such considerations? Or it gave top priority to cooperation with the West?) Russia, now more confident of its freedom of action and resolved to pursue its real interests, began to conduct a more active CIS policy. But by this time the ‘exclusive’ relationship was over. Now Russia must prove its right to such esteemed relations once again – both to Europe, which has arguments of its own, and to the U.S., whose policies are presently influenced by the presidential campaign.

In the autumn of 2003, Russia’s CIS policy suffered a serious setback when Moldova’s President Vladimir Voronin declined to sign a new treaty on Transdniestria that was prepared by Moscow and initialed by all interested parties. The great efforts by the Russian intermediaries were made redundant by one call to Voronin from the incumbent chairman of the OSCE who expressed his perplexity over Moscow’s unilateral activity.

Ten years later and already facing a new situation, the post-Soviet space demonstrates the intentions and policies of the world’s leading powers and their mutual relationships.

WHAT DOES RUSSIA SEEK AND WHAT CAN IT ACHIEVE IN THE CIS?

Russia’s national interests in the CIS traditionally cover three major, mutually connected spheres – economy, politics and security. In the last few years, however, the context, instruments and concepts for implementing these interests have undergone changes.

Economy. Economic growth in Russia and other CIS countries has become a key factor in this field. The economization of Russia’s policies is not a mere declaration but a real practice.

The August 1998 financial crisis had a healing effect on the economy of Russia and the European CIS countries. Disproportions in trade and economic relations, brought about by their shared Soviet past, largely leveled out. In January-September 2003, the CIS accounted for 17 percent of Russia’s foreign trade (U.S. $23.7 billion), including 15 percent of Russia’s exports (U.S. $14.4 billion) and 23 percent of Russia’s imports (U.S. $9.3 billion). The CIS also accounted for nine percent of Russia’s favorable foreign-trade balance.

The commodity pattern of the CIS market differs essentially from that in Russia-West trade. Although fuel and energy account for 43 percent of Russia’s exports to the CIS, machinery and equipment comprises 22 percent of the exports, which is almost four times more than the percentage of machinery and equipment which Russia exports to other countries.

Russia’s imports from the CIS include largely foodstuffs and farm produce (over 21 percent). Also, Russia has been steadily increasing the import of raw materials and low-processed goods (coal, natural gas, ferrous rolled stock, etc.). From January to September 2003, Russia’s trade with the CIS increased by almost 30 percent, compared with the same period in 2002. Russia’s exports increased by 31 percent, while imports increased 28 percent. Russia’s favorable trade balance grew by 34 percent (U.S. $5.1 billion).

Apart from being a market for Russia’s highly processed goods and armaments, the CIS countries still play an important role for Russia as a source of accessories. Economic cooperation with Belarus (car manufacturing, household appliances) and Ukraine (defense and other industries) are of vital importance to Russia’s machine-building industries. Another source of assemblies and accessories for machine-building is Transdniestria.

European CIS countries play a strategic role in ensuring the transport of Russia’s fuel/energy exports to the West (the importance of telecommunications traffic is growing as well) and Russia’s imports by railways, roads and sea.

Finally, another strategic factor for Russia is the strengthening of its cooperation with its mightiest rival in the CIS – Kazakhstan. To this end, Russia is looking for an optimum format for the development of economic cooperation within the CIS. Apart from bilateral ties, this format now includes the EurAsEC. The results of the latest Russian-Kazakh summit attest to the strength of Kazakhstan’s position in its relationship with Moscow.

On the one hand, Astana agreed to extend the agreement on the Baikonur space launch site until 2050 and granted Russia’s LUKOIL Company a 50-percent share in a product-sharing agreement for the Tyub-Karagan oil field in the Kazakh sector of the Caspian shelf. The oil field’s resources are estimated at 150 million tons of equivalent fuel. Also, Kazakhstan granted LUKOIL a contract for geological prospecting in the neighboring Atash offshore sector (130 million tons of equivalent fuel).

On the other hand, Kazakhstan has made the final decision to participate in the Baku-Tbilisi-Ceyhan oil pipeline project, which is opposed by Moscow. Furthermore, Astana invited tenders for the modernization of its integrated air traffic control and air defense systems, worth U.S. $1 billion. Russia was invited to submit its tender later than the U.S., Britain and France, and experts consider Russia’s chances of winning the contracts to be low.

The CIS countries are highly dependent on trade and economic ties with Russia. The dependence is the highest in Belarus (90 percent), and the lowest in Kazakhstan (40 percent) and Ukraine (30 percent). European CIS countries remain critically dependent on supplies and the transit of Russian oil, gas and electricity. The increase in electricity supplies to Georgia played a major stabilizing role during the November-December 2003 crisis there, and demonstrated Moscow’s position with regard to the new leadership in Tbilisi.

Several countries, above all Georgia, Ukraine, Azerbaijan and Moldova (GUAM), hold out hope for generating substantial profits from the transit of energy resources bypassing Russia; these hopes are unlikely to materialize. Experts maintain that the Baku-Tbilisi-Ceyhan pipeline, for example, cannot define Georgia’s economic policy. Furthermore, it only emphasizes its pro-Western orientation. (At the same time, Lithuania has given the green light to the sale to Gazprom of 34 percent of state-owned shares in the Lietuvos dujos gas company, worth ?29 million. The sale agreement has obliged Gazprom to meet not less than 90 percent of the gas requirements of its consumers in Lithuania for the next ten years. This deal does not at all stand in the way of the country’s admission to NATO and the EU!)

Russia, too, is oriented to the EU and NATO. The general orientation of the policies of the CIS countries has not changed: the West remains a priority area in the economic development of the CIS, including Russia.

Apart from the pipelines, large energy suppliers, such as Gazprom and UES, are another lever in Russia’s CIS policy which is becoming increasingly effective is large private capital. The effectiveness of this lever depends on how advanced the economic reforms and privatization policies are in the CIS countries. Therefore, Russia’s policy is aimed at boosting these reforms.

In Moldova, the participation of Russian capital in the privatization of the most attractive mid-sized businesses – wine-making, and the sugar and tobacco industries – did not meet with much opposition. In Ukraine, before the establishment of strong financial and industrial groups in the country, Russian capital had been strongly opposed. Later, however, those groups gave a boost to privatization, and Russian capital became increasingly more active in the Ukrainian economy (oil refining, aluminum production, car manufacturing, the food industry, telecommunications). Projects that meet with more opposition involve the international gas consortiums and power grids.

Belarus has offered the fiercest opposition to the penetration of Russian capital in the strategic industries (even the brewing industry), as privatization would weaken the economic basis of the Lukashenko political regime.

For the first time in its history, Russia is engaged in capital expansion. Perhaps, this was why Anatoly Chubais last autumn defined Russia’s strategy as that of a “liberal empire.” The effectiveness of Russian private capital in the CIS directly depends on state support. Any problems that arise in the relations between business and the state authorities affect the climate in which business has to operate in the CIS countries.

Russian private capital has an advantage over Western capital, in that it better understands the ins and outs of doing business in the CIS. However, the preservation of ‘peculiarities’ of business in the CIS would run counter to long-term interests of both Russia and other CIS countries, as well as the interests of local businesses. As post-Soviet countries are integrated into the Western economy and Western institutions, and as they continue to make their economies open to Western companies, the advantage of Russian private capital will gradually diminish. That is precisely why the present activities of Russian business will determine Russia’s future positions in the CIS countries. The temporary nature of Russia’s capital advantage, together with electoral considerations and the belated confidence when it enjoyed a freedom of action caused Moscow in late 2003-early 2004  to use very actively, if not aggressively, its economic and diplomatic levers in the CIS. Some analysts maintain that Russia is creating a basis for “new isolationism.”

Is Russia really choosing between “liberal empire” and “new isolationism” within the CIS? It seems that the choice largely depends on developments in the spheres of politics and security, but most importantly, it depends not only on Russia but also on the West.

Politics. The pragmatic approach, characteristic of Putin’s presidency, and the long span of time that has passed since the breakup of the Soviet Union, has made Russia’s policy with regard to the sovereign CIS countries more moderate and better-balanced. It can be described as a “policy of the possible.” In the last few years, President Putin’s high popularity ratings, the consolidation of his power base and the improvement of Russia’s positions in the Western world have been effective instruments of Russia’s CIS policy. At the same time, despite bold declarations, Russia has not achieved much success in the humanitarian, cultural and informational fields: the protection of the rights of ethnic Russians abroad, the popularization and support of Russian culture, and the extension of radio and TV broadcasting in the CIS.

Moscow has been making repeated attempts to influence the balance of forces in the CIS countries, and to strengthen the positions of pro-Russian politicians there. However, the activities of Russian political consultants, especially in Ukraine, have often initiated results opposite to what was expected, much to the irritation of Moscow. Invaluable people-to-people contacts are being gradually lost, too. The pragmatic policy, however effective, does not create the necessary prerequisites for progress in this delicate sphere. According to public opinion polls, the pro-Russian solution of the Tuzla Island in the Kerch Strait has negatively affected Ukrainians’ attitudes toward Russia.

The good news is that ‘pro-Russian’ attitudes no longer equal ‘Soviet’ attitudes, as was the case in the 1990s when ‘pro-Russian’ politicians could be found in Communist factions in Ukraine’s Verkhovna Rada, whereas pro-reform political forces took pro-Western positions. Now, when the situation arises for opposing Russia’s aggressive policy, not a single responsible politician in the CIS – in power or in opposition – would take the position ‘anti-Russian.’

A multi-vector policy – cooperation with both Russia and the West – is now characteristic of all CIS countries, except for Belarus which is not welcome in the West while its incumbent regime remains in power. Meanwhile, Moscow’s attempts to boost the integration of Russia and Belarus into a union state have met with the same obstacle in the person of Lukashenko.

Analysts in Kiev define Russia’s policy toward Ukraine as the “retention” of Ukraine as a key state in the post-Soviet space. Abiding by the multi-vector principle, Ukraine seeks to “restrain this retention.”

Although the cooperation of the ENIS countries with Russia, especially in the economy, has been actively developing, their actions still lack the main integration characteristic, that is, the coordination of their policies with regard to partners in the West.

Security. The autumn 2003 crisis in Georgia, together with Russia’s proposal for establishing a confederation in Moldova, brought to a head one of the most serious problems for the region: the relations with separatist forces and unrecognized territories in the CIS. Russia, with its sad record in Chechnya and ‘dormant’ conflicts near its borders, is gradually beginning to support the territorial sovereignty of the CIS countries. At the same time, it is making active attempts to preserve its military presence there. Factors underlying these attempts include, first of all, traditional stereotypes which are corroborated by similar U.S. actions; second, fears that a withdrawal of Russian troops without an adequate replacement may only aggravate conflicts and pose a real threat to Russia’s security; third, the imperfection of the legislative base; fourth, the lack of funds; etc.

At the same time, the breakdown of the accords on Transdniestria demonstrated that such initiatives require a professional multilateral dialog with all the parties and institutions involved, and primarily the international ones. It also showed that Russia and its stated intentions have lost credibility with the West. Whereas Russia’s proposal concerning Transdniestria was opposed, above all, by the OSCE and the EU, which now pays special attention to Moldova in view of Romania’s forthcoming admittance to the European Union, Russia’s military bases in Georgia caused differences in Russian-U.S. relations. A successful compromise to these issues directly depends upon the state of the relations of the involved parties, and on whether the parties are able to present a package of accords. Any agreements, however, must take account of Russia’s interests in maintaining stability in Abkhazia and ensuring transportation links (including rail passage) between Russia and its troops in Armenia.

On the whole, despite the growing uncertainty and erosion of the legislative base for security, this new, high-priority situation contributes to the consolidation of Russia’s positions in the Western community. The continuation of Russia’s policy of cooperation with the West will require from both parties a clear understanding and articulation of their interests, in addition to the achievement of accords on the CIS security. Russia-West interaction in 2001-2002 showed that there are no insurmountable obstacles on this road. At the present ‘post-exclusive’ stage, Russia must clearly understand the position of its Western partners.

VARIANTS FOR RUSSIA’S POLICY

At the present stage, the importance of the CIS for the U.S. is again on the rise. Most analysts in Russia, the CIS and the West argue that Washington, driven by the difficulties of post-war Iraq, the situation in Iran, as well as economic (above all, energy) and security considerations, now seeks to increase its influence in the Caspian and Caucasian regions. Its unilateral approach to foreign policy, security, and the war against terrorism requires stronger influence and positions in those unstable zones which coincide with energy zones. These subjects will play a major role at the forthcoming presidential election in the U.S., and they are President Bush’s main trump card. And this is certainly nothing new to Russian diplomats.

In the foreseeable future, Russia, as other CIS countries, will have no alternative policy for cooperating with the U.S., which derives its dividends in the security field. Agreements with Washington on particularly acute issues related to the CIS are quite attainable. Moreover, it would be logical to assume that the White House is interested in such agreements, since it can present them as yet another victory of George W. Bush’s foreign policy. Russia must clearly define its strategic interests, which have the following two aspects: developing economic cooperation and supporting Russian capital in the CIS countries, and ensuring stability in the problematic areas of the CIS countries bordering on Russia. There are no strategic differences between Moscow and Washington on either aspect.

Much more uncertain is the position of the European Union. Russia’s relations with the EU have not seen much progress of late. The EU’s approach to European countries in the CIS (Eastern Europe) and to Russia has been – and will continue to be – largely determined by Germany. In September 1994, the CDU, which was the ruling party in Germany at the time, formulated Germany’s position in the so called Schauble/Lamers paper: “The only solution that will prevent the emergence of a new unstable system, like the one that existed before the war, and that will prevent Germany again being in the center of this instability, is integration of its Eastern and Central European neighbors into a West European postwar system and the establishment of a comprehensive partnership between this system and Russia. One must not allow the re-emergence of an ‘intermediary Europe’ (Zwischeneuropa) prone to destabilization.”

This position does not run counter to Russia’s strategic goals or the ideology of its CIS policy – “together into Europe.” The road to Europe will be long and difficult, as it does not conform to the ‘Russian nature,’ and may provide for an inconsistent rate of integration for the post-Soviet states. Yet, this does not mean that Russia should turn off this road; nor does it mean that it should not use its levers for asserting its interests in the CIS countries.