17.02.2004
“The Multispeed Commonwealth”
№1 2004 January/February
Irina Kobrinskaya

Irina Kobrinskaya is Senior Research Fellow at the Institute of World Economy and International Relations (IMEMO) at the Russian Academy of Sciences.

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.