18.05.2005
The Post-Soviet Space in the Era of Pragmatism
№2 2005 April/June

For over 15 years, the people of the former Soviet Union have
been desperately trying to choose between two formulas of
existence: “Separately impossible. Together” and “Separately.
Together impossible.” When the dragged-out agony of the Soviet
empire ended in 1991, it seemed that the question was finally
solved and the solution was “Separately. Together impossible.”

Soon the issue was again on the agenda; the euphoria of
achieving sovereignty inside the post-Soviet space proved to be
short-lived. It became necessary for the newly independent states
to pool their efforts to reinforce their independence, especially
after losing their traditional ties which bound them. A tendency
for reintegration began to develop, and by the mid-1990s it seemed
that the formula “Separately impossible. Together” would soon
prevail. During this period, the most important initiatives were
undertaken within the format of the Commonwealth of Independent
States: the Economic Union Treaty (1993), the Agreement on the Free
Trade Zone (1994), the Agreement on the Union for Financial
Transactions (1994), the Agreement on the Customs Union of Russia,
Belarus, Kazakhstan and Kyrgyzstan (1995), and the Treaty on the
Formation of a Community of Russia and Belarus (1996).

The CIS filled the vacuum that had emerged after the Soviet
Union’s collapse, and successfully offered a ‘civilized divorce.’
Yet, it proved unable to become an efficacious regional association
of countries. In the economic sphere, it did not extend beyond the
regime of free trade, and then only with certain exemptions. Nor
did the Commonwealth play a significant role in solving the
political problems between its member states. The inveterate
conflicts in Moldova’s Dniester region, Georgia’s South Ossetia and
Abkhazia, and the Armenian-populated Azerbaijani enclave of
Nagorno-Karabakh did not disappear. Moreover, new conflicts
continued to flare up. Russia and Ukraine quarreled over Tuzla, an
island or sand-spit few people had previously heard of;
Russian-Belarusian relations hit a deep crisis which required
public declarations of their positions; Georgia made known its
choice in favor of the European Union and NATO; Ukraine and Moldova
followed suit.

Do all of these events mean the CIS is nearing its end? Or that
Russia has suffered a geopolitical defeat as a result of the
malicious techniques of the Western secret services? Does it
signify the victory of the formula “Separately. Together
impossible?” Not in the least. It just means that the epoch of
political pragmatism, ushered in by the change of the political
elites in the post-Soviet space, has taken firm root.

EVOLUTION OF PERCEPTION

In the mid-1990s, I commented on many occasions that the CIS was
to a great degree the personal creation of its founders and that it
was unlikely to last beyond the end of their political careers.
Quoting oneself may seem immodest, but this is what I wrote in
1997: “The CIS does not have a solid institutional foundation and
largely relies on personal contacts and trust relationships between
the leaders of the member countries, as many of them have known
each other since the times of “joint work” in Soviet institutions.
Most leaders in the CIS share an integration-oriented mentality and
political culture. They continue speaking the same language – both
in the literal and figurative sense. They think along the same
lines and many things in the Commonwealth have come into being due
to their ability to tap solutions to knotty political issues inside
this selective club.

“What is more, the first generation of presidents of the
Commonwealth countries is aware of their responsibility for the
unavoidable yet painful decision to disband the Soviet Union and is
trying to compensate for the hardships that this decision brought
to their peoples. This is probably why they are pushing for a fast
– but chaotic – integration, without assessing its economic
aftermath.

“But the Commonwealth will inevitably get a different appearance
as new state leaders come to power. These people will be free from
the burden of responsibility for the past and they will treat
integration issues the way they should be treated – by assessing
all the pros and cons and only taking steps that meet the economic
and political interests of their nations.”

This forecast has materialized. New people are coming to power
in the CIS countries as the Commonwealth is changing right in front
of our eyes. Relations between the member states are becoming
different, too.

Russia has been the trailblazer in this process. In the 1990s,
Moscow’s policy toward the former Soviet republics was devoid of
pragmatism. It was highly contradictory, even chaotic, as it bolted
from one extremity to another.

Occasionally, Moscow would look at the CIS countries as
quasistates, as former republics or even former colonies which were
economically dependent on Russia, especially when it came to energy
resources. Adhering to the popular thesis “Who will they turn to,
if not us?” inflicted a serious blow on Russia’s political
interests in the post-Soviet space in the early 1990s. Russian
politicians were terribly slow in realizing that the CIS countries
had acquired genuine independence in every sense of the word. They
had designed alternative development strategies and secured
alternative allies – the components of a multivector diplomacy.

The other extremity of Russia’s position went something like
this: “The people in the CIS countries are also our people, and we
must help them selflessly because economic computations are out of
place when it comes to fraternal relations.” This line of thought
opened up broad opportunities for our partners to run up debts,
specifically debts for energy supplies.

Moscow’s non-systemic policy toward the post-Soviet states was
linked to a hidden conflict between Russia’s long-term strategic
interests which demanded that the CIS be kept within the sphere of
its influence, and its economic capabilities at that time, which
made a costly foreign policy impossible.

Nonetheless, starting in 2000, Russia began to show a pragmatic
approach to the CIS countries. It began to treat them as strategic
and preferential partners, while at the same time building
relations on the basis of precise economic calculations. Limited
resources forced the Kremlin to weigh the potential effects of
integration-oriented measures and bilateral cooperation against the
price it had to pay for them.

That is how Russia has developed an understanding that the
sooner it drops the early post-Soviet conception of the ‘Near
Abroad,’ and the sooner it gets accustomed to the fact that the
Commonwealth consists of truly ‘foreign countries,’ the better it
would be for everyone. Russia has realized the importance of having
distinctive relations with the CIS countries, while at the same
time building those relations on the basis of generally accepted
international norms.

A CRASH AFTER TAKEOFF?

There is no doubt that integration with the CIS countries also
meets Russia’s strategic and short-term interests. However,
“integration at any rate” is out of the question. Russia must
develop integral ties that would foster democratic and market
changes both in the CIS and Russia, facilitate its economic growth,
create new jobs and provide integration into the world
community.

 This pragmatic approach has been underlying Russia’s
policy toward the Commonwealth until very recently and it has
proven productive: Russia succeeded in finding solutions to many
chronic problems in its bilateral relations, such as reorganizing
Ukrainian and Moldovan debts for natural gas supplies. Plans were
launched to establish a Russian-Ukrainian gas consortium with a
provision that leading European companies may join it at a later
date. Russia and Ukraine completed the delimitation of their
territories and found a denouement to the border complications in
the Sea of Azov and the Strait of Kerch. Tremendous effort was
invested in helping Belarus accept the Russian ruble as a common
legal tender. The problem of Armenian and Tajikistani debts to
Russia was resolved and a great legislative breakthrough was
completed with regard to the Caspian Sea issue: the agreements that
Russia signed with Kazakhstan and Azerbaijan made it possible to
develop mineral deposits on the Caspian shelf and resolve the
Caspian Sea knot by dividing the seabed and declaring the body of
water common territory. A long-term agreement was signed on the
purchase of natural gas in Turkmenistan. The rest of the list is
long enough, too.

The achievements in the multilateral format look equally
impressive. In 2000, Russia, Belarus, Kazakhstan, Kyrgyzstan and
Tajikistan created the Eurasian Economic Community (EurAsEC), an
organization based on Europe’s integration experience and aimed at
forming a common economic area in the future. Ukraine, Moldova, and
Armenia acquired the status of observers there. With great speed,
Russia, Ukraine, Belarus and Kazakhstan drafted, signed and
ratified an agreement on the Common Economic Area (CEA) and began
working on the documents to ensure its implementation. The
presidents of Russia, Kazakhstan, Uzbekistan and Turkmenistan
signed a declaration on strategic partnership in natural gas.
Several CIS countries created the Collective Security Treaty
Organization. The CIS Antiterrorist Center began active operations.
And again, the list continues.

Suddenly, however, these and many other achievements seemed to
be nullified as election campaigns in Georgia and Ukraine produced
unexpected results, while Russian-Moldovan relations started to
deteriorate on the eve of their elections. Has the Russian policy
of the past three to four years begun to falter? Is Russia’s
position weakening in the post-Soviet space? To get answers to
these questions, let us look closer at the very nature of equitable
relations that presuppose the presence of at least two sides
defending their interests. Pragmatism on the Russian side presumes
pragmatism on the side of its partners, whose policies may
sometimes be viewed as anti-Russian.

Moscow is being put to a test – a test for commitment to
pragmatic policies – by the new pragmatism of our old partners, the
inevitable change of elites in some CIS countries, and a
controllable or spontaneous accession of power by new political
forces and figures. Hopefully, Russia will successfully pass the
test.

MOVING FROM THE VIRTUAL TO THE REAL

Russia’s partners can make, and have already made, choices that
run counter to its expectations. This is their choice, however, and
from now on such choices will be based on pragmatism. Pragmatism
opens the doors to seemingly unnatural alliances among, for
example, the Georgian and Ukrainian proponents of a market economy
and Moldovan Communists. In this situation, it is important that
Russia resist the temptation of replacing the pragmatic approach
toward its neighbors that has proven so fruitful in the past few
years with “geopolitical concepts” of some kind. Today, Russia and
all other CIS countries steer their foreign policies exclusively in
compliance with national interests, and keep them poised using the
art of pragmatic policy-making. It is from this position that one
must analyze the situation in the post-Soviet territory.

Despite all the efforts to reform the CIS, it remains a rather
virtual integrative amalgamation with a complex and poorly
governable bureaucratic structure. Today, the member states are
discussing the possibility of yet another reform, but they still
leave major questions unanswered, namely: What is the objective of
integrating in the format of the CIS? What are they creating? How
much will it cost? What will be the main phases of this
process?

Initially, the documents signed in 1992 and 1993 – most
importantly, the Economic Union Treaty – suggested that the CIS
would develop along the patterns of a normal regional union and
would have:

– a free trade zone;
– a customs union;
– a common economic area with four freedoms (free movement of
commodities, services, capitals, and workforce);
– economic and monetary unions.

Together with the declaration of these objectives, the CIS
countries set themselves the task of fully preserving their
sovereignty and refused to form any supra-national agencies, which
fully contravened the above provisions. It is well known that even
a customs union demands a partial relaying of sovereignty to
supra-national agencies, to say nothing of economic and monetary
unions. Since the member countries realized this in the mid-1990s,
there has been no mention of the Commonwealth’s final goals.

The first serious attempt to reform the CIS was begun at the end
of the 1990s, following a range of bustling summit conferences. The
institutional reorganization of the CIS made its bureaucratic
machinery less cumbersome, yet the member states failed to bring
together the rather disunited governing bodies. The task of
creating a free trade zone was solved de facto, mostly through
bilateral agreements. In other words, the planned reform was
aborted, while a spontaneous reform took place. Over the past few
years, the Commonwealth has evolved into a general political
organization in an era of pragmatism, a “club of presidents” and a
forum for discussing a wide range of political problems, including
global ones.

This is certainly not a bad thing. We can only applaud the
growing cooperation in such areas as the fight against terrorism
and extremism, maintenance of security, and interaction between law
enforcement agencies, as well as humanitarian and cultural
institutions. The Commonwealth is thus achieving realistic goals
and objectives.

It seems that a radical reform of the CIS, with a view to
transforming it into an efficient integrated economic union, is not
necessary as new organizations with clear objectives and mechanisms
have spun off from it in recent years. These are the Eurasian
Economic Community, the Common Economic Area and the Collective
Security Treaty Organization.

International experience testifies to the success of this sort
of scenario. History knows of instances where one and the same
group of countries have set up different organizations with similar
goals over a rather brief period of time. If the first attempt
appeared to be unsuccessful, the initial organization would not be
disbanded but a new one would be immediately set up. A good example
is the 1948 Brussels Treaty of Economic, Social and Cultural
Collaboration and Collective Self-Defense signed by Belgium,
Britain, Luxembourg, the Netherlands and France. This document
provided the basis for the 1954 Paris agreements that formalized
the emergence of the West European Union (which ultimately united,
besides the abovementioned countries, Italy and Germany). The
organization proved to be quite inert, however – probably as inert
as the CIS is at present – as its member countries failed to
develop trade within its format. Several years passed, and the
Treaties of Rome (signed in 1957 and enforced in 1958) opened the
road to the emergence of a fully integrated European Economic
Community which later grew into the European Union. Meanwhile, the
West European Union continued to exist, and in the early 1990s the
Europeans integrated it into the EU structures.

In other words, if the CIS is maintained as a “political frame”
and a general political or humanitarian organization embracing the
post-Soviet space – something like a mini-Council of Europe – then
it may focus its efforts on consolidating the EurAsEC as an
economic union and the Collective Security Treaty as a defense
organization.
The EurAsEC has good prospects as a regional organization built on
the basis of EU principles. Unlike the CIS, the decisions passed by
this organization will reflect Russia’s economic weight, albeit not
in full.

The EurAsEC has clear economic objectives and an institutional
structure. It also has an efficiently functioning free trade zone.
As stipulated by the Guidelines for EurAsEC Economic Development
from 2003 Through 2006 and Beyond, by the end of 2006 preparations
to establish an integrated customs union should be finished. Over
the long term, economic and monetary unions may be possible, as
well.

The EurAsEC is already getting practical economic content, with
multilateral projects being implemented in the key economic
sectors, such as energy and transport. This progress helps develop
trade between the member countries at a faster rate than with other
Commonwealth nations.

In 2004, Russia’s foreign trade turnover grew 34.6 percent,
while trade with the EurAsEC member states saw an increase of 41.2
percent (and 34 percent with the CIS countries outside that
economic community). Five years ago, Russia’s trade with the
EurAsEC stood at U.S. $10 billion; today, it has exceeded $26
billion.
The Common Economic Area could also play a significant integrating
role in the CIS. Russia’s partners in that association, set up in
September 2003, are Ukraine (second biggest economy in the CIS),
Belarus (Moscow’s closest, although somewhat controversial
partner), and Kazakhstan (a dynamically developing country with
rates of market reform ahead of Russia in some aspects).

The goals of that association are in many ways identical to
those of the EurAsEC, and the list of participating countries is
almost the same, as well. Yet the CEA legislation, although drafted
just seven months after the president’s declaration of interest, is
more advanced than that of the EurAsEC. In an unprecedented move,
the participants prepared documents that meet the highest
integration standards. Furthermore, the parties’ resolve for
compromise during the course of the extremely complicated
negotiations did not detract from the CEA content.

Success was achieved due to two crucial agreements. First, the
parties regarded the Agreement, together with the ancillary
Convention for the Common Economic Area, not as mere “papers for
negotiations” subject to diplomatic bargaining, but as a universal,
theoretically and practically verified model of integration that
fixed the notion of the CEA and the sequence of steps to be taken
in order to form it.

Second, the parties embedded into those documents the principle
of integration at various levels and at a variegated pace. The CEA
member-nations can determine the rates of their integration
independently, but they cannot block integration steps taken by
other countries. The founding countries agreed at the same time
that all the measures pertaining to the CEA are interrelated and
the countries taking part in the project will not have the right to
choose what steps they will take and what steps they will ignore.
In other words, the CEA is a standard lunch and not a menu а la
carte.

The CEA documents incorporate several principles that sound
quite revolutionary for the post-Soviet territories. All the four
signatory countries have affirmed and ratified the provisions
declaring the necessity of supra-national coordinating agencies.
Simultaneously, they agreed that decisions would be taken with due
account of the economic weight of each country. The CEA agencies
will be built on the same principles that ensure the efficiency of
the European Union.

Currently, the parties are working on a package of 85 documents
that will make up the core of the CEA legislative base. At a CEA
summit in Astana in September 2004, the leaders endorsed a list of
priority documents subject to coordination and signing. A total of
29 are expected to be signed before July 1, 2005.

THE MAIN CHALLENGE

Ukraine represents a major trial for the CEA project, while the
country’s new political elite doubts whether the CEA is compatible
with its “European choice.” This question would still be relevant
even had there been a different outcome of the recent presidential
elections. Ukraine has been faithfully following a course for
active integration into the European political and economic
institutions and this is unlikely to change. The advantages of
European integration for Ukraine are certain and very likely to
increase in the future. Thus, any attempts to deny them are
senseless, all the more so as Russia itself has clearly indicated
the European vector in its policy and is moving toward forming
‘four common spaces’ with the EU.

A concept adopted at the 2003 Russia-EU summit in Rome states
that the Common European Economic Space (CEES) embracing Russia and
the EU aims to help the sides achieve closer coordination in their
legal and economic systems and broaden cooperation in investment.
It is also meant to promote contacts in the energy sector,
coordinate the Russian and European transport systems, implement
projects of pan-European importance, and develop cooperation in
innovative and hi-tech spheres. It is worth remembering that the
CIS countries account for a mere 17.9 percent of Russia’s foreign
trade at the moment, while the EU share amounts to about 50
percent.

Ukraine also has more active ties with the European Union than
with post-Soviet countries. The structure of Ukraine’s GDP has
changed in recent years, with the services sector now having a much
greater share; this fact certainly heightens the country’s interest
in an access to European markets. Apart from objective factors
underlying Kiev’s choice in favor of Europe, there are subjective,
ethno-psychological factors: the traditional jealousy toward the
Moskals [a derogatory word derived from ‘Moscow’ that the
Ukrainians refer to the Russians – Ed.] and the desire to lead the
Russians in absolutely every sphere of activity. The traditional
mixture of love and hatred for Poland plays a role, too, which can
be summed up by a phrase heard amongst the Ukrainians “The Poles
are in NATO and the EU, and are we any worse?”

Nor should one underestimate the very dynamics of European
integration, as the EU systematically draws countries along its
periphery – “the new neighbors” in its own terminology – into its
orbit. Since the formation of the alternative centers of
integration – the CIS, EurAsEC and CEA – has not been completed and
since these centers have yet to demonstrate their economic
advantages, Ukraine is naturally getting sucked into the “European
hoover.” Moldova and Belarus are most likely to follow in its
footsteps.

The expanding EU is becoming more and more attractive to new
members for a number of reasons. Previously, when the EU united 6
to 12 countries, the leading positions were occupied by big
countries – Germany, France, Britain and Italy. Today, their
dominance in the Europe of 25 is being diffused. The weight of New
Europe is putting pressure on Old Europe: present-day EU mechanisms
make it possible for smaller countries to devise successful
combinations against bigger countries, and they increasingly resort
to these methods.

For the first time in history, the smaller European nations –
Belgium, the Netherlands, Poland, Slovakia, Slovenia, the Czech
Republic and others, which for centuries were mere objects in
international relations that forcibly fell under the sway of one or
another European empire – have become full-fledged subjects in
international relations whose voice can really influence
decision-making. This explains the triumph of the European Union
idea and what makes it look so enticing for many CIS countries.
Arguing against this fact without offering any tangible
alternatives would be senseless.

The Common Economic Area could play the role of such an
alternative. Membership in this organization does not contradict
Ukraine’s European choice and does not rule out its future
accession to the EU; Europe has known precedents of countries
shifting from one organization to another. In the early 1970s, for
example, Britain, Denmark, Ireland and several other countries
abandoned the European Free Trade Association and joined the
European Economic Community. Since Russia, too, is now engaged in
forming a common economic space with the European Union (CEES), the
norms and regulations for the Common Economic Area with the CIS
countries must fully meet the norms of the CEES, i.e. the EU norms
and rules. The basic difference is that the CEES does not imply
forming supra-national bodies and transferring sovereign powers to
them, while the CEA does suggest it. That is why the mechanism of
parallel activity along those two directions is yet to be designed.
Russia is already seeking such a move, purely out of its own
interests. For Ukraine, membership in the CEA thus offers a dual
advantage – it can have access to the partner countries’ markets,
while preparing its economy, at the same time, for EU
accession.

Nor should we rule out the possibility of the CEA becoming an
efficient and self-reliant organization with supra-national powers,
capable of competing with the EU in attracting new members. It is
also possible that the process of forming the CEES will pave the
way to forming a general common economic space that will someday
embrace the EU and the CEA. If this happens, the problem of whether
Ukraine belongs to the EU or the CEA will simply become irrelevant.
Unfortunately, the Ukrainians have extremely politicized the CEA
project, yet there is still hope it will take a pragmatic decision
on the issue.

Naturally, a different scenario is also possible. Ukraine may
simply refuse to work on the CEA project, or it may conclude an
agreement on a free trade zone, while at the same time speeding up
its preparations for EU accession. What will happen then?

In this situation, there will probably emerge an ‘integration at
variegated pace.’ The CEA will function as three countries and
coordinate its activities with the procedures prescribed by the
EurAsEC. In this case, a common economic space will be established
all the same, but alas, without Ukraine.

Russia and its partners in the CEA will be forced to take
“preemptive” measures to minimize the costs arising from Ukraine’s
speedy drive to the EU. Apart from the obviously discouraging
political and humanitarian effects (concerning travel visas, the
status of ethnic Russians living in Ukraine, the possible
development of an inferiority complex among Russians with regard to
“Ukrainian Europeans”), there are serious economic risks, as
well.

Those risks were made evident by the integration experiences of
Central and East European countries. Those nations were forced to
revise all of their legislative norms and acts pertaining to trade
and economic cooperation, as well as limit the access of Russian
commodities and services to their markets. In Ukraine’s case, the
risks are a hundred percent higher. Russia may acquire an extremely
dangerous competitor right at its doorstep. Once Ukraine integrates
into the European zone and also receives a free-trade regime with
the CIS countries, Western investors may turn Ukraine into their
base of operations. They will be attracted by its relatively
inexpensive workforce, solid infrastructure and, most importantly,
free access to the spacious Russian market.

How can Russia respond to the Ukrainian challenge? Protective
measures, such as putting up massive barriers to Ukrainian
commodities and services, or ending the free trade regime, do not
meet the requirements of the time. As is well known, pre-emptive
strikes are the best method of defense; so the best way for Russia
to minimize the negative effects of Ukraine’s European integration
is Russia’s own European integration.

Paradoxically as it may seem, in order to maintain and reinforce
its positions in the post-Soviet territory, Russia must focus on
enhancing the market-oriented and democratic transformations at
home rather than defending that territory from “encroachment by
alien powers.” Russia must modernize its economic system and become
fully integrated into the world economy. This would include the
earliest accession to the World Trade Organization and the creation
of the Common European Economic Space.

The image of Russia standing at the crossroads has always scared
its neighbors. History provides enough instances. Russia lost
influence in Central and Eastern Europe during the abortive August
1991 coup. It was then that its former allies in the Council for
Mutual Economic Assistance and Warsaw Pact, frightened by the
Soviet Union’s unpredictability and the possible re-creation of the
Iron Curtain, turned their eyes to Europe. Also, NATO and the
European Union, hitherto apprehensive of costly schemes of
integrating Central and East European nations, believed that the
threat from the East was quite real.

Conversely, the past few years have shown that a stable,
pragmatic, predictable Russia that builds its relations along the
principle of “business only, no sentiments” has a real chance of
keeping up and consolidating its positions in the post-Soviet
space. More than that, it has a chance to take the lead in
integrating into the global economy.