Vladimir Sarkisyants examines the Russo-Ukrainian trade deal and asks whether Russia is making a rod for its own back with the creation of a Eurasian trade bloc to rival the EU.
On 17 December, Russia threw a ‘lifeline’ to the embattled Ukrainian president Viktor Yanukovych. The ongoing social unrest in Kiev notwithstanding, Yanukovych’s efforts to play Russia against the EU in trying to obtain the best possible deal for his troubled country seem to have paid off. Making a public statement after the talks with his counterpart in Moscow, Vladimir Putin did not hide his satisfaction: ‘Without any doubt Ukraine is our strategic partner and ally in every sense of the word.’
But should this development be treated as a ‘victory’ for Russia? The answer is less obvious than it may seem at a first glance. Director of Moscow’s Carnegie Centre Dmitri Trenin is of opinion that Russia ‘is stronger without Ukraine. With Ukraine, it will be weaker.’ Regardless what Russia was to offer Ukraine a large section of its population will still be looking west.
Internally, one of the biggest issues with Moscow-advanced integration models is their lack of attractiveness, resulting from corruption and lack of transparency. Another issue is the fact that Russia is still a giant with feet of clay – Moscow’s aspiration to gather most of the former Soviet states under the Eurasian Union umbrella has a fundamental flaw: each joining state increases the very real costs to ‘the centre’ while conferring little to no economic advantages, at least in the short term.
Russia’s $15 billion bailout, meant to plug Ukraine’s funding gap of $17 billion next year, may be only the first of such emergencies. Indeed, all the states that are considering joining the Eurasian Union (bar Kazakhstan) are economic liabilities rather than assets. Ever since the Soviet collapse the most ardent proponents of re-integration with Russia are still to be found among its most impoverished neighbours.
Even these states, however, by no means hurry into Moscow’s embrace. Thus Armenia tried to pursue deeper economic links with the EU despite the Russia-advanced regional initiatives, and had to be ‘brought into line’ by Moscow. Much troubled and Russia-dependent Kyrgyzstan too has declared that it ‘won’t join Customs Union on ‘Someone Else’s’ Roadmap,’ which was drafted without consulting the Kyrgyz government.
The Kremlin’s determination to keep up the pace and let itself be entangled in the Ukrainian search for the highest bidder is hardly surprising. More than twenty years after the disintegration of the Soviet Union, Russia ‘is still suffering from phantom pain in its amputated limbs. It aches each time a former Soviet republic takes a step towards integration with the West. The pain is greatest in Ukraine.’ Cultural and religious ties between the two are traditionally strong, even if the Ukrainian nationalists would beg to disagree. Geopolitically, the Kremlin seems to perceive of Ukraine as a fundamental element in its national security.
For the last two decades Russia was cautious of the burden that the commitments in the CIS space could result in. It was wary of the costs, both political and economic, that assuming a leadership role within the former Soviet space would entail. Today, this ‘red line’ seems to be more blurred than it has been since the collapse of the USSR. With the enlargement of both NATO and the EU reaching Russian borders, the Kremlin found itself an outsider to these processes and was presented with a challenge. Internal CIS developments, including the more assertive stance of natural resource-rich Azerbaijan and Kazakhstan, posed another dilemma. It remains to be seen whether Russia’s dependence on extractive industries can keep up with its elite’s geopolitical ambition or whether the world will witness yet another ‘imperial overstretch.’