Publication: Monitor Volume: 8 Issue: 56

At their meeting with Putin in Odessa on March 17, Kuchma and Moldova’s Communist President Vladimir Voronin jointly appealed for the inclusion of these two countries as full members in the Eurasian Economic Community (EAEC). This would-be trading bloc consists thus far of Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. Until now, Ukraine has steadfastly refused to join the EAEC, citing the latter’s lack of substance, as well as Ukraine’s own aspirations to move closer to the European Union.

Kuchma’s statements in Odessa, if taken at face value, would seem to stand his own policy on its head. The apparent reasons are two-fold. First, the move represents Kuchma’s usual election-year political tribute to Moscow, a tribute that seldom goes beyond lip service. This electoral season may, however, be different because the after-effects of Kuchmagate persist as a divisive factor in Ukraine’s relations with the West while pushing Kuchma closer to Moscow.

Second, Kuchma’s plea represents a reaction to a recent wave of anti-dumping or protectionist measures in the EU and the United States, which have hit hard at major Ukrainian exports. During the Odessa meeting, Kuchma chastised the West for “not becoming any kinder to us” on trade. While Ukraine’s complaints regarding the EU are long standing and partly substantiated, Kyiv has recently begun targeting also the United States in polemical attacks and ill-advised moves against U.S. commercial interests, for example on the audio and video cassette trade and on poultry meat imports. Such moves reflect in part the interests of Ukrainian circles tied economically to the Russian market and politically to power groups in Moscow. While Putin develops his charm offensive in the West, the Russian-oriented groups in Ukraine are more actively using the old Moscow-inspired thesis that “nobody awaits Ukraine in the West”–a rationalization for “integrating” with Russia.

A considerable degree of confusion marked Kuchma’s–and also Voronin’s–request for admission to the EAEC. The two presidents not only stumbled over the organization’s name, but tended to use interchangeably the terms: CIS Economic Union, CIS Customs Union, CIS Free Trade Zone and EAEC. In fact, the first three are long dead and were later buried officially under Putin. Those three were succeeded in 2000 by the EAEC, which exists thus far on paper only. Adding to the confusion in Odessa, Kuchma evidenced a hope that joining the EAEC would promote free trade between Ukraine and Russia bilaterally.

The joint communique failed to mention Ukraine’s and Moldova’s European aspirations. The document, and the three presidents’ statements, suggested instead that joining the EAEC would “accelerate Ukraine’s and Moldova’s economic development and increase the prosperity of their peoples.” In an accompanying statement, Putin and Kuchma announced that they have instructed their respective cabinets of ministers to draw up plans for creating a “free trade zone.” Whether this would be another plan for a CIS free trade, or an EAEC free trade zone, or a Russia-Ukraine free trade zone–such as provided by the 1994 Russian-Ukrainian agreement, another dead project, though not yet officially buried–the statement failed to specify. Such communiques merely document the unreality of the discussions on economic projects in the CIS and its subgroups of countries.

The one move of practical economic significance in Odessa concerns the pipeline for Russian natural gas transit to Europe via Ukraine. The Putin-Kuchma statement registered their agreement on the need to make maximal use of that gas transit system in the common interests of Russia, Ukraine and the European consumer countries. This suggests that Russia has given up the idea of redirecting gas from the trans-Ukraine pipeline into a new, “bypass” pipeline via Belarus, Poland and Slovakia. That project was under active consideration last year, but appeared to have been shelved at a board meeting of Gazprom earlier this year because of insufficient investment funds. The Russian-Ukrainian statement in Odessa seems to confirm that the bypass project is being postponed, or at least that the Russian gas flow through Ukraine will not be reduced. The statement suggests, moreover, that Moscow wants some Central Asian gas to be routed to Europe through the Russian and Ukrainian transit pipelines–an intention stemming from Putin’s larger plan for a “Eurasian alliance of gas exporting countries.” With that in mind, the Putin-Kuchma statement implies that some investment is under consideration for enabling the pipeline via Ukraine to be used at a level closer to its full capacity. This has all along been Kuchma’s position (RIA, Interfax, Unian, March 17-18; Nezavisimaya Gazeta, March 19).

The Monitor is a publication of the Jamestown Foundation. It is researched and written under the direction of senior analysts Jonas Bernstein, Vladimir Socor, Stephen Foye, and analysts Ilya Malyakin, Oleg Varfolomeyev and Ilias Bogatyrev. If you have any questions regarding the content of the Monitor, please contact the foundation. If you would like information on subscribing to the Monitor, or have any comments, suggestions or questions, please contact us by e-mail at pubs@jamestown.org, by fax at 301-562-8021, or by postal mail at The Jamestown Foundation, 4516 43rd Street NW, Washington DC 20016. Unauthorized reproduction or redistribution of the Monitor is strictly prohibited by law. Copyright (c) 1983-2002 The Jamestown Foundation Site Maintenance by Johnny Flash Productions