Borysfen Intel

Economy in Exchange for Sovereignty

July 18, 2019
<p>Economy in Exchange for Sovereignty</p>

Should We Stake On Russia?

 

Despite the clear constitutional definition of Ukraine's external course, the election campaign in our country again gave relevance to this issue. Thus, despite Russia's continuation of its armed aggression against Ukraine, a number of Ukrainian political forces openly advocate restoration of relations with the aggressor without any commitments on its part.

In support of this, the arguments are put forward about “positive effects” of such a step, which supposedly would contribute to the development of the Ukrainian economy and increase the standard of living of its population. According to the apologists of this idea, all of this dominates the interests of Ukraine in preserving its sovereignty and restoring the territorial integrity of the state. Naturally, such positions are supported by Moscow, which keeps making every possible effort to return Ukraine to its sphere of influence.

We will not enter into useless debates with supporters of similar preferences. Let's take a look at what is a real priority for the Ukrainian society, and what is happening now in the sphere of trade and economic relations between Russia and other countries of the former USSR. That is what will give us an answer to where we are going to move.

…Today 62 % of our citizens support Ukraine's accession to the EU, and about 55 % — to NATO…

According to sociological surveys, today 62 % of our citizens support Ukraine's accession to the EU, and about 55 % — to NATO. In turn, 24 % of Ukrainian citizens are for Ukraine's equidistance from the West and Russia, and 10 % — for joining the Eurasian Economic Union (former Customs Union). Apparently, despite all the problems of recent years, most Ukrainians remain loyal to Ukraine's European choice, and those who want to return to Russia are in absolute minority. Incidentally, their share among the Ukrainian population is exactly equal to the rating of the pro-Russian opposition in our country.

 

However, the results of public opinion polls in Ukraine are fully consistent with the processes taking place on post-Soviet territories. Evidence of this is the failure of Moscow's efforts to reintegrate former Soviet republics into the economic sphere as the basis for restoring something like the Soviet Union in one form or another. And this is not the insinuation of Russia's opponents, as the Kremlin's propaganda claims. This fact is openly recognized by Russia's own experts, including representatives of state authorities, of the Federal State Statistics Service of the Russian Federation included.

According to Rosstat, while in 2000 the share of former republics of the USSR in Russia's total imports was 34 %, by 2018 it had fallen more than three times — to 11 %. Significant changes also occurred in the structure of trade of former Soviet republics with Russia.

In particular, in the same year 2000, Russia's share in Belarusian exports amounted to 84.3 %, and in 2018 — already only 38.5 %. In the same period, the similar indicator in Kazakhstan decreased from 19.5 % to 8.5 %, and in Ukraine — from 34.5 % to 7.7 %, which became a special case in the post-Soviet space.

…The only factor that still unites Russia and its former allies in the USSR is the mercantile interests of their top leaders and business circles, as well as the historical memory of some population…

The same happened with post-Soviet countries' imports from Russia. In Belarus its share decreased from 92 % in 2000 to 59 % in 2018; in Kazakhstan — from 48.7 % to 38.1 %; in Ukraine — from 26.2 % to 14.2 %. At this, both, in exports and in imports of the countries of the former USSR, the share of their trade with Russia was redistributed and continues to be redistributed to other partners, first of all, EU members and China.

That is, instead of deepening their integration, former Soviet republics are increasingly reorientating economic relations outside the post-Soviet space. And therefore, the grounds for their unification around Russia in the political, security and other spheres disappear. In fact, the only factor that still unites Russia and its former allies in the USSR is the mercantile interests of their top leaders and business circles, as well as the historical memory of some population.

The reasons for these processes are both objective and subjective factors, namely: reducing the economic attractiveness of Russia because of its own economic problems; the negative character of Moscow's economic policy, which refuses to cooperate equally with its partners and imposes its own conditions; the EU, China, the USA and other countries' series of steps to deepen interaction with former Soviet republics. As a separate aspect, we can mention Moscow's systematic economic (including energy) wars against the countries of the former USSR, which forces them to seek other partners.

 

All this has created significant problems for Russia, which have become especially serious since 2014, after the introduction of political and economic sanctions imposed on the RF by the United States and the European Union for Russia's armed aggression against Ukraine. At this, along with Russia, its partners in the Eurasian Economic Union (EAEU), which at that time remained rather closely linked with the Russian economy, suffered significant economic losses.

…Instead of deepening their integration, former Soviet republics are increasingly reorientating economic relations outside the post-Soviet space. And therefore, the grounds for their unification around Russia in the political, security and other spheres disappear…

Despite the certain stabilization of the economic situation within the framework of the EAEU after 2016, and even the growth of trade within the organization (which was mainly due to rising world prices for energy-carriers), disagreements between its members not only did not mitigate, but even gained more aggravation. As before, the reasons for this are the above-mentioned unresolved issues.

Besides, China's active implementation of its “The Belt and Road” strategic initiative, which among others, included the countries of Central Asia, became an additional factor in the relationship between Russia and its EAEU partners. At this, the economic potential of the PRC and its reasonable economic policy have allowed Beijing to offer them much better terms of cooperation than Moscow's. As a result, by a number of indexes of trade, economic and investment cooperation with the countries of the region, the PRC is already ahead of Russia.

In particular, in 2018, China's share in Kyrgyzstan's foreign trade amounted to about 60 %, while Russia's — fell to about 20 %. For Tajikistan, similar figures are 40 % and 20 %, respectively. In turn, China's accumulated investments in the economy of Kazakhstan is 16.6 billion US dollars, while Russia's — about 9 billion US dollars; for Tajikistan — 1.16 billion US dollars and 0.986 billion US dollars; for Uzbekistan — 7.6 billion US dollars and 6 billion US dollars.

…President of Belarus A. Lukashenko keeps criticizing the activities of the EAEU and accuses Russia of violating the rules of the organization and, moreover, putting economic pressure on its members…

On the whole, these circumstances reduce the attractiveness of the EAEU for most of its members, which is an additional factor in undermining Moscow's positions in the post-Soviet space. For example, for today, open dissatisfaction with the organization's activities is already expressed at both, governmental and expert levels of the member countries of the organization. Among them, Belarus and Kazakhstan are especially dissatisfied.

Despite strategic partnership and allied relations between Minsk and Moscow, President of Belarus A. Lukashenko keeps criticizing the activities of the EAEU and accuses Russia of violating the rules of the organization and, moreover, putting economic pressure on its members. At the same time, on his initiative, the Belarusian government is intensifying trade and economic relations with the EU countries, China and other partners outside of the EAEU.

At this, such policy of A. Lukashenko finds support inside the country. Thus, according to polls, 51 % of Belarusians trust the European Union today, while the Eurasian Union is supported by 48 % of the respondents. Last year, these figures coincided and were 47 %, which means a shift in the priorities of the Belarusian society towards the EU. To 62 % (12 % more) has also increased the number of Belarusians who give a positive assessment of the relations between Belarus and the EU.

At the official level, the leadership of Kazakhstan demonstrates a more restrained attitude to the EAEU. At the same time, the real position of the country's leadership is voiced by Kazakh experts, including in government structures of the country. In particular, such position was expressed by Director of the Risk Assessment Group under the Kazakh government D. Satpayev during the Global Manufacturing and Industrialisation Summit (GMIS-2019) in Yekaterinburg in July 2019. According to him, Kazakhstan's membership in the EAEU draws the country down, both, economically and politically. He also acknowledged that Kazakh entrepreneurs less and less believe in the prospect of integration in the post-Soviet space.

By the way, such sentiments prevail not only in the countries of the former USSR, but also in some separatist state formations on their territory, which were created by Russia and entirely depend on it. In particular, this concerns the “Trans-Dniester Moldavian Republic” (PMR), which actively develops trade and economic relations with the EU within the framework of realization of joint or coordinated with Moldova projects. As a result, today the share of its trade with the countries of the European Union, Moldova and Ukraine (62 %) is already more than twice the share of trade of this self-proclaimed republic with Russia (29 %).

 

…One should not hope for the possibility of resolving economic problems of Ukraine at the expense of renewal of cooperation with Russia. And, moreover, to sacrifice for this sovereignty and territorial integrity of our state…

Therefore, one should not hope for the possibility of resolving economic problems of Ukraine at the expense of renewal of cooperation with Russia. And, moreover, to sacrifice for this sovereignty and territorial integrity of our state. This is confirmed by the example not only of Ukraine but also of other former Soviet republics, including Russia's closest partners in the Eurasian Economic Union.

It is also evidenced by the futility of Russia's hopes for the restoration of the former USSR, including at the expense of restoring its influence on Ukraine. No matter how badly Moscow wants this and what it does to achieve its goals. Even by demonstrating military force and its real use against Ukraine and Georgia.

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