Recent CIS summit in Minsk has proved that differences between CIS countries and Russia appear more pronounced. Moreover, controversies within the Customs Union itself become more serious as well. The reason is obvious: Moscow does not want equal partnership with CIS countries, but considers them as "little brothers". Such position manifests itself in Russia's policy regarding protection of the internal market, when violating its own rules and contrary to its public statements about "close integration", Russia keeps banning import from other CU members.

Even such fierce supporter of Eurasian integration like President of Kazakhstan Nursultan Nazarbayev complained during the summit about shortfall in observance of mutual agreements, including removal of exceptions and limitations. According to the high official, "every state in the Union wants to have equal relations and mutual benefit. We still have unsolved issues on oil and oil products, main pipelines, etc. Russia, of course, is the biggest country and has the biggest expenses, but we work together, thus must take into account mutual interests."

Belarusian leader Aleksander Lukashenko added that the integration means moving forward and removing all obstacles on the way to mutually beneficial cooperation. "Unfortunately, despite the work done, the number of problems has not reduced, but even increased in some sectors. We cannot move further unless we fulfill previous agreements and reach previously established goals of the integration," Lukashenko said.

In turn, Ukrainian President Viktor Yanukovych said that "we must analyze everything that has been done for the last two years in our trade relations with CIS countries, including Customs Union members."

Except Russia

Indeed, Russian policy regarding neighbors force the latter to strive for bigger independence. Almost every CIS country has had a conflict with Russia at least once: Moldova argued about wine and Transdnestrian region, Azerbaijan - about gas and oil markets and Armenia, Kirghizia - about Moscow interference into its internal affairs, etc. No surprise that with every passing year the Commonwealth becomes more competing and that CIS members establish "horizontal" unions bypassing Moscow. Take, for example, the alliance GUAM (Georgia, Ukraine, Azerbaijan, Moldova) or "Eastern partnership", including three European CIS republics (Belarus, Ukraine, Moldova) and all three Caucasian post-soviet countries.

CIS leadership, however, believes that such state of affairs is normal and common. Thus, head of the CIS executive committee Sergey Lebedev notes that the states of the Commonwealth are very different, and it is no wonder that for 20 years of independence each of them has worked out different foreign policy. "The Commonwealth follows the principle of heterogeneous integration, when members do not have strict obligations to participate in every decision, but are able to establish a flexible policy of cooperation. Thus, there are no obstacles for CIS members to participate in other unions, unless it contradicts with membership in CIS itself," the official says.
However, "federals" continue pressing on other participants, applying both political and trade sanctions, including non-tariff technical barriers, steep sanitary demands and measures on certification, licensing, quota allocation. Against such background, CIS republics are interested in developing mutually beneficial relations bypassing "the big brother". In this respect, it is worth mentioning that in 2012 Ukrainian export to CIS (excluding Russia) made almost $7.7 billion, and import - $7 billion, which means our trade with "non-Russian" CIS has positive balance, as well as good potential for further development.

As of today, Kazakhstan is the leading consumer of our production (supplies for $2.5 billion), including high tech goods, like locomotive engines (supplies for $753 million) and other engineering products; ready metalware (supplies for $460 million).

According to the economic report, Minks is the second biggest consumer after Astana: last year Ukraine supplied goods for $2.3 billion (by 17.1% more than in the previous year). Supplies to Belarus mostly include engineering products and equipment (for $279 million), metal products (for $330 million).  

Friendly republics

The data proves that the Commonwealth is a reliable consumer of Ukrainian high value-added products and that this export destination can be developed further. Considering that after signing the Association agreement with the EU Ukrainian producers will have to improve the quality of goods and services, Ukrainian production will become more competitive, thus more popular on foreign markets. CIS countries have similar traditions of consumptions as the rest of former USSR, which means Ukraine will still have market outlets for its goods in case Russia decides to oust Ukrainian products from its market.

Moreover, Ukraine has already agreed a number of common projects with some CIS partners. Thus, there are plans to establish joint ventures with Kazakhstan on production of train cars (with participation of Ukrainian "Azovmash", Kazakhstani Akmolinski car repair plant and Kazakhstani railway road "Kazakhstan Temir Zholy); on production of regional mixed cargo aircrafts An-140 (with participation of Ukrainian Kharkiv aircraft factory and "Motor Sich"); on purchase of Ukrainian passenger short range aircraft An-148.

As for promising sectors of cooperation with Belarus, engineering industry is first to come to mind. Thus, in 2008 Kryukovsky Railway Car Building Works established a joint venture with Gomel car-repair plant and started production of passenger rolling stock for Belarus. Ukrainian market, in turn, is interested in Belarusian field engines. According to experts, Ukraine loses about five tons of grain every harvest because of lack of agricultural machinery, especially tractors. We need to upgrade about 31 thousand of worn-out tractors, and If Ukraine sets a task to harvest up to 80 million grain annually, it must upgrade 3-5 thousand tractors every year. It can be possible if Ukraine develops already existing cooperation between Minsk tractor plant and Ukrainian "Ukravtozapchast". For this Belarus is ready to move a part of its production to Ukraine and manufacture 30-40% of the product on its territory, first vice PM of Belarus Vladimir Semashko says. Moreover, Belarus is ready to offer at least three cost-cutting variants for machinery supplies, including leasing (see article "Ukraine-Belarus: Friendship, tractors and candies").

There are similar projects agreed with other CIS members - Moldova, Azerbaijan, Uzbekistan. And even if the Kremlin applies the toughest sanctions against Ukraine in response to our Association agreement with the EU, Ukraine will have alternative markets to promote its production, considering that other countries-consumers rely on it and are ready to pay. Looking forward, we may even establish an alternative alliance, based on "Eastern partnership" and GUAM unions and similar to the Visegrad Group, in order to counterbalance the influence of Moscow in CIS.

Andriy Boyarunets


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