ANALYSIS: The single economic zone or the European Union? (09/14/03)

ANALYSIS

The single economic zone or the European Union?

by Askold Krushelnycky
RFE/RL Poland, Belarus and Ukraine Report

Ukraine's Finance Minister and Vice Prime Minister Mykola Azarov, together with his counterparts from Russia, Belarus and Kazakstan, have approved a draft agreement on the formation of a single economic zone encompassing their countries.

The agreement is to be signed by the four countries' presidents at a Commonwealth of Independent States (CIS) summit to be held in the Crimea later this month. The zone is intended to increase trade by simplifying bureaucratic regulations and scrapping tariffs. Russian Prime Minister Mikhail Kasyanov indicated it could lead to deeper integration, a single currency and common economic borders.

The plan has taken many in Ukraine by surprise, with some observers saying the move appears to contradict Ukraine's declared aim of strengthening ties with the European Union. But the EU itself does not appear to be concerned by the plan.

Steffen Kovmand is the acting head of the European Commission's Kyiv office. On August 26, he was among the Western diplomats to attend a meeting called by Mr. Azarov.

Mr. Kovmand said that the European Union has not been shown details of the proposed agreement. But he said Mr. Azarov's briefing gave the EU no reason for worry over its relationship with Ukraine.

"[Azarov] certainly managed to reassure everyone in the room that this was in no way contradictory to Ukraine's EU ambitions. And he pointed out that it was something that he felt could make good economic sense to Ukraine. And he also pointed out that in various articles and provisions of this agreement - that, I repeat, we haven't actually seen yet - the speed and depth of integration was very much something that would be decided step-by-step, and by each signatory to the agreement," Mr. Kovmand said.

EU Enlargement Commissioner Guenter Verheugen was due to visit Kyiv on September 11-12, and Mr. Kovmand says the economic zone agreement had not affected his plans. Mr. Kovmand said that Mr. Verheugen will ask Mr. Azarov and other members of the government for more details about the plan. For his part, Finance Minister Azarov told RFE/RL the proposals did not exclude the desire for a closer relationship with the EU.

"I do not see any obstacles [to the EU] in the agreements that have been signed. Again, I emphasize, I would not sign any agreement that would produce such obstacles," Minister Azarov explained.

The single economic zone also appears to have surprised some officials at Ukraine's Foreign Affairs Ministry. Then Foreign Minister Anatolii Zlenko said that Ukraine's priority remains closer ties with the EU.

"We already have a strategic course for our country, and that is toward European integration. And currently we are mobilizing - by this I mean the president of Ukraine is mobilizing - all our efforts for the realization of this political course for our country," said Mr. Zlenko, who was retired on September 2.

Mr. Zlenko said Ukraine could enter the new economic zone only if such an arrangement was compatible with EU regulations and standards and did not impede Ukraine's timetable for closer relations with the EU. He added that the zone could improve Ukraine's chances as an EU candidate if it improved the country's economy.

Former Ukrainian Foreign Affairs Minister Borys Tarasyuk now heads the Ukrainian parliament's committee on European integration. He said Ukraine should seek better relations with Russia and other former Soviet republics. He added, however, that trying to integrate Ukraine with both the EU and Eurasia simply does not seem practical.

"If integration with the European Union is the natural path for Ukraine, then integration with the East, which is represented by the Single Economic Zone, is the Kremlin's main objective and nothing else," Mr. Tarasyuk observed.

Kyiv has a history of often appearing to change its foreign policy priorities, at times seemingly moving toward the West and at others toward Russia and Eurasia. President Leonid Kuchma has characterized such apparent vacillation as a "multi-vector [directional] policy."

Mr. Tarasyuk described the situation as follows. "In connection with the behavior of the Ukrainian government and the use of popular slogans - such as 'European integration,' 'European course,' 'Euro-Atlantic course' - and what actually happens, I want to say that we are witnessing the diagnosis of what doctors call a split personality."

He said the government is deliberately keeping its intentions unclear in order to play the EU and Russia against each other.

Mr. Tarasyuk said he thinks the government will be able to secure the two-thirds majority needed in the Verkhovna Rada to ratify an agreement on the economic zone. But he believes that in reality, Moscow and Kyiv - the two most powerful players in the potential zone agreement - are far from reaching a final agreement.

"Ukrainian and Russian participants in the talks have absolutely different concepts of what constitutes a single economic zone. Ukrainian participants take it to mean a free trade zone, while the Russian participants mean a common currency, a common customs union and so forth. These are completely different levels and I think problems will arise out of this," Mr. Tarasyuk pointed out.

Mr. Tarasyuk added that other such schemes have been created in the past to augment economic ties between CIS republics: "There have been ideas for economic union and free trade zones between Ukraine and Russia, and free trade zones between CIS countries, but nothing has ever come of it. I want to say that of the thousands of projects initiated during the 12 years of the CIS's existence, none, luckily, have materialized."

Mr. Tarasyuk said he believes the current idea may suffer the same fate.

Askold Krushelnycky is an RFE/RL correspondent correspondent.

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