Saint Petersburg hosted a CIS summit on October 18. Among those present was Ukraine’s Prime Minister Mykola Azarov. In the end a treaty on free trade area was signed by Russia, Ukraine, Belarus, Kazakhstan, Armenia, Tajikistan, Moldova, and Kyrgyzstan. Azerbaijan, Turkmenistan, and Uzbekistan didn’t sign this treaty. Russia’s Prime Minister Vladimir Putin said: “This is a fundamental treaty that will lay the foundations of business trade relationships between our countries.”
During the summit 28 other instruments were adopted, including CIS currency regulation and control guidelines, a rail transportation strategy until 2020, uniform registration system for nationals of Third World countries and stateless persons in the CIS countries, declassification procedures in regard to documents classified during Soviet times, budget appropriations, in 2012, for a uniform system of CIS air defenses. At the moment, there is no indication that Ukraine has signed these agreements. According to the Ukrainian prime minister’s press secretary, Vitalii Lukianenko, Ukraine signed the FTA and the agreements on data exchange and rail transport concepts.
Azarov believes the FTA will become effective in January 2012, although there is the red tape of official registration and ratification. He hopes the good political will of the CIS leadership will speed up the process, stressing that “the signings of the FTA with the CIS and EU are two clauses of a single action plan aimed at giving the Ukrainian market access to those of other countries, which is necessary for Ukraine’s comprehensive economic development, now that these markets are anything but stable.”
A journalist recently said that repeating bad mistakes is germane to Ukrainian politics. This is absolutely true in regard to the CIS FTA. The thing is that FTA was made back in April 1994 and that this agreement has since seemed to be effective (at least for Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, as well as temporarily for Armenia, Belarus, Russia, Turkmenistan, and Ukraine), yet this free trade area agreement has never proved its worth on a multilateral basis due to its controversial exception clauses that the contracting parties ne-ver succeeded in having settled. The current FTA contains these clauses, along with promises to delete them. Among these clauses are ones having to do with sugar, oil, and gas.
According to Azarov, no exception clauses will be present in regard to most commodity groups that are especially important for Ukraine: “Sugar is the most important issue for Ukraine; it has always been included in the exception clauses and now, for the first time, we have agreed on deleting such clauses after a certain period.” OK, fine, but what about oil and gas? Prime Minister Azarov told Ukrainian journalists: “You must realize what the oil and gas customs duties mean to Russia,” adding encouragingly, “This agreement clearly provides for these duties to be eventually canceled.” He stressed that Ukraine’s negative trade balance was still there, and that this problem remained unsolved because of the exorbitant gas costs. Another reason behind Ukraine’s budget deficit, he said, was the lack of export opportunities, and that the Ukrainian government could solve this problem by securing better access for Ukrainian commodities on the world market.
Ukrainians must have heard similar statements when their country was joining the WTO. Since then the results have been nil. As it was, the Ukrainian head of government apparently decided to lighten his fellow citizens’ hearts. Contrary to Azarov’s previous statements to the effect that the gas conflict would be settled in a matter of weeks, this time he stated: “The talks held on the level of presidents and officials in charge of the fuel-energy complex are evidence of this [breakthrough]. Last night Prime Minister Putin reaffirmed that they will be completed before long, saying that achieving compromises would take several days. When asked to specify, Putin said arrangements had been made to keep the talks secret until the outcome.
Lack of information is known to have inspired journalist investigations. In this particular case, no one trusted the cabinet’s stand. “All I can say is that Ukraine’s previous memberships are no obstacle in concluding a European agreement,” Oleksandr Paskhaver told The Day (he was echoed by the European Commission’s spokesperson John Clancy). “What makes me wonder,” he went on to say, “is the difference between these [free trade] areas, along with Tihipko’s statement that if they don’t want Ukraine at the EU, Ukraine will join the [CIS] Customs Union. After all, this isn’t a hide-and-seek game. We’re all of us aware that this kind of agreement [i.e., Ukraine’s CU membership. – Ed.] means making a civilizational choice. Seeing how easily such decisions are being made, all I can say that they’re trading in Ukrainian people.”
Vasyl Yurchyshyn, head of the economic programs department at the Razumkov Center, was as critical about the cabinet’s intentions of adjusting Ukraine’s geopolitical course: “I think that Ukraine has signed a purely political instrument, making a move mostly aimed at demonstrating to Europe Ukraine’s ‘you-don’t-want-me-then-I’ll-go-elsewhere’ stand. I think this was a rash decision. In fact, I’d describe it as irrational. The fact remains that none of the CIS integration resolutions, including the FTA (signed in 1994 and ratified by the Ukrainian parliament, unlike its Russian counterpart) has been actually implemented. I can see political risks involved. This serious decision must have been meant to alter Ukraine’s foreign policy choice. As it is, Ukraine is about as involved with the Customs Union as the other member countries. Therefore, this FTA should be regarded as a means of dragging Ukraine into the Customs Union, forcing this country to abandon European integration and head in a different direction.”
