Russia Forges Post-Soviet Economic Union

July 7, 2008 - 7:15 PM

Moscow (CNSNews.com) - Russia is making yet another attempt to form an economic union among leading post-Soviet states to serve as a potential counterweight to U.S. influence in the region.

On Monday, the presidents of Russia, Ukraine, Belarus and Kazakhstan met in the Ukraine Black Sea resort of Yalta to discuss formation of the Common Economic Space (CES), a body modeled loosely on the European Union.

Presidents Vladimir Putin, Leonid Kuchma, Alexander Lukashenko and Nursultan Nazarbayev agreed to promote greater coordination of economic policies and trade, including a free trade zone which could be set up by 2010.

The four also expressed hope that the CES would help their bids to become members of the World Trade Organization (WTO).

Putin called for quick implementation of the plan, telling a cabinet meeting in Moscow Tuesday that he hoped the main agreements for a new economic zone could be signed by 2005-6.

The CES proposal was first tentatively broached at a meeting in February 2003, and last September, leaders of the four major ex-Soviet states pledged to revive the economic union that collapsed with the breakup of the Soviet Union in 1991.

Russia has suggested that its currency dominate transactions among the group.

Kazakh President Nazarbayev, whom Putin has credited with first proposing the idea, emphasized this week that the CES would not be closed, and that other former Soviet nations would be encouraged to join.

Nazarbayev also insisted that the creation of the CES would not be detrimental to other post-Soviet bodies.

The CES is seen here as an attempt to counterbalance U.S. influence, and in particular the group known as GUUAM -- an acronym for the former Soviet states of Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova.

GUUAM has been dormant for some time, and its attempts to make a comeback have been prompted in part by the U.S.

GUUAM-U.S. cooperation began to accelerate in December 2002 with a program to develop trade and improve border and customs control to combat organized crime and narcotics trafficking.

In May 2003, the U.S. said it would allocate $46 million to support joint projects with GUUAM. Three joint initiatives have been formally launched, including a deal to training mobile anti-terrorist units to guard pipelines and combat terrorism.

Last July, GUUAM members agreed to focus on developing trade and enhancing anti-terrorism cooperation. They also issued a joint statement with the U.S. on the need to take steps against international terrorism and weapons of mass destruction proliferation, and to intensify the battle against organized international criminal activity.

The U.S. reportedly helped persuade Uzbekistan, which suspended its membership in 2002, to rejoin the grouping, and has been providing economic assistance to foster GUUAM's development.

That the U.S. would take an interest in GUUAM is not especially surprising.

The five nations are located in the important Caspian Basin and Black Sea regions, which have emerged over the past decade as a zone of geopolitical competition between Washington and Moscow over energy development and export routes.

Some GUUAM members -- notably Georgia -- have uneasy relationships with Russia, making the U.S. a logical strategic partner.

Until recently, officials in Moscow remained largely silent about GUUAM developments, although Russian media have left little doubt that the Kremlin takes a dim view of the organization.

Earlier this month, Russian Deputy Foreign Minister Vyacheslav Trubnikov described GUUAM as an "absolutely unnatural entity, stuffed with U.S. money," which he said was designed "to counter what they call Russian neo-imperial ambitions."

A primary source of tension is competing trade and transit interests. GUUAM states have supported a trans-Caucasus transportation corridor, known as TRASECA, which would link countries in the Caspian Basin and Black Sea regions, bypassing Russia.

At the same time, Moscow is seeking to promote what is called the North-South transport corridor, which involves Iran.

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