Russia piles pressure on former Soviet satellites to drop EU aspirations

Written by on September 5, 2013 in Perspectives - No comments

As the Vilnius summit of EU’s Eastern Partnership draws nearer, at which several former Soviet states are expected to sign association agreements with the EU, Russia appears to have stepped up efforts to pull those same former Soviet states closer and into its own Customs Union, with mixed results.

On the surface, it appears to be a simple choice between which free trade agreement would offer those countries a better economic incentive – but where the EU can wield the carrot of foreign aid, Russia leans on the stick of threatening to withhold energy resources (and, unlike the EU, could not care less about asking for lasting reforms).

In the long run, Russian president Vladimir Putin sees the Customs Union as the building block of the Eurasian Economic Union – outlining its key institutions in an article he penned for Russia’s newspaper of record, Izvestia, in October 2011.

Despite pointing out in that piece that that the new entity was not meant to hijack the EU aspirations of former Soviet republics, it has become clear that at the very least the Eurasian Union is meant as a counterweight to the EU, but also a way to bring the former Soviet states closer into Russia’s orbit in a way that the Commonwealth of Independent States (which former out of the ashes of the Soviet Union in December 1991) never quite managed.

One of the four countries expected to initial an association and free trade agreement with the EU at the Eastern Partnership summit in Vilnius in November, Armenia, has now given in to Russian wooing, announcing that it would join the Moscow-led Customs Union.

Given the government change in Georgia, which has lead to the thawing of relations with Russia, Tbilisi could be expected to follow suit. Indeed, pro-Russian prime minister Bidzina Ivanishvili said on September 4 that his government was “studying” the customs union issue, although that statement was later clarified to mean that membership was not an option, Radio Free Europe/Radio Liberty reported.

But in Moldova, Russia’s efforts have been unsuccessful so far, prompting a deputy Russian prime minister to make not-so-subtle threats that the country could find itself freezing come winter. And the big prize, Ukraine, appears also out of the Kremlin’s grasp.

Russian president Vladimir Putin, left, with Ukrainian counterpart  Viktor Yanukovich and Moldova's Nicolae Timofti in Kyiv. Photo: kremlin.ru

Russian president Vladimir Putin, left, with Ukrainian counterpart Viktor Yanukovich and Moldova’s Nicolae Timofti in Kyiv. Photo: kremlin.ru

Abrupt announcement

Armenian president Serzh Sargsyan’s announcement on September 3, following talks with Putin in Moscow, appeared to take the EU by surprise.

“We look forward to understanding better from Armenia what their intentions are and how they wish to ensure compatibility between these and the commitments undertaken through the Association Agreement and the Deep and Comprehensive Free Trade Area,” the European Commission said in a statement. “Once this consultation has been completed, we will draw our conclusions on the way forward.”

The bafflement was best summed up by Swedish foreign minister Carl Bildt, a frequent visitor to Eastern Partnership countries in recent years, who tweeted: “Armenia negotiated 4 years to get Association Agreement with EU. Now President prefers Kremlin to Brussels.”

It appears security concerns – Armenia still has an unsolved dispute over Nagorno-Karabakh with Azerbaijan – might have played the decisive role in Sargsyan’s decision, according interpretations by some EU politicians, like British MEP Charles Tannock, who told the BBC on September 5 that concern about Russian arms sales to Azerbaijan appeared to have influenced Sargsyan more than any other issue.

Sargsyan’s own statement at the joint news conference with Putin could certainly be interpreted to lend credence to such claims. “Twenty years ago, Armenia in cooperation with Russia and other CIS countries established its military security structure in the format of the Collective Security Treaty Organization. Through these decades, the structure proved its viability and efficiency,” he said.

“Currently, our CSTO partners are forming a new platform for economic cooperation. I have said on many occasions that participating in one military security structure makes it unfeasible and inefficient to stay away from the relevant geo-economic area.”

Under pressure

Moldova is home to the other major “frozen conflict” dating back to the immediate aftermath of the Soviet Union’s dissolution, with the de-facto independent (albeit unrecognised by the international community) breakaway region of Transnistria, or Pridnestrovie, as its Moscow-backed government calls it.

Over the past two decades, Moscow has opposed any efforts to remove its troops in the region and replace them with international peacekeepers. Russia has also rebuffed any plans to settle the conflict, other than its own plan to form a federation, on equal footing, between Moldova and Transnistria.

Moscow has also given the breakaway region hundreds of millions of roubles in financial aid, but, curiously, insists that the bill for all the gas shipped to Transnistria – where consumption outweighs that in the rest of Moldova – be footed by authorities in Chisinau.

Moldova is entirely dependent on Russian gas supply. On September 3, Russian deputy prime minister Dmitry Rogozin, who is also the Russian envoy to the region, said during a visit to Chisinau that “energy is important, especially to stop the cold; I hope you won’t freeze in winter.”

At the same time, a senior official at Russia’s consumer watchdog Rospotrebnadzor, Kremlin’s weapon of choice in blocking foreign imports (such as Moldovan wine in 2006, or anything from Georgia until recenty), raised the prospect of a new ban on Moldovan products – prompting Bildt to tweet “Threatening a small nation to cut off gas and to block exports – is this Europe 2013?”

Ukraine has only joined the Customs Union as an observer. Left to right: presidents Viktor Yanukovich (Ukraine), Alexander Lukashenka (Belarus), Nursultan Nazarbaev (Kazakhstan), Vladimir Putin (Russia) and Almazbek Atambaev (Kyrgyzstan) at an informal meeting of the Eurasia Economic Council in May. Photo: kremlin.ru

Ukraine has only joined the Customs Union as an observer. Left to right: presidents Viktor Yanukovich (Ukraine), Alexander Lukashenka (Belarus), Nursultan Nazarbaev (Kazakhstan), Vladimir Putin (Russia) and Almazbek Atambaev (Kyrgyzstan) at an informal meeting of the Eurasia Economic Council in May. Photo: kremlin.ru

Trade war

Most recently, Rospotrebnadzor banned, in August, all confectionery made by Ukrainian firm Roshen, claiming it contained carcinogens. Similar checks carried out in several other countries reportedly found no problems.

Chocolate is not the only Ukrainian products not welcome on the Russian market – Russia recently scrapped the quota for Ukrainian steel pipes. Furthermore, some Ukrainian companies have complained in recent weeks about harassment by Russian customs officials.

Most recently, Russian authorities plan to bill Ukraine for all the taxes Ukraine has collected from goods delivered to Russia’s Black Sea fleet, stationed under a long-term lease on Ukrainian territory, Russian daily Nezavisimaya Gazeta reported on September 4. Russia estimates the figure at an annual $10 million to $15 million.

(A dispute there could end costing Russia more than Ukraine, since Moscow pays only $98 million a year to lease the fleet’s base, built during the Soviet times – Ukrainian opposition parties have long been demanding a review of the leasing agreement, which currently runs until 2042.)

Separately, Moscow is demanding $7 billion from Ukraine under the terms of the long-term gas contract Kyiv has with Gazprom, claiming that Ukraine has failed to buy the amounts stipulated under the “take-or-pay” clause of the contract – as part of its efforts to convince Ukraine to turn over its gas grid to Gazprom.

Negotiations with Russia on a “bilateral consortium” to manage the gas grid – relinquishing control to Gazprom in all but name – reportedly came close to being finalised earlier this year, but the legislative amendments that would have allowed the privatisation to go ahead were never tabled. Since then, Moscow has stepped up its rhetoric against Kyiv, hinting at a possible repeat of gas disruptions like the ones in 2006 and 2009.

Ukraine is one of the two largest former Soviet republics – Kazakhstan has long been on board with Moscow’s initiatives and is a founding member of the Customs Union – and would represent a coup for the Kremlin both politically and economically, especially given that Ukraine trades as much with the EU as it does with Russia.

Ironically, the presidency of Viktor Yanukovich, elected on the ticket of the pro-Russian Party of Regions, has not brought quite the results that Moscow expected when he took office in 2010.

(Top photo: Russian president Vladimir Putin with European Commission president Jose Manuel Barroso at the last EU-Russia summit in June. Photos: kremlin.ru)

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About the Author

Alex Bivol is the news editor of The Sofia Globe.