Russia's efforts to widen its Customs Union initiative has hit road blocks as citizens of Kyrgyz Republic and Ukraine are opposed to their countries' integration in the economic bloc.
Belarus, Kazakhstan and Russia began the Customs Union on January 1, 2010, as Russia hopes to develop an economic bloc similar to the GCC Customs Union or the Euro zone.
While Russia says it wants to engage the Commonwealth of Independent States (CIS) purely at an economic level, the Americans and European Union authorities consider it as Moscow's ploy to keep the former Soviet states within its political orbit.
At the moment, the combined economy of the three current members is USD 2.1 trillion. Other CIS states that could potentially join the union include Armenia, Kazakhstan, Tajikistan and Uzbekistan.
The Supreme Eurasian Economic Council - an entity charged with managing the union - strengthened its association at a recent meeting in Astana, with Ukraine and Kyrgyz Republic deepening their cooperation.
"While Kyrgyzstan had already filed an application to enter the Customs Union on June 8, 2009, Ukraine seeks the status of an observer, which, Kyiv believes, would allow it to move closer to the Customs Union without jeopardizing its membership in the World Trade Organization (WTO) or its relations with the European Union," said Alexander Kim, analyst at Washington-based Jamestown Foundation.
The analyst reports that after the meeting, the presidents of both Kazakhstan and Ukraine made statements to assure their respective electorates that the Customs Union was an economic initiative and would not result in a political integration.
"I want to note once again that there is no planned transfer of political functions to the supranational bodies that could weaken the state's sovereignty," Kazakhstan's Nursultan Nazarbayev said.
Ukrainian president Viktor Yanukovych gave similar assurances.
UKRAINE: THE BIG PRIZE
As the union gains momentum, both the EU and Russia have stepped up their efforts to court Ukraine.
The European Union has pursued a carrot and stick policy with Kiev, luring the country with its Deep and Comprehensive Free Trade Agreement, but insists that Ukraine can't be a member of both the DCFTA and the ECU.
"The emergence of the ECU means that the EU is not the 'only game in town' and presents a normative challenge to it," said Chatham House in a report.
"This is particularly visible in Ukraine, where Russia has been actively promoting the ECU as an alternative to the EU integration mechanism, i.e. the Association
Agreement. Given the viability of the ECU, which is bolstered by its centrality to Vladimir Putin's agenda, this 'normative rivalry' is likely to grow and will require the EU to adapt its approach to the eastern neighborhood if it is to continue to be an influential actor there."
The Ukrainian government is under pressure from opposition parties to stay away from the Russian union, while still others are against coming closer to the European Union.
"In Kazakhstan, meanwhile, attempts arose to challenge the authorities' decision to have entered the Customs Union with Russia and Belarus in the first place," said Jamestown's Kim.
"A group of activists convened on March 16, 2013, in Almaty, and proposed organizing a referendum that, as opposition leader Bulat Abilov summarized on his Facebook account, should decide on the 'four most critical questions of the country's life. These are: withdrawal from Customs Union membership, nationalization of the largest mining enterprises, elections of regional administrations at all levels and a ban on the construction of nuclear [power] stations.' The group had to collect not less than 200,000 of signatories to organize such a referendum."
The ECU initiative is a more improved model than previous efforts to integrate the CIS economies, however Russia's strong position in the union has led to considerable doubts over Moscow's true intentions.
According to the current agreement, Russia has 57 of the vote while Belarus and Kazakhstan each hold 21.5% - which effectively means that Russia will have to side with at least one of the parties to get a decision through. However, even if the other two countries combine, they cannot overrule Moscow.
"Yet there are indications that Russia may be prepared to move towards greater multilateralism," noted Chatham House. "This is evidenced in the arrangements regarding the new Eurasian Economic Commission, which replaces the CU Commission. The College, which will be the executive body of the commission, consists of three country representatives with one vote each. Thus, at least in theory, with regard to certain decisions Russia can be outvoted."
Russia may also be prepared to move the headquarters of the union to another country as an incentive.
While Russia and the EU battle out for the Commonwealth states, it may well be that CIS states emerge as the winners with sweeter deals from both parties.
© alifarabia.com 2013
