Courcy’s Intelligence Brief

In recent issues we have highlighted Russian concerns about its strategic weakness.  These centre on the expansion of Nato, the introduction of missile defence, population decline, and the rise of China.  On 5 May, however, Russia’s Prime Minister Vladimir Putin revealed that the view from the Kremlin is not universally pessimistic.

Putin was talking about the Customs Union of Russia, Belarus, and Kazakhstan and the creation of a single economic space (SEC).  The Russian premier said that the SEC was open to other countries joining it and that it is ready for close cooperation with the European Union.

The SEC, which envisages a common market with the free movement of goods, services, capital, and labour, is due to be established by 1 January 2012, and Putin urged his colleagues to redouble their efforts for “the development of integration links between our three countries and strictly adhere to the approved action plan for the establishment of the SEC”.

In his most notable remarks, Putin gave the impression that he saw the SEC as providing a new dynamic for the reintegration of the former Soviet republics – and, eventually, as providing a strategic counterweight to the European Union.  He said: “I am sure that a strong integration-oriented union can radically change the geopolitical configuration of the entire Eurasian space and stimulate integration processes in the CIS.”

Putin’s optimism about the SEC will have been boosted by Kyrgyzstan’s decision to join the grouping.  Speaking early in April, Prime Minister Almazbek Atambaev said joining the union with Russia, Kazakhstan, and Belarus would "strengthen the external borders of the republic and improve the living and working conditions of the nearly half a million citizens of Kyrgyzstan who work in Russian and Kazakhstan."

Ukraine, however, is the big prize, and under President Viktor Yanukovych it, too, seems to be heading towards membership.  Speaking in April Yanukovych said: “Our future relations with the customs union will be based on a possible agreement on three plus one co-operation.”  And in an earlier indication of a willingness to rebuild ties with Russia, last year Ukraine renewed the lease of the Russian Black Sea fleet base in the Crimea and moved to restore production ties between Kiev and Moscow on aircraft and shipbuilding.

Russia is offering significant incentives to Ukraine, with Gazprom Deputy Chief Executive Valery Golubev saying on 7 April that Ukraine could save some $8bn in gas imports by joining the union.  On the other hand, on the same day, EU Trade Commission spokesman John Clancy said that if Ukraine were to join the SEC, the country could not hold talks with the EU on creating a free-trade zone.

The Customs Union came into existence on 1 January 2010, with the removal of all customs borders due on 1 July 2011.  According to Putin, trade between the three countries of the Customs Union increased by 28% last year.