Ukraine's Cabinet unanimously rejects plan for "common economic space" (09/14/03)

Ukraine's Cabinet unanimously rejects plan for "common economic space"

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine's Cabinet of Ministers on September 10 unanimously rejected a draft agreement for a "common economic space" - which could bring Ukraine into eventual economic union with three other countries, including Russia - and sent it for an article-by-article analysis.

The move came after several ministers questioned the constitutionality of the country entering into such a treaty. The decision made it very unlikely that a signing ceremony would take place on September 18-19 in Yalta during the annual Commonwealth of Independent States meeting, as President Leonid Kuchma had hoped, and put the entire project into doubt.

During a fiery two-hour session, three ministers - Minister of the Economy and European Integration Valerii Khoroshkovskyi, newly appointed Foreign Affairs Minister Kostyantyn Gryshchenko and Minister of Justice Oleksander Lavrynovych - identified problems in the draft and at least one major inconsistency between the agreement and the Constitution of Ukraine, which forbids any supranational body to be able to impose its rule over the country.

"There are several issues in the draft that do not conform to Ukrainian legislation and articles of the Constitution," explained Mr. Lavrynovych. "We need to analyze this item by item."

Prime Minister Viktor Yanukovych directed the three ministers to prepare an analysis and proposals for putting the draft agreement in compliance with Ukrainian law, which they are to do within a week.

Foreign Affairs Minister Gryshchenko said that one of the goals of the review was to try to get the agreement back on track by the summit date.

President Kuchma initiated the idea for a common economic space in conjunction with Russian President Vladimir Putin in February, when the Ukrainian president became chairman of the CIS, becoming the first non-Russian leader to head the loosely organized and all but dormant organization of 12 former Soviet republics.

Mr. Kuchma, whose main objective almost since he became president has been to develop a free trade zone with Russia to open that huge country's markets to Ukrainian goods, said after the unexpected move that, if there is to be no signing of the general agreement, at least there could be a signing of the free trade zone agreement while the rest of the articles were worked out.

The document, to which the Russian government gave preliminary approval on September 8, envisages a series of economic agreements among Ukraine, Russia, Belarus and Kazakstan, that would at first result in a free trade zone among the countries and eventually could lead to a single currency. The document clearly states that each country could move toward closer economic cooperation as it saw fit, similar to the agreement among the members of the European Union. However, it also states that if three of four members agreed to new stipulations, the fourth party would become bound as well.

The proposal has been the subject of numerous criticisms, including suggestions that it compromises Ukraine's expressed intention for Euro-Atlantic integration, its effort to join the World Trade Organization and even its sovereignty and independence.

While opposition leaders, such as Our Ukraine's Viktor Yushchenko, have expressed their disdain for the common economic space because it brings Ukraine back into a relationship with Moscow and is not in Ukraine's national interest, extensive disagreements over the ramifications of such an agreement have taken place even within the ostensibly pro-Moscow government of Prime Minister Yanukovych.

The bickering over the details of the agreement went public when Minister Khoroshkovskyi stated on September 5 during a press conference that if Ukraine were to enter into the economic union as it looks today it would lose its economic independence. He added that, at the very least, it would bar the country from entering either the WTO or the European Union because no country can became part of either organization if it is in a customs union with countries that are not members of either one.

"The agreement regarding the common economic space project needs fundamental changes," said Mr. Khoroshkovskyi.

First Vice Prime Minister Mykola Azarov, a main proponent of the economic union, responded in the press by criticizing the 33-year-old economic ministers lack of political discipline in putting forth a conflicting government voice. He voiced disagreement with the notion that the agreement would create a customs union and a supranational agency to oversee it.

The first vice prime minister said that the document would merely establish "a joint interstate regulating agency for tariffs and trade relations." He also noted that the economic union would be created in a step-by-step approach, which meant that Ukraine would take on no responsibility for becoming part of a customs union, if the other countries did, in fact, move in that direction.

"We have guaranteed in principle as a key provision that we will harmonize our laws with regard to international treaties and the EU," explained Mr. Azarov while in Moscow on September 3, according to Interfax-Ukraine.

Nonetheless, the Ukrainian Parliament's Committee on European Integration passed a recommendation on September 10 in which it called on President Kuchma not to sign the current agreement as written.

"The draft agreement contradicts the course towards European integration as called for by the president of Ukraine ... and supported by the Verkhovna Rada, the end result of which is to be membership for Ukraine in the European Union, and the agreement on partnership and cooperation between Ukraine and the European community," the document noted.

"In addition, the signing of the draft agreement would suspend the process of entry by our country into the WTO, inasmuch as it would demand a review of the conditions of entry into its markets," the document further stated.

Even a presidential advisor questioned whether Ukraine could remain an equal partner in a common economic space with three non-EU countries and still obtain EU membership.

The director of the National Strategic Research Institute, Anatolii Halchynskyi, who advises the president on foreign affairs matters, told Interfax that Ukraine could only go as far as a free trade zone - otherwise it would risk exclusion from European economic structures.

"The free trade zone is the maximum level of integration with other countries, at which Ukraine retains the prospect for EU membership in keeping with article 49 of the agreement on the EU. This is an unshakable norm of the European Union," explained Mr. Halchynskyi.

Meanwhile, a spokesman for the EU, speaking in a broadcast of the Ukrainian service of Germany's Deutsche Welle radio, said that whether or not Ukraine enters into a customs union with Russia the EU's relationship with Kyiv will not change.

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