Sunday, July 5, 2009

Russia Reconsiders WTO Accession at National Level; Favors Customs Union Approach Instead

CIS remains key priority of Russia, says Putin

China's People Daily Online


June 29, 2009

Countries of the Commonwealth of Independent States (CIS) are pivotal political and economic priority of Russia, said Russian Prime Minister Vladimir Putin on Sunday.

"Cooperation is profound. We have common transportation and energy networks and speak Russian," Putin was quoted by the Itar-Tass news agency as telling leaders of political groups in Russia's State Duma, the lower house of parliament.

The CIS, an alliance of 11 former Soviet Republics, groups Russia, Belarus, Kazakhstan, Kyrgyzstan, Azerbaijan, Armenia, Moldova, Tajikistan, Uzbekistan, Ukraine and Turkmenistan. Georgia withdrew from the bloc due to the South Ossetia conflict last year.

Putin also said that entering the World Trade Organization (WTO) remains on Russia's agenda, but "the customs union of Belarus and Kazakhstan has come to the forefront."

Russia, Belarus and Kazakhstan agreed on June 9 to start new talks on WTO accession as a single customs union, and thus suspend individual talks.

Russia, which has been seeking WTO membership for more than 15 years, is the largest economy remaining outside the global trade watchdog.

Putin also recalled the recent Yekaterinburg summits of the Shanghai Cooperation Organization (SCO) and BRICs (Brazil, Russia, India and China).

"We will build up cooperation in these formats," he said.


Georgia's parliament formally puts end to CIS membership

Yhiah News Agency

RIA Novosti

June 12, 2009

The parliament of Georgia unanimously passed on Friday decrees on the formal withdrawal of the former Soviet republic from the Commonwealth of Independent States (CIS), RIA Novosti reported.

Georgia notified the CIS executive committee of its desire to quit the Russian-dominated organization on August 18, 2008. The move came after a five-day war with Russia over the Georgian breakaway republic of South Ossetia.

"Georgia has already withdrawn from the organization... Therefore, today we are wrapping up this process by the proper decree formally and legally," parliament Speaker David Bakradze said after the first parliamentary session in two months amid mass opposition protests in Tbilisi.

The CIS currently comprises Russia, Georgia, Belarus, Kazakhstan, Kyrgyzstan, Azerbaijan, Armenia, Moldova, Tajikistan and Uzbekistan. Ukraine is a founding and participating country but technically not a member state. Turkmenistan holds associate status.

Following a CIS foreign ministers` meeting in Kyrgyzstan last October, Russian Foreign Minister Sergei Lavrov said Georgia`s withdrawal would change nothing and Tbilisi`s participation in the post-Soviet alliance had been malign in recent years.


Analysis: Implications of Georgia leaving C.I.S.


United Press International (UPI).com

June 9, 2009

WASHINGTON, June 9 (UPI) -- Georgia hopes to continue its free-trade arrangements with members of the Commonwealth of Independent States after its withdrawal from the organization takes place on Aug. 18. Given the aftereffects of its ill-advised five-day military clash with Russia last August, that may prove to be a forlorn hope, as the confrontation reminded the other Caucasian former Soviet republics of Azerbaijan and Armenia that Moscow is determined to protect what Russian President Dmitry Medvedev has labeled its "privileged interests" in the former Soviet space.

Georgian President Mikheil Saakashvili's determined attempts to bring his country into NATO have increasingly soured relations between Washington, Brussels and Moscow for the last several years, as the Kremlin has repeatedly stated that neither Georgia nor Ukraine should be admitted to the alliance. Heightening Moscow's fears of being outflanked in the Caucasus, from May 21 to June 1 NATO staged its Cooperative Lancer 2009 exercise at Georgia's Vaziani military base, with about 700 soldiers from 13 NATO member nations participating alongside Georgian troops.

The West can hardly feign disinterest, as the crown jewel of Western efforts to bring Caspian oil westwards for export, the $3.6 billion, 1,092-mile, 1 million-barrel-per-day Baku-Tbilisi-Ceyhan pipeline, opened in May 2006, carries Azeri crude from Azerbaijan's Caspian offshore Azeri-Chirag-Guneshli fields to Turkey's deepwater Mediterranean terminus at Ceyhan, crosses 155 miles of Georgian territory and contains two of the line's eight pumping stations.

On June 8 Interfax news agency reported that Georgia's Economic Development Ministry's Department for Foreign Trade Policy head Marina Machavariani told reporters that Georgia hoped that its current free-trade arrangements with C.I.S. member states would remain intact following Georgia's withdrawal from commonwealth. Attempting to soften the prospect of significant damage in its relationships with the C.I.S. after that date, Machavariani observed that there are international regulations allowing use of mechanisms of free movement of goods between Georgia and certain countries, commenting, "To date, Georgia has already signed bilateral free trade agreements with eight C.I.S. countries. With Azerbaijan and Ukraine, which are GUAM (Georgia, Ukraine, Azerbaijan, Moldova) member states, Georgia also has free economic zone agreements." Machavariani concluded by noting that the GUAM nations account for up to 65 percent of all Georgian exports.

What Machavariani's optimism glosses over is that Ukraine has significant issues with Russia that dwarf its commitments to Georgia. Kiev suffered a brief "gas pipeline" war with Moscow in early January, which forced Ukrainian President Viktor Yushchenko's government into a humiliating climb-down on pricing.

Another prickly issue irritating Russian-Ukrainian relations is the status of Sevastopol, the finest natural harbor on the northern shore of the Black Sea and currently jointly shared by both the Ukrainian navy and Russia's Black Sea Fleet. Last but not least, Yushchenko's government is embroiled in a bitter fight for political survival, with some recent political polls giving Yushchenko a dismal 5 percent approval rating. In sum, the above issues hardly incline Ukraine further to antagonize Russia by broadening its contacts with Georgia following its withdrawal from the C.I.S., an organization in which Ukraine remains a member.

Azerbaijan also has less than perfect relations with Tbilisi, despite being conjoined by the BTC oil umbilical cord. The Russian-Georgian military confrontation inflicted significant fiscal "collateral damage" on Azeri oil exports, as all its westward export routes were closed.

On Aug. 5, 2008, two days before the outbreak of hostilities between Georgia and Russia, there was an as yet unexplained explosion on the BTC segment at Yurtbasi village in eastern Turkey. The cause of the explosion remains unclear, although Ankara initially suspected that it might have been a terrorist attack by the Kurdish separatist Partiya Karkeren Kurdistan, or Kurdistan Workers' Party. BTC operator BP declared force majeure, and the pipeline only resumed operations on Aug. 25.

Seeking an alternative route, BP switched to the recently reopened 550-mile, 140,000-bpd Western Route Export Pipeline, better known as the Baku-Supsa line, which opened in 1999 and was running at about 90,000 bpd. Because of the worsening military conflict, on Aug. 12 BP announced that it was suspending shipments through Baku-Supsa, as well as the South Caucasus Pipeline, which transports natural gas from Baku to Turkey via Tbilisi. Completing the lock-in of Azeri oil exports, the fighting caused authorities to suspend seaborne shipments from Georgia's Black Sea ports of Batumi (200,000 bpd) and Poti (100,000 bpd), both supplied by rail. Poti was closed Aug. 8 following reported Russian airstrikes. Adding to the grim picture, authorities also ceased exports from Kulevi, Georgia's third Black Sea oil terminus, which opened in 2007 and is capable of shipping 200,000 bpd.

For Azerbaijan the conflict was an unmitigated financial disaster, as the country's oil sector receipts account for almost half of all government revenues, with oil exports generating around 90 percent of total export revenues. Between the BTC explosion and the military clash, Azerbaijan had been blocked from shipping approximately 17 million barrels of crude, while the U.S. Department of Energy estimated that Azerbaijan's final cost for the lost shipments surpassed $1 billion.

Georgia suffered lost revenue from the confrontation as well: In 2007 BTC fees generated $25.4 million in transit revenues, and before hostilities erupted Saakashvili's government had estimated BTC transit payments for 2008 at about $45 million.

For the remaining members of the C.I.S. then, the choices are stark -- continue relations with Georgia after Aug. 18 as before, thereby tacitly approving Tbilisi's confrontational posture vis-a-vis Moscow and risking Russia's wrath, or pay heed to Medvedev's "privileged interests" in the Caucasus. While little is clear in that part of the world, last year's military clash has given former Soviet states significant food for thought about what happens to former Soviet republics that ignore Moscow's concerns and stray too far westwards. Accordingly, it would seem unlikely that C.I.S. nations are likely to follow Saakashvili's lead or conduct "business as usual," unless Tbilisi somehow repairs its unraveled relationship with the Kremlin first.

No comments:

Post a Comment