Archive for December 20th, 2013

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Putin’s Ukrainian “solution” – What of the Customs Union now?

December 20, 2013

A few weeks ago I wrote about a very possible cause for Mr. Putin’s Customs Union and soon to be launched Eurasian Union unraveling before it even takes off – “Despite many “experts” and “commentators” stating that without Ukraine it is nothing but a hollow shell, it is perhaps Kazakhstan and not Ukraine that will be the undoing of Mr Putin’s Eurasian political legacy before it even officially gets going. It is no secret that the Kazakhs are very unhappy with the existing Customs Union and will need a great deal of convincing to continue onwards with the new Eurasian Union. Perversely the threat of it unraveling comes not from an unwilling Ukraine, but from within its existing ranks.”

Well, perhaps that threat should now include the other nation in the Customs Union trio – Belarus.

It is no secret that the Belorussian President, Alexandre Lukashenko, has mismanaged his economy for decades to such an extent that it is in a far worse position to that of Ukraine – whom Mr. Putin so graciously bailed out a few days ago to the tune of $15 billion from the Russian National Welfare Fund, together with reducing gas prices by 33% – worth approximately $7 billion per annum until 2019.

However, in several recent visits, President Lukashenko has been told by the Kremlin the cupboard is bare and there is no further money to give to bail him out, despite Belarus being a dear ally and partner – and the Russian cupboard whilst not entirely bare is certainly very close to it, and the Russian economy has stalled.

The result for Mr. Putin will be one of two things.

Firstly, a very upset President Lukashenko sitting along side a very annoyed President Nazarbayev of Kazakhstan who has not seen the benefits of the Custom Union he expected to see.

When President Lukashenko comes again for more assistance, if Mr. Putin refuses to bail out Belarus from the Russian Welfar Fund as well – with everybody now aware that the the Kremlin is prepared to slash prices, lower levies and throw up to $15 billion at a struggling economy – and by extension nation – it wants to control, and that is not even a member of the Customs Union, well surely keeping a member within the fold demands equal financial assistance from a Lukashenko perspective.

In the wake of the Ukrainian “solution”, it is a certainty that the Belorussian regime will be quickly knocking on the Kremlin door with begging bowl in hand and realpolitik in mind.

Alternatively, Mr. Putin can say “No”, but in the current circumstances and with an already very annoyed Kazakh partner, a very upset Belorussian partner may very well spell a crisis for the Customs Union and snuff out any chance of the Eurasian Union ever seeing the light of day when signatories are required in 2015.

With its usual perversity, the regional geopolitics of the region – and the Putin “solution” for Ukraine – may yet be the end of his dream with regard a regional political legacy – as well as relieving  immediate concerns with an exposed EU regarding immediate Ukrainian default.

Pandora’s Box – or rather the Russian Welfare Fund – may just have been opened with no way to close it again whilst sustaining Mr Putin’s vision.  Ukraine may well prove to be its downfall – though we have to suspect that assurances have been made by President Yanukovych that upon reelection, the Eurasian Union will be the favoured direction.

The Kremlin and Mr Yanukovych must therefore hope that the necessary election fraud to keep him in power will be within the parameters of plausible election result manipulation.

In the meantime the EU and those in favour of a definite and binding European integration (not necessarily the same thing as joining the EU) must remember that time – via demographics – are on their side as the USSR become little more than a chapter in Ukrainian history books for those increasing number of voters born to an independent Ukraine.

Keeping the domestic and international pressure on the current leadership via the framing of issues through democratic, transparent good governance is the only durable and intelligent way to win the day – whether agreements are ever signed or not!

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