Yanukovych was in Sochi for talks with Fradkov about the price Ukraine will pay for Russian gas. On August 16, Yanukovych announced that both sides agreed to keep the current gas price for Ukraine until the end of 2006.
Eurasec was created in 2001 to further the economic integration of former Soviet republics. The organization is seen by the Kremlin as a way to restore its political and economic clout, not only over Central Asia but in the European part of the former Soviet Union. It comprises Russia, Belarus, Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan.
Although Russia has made some gains in Central Asia, with the help of its ally Kazakhstan, it has had little success westward. Its only ally to the west, Belarus, cannot play the role of middleman with the European Union because of the isolated regime of Belarusian President Alyaksandr Lukashenka.
In terms of influence to the west, Ukraine is the key. In 2003, the Kremlin advanced the idea of the Single Economic Space (SES), an idea supported also by Belarus and Kazakhstan.
The weak and corrupt administration of Ukrainian President Leonid Kuchma signed the SES accord, but Ukrainian interest waned after Kyiv shifted its foreign-policy orientation to the West after the country's 2004 Orange Revolution.
Thus, with a new pro-Moscow Ukrainian prime minister, Moscow put its cards on the table. Konstantin Zatulin, a Duma deputy and director of the Institute for CIS Studies, said that "Despite the impression that the energy issue dominated, the topic of Ukraine's integration should not be forgotten," regnum.ru reported on August 16.
Central Asia's Water Problem
Another important issue on the Eurasec summit agenda was the creation of a Eurasian hydro-energy consortium.
Eurasec is one of the few mechanisms with which Moscow attempts to ward off Chinese and U.S. influence in the region. And the creation of a hydro-energy consortium under Russian leadership is an ideal tool.
Water is a potentially explosive issue in Central Asia. Uzbekistan and Kazakhstan are the region's main fresh-water consumers, while up to 80 percent of the region's water resources belong to Kyrgyzstan and Tajikistan. To avoid conflicts over water, Russia has suggested creating a supranational hydro-energy consortium that will regulate the use of water resources and intervene if conflicts arise.
Russia, with 24 percent of the world's fresh-water resources, can use water as a political lever, just as it has already done with oil and gas. Moreover, the choice of water as a weapon gives Russia the edge over China, which itself suffers from an acute fresh-water deficit.
Because of the sensitivity of this issue, it was discussed behind closed doors. The leaders were briefed about the project but no details were made public.
Also under discussion was the creation of a joint customs union, which would eliminate border duties between member countries. It was decided that Russia, Kazakhstan, and Belarus would be the first members of the union, providing their parliaments approved. The other Eurasec states will join the process later.
Since Moscow failed to get Washington's consent to join the World Trade Organization (WTO) at the July Group of Eight (G8) summit in St. Petersburg, the Kremlin has pushed for the creation of a customs union. Among Eurasec states, only Kyrgyzstan is a member of the WTO, with Russia, Kazakhstan, and Ukraine on the verge of joining.
With WTO membership delayed probably until the end of 2007, Russia is pushing to become a big regional economic player. The customs union -- which could be a prototype for an all-ruble zone -- is just one way of doing this.
An Increasingly Thirsty World
An Iraqi boy drinks from a waste-water reservoir near Baghdad (epa file photo)
A MATTER OF LIFE AND DEATH. Disputes about access to water are increasingly coming to the center of global attention, especially in China, India, and Central Asia. Writing about the 1967 Six Day War in his 2001 memoirs, Israeli Prime Minister Ariel Sharon said that "while border disputes between Syria and ourselves were of great significance, the matter of water diversion was a stark issue of life and death." (more)