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Russia: Analysis from Washington - The Political Ends of Russian Economic Advice

Washington, 13 April 1998 (RFE/RL) -- Even as Moscow applies economic pressure to Latvia, Russian officials are once again seeking to use economic arguments to promote Moscow's political influence over the members of the Commonwealth of Independent States.

Last week, a spokesman for the Russian ministry for relations with the CIS countries suggested that reversing the decline in trade turnover among these countries was the key to restarting economic growth in all of them.

Deputy Ministry Marat Khasmutdinov noted that overall trade turnover among the CIS countries was down another 10 percent in 1997. He said that such trade now amounted to only six percent of the total CIS GDP, down from 21 percent in 1992. Only by increasing trade, he concluded, could these countries escape their current economic slump.

Such arguments are superficially plausible: After all, an expansion in foreign trade has often helped power economic growth. But there are three reasons that the countries involved are unlikely to take such arguments seriously, even if Western commentators do find them attractive.

First, the decline in trade turnover among the former Soviet republics that make up the CIS today is not the primary cause of their economic distress. And reversing it would not necessarily be the primary cause of their recovery. Indeed, such a change might impede further economic reform.

It is certainly the case that dislocations in trade following the collapse of the USSR had an impact on the economic situation of the 12 CIS member states. When the Soviet Union fell apart, enterprises and ministries on the territory of each of the 12 countries suddenly had to seek new partners to obtain raw materials and spare parts and new markets to sell their own products.

But whatever impact that process had on their economic growth, three other factors had considerably more: the shift toward a free market in many of these countries, the collapse of political authority, and the impact uncertainty about both these processes had on investment both foreign and domestic.

Second, the CIS itself has little prospect of becoming the most relevant trade organization for most of the countries that are currently its members.

On the one hand, most have more natural trade partners beyond its borders. Moscow managed the Soviet economy in such a way to promote the integration of its empire into a single state, cutting off the republics from most foreign trade and creating chains of economic activity that could only be described as irrational.

In many cases, individual republics could have made far more by selling their products abroad than they did by providing them to Moscow. And few of them could have seen arrangements in which each republic was so highly specialized and so dependent on Moscow for establishing prices that it could not conceivably go their own ways.

And on the other, the CIS is increasingly a Russian claim than a genuine reality. Since its creation in December 1991, the CIS has adopted some 800 agreements. But very few of these have been approved by all the members or implemented even when they are approved.

As a result, and whatever the advocates of the CIS say in its defense, the CIS is simply not a the most important actor in either the economic or political lives of its member states. Indeed, an increasing number of the leaders of these countries have indicated that they remain members only because of the likelihood of a sharp Russian reaction should they leave.

And third, this argument obscures the fundamental difference between economic integration and economic reintegration.

As the Soviet Union moved toward its end, USSR President Mikhail Gorbachev and his supporters routinely pointed to developments in the European Union and argued that integration rather than disintegration was the order of the day.

Russian officials are again repeating these arguments, but they are unlikely to impress many because such claims represent a confusion between integration and reintegration. The first is a natural process reflecting both individual national interests and a level of self-confidence that would allow countries to yield some of their sovereignty for other gains.

Reintegration, in contrast, is something else. Even before all the member countries of the CIS can feel themselves confident about their status, some in Moscow are advocating that they yield some of the sovereignty that they have not yet been able to completely secure in the name of economic interests.

But the reactions of the non-Russian countries to such proposals in the past suggest that most of these countries will view these arguments for what they almost certainly are: a political program to expand Moscow's influence rather than a genuinely economic one intended to benefit them all.