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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Real Man who wrote (1035)6/8/1999 12:22:00 AM
From: CIMA  Read Replies (1) of 1301
 
CIS Patches Rift and Remains Intact -- For Now

Summary:

More problems emerged for the Commonwealth of Independent States
(CIS) at a June 4 meeting of CIS foreign ministers in Minsk,
Belarus. The ministers only escaped deadlock regarding the
establishment of a CIS free trade zone and the restructuring of
CIS decision-making bodies by forwarding the issues to the CIS
Council of Heads of Government. As with the recent conflict over
the CIS's Collective Security Treaty, this month's dispute pits
the pro-Western countries of the GUUAM alliance against Russian
leadership in the CIS. Divided over military, economic, and
political issues, it is unclear how much longer the CIS can
continue to limp along.

Analysis:

A June 4 meeting in Minsk, Belarus, of Commonwealth of
Independent States (CIS) foreign ministers, deadlocked over
proposed changes in the CIS decision-making bodies and on a CIS
free trade zone. Lining up against the measures were the "GUUAM"
group of countries -- Georgia, Uzbekistan, Ukraine, Azerbaijan,
and Moldova -- which have already opted out of the CIS Collective
Security Treaty in favor of establishing closer ties with NATO.
Scrambling to work out a solution were the Russian and Belarusian
prime ministers and foreign ministers. In the end, the CIS
foreign ministers dealt with the most recent dispute by passing
draft resolutions on these issues to the CIS Council of Heads of
Government -- essentially deferring the conflict to a later date
and higher level. While temporarily patched over, the rift in
the CIS now encompasses not only military but also fundamental
economic and political issues, raising the question of whether
and how long the current CIS grouping can continue to limp along.

The primary agenda of the meeting of CIS foreign ministers in
Minsk was the implementation of political decisions regarding the
restructuring of the CIS, which were adopted at the meeting of
CIS Council of Heads of State on April 2, 1999. The measures,
which were to have been endorsed at the meeting, included the
establishment by January 1, 2000, of a CIS free trade zone and
the formal administrative bodies to secure its smooth operation.
In addition, the 12 foreign ministers were to have discussed the
draft resolutions to establish an Executive Committee, an
Economic Council, and a Council of Permanent Authorized
Representatives within the CIS. Significant details, such as the
distribution of seats in these CIS agencies and modifications to
these resolutions proposed by some CIS members, were also on the
meeting's agenda. The meeting of the CIS foreign ministers was
to be followed, also in Minsk, by an afternoon meeting of the CIS
prime ministers.

Although there had been previous indications of discord among the
CIS states regarding economic integration, the complete failure
of the CIS foreign ministers to reach agreement on the draft
resolutions came as a surprise. Given the fact that several
states were unable to submit their recommendations and comments
on the basic draft documents, Russian Foreign Minister Igor
Ivanov then proposed that the regulations be implemented as a
temporary measure. Only six states, however, supported Russia's
proposal and six other CIS members opposed it. Because the
participants neither reached a compromise on restructuring the
CIS nor were they able to reach a consensus on the guidelines for
establishing a free trade zone, the draft documents were
forwarded to the meeting of the prime ministers of the CIS to be
held later that day.

Following the failed CIS foreign ministers' meeting, Belarussian
President Alexander Lukashenko charged that some participants
"literally block[ed] decisions on setting up a free trade zone."
Lukashenko also claimed that the prime ministers, who hindered
the implementation of the free trade zone, were acting in a
fashion that was not only shocking but also inconsistent with the
political will of and directives given by the leaders of the CIS.
Lukashenko's accusations clearly targeted the GUUAM alliance
foreign ministers.

On June 5, ITAR-TASS reported that a "delicate compromise" had
been reached at the meeting of CIS prime ministers. Thanks to
the efforts of the Belarusian and Russian delegations, the prime
ministers agreed, with one abstention, to pass draft resolutions
to the CIS Council of Heads of Government -- effectively
deferring confrontation over the free trade zone and the new
structure of the CIS to a later date and higher level. At the
same time, the GUUAM grouping of CIS countries managed to achieve
certain modifications in the structure of CIS agencies.
Significantly, the number of deputies in the Executive Secretary
was raised from six to twelve -- one representing every state in
the CIS. This change, which is designed to foster further
decentralization in decision-making, was advocated by the prime
minister of Uzbekistan, a country associated with GUUAM. Whether
this decentralization will increase or decrease the rift within
the CIS is not yet clear.

What is clear is that the CIS's division has spread from security
issues to economic and political issues. When Georgia, Ukraine,
Azerbaijan, and Moldova began their informal alliance, they
insisted that it was focused only on expanding trade, and did not
and would not have a military component. When the group expanded
to admit Uzbekistan and signed agreements on defense and security
cooperation -- alongside ceremonies commemorating the 50th
anniversary of NATO in Washington DC -- GUUAM members again
insisted that the organization was not incompatible with the CIS.
Shortly thereafter, those GUUAM members who has been part of the
CIS Collective Security Treaty opted out of the renewed Treaty,
preferring to develop relations within GUUAM and with NATO. Now
GUUAM members have balked at CIA economic and political
agreements being championed by the newly federated Russia and
Belarus.

Thanks in part to a compromise that further decentralized CIS
decision making, the CIS did not collapse last week in Minsk.
However institutional compromises are limited in their capacity
to bind together an organization increasingly divided on all
issues into pro-Russian and pro-Western blocs. The CIS was
intended to maintain a degree of unity and cooperation among new
countries that, while technically independent, remained
economically, politically, and militarily incomplete as
individual states. But CIS members have had time to deal with
their individual loose ends, and a decade after the collapse of
the Soviet Union, its successor organization appears ready to
dissolve as well.

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