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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Rob Shilling who wrote (1080)1/21/2000 2:03:00 AM
From: CIMA   of 1301
 
Reinventing the CIS: Putin Takes the Helm

Summary

Commonwealth of Independent States (CIS) Executive Committee Chair
Yuri Yarov stated on Jan. 14 that the Jan. 24-25 CIS Moscow summit
"will be a notable event in the life of the Commonwealth." Acting
Russian President Vladimir Putin will redefine the meaning of CIS
membership, in an attempt to make a more functional supra-national
organization. Such action will likely induce Georgia, Azerbaijan
and Uzbekistan to withdraw.

Analysis

Since the formation of the CIS after the 1991 collapse of the
Soviet Union, member states with differing visions of that
organization's purpose have engaged in a continual tug-of-war. This
fractured view of the region's premier supra-national organization
cannot last. At the Jan. 24-25 CIS summit in Moscow, Putin will
change all that.

Up until now, Russia and Belarus have viewed the CIS as a mechanism
to recreate a version of the Soviet Empire. Kyrgyzstan, Armenia and
Tajikistan have valued the CIS as a method to garner Russian
military assistance. Moldova, Kazakstan, Turkmenistan and Ukraine,
forced to affiliate with Russia for economic reasons, have often
seen the CIS as a necessary evil to be endured. Georgia and
Azerbaijan - which were forced into the organization - have
doggedly tried to dilute the CIS's institutions whenever possible
in order to lessen Russian influence. CIS members all have had
different priorities, oftentimes siding against Russia. The
Georgia-Ukraine-Uzbekistan-Armenia-Moldova (GUUAM) group,
specifically formed to counter Russian hegemony, is the most
flagrant example of this.

According to the CIS's packed summit agenda, Putin will hold no
fewer than five sideline meetings. Ukraine and Kyrgyzstan want to
hammer together a free trade agreement. Azerbaijan and Turkmenistan
are interested in petroleum export routes. Armenia and Tajikistan
are concerned with security issues. With only a day-and-a-half to
cover an aggressive 17-point agenda, Putin's sincerity is suspect.
With so much to cover in so little time, the official agenda will
probably not be adhered to at all.

Instead, Putin will use the summit to transform the CIS from a weak
organization filled with near-warring members into a coherent
organization. He will not tolerate member states actively
undermining the CIS or Russia's hegemonic role. States with
aspirations to join NATO or the European Union (EU) will be firmly
reminded that Western alignment is not a sustainable choice for a
CIS member. Putin sees that such double-dealing would erode any
possibility of the CIS being a cohesive organization. Putin wants
to reinvigorate the CIS and ensure that its members are committed
to working with, not against, Russia.

At the summit Putin will force all 11 of Russia's CIS co-members to
determine their future relationships with Russia. Putin knows that
most CIS member states will stay with Russia. Belarusian President
Alexander Lukashenko, although vocal and short-tempered, will
remain Moscow's pet. Kazakstan has nowhere to go except to Russia.
While tiny Kyrgyzstan doesn't feel particularly threatened by
Moscow, it is dependent upon Russia for access to the wider world.
Tajikistan is not prepared to snub Moscow for fear of losing the
Russian military support it needs to counter Islamic militants.
Armenia, despite its desire to strengthen its independence, is
still wholly dependent upon Russia for military support against
Azerbaijan in their conflict over Nagorno-Karabakh. These five
states will willingly keep themselves hitched to the Russian star.

Three other states will likely join with Russia, but will try to
delay this for as long as possible. After Jan. 20 talks among
Turkmenistan, Iran and Azerbaijan collapsed over a trans-Caspian
pipeline, even neutral Turkmenistan will need to look to Russia for
petroleum export routes. Ukraine and Moldova, having failed in
gaining significant EU attention, are now forced to again look
eastward. Thus, Ukraine, Moldova and Turkmenistan will be the
wafflers, not particularly wanting membership in the CIS, but not
having much of a choice.

This leaves three states that will more than likely decide to
withdraw from the CIS: Uzbekistan, Azerbaijan and Georgia.
Uzbekistan still desires to be part of a weak and fragmented CIS.
Once it becomes clear that Putin will demand a functional CIS,
Uzbek President Islam Karimov will drag his country completely out
of the CIS and become Russia's Central Asian spoiler.

In the Caucasus, Putin faces a far more serious challenge.
Azerbaijan and Georgia have held a half-dozen mini-summits and
bilateral meetings in recent weeks with a resurgent Turkey. Topics
ranged from oil-pipelines to the proposed Caucasus Stability Pact
to their quiet support for the Chechens. In Putin's mind, these are
excellent examples of what CIS members should not be doing. Both
Azerbaijan and Georgia feel that the United States will support
them in the face of an angry Russia, yet the United States probably
has no intention of providing any direct military assistance.

The CIS summit will consolidate the organization's membership, with
Georgia, Azerbaijan and Uzbekistan increasingly going their own
way. Depending upon how tightly Putin seeks to rein in the former
Soviet states, these three states would likely withdraw. Such a
withdrawal would deal a diplomatic blow to Russia, but then Putin
will have confirmed that the three are indeed not allies. The
question will then be whether the three who jumped ship should be
considered Russia's enemies. Continuing to support the Chechens
would clearly establish them as enemies. Russia would then no
longer categorize these states as disrespectful neighbors to be
manipulated, but as insolent foes to be crushed.

(c) 2000, Stratfor, Inc. stratfor.com

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