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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: CIMA who wrote (957)4/1/1999 11:43:00 PM
From: CIMA  Read Replies (1) of 1301
 
CIS to Meet Under Shadow of Kosovo Crisis

Summary:

Leaders of the Commonwealth of Independent States will meet on
April 2 to address an official agenda of trade and anti-crime
agreements. However, the Kosovo crisis will overshadow this
meeting, the first for the CIS in the post-post-Cold War era.

Analysis:

Amidst increasing tensions with NATO over Kosovo, the heads of
the Commonwealth of Independent States, the successor to the
Soviet Union, will be meeting on Friday, April 2. The immediate
issue on the agenda will be changes to the agreement on free
trade among the members states, which was signed on April 15,
1994. Agreement on this and other issues like anti-crime
measures appear to have been worked out before the meeting. Not
worked out, but high on the agenda will be discussions about the
extension of the CIS' collective security agreement. Three CIS
countries -- Azerbaijan, Georgia, and Uzbekistan -- have already
stated their opposition to extending the collective security
agreement.

The effect that the Kosovo crisis will have on the meeting is
unclear. Russia and Belarus have taken extreme positions on the
crisis. On one hand, many of the other CIS countries do not want
to be drawn into a confrontation with NATO. On the other hand,
given the mood in Russia, most CIS members do not want to get
drawn into a confrontation with Russia. With Russia framing the
Serbian question as a direct challenge to fundamental Russian
national interests, it follows that nations taking an independent
line might be viewed as themselves challenging the Russian
interest. Thus, Uzbek President Islam Karimov, who had
previously made it clear that he intended to take Uzbekistan out
of the collective security agreement, said today that, "All
Commonwealth countries must be equally interested in the
collective security treaty. This treaty should be grounded to
meet the specific conditions, it must not be unilateral. We
reserve the right to prolong the collective security treaty
between members of the Commonwealth of Independent States on
condition that it resolves all current problems." While far from
a ringing endorsement, it is not quite the same as saying that
Uzbekistan is pulling out.

There is an additional sidelight to the meeting. The current
executive secretary of the CIS is Boris Berezovsky, one of the
wealthiest men in Russia and one of the leaders and beneficiaries
of the reform movement in Russia. According to a report by TASS
news agency, Berezovsky, who is likely to be ousted from his post
at this meeting, told NTV in Russia that "he might be handcuffed
at the end of the meeting." This is not, apparently,
metaphorical. Berezovsky is under investigation for various
financial crimes and his offices were raided earlier this year.
The Speaker of the Duma, Gennady Seleznyov said two weeks ago
that "Berezovsky's days are numbered and very soon his arrest
warrant will be signed." Berezovsky is claiming that his arrest
will be politically motivated rather than as a result of criminal
activities.

Whatever his fate, the CIS meeting is the first one that takes
place in the post-post-Cold War world. With Russian ships
sailing into the Mediterranean and the Northern Fleet test-firing
missiles, geopolitical questions that previously could be left
open must now be settled. The precise relationship between
Russia and Ukraine and the management of security both in the
Black Sea and on Ukraine's western frontiers are now pressing
issues. With the Baltic becoming a more active zone, the status
Kaliningrad and access to it via Lithuania become critical, as
does the relationship of the Baltic states themselves to Russian
security concerns. Indeed the never-ending conflicts in the
Caucasus, the "Balkans" of southern Russia, also become critical
to Russian security.

The CIS meeting will be an opportunity for the Russians to put
forward a more assertive and traditional face. Not only is it an
opportunity to deal with a symbol of the Russian Kleptocracy --
one with close ties to Western financial circles -- but it is
also an opportunity for the Russians to define the limits of
freedom of maneuver for the other members of the CIS. Many
nations have freely ignored Russian security concerns over the
last few years, not so much because of their own strength as
because of Russian indifference and Russian deference to the
West. In the current confrontation, both the indifference and
the deference are slipping away.

We expect this to be an important meeting psychologically. Less
than for substance than for atmosphere, the meeting will reveal a
new Russia to the old members of the Soviet Union. This is part
of the process we have been tracking for a while. A major test:
will the Russians be able to force a unanimous vote condemning
NATO's air strikes? What will Russia do with those who won't go
along?

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