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RIA Novosti
Moscow, February 8.
(Vasily Zubkov, RIA Novosti economic commentator.)

At a recent RIA Novosti press conference, Gleb Pavlovsky, the president of the Effective Policy Foundation, commented that transforming Russia into a global power was an absolute priority for President Vladimir Putin and his successors.

"It will not be easy to achieve this goal," the political scientist said, "because Russia today is a weak regional power with an economy dependent on raw-materials." The Kremlin understands the situation can only be changed through cooperation with neighboring countries; unfortunately, economic and political ties with them have been all but lost over the past 15 years.

Given this situation, a decision was made to establish the Common Economic Space (CES) of the most advanced countries in the CIS: Russia, Belarus, Ukraine and Kazakhstan. The inter-state association has a total population of 220 million and accounts for the lion's share of the total industrial output and foreign trade of the CIS.

Perhaps unsurprisingly, the West has reacted negatively to the project. The United States and Europe do not have a habit of welcoming attempts to improve, under Russia's auspices, the economic and military integration of post-Soviet states. The often repeated claim that Moscow is "creating a new USSR" by establishing the CES misleads people in the West. After all, the communist state was built on ideology and the planned economy.

Russia has made great progress in market reforms since discarding Marxist ideology. The goals Moscow is pursuing are simple. It seeks to use the advantages of cooperation and historical economic ties with neighboring states to the greatest possible extent. Although it may seem to be a paradox, Russia took the European Union as an example, because it is the most advanced form of inter-state integration.

However, if political analysts are more concerned about the future of Russian-Ukrainian relations, then economists and businessmen are asking different questions: Can the CES as a full-fledged international economic organization exist without Ukraine? Will large-scale cooperation projects in aerospace and the military sphere continue? Will Russian business suffer after the change of power in Ukraine?

Many Moscow-based experts saw the first statements from the new Ukrainian authorities about the country's orientation toward the EU and correcting the CES idea as a hint that the project would be discarded. Dr. Mikhail Delyagin, the director of the Institute for Globalization Problems, believes the CES project will gradually be dropped, because the new Ukrainian leadership is more interested in the EU. "It is impossible to integrate simultaneously in two economic spaces, especially if they are so different," the academic says.

In this context, Dr. Pavlovsky's forecast for the CES project's development is interesting. In particular, he does not agree with the view that the CES was largely conceived with a view to Ukraine's indispensable membership. The CES was designed and began to be implemented with due account for the high level of economic ties among the four states. And each of them independently determined the extent of its participation in the project. But given the latest developments in Ukraine, Dr. Pavlovsky believes a serious test lies in store for the CES.

The "orange revolution" and the change of leadership in Ukraine did not pass by painlessly for the Kremlin, and work to correct its mistakes is underway. Dr. Pavlovsky, for instance, is confident that Russia will pay greater attention to ensure that bilateral and multilateral ties are not exploited for pumping resources out of Russia for other countries' projects.

Many analysts agree with Mr. Pavlovsky that the CES will be revised to some extent, but not completely rejected. The project parameters and development rates may be corrected, while some experts believe groups may emerge within the CES that will develop at different speeds.

In a bid to please the West, Kiev may reduce its role in the CES. Then the effect of integration will be lower, but largely for Ukraine alone. The CES may develop in a new, 3+1 format. Viktor Khristenko, Russia's industry and energy minister, is also optimistic about the project's future. "It is an absolutely competitive project, which can be continued without Ukraine's full-fledged participation," he said recently.

These comments are not without sense. The CES is not a short-time project, so it would be premature to give it up as a lost cause. The same is true with regard to bilateral economic relations between Russia and Ukraine. The "orange revolution," like any political crisis, could not but affect bilateral economic ties.

The constant rallies and demonstrations in Ukraine last year did not allow Moscow and Kiev to achieve the planned bilateral trade target of $18 billion. But the $16 billion that was attained (an increase of 41.6% in comparison with 2003) is not so bad either. Kiev is Moscow's third biggest trade partners after Minsk and Berlin.

Therefore, the new Ukrainian leadership has too few reasons to scale down cooperation with Russia. The lack of a clear position in the EU on Ukrainian membership (it will not be admitted to the EU for at least ten years) is a very strong argument for Kiev to maintain integration ties with Russia and the other CES member states.