Putin woos Ukraine with a Russian common market

The fate of a key Kremlin plan to build a post-Soviet common market may hang in the balance this weekend as the voters of Ukraine choose a new president in a cliffhanger election.

Russian President Vladimir Putin has risked international condemnation by making two high-profile forays into Ukraine in the past month to all but openly campaign for pro-Moscow prime minister Viktor Yanukovich. Mr. Putin hints at dire economic consequences if the pro-European Union and NATO-leaning liberal Viktor Yushchenko should be elected.

On the other hand, many critics fear a victory for Mr. Yanukovich would end Ukraine's fragile post-Soviet independence and chain it to an increasingly authoritarian and imperial Russia.

The stakes are high for Putin, who has described the four-nation Common Economic Space (CES) free-trade agreement, slated to be signed next spring, as vital to his plans for modernizing Russia's economy and doubling its gross domestic product within a decade. Some Russian experts suggest the new union, to be headquartered in Kiev, might even evolve into a Eurasia alternative to the EU.

Though the post-Soviet states of Belarus and Kazakhstan are firmly on board, the scheme probably cannot be realized without Ukraine, after Russia the most important component of the former USSR's industrial complex and its agricultural breadbasket. "We would like to restore what was lost with the Soviet Union's disintegration," Putin told a meeting of post-Soviet leaders last June. "We must steer toward integration ... concerted action is the only way to survive in conditions of [global] competition."

After a decade of benign neglect toward its ex-Soviet neighbors, Moscow has grown much more attentive. Russia must create an alternative to the expanding European Union, or may itself be doomed to become little more than a giant raw materials warehouse for the workshops of Europe, China, and Japan, says Ruslan Grinberg, director of the independent Institute of International and Political Studies in Moscow.

"This is the integration of last hope," for Russia, he says. "Our economy is growing, but not developing. We need modernization and technological breakthrough. This can only be done if Ukraine and Russia unite their efforts."

While the Kremlin's interest in integration is chiefly economic, the core objections in Kiev tend to be political. Ukrainian experts worry that, in a country where almost half the population describes Russian as their "first language," Yanukovich's plan to give Russian official status will end all hope of creating an independent, Ukrainian-speaking national culture. After more than 300 years as part of Russia and the USSR, Ukraine needs to move vigorously westward, or risk being swallowed up again, they say.

Others fear that Ukraine's sharply-contested presidential election, for all its flaws, could be democracy's swan song if the country moves back into the shadow of its eastern neighbors. Russia under Putin has grown increasingly authoritarian, while Belarus and Kazakhstan are ruled by virtual presidents-for-life.

"With Yushchenko, we will have a chance for democracy and independence; with Yanukovich it's Russia's embrace and probable dictatorship," says Oleksandr Shuhko, director of the independent Center for Peace, Conversion, and Foreign Policy in Kiev. "For the first, and possibly the last time, Ukrainians have a real, clearly-defined choice."

The nation of 48 million split in the Oct. 31 first round of the election, giving each candidate about 40 percent of the vote, with a slight edge for Mr. Yushchenko. Clashing in a televised debate this week, both acknowledged the stakes in Sunday's final round. "This is not a conflict between two Viktors, but a struggle between two world views, two moral systems," said Yushchenko.

Russian experts argue that the CES project, which would begin as a free-trade zone but could develop into a full currency and customs union, has powerful economic logic behind it. Much of Ukraine's Soviet-era industry can find markets only in Russia, while the country remains dependent on generously subsidized Russian oil and gas. Some 3 million Ukrainians, unable to find work at home, live in Russia. Putin, visiting Kiev last month, pledged to reduce travel restrictions between the two countries.

"Ukraine needs the CES, and if Yushchenko becomes president the whole idea will be threatened," says Kirril Frolov, an expert with the official Institute of the Commonwealth of Independent States in Moscow. "Only this market will permit the Ukrainian economy to survive."

But some say the Moscow-friendly option will only isolate Ukraine from the global economy and make it dependent on cheap Russian energy. Yushchenko calls for tough market reforms to prepare Ukraine for eventual entry into the EU.

"In the past two years, the EU has moved right up to our borders, and it has become obvious that Europe is the economic space we should want to join," says Volodimyr Gorbach, an expert with the independent Institute of Euro-Atlantic Cooperation in Kiev. "But that represents the hard path of reform. Taking Russia's subsidies looks like the easy way."