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WHY RUSSIA CREDITS ITS NEIGHBORING COUNTRIES
YURI PANASIK,
Expert of the Eurasia Heritage Foundation, Moscow
The world financial crisis is a real challenge not only for Russia but also for the regional integration organizations and bilateral alliances in the former Soviet Union where Russia pretends to be the leader. This offers new opportunities as well as new challenges to Russia.
Russia’s recent actions towards its neighbors show that it is going to take the new opportunities. Russia will issue the $500 million stabilization credit to Armenia. Moscow has promised Kyrgyzstan the free aid and the large-scale investments of over $2 billion. It has already extended half its credit of $2 billion to Belarus, and Minsk asked for another 100 billion rubles credit. At last, Moscow may give $5 billion to Ukraine. Does Russia act rightly?
If Moscow refuses to render the financial assistance to its allies and partners, Russia may lose its influence on the neighboring countries and cannot strengthen its positions in the post-Soviet space. Russia’s neighbors can turn away from Moscow and become the USA and Western-oriented states, and after having received the West's credits they can become still more dependent on the foreign capital.
Russia’s financing its neighbors will give it a unique chance to drastically strengthen the integration processes in the former Soviet Union. One should bear in mind Russia’s economic motives. Moscow is going to seek the further creation of the Customs Union and the single economic space within the Eurasian Economic Community. Apart from that, Russia has proposed concluding the multilateral agreement on free trade within the CIS in 2009.
The potential economic collapse and the former Soviet republics’ inability to settle the debts are fraught with new losses incurred by the Russian businessmen and the state monopolies that invested a lot of money in the post-Soviet economies, particularly Ukraine and Belarus, which traditionally receive the greater part of Russia’s investments in the CIS.
It is important to guarantee uninterrupted transit of the Russian energy resources via adjacent states to the consuming countries. The economic problems can destabilize the political situation in the neighboring countries, thus making the Russian gas supplies to Europe unstable.
The article is published in “Rossiyskaya Biznes-Gazeta”, 690, 17 February, 2009
February 19, 2009
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