By Serhiy Syrovatka, Den, Kiev, in Russian 4 Mar 04; p 1
BBC Monitoring Service, UK, in English, Mar 04, 2004

The following is the text of the article by Serhiy Syrovatka, entitled "Choice of company", published in the Ukrainian newspaper Den on 4 March; subheadings have been inserted editorially:

Yesterday the Cabinet of Ministers approved a bill to set up the Single Economic Space [SES - economic union with Russia, Belarus and Kazakhstan].

The document was sent there and then to the Supreme Council [parliament] for ratification. The governments of Ukraine, Russia, Belarus and Kazakhstan had earlier agreed to ensure ratification of the agreement in the first half of 2004. During his recent visit to Ukraine, the speaker of the Russian State Duma [lower house of parliament], Boris Gryzlov, spoke with the chairman of the Supreme Council, Volodymyr Lytvyn, about the ratification of the agreements taking place in the parliaments of the two countries simultaneously. It looks as if the two main founders of the SES have insured themselves against possible embarrassment. This all clearly shows the probability of full legalization of the European regional organization as early as late spring.

NO HASTE TO JOIN WTO

Meanwhile, a second priority of Ukraine's economic integration, several times named by the country's leadership as the most pressing - joining the WTO - seems to have lost the government's attention for some time. Economics Minister Mykola Derkach, unlike his predecessor [Valeriy Khoroshkovskyy], is not very actively "tasking" his subordinate departments with the aim of accelerating talks with the World Trade Organization. To date, less than half of the bilateral agreements have been signed with members of the organization that are part of the working group on Ukraine.

It will take approximately another year of coordinated diplomatic efforts to overcome this distance. And although Deputy Economics Minister Valeriy Pyatnytskyy, who is in charge of this area, is giving assurances that in fact all the accords are on the point of being signed, his optimism is most likely based on propaganda considerations. After all, last autumn he was already promising that the negotiation process would be completed by the end of 2003. But only five or six bilateral agreements have been signed since then.

But if that were the main problem in Ukraine's accession to the WTO, the picture would not look so gloomy. The basic obstacle today looks like a lack of will on the part of the government to prepare actively for integration into the World Trade Organization. It requires quite a lot of lobbying effort for this, with the aim of getting a whole package of bills passed in the Supreme Council. Most of them are not advantageous to various lobby groups, so that without political will on the part of the cabinet, the issue is unlikely to be solved some time soon.

Meanwhile, the deputies - quite the opposite - are actively adopting economic laws that either do not correspond with WTO norms or substantially complicate the negotiation process for entry to the organization. In particular, this refers to parliament's latest attempts to regulate imports of sugar, cars and other goods. Against the background of these difficulties, the concentration of the Ukrainian government's main efforts on integration in the Single Economic Space looks like taking the easy way out. After all, in order to join the SES there is no need to raise standards of production of goods and quality of economic policy. The other members of the future space are approximately at the same (if not worse, in the case of Belarus and Kazakhstan) stage of economic development as our country.

RUSSIAN GAIN FROM SES CHOICE

Russia is the biggest winner from such a scenario. Moscow has never hidden its apprehensions that Ukraine might join the WTO before the Russian Federation. After all, in that event Kiev would receive the fine opportunity, through the procedures and institutions of the WTO, to gain for itself the maximum acceptable customs regime in trade with its northern neighbour. Moscow has an interest in putting a brake on Ukraine's accession to the WTO.

In an interview with Den, the head of the department of bilateral ties with CIS countries of the Russian Economic Development Ministry, Konstantin Myshak, depicted his vision of the question like this: "I think that our two countries first of all need to create the SES, agree their positions regarding the WTO, assess the consequences of that step on our markets and then join the WTO in a coordinated way. Both Russia and Ukraine will benefit from that."

It is clear from that position that Kiev was faced with a choice at this stage: either speed up integration into the WTO, or concentrate political efforts on creating the SES. And whatever First Deputy Prime Minister Mykola Azarov says that these two directions in the work of the government's economic bloc are being carried out independently of each other, future partners in the Single Economic Space may "link" them. Link them in such a way that the WTO will become as close a goal as association with the EU.

The obvious concession of the Ukrainian government in Moscow's SES interests will be justified only in one event: if the first step on the road of creating the SES is the signing, declared by the cabinet, of a new edition of the treaty on a free trade zone with the Russian Federation on conditions acceptable to our country. But nothing has yet been heard about Moscow's intention to make reciprocal concessions.