By Yuliya Tymoshenko, Member of Parliament, Ukraine
Article from Project Syndicate, Published by The Straits Times,
English Language Daily, Singapore, Asia, February 6, 2004

A huge benefit for the accession countries in preparing themselves to join the European Union (EU) was that they were forced to conform to European business, political, and legal norms. The proposed 'united economic space' will also have its own norms - the ways of the oligarch, the corrupt bureaucrat, the crony capitalist, and the politically motivated prosecutor.

Does anyone doubt that the jailing of Mr Mikhail Khodorkovsky, chairman of oil giant Yukos, is politically motivated? I myself have endured numerous politically inspired investigations and prosecutions of my former business as a means to drive me out of politics. Can anyone imagine such a prosecution occurring in the EU?

That Mr Khodorkovsky is spending months in jail before he is formally charged tells us much about the nature of business, politics, and law in the nations of the former Soviet Union.

In the countries of the 'united economic space', the rule of law typically means 'I rule, and I am the law'. So, instead of promoting growth, the 'united economic space' will retard it by discouraging competition and investment.

Instead of enhancing European stability, it will undermine it by dividing Europe into the EU's single market and an economic trading area ruled by arbitrary fiat and decree.

But, as a matter of economic principle, practical diplomacy and visionary politics, aren't regional free-trade areas at least a step in the right direction?

After all, countries that scrap tariffs among themselves trade more and often raise their economic growth rates as a result. Moreover, free-trade agreements are typically seen as politically valuable: Countries tied by commerce are supposedly less likely to shoot at each other.

Unfortunately, the 'united economic space' promises no such benefits.

By definition, it discriminates against countries outside the club, with which trade will not be liberalised. Members will specialise in industries in which they lack comparative advantage, undercutting the main reason to support free trade in the first place. Worse yet, markets will be carved up for political, not commercial, reasons, locking in inefficiencies.

The 'political' argument - that regional trade bodies promote peaceful foreign relations - is simply wrong-headed in the post-Soviet case.

After all, Ukraine managed to eliminate its nuclear weapons and reach accommodation over the Black Sea fleet without joining a private economic bloc with Russia.

On the other hand, not long after the 'united economic space' was announced, Russia began to cast covetous eyes on the Ukrainian Black Sea island of Tuszla. Economic borders cannot and will not disappear until Russia and Ukraine agree on their territorial borders.

Because the proposed members of this new 'united economic space' share Russian as a lingua franca and a common past within the former Soviet Union, outsiders may dismiss too readily subtler differences in culture, outlook, and even vocabulary. Because the region shares many outward forms of European culture, it is a short step to assuming that recent moves to free markets and democracy will be seamless and permanent.

But the 'united economic space' is also a perversion because the presence of Belarus and Kazakhstan will ensure that democracy remains low on the agenda.

Another perversion of democracy is the fact that the supra-national body that is to administer the 'united economic space' grants Ukraine and its 49 million people only 9.9 per cent of votes, while it gives Russia and its 140 million people 83 per cent.

That gross imbalance in representation is a shameful betrayal of Ukraine's sovereignty. It is a deal that can only have been agreed to as the price of Russian support for Ukraine's President Leonid Kuchma as he desperately seeks to extend his presidency beyond the two-term limit that he faces this year.

My opposition to the 'united economic space' is not opposition to Russia. The more Ukraine trades abroad, the better; if more of that open trade goes Russia's way, so be it. But that trade should reflect that Ukraine is competing with the world, unconstrained by a private deal that excludes outsiders and their demands for a stable and predictable legal environment and the best business practices.

I am not one of those people who think Russia is so naturally collectivist that free trade and an open economy cannot work there. Nor do I believe that Russia is so inherently autocratic that democracy must invariably fail. But I do believe that, for these canards to be discarded, Russia and Ukraine must open themselves to global competition, not isolate themselves with each other.

Mr Dmitri Likhachev, one of Russia's most respected intellectuals in the communist era, said that there is no such thing as the Russian soul - 'we can create whatever future we want'. Ukraine and Russia, too, can create the future they want, but not by closing themselves off in a 'united economic space' that, in reality, is nothing more than another dark corner.