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What’s behind Kazakhstan and Belarus’ opposition to import penalties on Ukraine?

02 july 2014, 15:02
0

Kazakhstan and Belarus have rejected Russia’s call for the Eurasian Economic Union to limit imports from Ukraine or slap heavy tariffs on them – moves that much of the world sees as a Russian attempt to punish Ukraine for signing a trade agreement with the European Union.

Moldova and Georgia joined Ukraine last week in signing trade-association pacts with the EU despite Russian threats to retaliate against the three countries.

Russia reacted to Kazakhstan and Belarus’ decisions not to penalize Ukrainian imports by saying that it would try to convince its Eurasian Economic Union partners to see the error of their ways.

“Some protective measures are needed, and we will keep up the dialogue to decide on concerted measures,” Russia’s Vedomosti newspaper quoted President Vladimir Putin’s press spokesman, Dmitry Peskov, as saying.

Russian Foreign Minister Sergei Lavrov made a last-ditch attempt last week to prevent Ukraine, Moldova and Georgia from signing the EU trade agreements.

He said if Ukraine signed, then cheap European-Union-made products would flood into Russia, damaging the economies of Russia, Kazakhstan and Belarus.

Russian Foreign Minister Sergei Lavrov

Russian Foreign Minister Sergei Lavrov. ©AFP

Other Russian government officials also have taken up the mantra.

Their argument is that the Ukrainians will repackage supposedly cheap EU-made products, then export them to the Eurasian Economic Union countries under the guise they were made in Ukraine.

A major problem with that argument is that EU-made products aren’t cheap. In fact, most are more expensive than products made in the United States, South Korea, China and many other countries.

Anyone who has traveled in Western Europe will tell you that a dress, for example, will cost 20 to 30 percent more in the EU than in the United States.

In addition, those who know anything about Ukrainian industry recognize that Ukrainian products are far cheaper than similar products made in the West.

Ukrainian tractors, for example, sell for a fraction of what tractors made in the United States, Canada or Germany go for.

Vedomosti quoted an unnamed Russian government source as saying that Kazakhstan and Belarus have legitimate concerns about buying in to a policy of limiting Ukrainian exports.

In the case of Kazakhstan, it’s “seeking to enter the WTO,” the source noted.

Kazakhstan is indeed in the home stretch in its quest to become a World Trade Organization member. The latest word from officials in Astana is the country may obtain membership before the year is out.

WTO logo

WTO logo. ©AFP

The Vedomosti source’s implication was that Kazakhstan fears Ukraine would react to punitive import duties by trying to prevent Kazakhstan from joining the WTO.

Ukraine joined the World Trade Organization in 2008. Countries that are members of the organization can delay an applicant country's admission by raising objections to its trade policies. If Kazakhstan agreed to sizable increases in import duties on Ukrainian products, the Ukrainians could portray the adjustments as punitive.

Belarus’ reason for not wanting to limit Ukrainian imports is that it shares a 600-kilometer-long border with Ukraine, according to the Vedomosti source – and sealing the border to shut out its neighbor’s goods would be cost-prohibitive.

Here’s the problem with that argument: If that border is so porous, why haven’t Ukrainians already taken advantage of it to engage in widespread smuggling of their goods across the border? If they have, you would think that the outspoken Belarussian President Alexander Lukashenko would have complained about it ages ago.

My theory is that Kazakhstan is reluctant to limit Ukraine’s imports for two reasons: it doesn’t think it would be right, and it thinks it would be a bad PR move.

I have no evidence to offer for my belief that Kazakhstan thinks restricting Ukraine’s imports would be wrong. It’s one of those feelings that settles into the gut of a journalist who has been in Kazakhstan eight years.

As for my public-relations argument, most of the world has condemned Russia’s takeover of the Crimean peninsula and what many countries view as its encouragement of a separatist rebellion in eastern Ukraine.

Kazakhstan would certainly not benefit from being lumped with Russia in any moves to hamper Ukrainian imports when a lot of the world would view those moves as retaliation for Ukraine embracing the European Union.

To start with, the EU is not only Kazakhstan’s biggest trading partner but one of its most important facilitators of reform – through offering ideas and expertise and providing loans from such institutions as the European Bank for Reconstruction and Development.

It wouldn’t be just the EU that would have a problem with Eurasian Economic Union members restricting or slapping tariffs on Ukrainian imports. Many other countries would see those moves as punitive as well.

Russian President Vladimir Putin (R), Kazakh President Nursultan Nazarbayev (C) and Belarus President Alexander Lukashenko shake hands during a meeting of the Eurasian Economic Union

Russian President Vladimir Putin (R), Kazakh President Nursultan Nazarbayev (C) and Belarus President Alexander Lukashenko shake hands during a meeting of the Eurasian Economic Union. ©Reuters/Mikhail Klimentyev

Kazakhstan doesn’t need that kind of PR. It has worked hard to portray itself as a country with a multi-vector foreign policy whose guiding light is friendship for all nations.

The conflict between Russia and Ukraine has led to Kazakhstan walking a fine foreign-policy line between Russia and the West. That soft stepping is likely to continue.

The bitter taste of Belarus’ own trade disputes with Russia may be one reason why Belarus is reluctant to punish Ukraine by restricting imports or slapping duties on them.

But my guess is that the reluctance is rooted even more in the countries’ longtime ethnic and cultural affinities for each other.

If Lukashenko had wanted a reason for punishing Ukraine, Russia just served it up on a platter. My guess is he’s not biting because he thinks it’s wrong to smack your brother on the cheek for a run-of-the-mill rather than over-the-top provocation.


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