Tale of two states – choosing between east and west

By bne IntelliNews May 15, 2014

Ben Aris in Warsaw -


Countries throughout the former Soviet Union are being forced to choose sides in the ongoing battle for control over Ukraine. But plumping to go east or west is not that simple and much depends on geography.

The prime ministers of Kyrgyzstan and Moldova highlighted the nature of the Hobson's choice they face in speeches at the opening session of the European Bank for Reconstruction and Development's (EBRD) annual meeting in Warsaw on May 14-15.

Both are liberal, market-oriented democracies. Indeed, following its "Tulip Revolution" in 2005, Kyrgyzstan is arguably the only true democracy in Central Asia. And Moldova's proximity to the EU countries of Bulgaria and Romania, with which it shares deep cultural ties, means that Moldova too aspires to European values.

"Moldova is not a Soviet republic of the last five years – we have tried to establish deeper and irreversible ties with the European Union," Moldovan Prime Minister Iurie Leanca told the EBRD delegates.

That stands in stark contrast to Kyrgyz Prime Minister Djoomart Otorbaev, who said: "By entering the [Russian-led] Customs Union, we have managed to open up access to a 170m people-strong market. Now most of the exports goes to those countries [of the Customs Union] so we have to do this, but challenges remain."

Go west

Clearly a lot more goes into the calculation than simply which values a country aspires to, but for its part the EU is happy to hold out a hand to everyone these days.

Leanca had only a day earlier accepted an offer by European Council President Herman Van Rompuy to sign off on an EU Association Agreement on June 27. "Efforts now have to concentrate on the signing and the implementation of the Association Agreement ensuring that Moldova and all its citizens can benefit from this closer relationship," Van Rompuy said. "The Association Agreement is not the final goal in our cooperation."

Moldovan President Nicolae Timofti also highlighted his country's hopes of becoming a full EU member in the future. "The citizens of our country have demonstrated that they are reliable and that they deserve being offered the prospect of becoming European citizens in a predictable timeframe," Timofti said.

Moldova has had to be brave, as it is under significant pressure from Russia to join its rival Customs Union and will punish the country with trade restrictions and higher duties if, as seems sure now, it carries through with its EU plan.

But no one is pretending that the Association Agreement is going to be a golden ticket to prosperity. Leanca was extremely candid about the challenges the country faces. "We are worried that the extent an economy will benefit largely depends on the policy that is put into place by the government," Leanca said. "Having strong institutions and the proper rule of law, benefits the citizens of my country."

Leanca has already pushed through a package of judicial reforms that will "enhance the freedom but also the responsibility of our judiciary and to tackle corruption on all levels."

"Graft is the most serious problem for our country's development in economic aspects. Over the decades it is become entrenched at all levels and in all institutions. It is hard to stamp it out," Leanca said. "It's obvious that a zero-tolerance policy to corruption is the only way to provide an environment where entrepreneurism can flourish."

Go east

Moldova can readily gravitate towards the EU, as it is already so close. The EU has already eased some trade restrictions on Moldovan wine imports and this month dropped most restrictions on visas.

But as Kyrgyzstan is so far away its natural partner remains Russia. "We are in a very quickly developing world and between three BRIC countries – China Russia and India. However the model for development in our part of the world is different from the European one," Kyrgyz PM Otorbaev said at the EBRD's opening session. "Can we apply the lessons learned here in Central Europe to the difference in economic and geopolitical environment essential nature? I'm sure we can."

But in a nod to the conflicting interests, Otorbaev called on the EBRD to spend more effort in drawing up "tailor-made" solutions to Kyrgyzstan's problems. "We already have huge trade and investment results, but we can't behave as if China doesn't exist. My country has been through four complicated years since April 2010 [and the Tulip Revolution]. We must prove that democracy is the best system to develop the economy and improve the lives of people," the prime minster said.

Otorbaev called for more equity investments in Kyrgyzstan and complained that the EBRD makes most of its equity investment in bigger countries. He also called for the EBRD to put more experienced bankers into the region. "The bank should not only provide loans and credit but act as a knowledge solution bank for governments to use," Otorbaev said. 


#CustomsUnion #EEU

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