Newspaper article The Christian Science Monitor

Former Soviet Republics Still Need Each Other

Newspaper article The Christian Science Monitor

Former Soviet Republics Still Need Each Other

Article excerpt

TODAY, when it is clear that the Soviet Union is politically dead, great hopes are pinned on the idea of creating an economic union in its place. A draft convention for such a union has been presented by academician Stanislav Shatalin. The Russian Republic's Ministry of Economy has put forward a program for organizing the inter- relationship of sovereign states. And there is also a program concocted by economist Grigory Yavlinsky, this time without the collaboration of Harvard University experts.

The idea of creating a single economic space within the borders of the former USSR is based on the deep integration and strong interdependence of the economies of the 15 republics, which have been tied into a state economic complex for decades.

It is this consideration that two years ago caused Estonian economist Mikhail Bronstein to launch the idea of a common market agreement. Delays in implementing it, while economic stagnation was deepening, pressured the leaderships of the republics to seek their own ways to salvation. In an attempt to avoid a sharp decline in the living standards of their populations, they resorted to closing domestic markets. One after another, republics banned the export of products and introduced their own customs serv ices.

On the other hand, inflation grew as the cabinet of then-premier Valentin Pavlov (one of the leaders of last month's attempted coup) pursued a policy of expanding the money supply. Republics responded with a policy of "escaping from money," openly distributing large amounts of the depreciating funds as social welfare and at the same time acquiring as much property as possible on the territories of other republics, thus transforming the rubles into real wealth.

No wonder, then, that the majority of republican leaders agree to an economic union only if their rights to protect domestic markets are guaranteed. That obviously undermines the idea of a common economic space.

Soviet President Mikhail Gorbachev and the leaders of 10 republics, in their joint statement of Sept. 2 to the Congress of People's Deputies, proposed "to immediately create an economic union with the aim of cooperating in the framework of a single economic space, to ensure the normal functioning of the economy."

But during three days of discussions, mostly behind closed doors, this proposal evaporated. In the final text, it had been reduced to an appeal to "work out and sign inter-republican agreements on economic and financial cooperation."

Taking into account the background of these developments, this shift is understandable. Existing inter-republican agreements to preserve economic ties have produced few results. They have been blocked, in practice, by restrictions on exports imposed by republican governments. Barter deals or bribes in the form of donations are used to get these.

Thus the Baltic republics of Estonia and Latvia, failing to fulfill their obligations to Russia under agreements on mutual deliveries, came to an understanding with the authorities in the oil-producing region of Tyumen to exchange foodstuffs for oil and gas. Or consider the deal between the Russian Republic and the Central Asian republic of Kirghizia. …

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