On the differences of Russia-relations in the CIS region

 Eevi Heikkinen  East Office/26.11. 2018

Eevi Heikkinen

East Office/26.11. 2018

 The CIS countries are connected to Russia most famously through the shared past still visible today, for example, in similar institutions, the wide use of Russian language and some other cultural implications, too. Maybe due to this, the differences are sometimes overlooked, and the region is seen as a homogeneous cultural entity. In a similar way, their relations with Russia are sometimes pictured as somehow given or static. However, this seldom seems to be really the case. Let’s take as an example the three largest countries in the region after Russia measured by GDP – Belarus, Kazakhstan and Ukraine – which all have quite different relationships with Russia.

When looking at the trade volumes, Russia’s importance to Belarus, Kazakhstan and Ukraine is quite clear. Russia is one of the major trading partners. It dominates the Belarusian trade with a share of 39 % of exports and 59 % of imports according to the national data of Belarus. Belarus needs oil imports for its refining industry and natural gas for its domestic energy system. History has shown that sometimes this dependence on Russia has turned into a political game as well.

For Kazakhstan, Russia is an important importer of foodstuff and oil refining products, imports consisting of 38 % of total imports this year. However, majority (53 %) of the exports go to the EU as Kazakhstan is important for EU’s energy security. Interestingly, even though the EU is the largest partner of Ukraine, Russia continues to be the major single trade partner (8 % of total exports, 14 % of imports). Considering the political relations of Russia and Ukraine and attempts to decrease the dependence, this seems somewhat surprising, but shows also how slowly structures change.

When measured by the investments, differences between the three countries grow larger. In Belarus, Russia is dominant also in this field. According to the national statistics, 57 % of the stock of foreign direct investments consisted of investments from Russia as of January 2018. However, Chinese investments have been growing rapidly, yet they are still marginal. As opposed to Belarus, large share of investments in Kazakhstan and Ukraine come from western countries. More than half of the FDI stock of the oil-rich Kazakhstan consisted of investments from the Netherlands, the US and the UK in January 2018, whereas Russian investments accounted for only 5 %. Russian investments to Ukraine accounted expectedly a small share too, 3 % of the FDI stock in July 2018 and the largest investments came from Cyprus and the Netherlands with a total share of almost 50 %.

The annexation of Crimea and war in eastern Ukraine marked a change in the relations of Ukraine and Russia. In the official rhetoric, Ukraine has chosen a course towards Europe and the West. Nation-building efforts are under way in Ukraine. In October, the Patriarch of Constantinople granted an autonomous status to the Ukrainian Church, which is, according to some experts, expected to strengthen the national identity and unity. Unlike Ukraine, Belarus is strongly interconnected with Russia politically. The Union State with Russia and the membership in the largely Russian-led Eurasian Economic Union (EAEU) influence its policies. Kazakhstan is also a member of EAEU and Kazakhstan’s multi-vectoral foreign policy promotes good relations to all countries.

However, the economic downturn and the events in Ukraine have changed policies not only in Ukraine, but in Belarus and Kazakhstan, too. Belarus has started a search of new partners, which is reflected, for example, in the intensified cooperation with China and resumed dialogue with the EU. Both countries have also been reported to have adopted new security doctrines as well as nation-building efforts have somewhat intensified and are visible in, for example, language policies.

This short overview demonstrates some of the differences characterising the relations with Russia. While Belarus has strong economic and political connections with Russia, Ukraine has adopted a radically different approach. Kazakhstan has good relations with Russia and for example important trade connections, but at the same time its energy sector is of high importance to the EU countries, which can be seen in large investment flows into the country.

 

Note: Trade statistics for Ukraine and Belarus are from January-July 2018 and for Kazakhstan from January-August 2018.