MOSCOW (RIA Novosti economic commentator Vasily Zubkov) - The first Common Economic Space integration forum held in Moscow and a subsequent session of High-Level Groups on the CES did not clarify the future of this economic alliance of Ukraine, Belarus, Kazakhstan and Russia.

The CES was designed as a common customs territory where similar mechanisms of economic regulations would operate and capital, services, commodities and labor would move freely. The leaders of the four countries signed a statement on the integration economic alliance two years ago and their parliaments have ratified the CES treaty.

These four largest CIS countries have an aggregate population of 230 million and vast natural resources that satisfy almost all of the four countries' requirements, as well as the most developed research-technical, industrial, financial and personnel bases in what was once the Soviet Union. Their aggregate GDP was over $711 billion in 2004, with Russia accounting for 82% of it.

Russian Minister of Industry and Energy Viktor Khristenko has said the 140.7% increase in trade between CES member countries last year proves the advantages of the CES. For the sake of comparison, the four countries' trade with the other countries grew by 134.6% in 2004.

The attempts made by Russia's partners to spotlight the most profitable sectors represent the main obstacle to more energetic efforts to implement the CES idea, Khristenko said. In particular, they apply high oil and gas prices and rail tariffs without negotiating them with the partners and signing and ratifying corresponding agreements.

This practice undermines the CES as a lasting formalized mechanism. The essence of the CES idea is for interaction between any two states to take into account the interests of the other two members. All of them must be sure that their national economic interests will not be contradicted anywhere in the CES.

Ukrainian Minister of the Economy and European Integration Sergei Terekhin clearly said in Moscow that his country wanted unilateral advantages from the free trade zone and did not intend to assume additional commitments and limitations under the CES agreement. In other words, Kiev will continue to act at the level of the free trade zone within the CES but plans to take a timeout as regards the CES to review some basic agreements (including the definition of the CES) and the establishment of supranational agencies.

The four countries do not need the customs union, Ukraine argues, while the introduction of the free trade zone will be possible only after Russia implements Kiev's conditions by the end of the year. Otherwise Ukraine might take radical measures that are linked with the speed of its accession to the EU, the Ukrainian minister said.

However, 58% of Ukrainians are in favor of joining the CES and another 18.5% are ready to support it if it does not hinder Ukraine's accession to the EU. The other CES members - Russia, Belarus and Kazakhstan - know that as soon as Ukraine joins the WTO, which will probably happen this fall, its pseudo-membership of the CES will become a black hole through which cheap imports will flow into the common market of the four countries.

Ukrainian premier Yulia Timoshenko, who suggested the idea of zero import duty on meat, is bound to know that the cheap imported meat will be sold everywhere from Minsk to Astana, and the same is true about ethanol (under an EU-Ukraine protocol, the import duty is 0%, while the duty set for Russia is 8%). Clearly, cheap ethanol from Europe will move to where it can be sold at a higher price, i.e., to the Volga region and beyond the Urals.

This is probably why Terekhin called on Moscow to cancel import and export duties and to pledge not to use anti-dumping and protection measures.

Kiev does not understand that the other three CES members can form a CES without Ukraine. The possibility was suggested by Dmitry Susloparov, head of the international cooperation department at the Ministry of Industry and Energy and Russia's coordinator for the CES. He said that if Ukraine refuses, for some time, to join certain agreements, the other members would approve them on their own, and all amendments and addenda to them would take into account only the interests of the three states.

Ukraine is trying to have it both ways with the CES and the EU, but it may end up losing out to both of them.