Russia, Ukraine and six other former Soviet republics signed a free trade agreement (October 10) that observers say may be the first step toward the ‘Eurasian Union’ promoted by Russian Prime Minister Vladimir Putin.

On October 4th, the Moscow newspaper Izvestia reported that Russia aims to build the Eurasian union on the basis of the existing Customs Union, a trade group that includes Kazakhstan and Belarus.

Putin said the talk of creation the Eurasia union isn't about "the recreation of the USSR," but is intended to build a connection between Europe and Asia-Pacific region. The pact is part of Putin’s drive to rebuild economic ties with the 11-nation Commonwealth of Independent States (CIS) formed after the collapse of the Soviet Union in 1991.

That ambition has presented problems at its accession talks with the WTO (World Trade Organization), which Russia hoped to finalize this year. But Putin said the trade pact would not clash with commitments Russia must undertake in order to join the WTO.

In the Izvestia article Putin noted that a balanced system of partnerships between the Eurasian Union and the EU “can create real conditions for changing the geopolitical and geo-economic configuration of the whole continent and would undoubtedly have a positive global effect.”

Besides Russia and Ukraine the six other signatory nations are Armenia, Belarus, Kazakhstan, Kyrgstan, Moldova and Tajikistan.  Azerbaijan, Turkmenistan and Uzbekistan did not sign but said they would consider doing so before the end of the year.

Ukraine is significant because it refused to join a Russia-Belarus-Kazakhstan customs union on the grounds membership in such a union could prejudice its aspirations for closer trade links with the EU.  This ambition may have suffered a blow following the recent guilty verdict against former Prime Minister Yulia Tymoshenko in a trial many observers said was politically motivated.

The trade pact is scheduled to go into effect on January 1, 2012 after ratification by signatory nations.

[Read more about Ukraine in the October/November issue of The Global Journal magazine]