Kommersant, Russia
Sep. 21, 2006

Commonwealth of Oil-Dependent States

Even non-primary-producing CIS countries depend on oil
and natural gas prices

Analytic centers believe that mid-term economic growth
in CIS countries will remain, but the long-term growth
strongly depends on oil prices and reforms in certain
countries. Apparently, economic growth in such
countries as Russia, Kazakhstan, and Azerbaijan is
dependent on exported raw material prices. However,
the changes in raw material prices influences other
CIS states as well, because their economies are
closely intertwined. For instance, work migrants earn
money in rapidly richening Russia and send it to their
homes. Money transfers are economically important for
such countries as Armenia, Georgia, Kyrgyzstan,
Moldavia, and Tajikistan, according to IMF’s review of
world economy.
Ukraine’s, Georgia’s, and Belarus’ economies strongly
depend on Russia’s oil and gas. Moscow now ties up
political agreements on prices with the level of world
prices on oil and gas. Thus, Belarus might lose from 2
or 3 percent to 9 or 10 percent of its GDP, depending
on prices of energy resources from Russia.

Georgia, who became the growth leader last year (9.3
percent of GDP growth), will keep it up this year as
well. This is partially the result of liberal economic
reforms and anti-corruption campaign. Yet, high growth
rate in Georgia is also the consequence of fast
economic recovery after decline. Georgia also has
another important source for growth – foreign
financial aid. Yet, the continuing debates between
Moscow and Tbilisi might slow Georgia’s economic
growth down to 5 or 6 percent in 2007.

IMF thinks Ukraine might slow down as well, due to
political instability. According to the estimations of
ING bank, if Russia, Ukraine, and Kazakhstan —
economic leaders of the CIS – join the WTO, their GDP
growth rates will slow down by 0.2-0.5 percentage
points in 2008, but will be accelerating by extra
0.5-1.0 percentage points beginning from 2009.