As expected, newly independent Latvia, Lithuania and Estonia refused to join the new common market. Georgia and Moldova rejected the agreement well in advance. But on the eve of the signing, the Ukraine, the second richest republic after Russia, changed its mind and refused to sign. Then, only an hour before the ceremony, Azerbaijan backed out, purportedly because its president was ill. Gorbachev spokesman Andrei Grachev said the Azerbaijanis had demanded a price for signing: “assurance of real protection” in their conflict with neighboring Armenia. Like the Azerbaijanis, the Ukrainians indicated that they might sign the treaty later on. But first they wanted to make bilateral economic deals with other republics, and they were leery of economic domination by Russia. “We don’t want to continue to be a colony,” said Ukrainian parliamentarian Ivan Plyushch.
“I don’t know if the Ukraine will survive without Russia, but Russia will definitely survive without the Ukraine,” said Russian Vice President Aleksandr Rutskoi. Weaknesses in the treaty made survival problematic for everyone. The agreement aims to set up a single market with a central bank and a common currency. But each republic also will have a central bank and the right to print its own currency, which is what Yeltsin says Russia will do. No one has yet explained how the union currency can have any credibility with foreign traders and investors if the republics themselves don’t have faith in it. And if the republics can’t even agree on a single currency, it is hard to see how political unity can be restored.
With the Soviet economy in free fall, official reform is getting nowhere. Unofficial reforms are taking up some of the slack. “Free commodity exchanges are springing up all over,” says Uldis Osis, deputy director of foreign economic relations for Latvia. “There are 200 to 300 such commodities exchanges, and they are trading everything except electric power-you can even buy whole-sale gasoline.” Salvation for the Soviet economy may lie in such informal arrangements. “Ad-hockery is the real engine of reform,” says economist George Holliday of the Congressional Research Service. The question is whether ad-hockery is an engine strong enough to pull the train across the mountain.
