David Cameron announced plans on Thursday for the UK to spend £20 million to help former Soviet states develop market economies and counter Russian influence in the region.
Around £5 million has already been spent on helping the government in Ukraine to support civil institutions under the programme, but it is now getting a £15 million boost to help “support democracy” in Moldova, Georgia, Bosnia-Herzegovina and Serbia, according to Bloomberg.
The “Good Governance Fund” is closely modelled on a similar programme launched by Margaret Thatcher in the 1980s, following the collapse of the Soviet Union. Thatcher’s Know-How Fund targeted Poland, Hungary and Czechoslovakia in an effort to help smooth their transitions into market economies by helping to establish a model for institutions and governance.
However, this latest announcement has a much more overtly political dimension than its predecessor. The expansion of the fund was explicitly linked to Cameron’s call for the continuance of European Union sanctions against Russia over its role in the ongoing conflict in Ukraine.
Moscow has spent the past decade trying to rebuild economic and political ties with its former Soviet neighbours under the auspices of the Eurasian Union. Yet international sanctions against Russia and the collapse in the oil price over the past year have put serious strains on its ambitions.
President Vladimir Putin is currently attending a Eurasian Union conference with his Kazakh and Belarusian counterparts in the Kazakh capital Astana. Tensions are likely to be higher than usual with the government in Astana having to dip into its gold and foreign currency reserves to defend its currency and rein in rampant inflation over recent months.
In July, the Kazakh government passed a new law increasing the sentence for separatist activity in a possible hint that the Kazakh authorities are becoming increasingly concerned about a possible Russian land-grab, not dissimilar to what has been seen in the breakaway regions of eastern Ukraine.
Cameron’s latest move (though modest in scale) is no doubt intended to signal that Britain offers an alternative to Moscow for regional development and economic cooperation.
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