The Customs Union is bursting but not expanding

The Customs Union is bursting but not expanding

Victoria Panfilova, columnist of Novaya Gazeta, exclusively for Vestnik Kavkaza

Kyrgyzstan was the first in line to join the Customs Union. It has been already stated that, by 2015, this Central Asian country will become a full member of the union of Russia, Belarus and Kazakhstan. The authorities of the country, seeing the interest of partners in the fast expansion of the union, expected to receive a number of preferential benefits from their membership in the organization. In particular, they demand to declare three wholesale markets "Madina," "Dordoi" and "Kara- Suu" free trade zones and get benefits for 400 commodity items for a period of 5 to 10 years. The authorities would allegedly secure themselves with these measures from the disadvantages of ceasing re-exporting goods from China after the country's accession to the Customs Union. Most likely Kyrgyzstan will be granted these benefits, since parallel to the development of the CU, the Eurasian Economic Union (EAU) is developing as well. By 2015, the treaty founding the EAC has to be signed. Its members will become members of the Customs Union - Russia, Belarus, Kazakhstan as well as Kyrgyzstan and perhaps Tajikistan and Armenia.

However, the Kyrgyz President, Almazbek Atambayev, offended by the words of his Belarusian counterpart Alexander Lukashenko and by Russia as well, where the problem of illegal migrants has deepened, sent the Deputy Prime Minister, Dzhoomart Otorbaev, to the summit. Just to remind you, responding to questions from journalists from the CIS countries on the eve of the summit, Lukashenko said that Kyrgyzstan and Belarus have to "simply turn the page of cooperation" and forget about Bakiyev. He also pointed out that in order to join the Customs Union, Kyrgyzstan has to sign all the agreements.

Expert on Central Asia and the Middle East, doctor of history Alexander Knyazev in an interview given to me, pointed out that, first, not everyone in the republic wants Kyrgyzstan to join the Customs Union. "The economy of Kyrgyzstan is totally criminalized and the profits offered by the smuggling of re-exports from China can compete only with the profits from drug trafficking. Any decision infringing on the interests of clan-based factions will instantly entail another attempt to overthrow the government and, as a result, the collapse of the country," Alexander Knyazev said. Secondly, demand for preferential treatment has been a habit of the post-Soviet Kyrgyz political elite for the last 22 years.

After the demarche of the Kyrgyz President, the prospect of Kyrgyzstan's accession to the CU is no longer on the immediate agenda. At the same time in Kazakhstan, despite the speeches by President Nursultan Nazarbayev campaigning for "greater integration," people say that one should not rush with the expansion of the integration of the CU. "This is a correct opinion. If we think about the European Union, it had been coordinating details for several decades," the director of the Kazakhstan Institute of World Economy Policy Sultan Akimbekov believes. According to him, the CU is facing a lot of problems due to the fact that it was created in too much of a hurry.

The expansion of the Customs Union is one of the hardest issues and it is hard to give a quick answer to it. "We invite Kyrgyzstan, Tajikistan and Armenia. We are eliminating levies which still remain in the framework of the common economic space and we're going to sign the contract for the EEC. This creates too much stress, first of all among the negotiators, officials of the Eurasian Economic Commission and as a result among the presidents. The result is not a very positive news environment," the director of the Political Sciences center "North -South" Aleksey Vlasov thinks. It is not surprising that one can hear people talking about leaving the CU in Kazakhstan and Belarus. But the expert believes that this is nothing more than scoring additional points by national patriots.

However, the Kazakh political scientist Anton Morozov does not quite agree with the opinion of his Russian colleague. He believes that the society of Kazakhstan is seriously alarmed by a number of factors, including the CU's tendency for rapid expansion, the rise in prices on the domestic market. "Their main concern is that the creation of the Eurasian Union will lead to a complete loss of national sovereignty, domestic and foreign policy will be determined by supranational bodies to the detriment of the interests of Kazakhstan, while the introduction of a supranational currency will lead to the fact that monetary and fiscal policy will be determined by new bodies dominated by Russia," Anton Morozov believes.

Perhaps this also explains the attempts of Astana and Minsk to counterbalance Moscow's actions. In particular, on the question of the accession of Armenia. If it happens, Russia will receive a full supporter in any discussion of CU issues. President Nazarbayev has not commented on the invitation sent to Armenia to join the union, but Alexander Lukashenko with his characteristic bluntness said that "the issue of the accession of Armenia to the CU has to be in line with the opinion of Azerbaijan."

Aleksey Vlasov, on the other hand, believes that the accession of Armenia to the CU poses two important questions. First, will Nagorno-Karabakh become part of the Customs Union territory together with Armenia? Kazakhstan will not agree to that. It will become one of the topics for discussions in the course of further negotiations. Secondly, when will Armenia be ready to join the CU? After all, Kyrgyzstan and possibly Tajikistan are waiting for their turn. "I think that it is necessary to determine the Central Asian vector. It is not necessary to give strict dates for the entry of Armenia. Otherwise, it will appear as a political, not an economic decision," Vlasov said.

Armenian economist Ashot Yeghiazaryan believes that the Customs Union has failed as a structure and political union and that Armenia's accession to the CU will be a dead end for the country. The expert believes that the Customs Union does not offer any benefits to Armenia, makes it dependent on Moscow and exposes it to many risks. Yeghiazaryan also noted that by entering the CU, it would in fact close its borders.In contrast to her colleague, Russian expert, deputy general director of the Information and Analytical Center for the Study of the socio-political processes in post-Soviet space, Julia Jakusheva, believes that Armenia has made the only right choice for itself by deciding to enter the CU: "The economic interests of Yerevan and its security entirely lie in the territory of bilateral and multilateral relations with Moscow... Research conducted by economists in Russia and Armenia has shown that as a result of Armenia's membership in the Customs Union, the country's GDP will increase by 4%, a whole range of sectors of the Armenian economy will get a boost to development."


While the CIS countries are thinking about the Customs Union, other republics of the former Soviet Union as well as foreign countries have expressed their interest in the Union. The other day, the Deputy Prime Minister of Syria, Qadri Jamil, said that Damascus is ready to begin negotiations on accession to the Customs Union. At various times, interest in the CU has been shown by India, Mongolia and Vietnam. Russia has offered to consider the question of Serbia, Montenegro and Turkey joining the CU, while Kyrghyzia has proposed South Korea, Japan, Australia and New Zealand to join the union.

Expert on Central Asia and the Middle East, Doctor of History Alexander Knyazev told me: "One gets the feeling that the brilliant idea of the Customs Union has neither a development plan nor a strategy. Russia, on the basis of goal-setting, far from the meaning of the Customs Union, is dragging into it Armenia, Kyrgyzstan and Tajikistan. Somewhere "out of the sleeve" suddenly pops up Syria as a candidate. The initiative of the Deputy Prime Minister of Kyrgyzstan to admit Korea and Japan into the alliance seems amusing. And, as if mocking the process, the President of Kazakhstan has taken the initiative to invite Turkey to join the CU... The founding fathers have forgotten why they created it." According to Knyazev, the task of the Customs Union is to protect its own producers from the expansion of foreign competitors. In addition to the three countries that founded the CU - Belarus, Kazakhstan and Russia - it doesn't need anyone else yet.