Three in one
[b]Leaders of Russia, Belarus and Kazakhstan explain their views on the Eurasian Union, allowing us to find common denominator[/b]Three articles in Moscow’s Izvestiya newspaper presage further integration of Belarus, Russia and Kazakhstan within the Customs Union. From January 1st, the Single Economic Space should become operational, with all details agreed. Many now question whether further integration is necessary. Russia’s Prime Minister, Vladimir Putin, was the first to write an article for Izvestiya, giving his views on the next stage of co-operation — the Eurasian Union.
Three articles in Moscow’s Izvestiya newspaper presage further integration of Belarus, Russia and Kazakhstan within the Customs Union. From January 1st, the Single Economic Space should become operational, with all details agreed. Many now question whether further integration is necessary.
Russia’s Prime Minister, Vladimir Putin, was the first to write an article for Izvestiya, giving his views on the next stage of co-operation — the Eurasian Union. He had just announced his intention to stand for the presidency again, so the article was seen as his proposal for his foreign political programme. It’s now clear that he intends to promote ‘land gathering’, which is very popular among Russians.
Putting ideology aside, a huge economic mechanism is being formed before our eyes. The GDP of our three states totals almost $2 trillion, while our industrial potential is estimated at $600bn. Our joint agricultural produce is worth around $112bn per year, and our combined consumer markets exceed 165 million people.
Russia is the largest and most powerful of our trio; understandably, it is an engine of unification. Whether the train rests in the sidings or steams ahead depends largely on Russia. Via the Izvestiya article, Putin has clearly outlined his future intentions for Moscow.
Alexander Lukashenko and Nursultan Nazarbayev have supported this integration, specifying their desired terms for Belarus and Kazakhstan’s co-operation. Naturally, no matter how strong Russia’s desire is, the national interests of all members must be taken into account within the Eurasian Union. The structure set out by the leaders of Russia, Belarus and Kazakhstan looks solid — at least on paper. Bringing the plan to life is another matter.
Let’s look in detail at the proposals of Moscow, Minsk and Astana. We here unite all three articles, aiming to show the interests of each state, where these coincide and where contradictions remain.
Foundations of the structure
The global financial crisis, which forced states to seek new avenues of economic growth, inspired integration processes forward. A colossal market with unified legislation began to be created in Belarus, Kazakhstan and Russia, boasting free movement of capital, services and workforce. Mr. Putin seeks an integration which is unambiguous and attractive for citizens and businesses. He wants it to be stable and long-term, unaffected by political issues.
Mr. Lukashenko adds, “Two referendums conducted in our country in the early 1990s gave the authorities a clear mandate for integration by absolute majority. Some fear where this may lead and we can’t just brush aside their anxieties, as people need to know what this new union means for them. We must prove that integration isn’t a political game but a guide for further improving standards of living — the task of politicians.”
Mr. Nazarbayev agrees, noting that the stability of the Eurasian Union won’t be borne from politics but from wide public support. He is confident that a Eurasian Assembly is needed: a supra-national structure uniting the parliamentarians of our states. He also wants to see a 24 hour TV channel — Eurasia 24; this would give citizens objective information about the advantages and pace of integration. He also thinks that other steps need careful consideration.
Of principal importance for Moscow is that the Single Economic Space shares macro-economic policies, ensuring equal terms for competition, technical regulations and agricultural subsidies, as well as transport and natural monopoly tariffs.
A single visa and migration policy is also important, allowing border control to be removed within our internal borders. It would imitate the Schengen agreement, benefiting Europeans and all those arriving here to work, study or rest. For the citizens of our three nations, the removal of migration, border and other barriers (known as labour quotas) will encourage free movement. People will be able to choose where they live, study and work. The USSR didn’t have this freedom with its ‘institute of registration’.
Our three states also plan to considerably raise the volume of goods which can be imported duty-free for personal consumption, easing the burden at customs points.
Competition driving progress
Businesses are to enjoy wider opportunities, with single standards for goods and services (unified with Europe in most cases). This will enable us to avoid technological failures and obvious incompatibilities, while bringing peace of mind to consumers.
Naturally, to gain a foothold on an open market, efficiency and reduced costs will be the watchwords of businesses, with investment into modernisation essential. Consumers will only benefit. All companies within our three states will enjoy the advantages of a domestic manufacturer, including access to state contracts.
Mr. Lukashenko suggests moving even further. “Why push out our partners’ goods via non-market methods when we have a common integration space? People and businesses won’t benefit. Rather, let businesses freely compete, fighting for customers. There’s no reason to artificially duplicate manufactures where demand can be satisfied by existing enterprises at lower cost and with higher quality. Won’t we lose out on foreign markets from such competition? It’s only wise to create conditions which encourage powerful, competitive, trans-national corporations within our SES, while promoting their access to outside states,” notes the Belarusian President.
This is the dawning of a true ‘competition of jurisdictions’ and an age of struggle for entrepreneurs. Each Russian, Kazakh and Belarusian entrepreneur will have the right to choose in which of the three states they wish to register for business and from which to perform cargo customs clearance. This should seriously stimulate each state to improve its business and investment climate, simplifying bureaucracy and overcoming the weaknesses that remain. Legislation needs to be improved to meet the best European and world practices.
It has already been decided to launch the codification of legislation for the Customs Union and the Single Economic Space. This will be in the interests of businesses, clearing the ‘debris’ of so many rules and regulations. Only two basic documents will be needed: the Customs Code and the Codified Treaty on Issues Pertaining to the Customs Union and the Single Economic Space.
From January 1st, 2012, the EurAsEC Court will become fully operational. States and market participants will be able to address the court regarding discrimination, violation of competition rules and equal conditions for doing business.
Modernisation — a new economic trend
Mr. Lukashenko believes that further modernisation of our economies and launch of innovations should be forthcoming. Belarus has already begun its path, initiating major sci-tech projects: the joint construction of a nuclear power plant; the joint creation and launch of satellites into orbit; and the creation of a satellite control system.
However, Minsk believes that we need to speed up such progress. If the leadership of our three states really do share a common position in favour of integration, then our officials — from top to bottom — should move quicker. Of course, we are most reliant on Russia: the largest partner in our integration.
Astana echoes Minsk’s feelings on this score, with Mr. Nazarbayev asserting that the Eurasian Union shouldn’t become a group of countries, developing in line with the principles of ‘catch-up modernisation’. It should rather embrace innovation and the latest technological breakthroughs via modernisation and innovative development. Kazakhstan has proposed that we promptly elaborate and adopt a joint programme of Eurasian innovation and technological co-operation, designed to guide the next 10-15 years.
In this respect, France, Germany and the UK are a good example, having set up the largest international avia-construction consortium — AIRBUS — back in 1970. Later, Italy joined them. In 2010, AIRBUS considerably outstripped American Boeing and Lockheed in its sales of new aircraft, enjoying annual profits of close on $30bn Euros. The company’s enterprises, located throughout Europe, employ 53,000 people. Since 2006, AIRBUS shares have belonged to the European Aeronautic Defence and Space Company (EADS), which is financed by governments and national companies from across the EU.
The most complex issue of the Customs Union and the Single Economic Space is the presence of non-state structures, since states need to part with some of their sovereignty. Moscow believes that the role of the Customs Union Committee, which already boasts considerable powers, should be enhanced. At present, it has forty areas of interest, with this number set to exceed a hundred in future — covering competitive policy, technical regulations and subsidies.
A fully-fledged, permanently operational structure is needed to oversee the Union, being compact, professional and efficient. Russia has proposed a Collegium of the Customs Union Committee, involving representatives of our three states to act as independent international officials.
Astana has suggested that powers could be delegated to a supra-national body, taking responsibility for long-term inner development, effectiveness of each nation’s economy, and monetary and social policy. The fate of Greece, which has failed its other Eurozone members, should be a lesson to us.
The most successful example of real integration at this scale is, of course, the European Union. The post-Soviet space has its own experience, although not always positive.
The construction of the Customs Union and the Single Economic Space lays the foundation for the future Eurasian Economic Union. Belarus believes that the Union State should act as a role model, at least regarding social issues and customs. It is a source of pride to Mr. Lukashenko, having been a catalyst for progress and a ‘laboratory’ for deep integration for the past 15 years. We have expanded our framework of integration from the economic to the social and, even, political. We have seriously advanced in ensuring equal rights for citizens, with a unified system of social guarantees and equal access to education and healthcare. Free movement regarding work and residence are possible due to the Union State, founding a solid base from which our trio can continue. The Union State is ahead of the EU in some spheres.
The best practices of the Union State can be applied across a wider, multi-lateral format. It’s no secret that the Belarusian-Russian Customs Union agreement of 1995 is the supporting frame for the Customs Union of Belarus, Russia and Kazakhstan. According to official Minsk, it’s vital that the Union State, the Customs Union and the SES enrich and complement each other. Existing integration experience should be built upon rather than discarded.
Eurasian Union’s contours
According to the leaders of our three states, the Eurasian Union has potential for the highest degree of integration yet seen within the post-Soviet space. How does Moscow view this?
Wisely, it makes no reference to recreating the USSR; it would be naпve to try to emulate the past. Close integration based on new political and economic terms is imperative, so Russia suggests creating a powerful supra-national association, acting as a central point in our contemporary world. Co-ordination of our economic and currency policies will be essential in creating a fully-fledged economic union on the basis of the Customs Union and the Single Economic Space.
Mr. Lukashenko agrees that, after achieving the maximum possible level of economic integration, our states should establish a solid socio-political superstructure promoting common values, legislation, living standards and so on. Some supra-national bodies will be needed, including those guiding political policy.
Is currency union the next stage?
“We admit that, in this case, the introduction of a new single currency will become a practical issue. Time will tell,” writes the President of Belarus.
The Head of Kazakhstan insists that the Eurasian Union should be a self-sufficient regional financial association — part of a new global currency-financial system. EU experience shows that the creation of a common payment system and a single currency is a logical stage of integration. Under contemporary conditions, the process must take into account trends resulting from the global crisis. However we may criticise the EU and Eurozone, they’ve shown strength in a crisis, providing powerful support to member states finding themselves in trouble.
Three years ago, Mr. Nazarbayev proposed the establishment of a Eurasian supra-national exchange unit to provide a regional reserve currency — a notion which remains relevant today, as the possibility of a new wave of global recession looms, with even more serious consequences. Practical solutions are needed.
“I’d like to note that the creation of a currency union as part of the SES presents a whole new level of integration — like that of today’s European Union. It would be like crossing the Rubicon,” writes the Kazakh President.
Trio welcomes others
Persuading our neighbours of the importance and viability of the trilateral union is our next step, with the aim of expanding membership of the Customs Union and the SES. Kyrgyzstan and Tajikistan are the first to show interest.
The Eurasian Union is an open project, yet our three presidents are in no hurry to push others into an ill-considered decision. Each state must take a sovereign decision, guided by its own long-term national interests.
The geo-economic and geo-political maturity of Eurasian integration should follow an evolutionary path, in a voluntary manner.
Mr. Lukashenko notes, “The reliability and longevity of the new mechanism will finally be determined by whether it ensures full protection of members’ interests. We must clearly understand that any infringements of rights will lead to future division, first destroying trust and then the new structure, which has been created with incredible joint effort. Minor matters today may become considerable in future. However, equality will bring a reliable foundation for our union; we must have equality of economic conditions, including equal access to a single energy and transport system. Only then will people and businesses trust us and our integration, supporting it in thought and action.”
Is Astana the centre of Eurasia?
Kazakhstan’s Astana is located at the geographical centre of the Eurasian sub-continent, so it’s a perfect site for placing the executive bodies of the Eurasian Economic Space.
“We have no ambitions here,” Mr. Nazarabayev assures us. “This would be a serious burden for us. However, it’s a fair tribute to Kazakhstan to initiate the idea of Eurasian integration.”
Kazakhstan believes that the location of the central office on its territory would place the new integration association above suspicion (from within the trio and beyond). It would arouse greater trust in the organisation, which is still taking its first steps. The same theories once dictated the decision to place the CIS headquarters in Minsk and it’s no accident that the headquarters of the European Union are located in Brussels rather than in Paris or Berlin.
Some neighbours of the Customs Union are unwilling to take part in advanced integration within the post-Soviet space as it contradicts their European choice. However, Mr. Putin sees this as false, since the Eurasian Union has no aim to isolate any nation from another. It is being formed on universal integration principles as an indispensable part of wider Europe, united by common values of freedom and democracy and by market laws.
Mr. Lukashenko echoes the Russian Prime Minister, saying that the integration of Belarus, Russia and Kazakhstan has no agenda to divide Europe from the Eurasian Union. Our three states have no desire to isolate themselves. Rather, the Eurasian Union will be an indispensable part of pan-European integration. It hopes to become a key regional player, building relations with leading world economic structures.”
Minsk is proposing an ‘integration of integrations’; the new single customs border will be sited in Brest.
Mr. Nazarbayev spoke in a similar vein, saying that it’s incorrect to view the Eurasian Union as an opportunity to become ‘jointly closed’ from economic, military, political, information, technological, ecological and other threats. It would be short-sighted to establish a new ‘iron curtain’ — a move which Astana sees as absolutely inadmissible. It emphasises that the Eurasian Union will be unstable unless it enjoys wider interaction with the EU.
Back in 2003, Russia and the EU agreed to form a single economic space, co-ordinating their economic activity without the creation of supra-national structures. To continue down this path, our trio has invited Europe to consider the establishment of a harmonious community of economies — from Lisbon to Vladivostok. We could create a free trade zone, with more advanced forms of integration in the spheres of industry, technology, power engineering, education and science. Finally, we could also remove visa barriers.
The proposal is being currently discussed by our European colleagues in detail.
The Customs Union, followed by the Eurasian Union, will be discussing many issues with the EU. Alongside direct economic benefits, Eurasian Union members should be able to enjoy integration with Europe more rapidly and from a stronger position.
The Customs Union of Russia, Belarus and Kazakhstan has already launched negotiations on the creation of a free trade zone with the European Free Trade Association.
Eurasia or Asiopa?
Despite our three leaders’ focus on developing collaboration between the Eurasian Union and the EU, they note that liaison with economic associations in the East is also essential — especially with China. Our trio already boasts rich experience of working with the Asian-Pacific region and, in uniting our efforts, we may more successfully promote our national interests.
The Asia-Pacific Economic Co-operation (APEC) is likely to drive forward the planet’s economy this century, so it can only be to Belarus’ benefit to gain a strong relationship in this direction.
Mr. Nazarbayev notes that several western experts have been quick to view the Eurasian Union as a buffer against Chinese economic expansion. On the contrary, the People’s Republic of China has been a strategic partner of Russia, Kazakhstan and Belarus for the last two decades.
The agenda of the next ATEC forum, which is to take place in Vladivostok within a year, will address trade liberalisation and removal of barriers on the way to economic co-operation. Russia promises to promote a common position for all Customs Union and SES members. Liaisons are sought with all nations — not just China.
Our integration is entering a whole new level, opening up wide prospects for economic development and creating additional competitive advantages. We should gain a stronger position within the global economy, making our voice heard during the process of decision-making and helping set the rules of the game. We may yet shape the contours of the planet’s future.
By Igor Slavinsky
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