EEU As a New Integration Community

EEU as a new integration community Integration is considered as one of the main tendencies of contemporary world politics. International division of labour, trade liberalisation and increasing interdependence make countries pursue a policy that is open to cooperation. This has become an indispensable condition for their further prosperity. A self-sufficient country able to produce everything that its citizens need is difficult to find; the reality is that every state in order to ensure its development has to specialize in the key industrial sectors only, sell this production to partners and buy in what it can not produce. This leads governments to cooperate closely with other countries, especially with its neighbors, and create inter-state institutions that facilitate integration. If not, they consign themselves to isolation, risk of lagging in technology and increase in poverty levels. Obviously, integration is a very complicated process; it is fraught with the threat of stagnation in the most vulnerable economic areas, inability to compete with more developed partners and even the loss of sovereignty. Nevertheless, countries take the risk and hope for the positive experience of different economic and political unions such as the EU, NAFTA and ASEAN which clearly demonstrate that this risk can pay off. The post-Soviet countries do not stand aside on this tendency. The period when all of them conducted policy resistant to integration with their neighbours is already in the past; nowadays many of them have a strong political will and economic necessity to form close cooperation with each other. In this article, the most effective integration project of the region, the Common Economic Space between Russia, Kazakhstan and Belarus, is analysed. At this moment, the community is in an ongoing process of development, nevertheless, the future and present benefits for all member-states are obvious. For example, only for the first year of the existence of the Customs Union preceded to Common Economic Space (CES), annual turnover between all three countries grew by 32,1%.1 In total, this project has created an internal market of 165 million consumers with unified laws and free circulation of capital, people and services, and with the total GDP of almost $2 trillion.2 Besides being at almost the same stage of economic development these three countries face similar problems, although these are likely to be solved between them. Certainly, in the foreseeable future, after transition to the next stage of integration – Eurasian Economic Union (EEU) – this community will become a large regional unit with possibility of enlargement. In addition to obvious economic benefits, the states are in line for political and social integration. Thus, Kazakhstan and Belarus are considered to be Russia’s closest allies in Central

1 Statistical data of the Eurasian Economic Commission. Available in Russian at: http://www.tsouz.ru/db/stat/Analitycs_trade/Documents/Analytics_2011.pdf p. 3 [Retrieved 2013-04-21]

2 Statistical data from www.stat.kz, www.gks.ru, www.belstat.gov.by [Retrieved 2013-04-23] Asia and Europe respectively; Union State of Russia and Belarus serves as a basis for further integration, whilst Kazakhstan’s President Nursultan Nazarbayev was the first who expressed a Eurasian Union idea. Russia in its turn openly declares that it is giving priority to former Soviet countries with vested interests in Eurasian integration development. Vladimir Putin, the President of the Russian Federation, made this clear in the international part of his annual Address to the Federal Assembly on December 12, 2012,3 the same provision was written in his order on Measures to Implement the Russian Federation Foreign Policy from 7th of May of 2012,4 besides the fact that he started his first foreign trip abroad after taking office in Belarus he finished it by visiting Kazakhstan thereby showing particular importance for these countries in RF conception of foreign affairs. Integration of Russia, Kazakhstan and Belarus is an indispensable condition of their further development, otherwise they could be “dragged apart” by other regions5 (Vasilyeva and Lagutina, 2011) and great powers may struggle for the region within their sphere of interest. In addition, from a social point of view, integration also finds permanent public support due to strong historical, cultural and human ties, whilst economically it is justified by interdependence among the participating states. Historical background This integration project is not the first in the post-Soviet area. Right after the collapse of the USSR a number of different ways to integrate its former countries was proposed, nevertheless, they found no support among the majority of the authorities in those days. The first efforts to restore damaged ties and reunite 12 states were made by Russia in 1993-1994 but it did not succeed because of the distressful economic situation in the RF and its inability therefore to incur organisational costs, as well as due to the impact of externalities in particular the financial institutions that extended credits to the CIS member-states at that time6 (Lihachev, 2010). In addition, the majority of the former USSR republics conducted their external and internal policies in a very different way from integration preferences, and very soon, it became clear that integration of all of them under the authority of the Russian Federation did not seem possible. The next attempt was made in 1995, that project had been worked out in order to create a Customs Union in a restricted membership of Russia, Kazakhstan and Belarus, which Kyrgyzstan and Tajikistan joined later. Nevertheless, that community also disintegrated very

3 Address to the Federal Assembly. Available in English at: eng.kremlin.ru/news/4739. [Retrieved 2012-04-21]

4 Executive Order on Measures to Implement Foreign Policy. Available in English at: eng.kremlin.ru/acts/3764. [Retrieved 2012-04-21]

5 Н.А. Васильева, М.Л. Лагутина, “К вопросу о формировании Евразийского союза: теоретический аспект” in Евразийская Интеграция: Экономика, Право, Политика, 2011, No 10, p. 168

6 See, Лихачев, А.Е., «Таможенный Союз России, Беларуси и Казахстана: история, современный этап и перспективы развития», в Российский Экономический Вестник, №6, июнь, 2010, pp. 4-5 soon due to a huge difference within their economic situation in the member-states and an unrealistic development plan (for instance, in accordance with intergovernmental agreements on the Customs Union creation it was scheduled that taxes and tariffs among participating parties should be eliminated in six months, which is a very short period in such situations). Besides that, the Asian Financial crisis exploded in 1997-1998 forcing countries to give up on integration projects and save their own economies alone7 (Lihachev, 2010). Since 2000, the new phase of the Eurasian integration has begun. It coincided with the advent of Vladimir Putin’s rule in Russia, improvements in the economic situation in a number of ex-Soviet countries and changes within the attitudes of their authorities towards integration that was in a more positive way than before. On October 10 of 2010, the presidents of the Republic of Kazakhstan, the Russian Federation, the Kyrgyz Republic, the Republic of Tajikistan and the Republic of Belarus signed a treaty on the creation of the Eurasian Economic Community (EurAsEC),8 the integration project that became one of the most successful ones in the post-Soviet space. It has gone through a long path of development. The very first ideas about that kind of close cooperation as well as the “Eurasian way” of integration after the collapse of the Soviet Union were expressed by the President of the Republic of Kazakhstan Nursultan Nazarbayev9 (Nazarbayev, 2003). It is very symbolic because before him the concepts of Eurasianism had been used widely by philosophers and writers rather than by prominent public officials. First of all it was an economic project based on equality and parity, which all members-states benefited from to varying degrees. Nevertheless, in spite of the political will to integrate all participating countries (except Uzbekistan that joined the organisation in 2006 but suspended its membership in 200810), great achievements had been made only until the stage of a free-trade zone. Then the integration process stopped because of the great imbalance in economic development of the member-states and their differently directed national policies. On the stage of the creation of the Customs Union, tariffs of Tajikistan and Kyrgyzstan were weakly coordinated with the reference list of the common customs tariff introduced by Kazakhstan, Russia and Belarus11(Lihachev, 2010). That made these three countries abandon the idea to form the Customs Union and promote further integration in the full number of EurAsEC member- states. In October 2007, the Treaty establishing the Single Customs Territory and Customs Union

7 See, Лихачев, А.Е., pp. 5-8

8 Treaty on the establishment of the Eurasian Economic Community. Available in Russian at: //archive.kremlin.ru/text/docs/2000/10/107540.shtml [Retrieved 2013-04-20]

9 Н. Назарбаев, На пороге XXI века, Алматы, Атамура, 2003 (2-е изд), p. 98

10 Official web-site of the EurAsEC//www.evrazes.com/about/history

11 Лихачев, А.Е., p. 8 was signed,12 and after the long process of tariff regulation, it became fully operational on the 1st of July of 201013 by abolishing all internal borders among states and establishing the common customs tariff with Third Countries. That process was not easy for the participating states, especially for Kazakhstan, where customs duties had been lower in comparison with Russian ones that were taken as a basis.14 Nevertheless, the states succeeded in overcoming these problems as well as disputes between Russia and Belarus around dairy product supply and gas transportation15 (Saivetz, 2012), and today the Customs Union operates to the full. The next step of integration was the creation of the Common Economic Space of Russia, Belarus and Kazakhstan in 2012 that implies the free movement of goods, services, capital, and people.16 The positive effects of the CES have already been noticed by ordinary people, who do not have to go through bureaucratic procedures such as passport control and registration when they cross borders between CES countries, while entrepreneurs of states-participants enjoy the same advantages and privileges as domestic producers17 (Putin, 2011) The principal thing about CES is that this is a supranational organisation regulated by the Eurasian Economic Commission that had been established at the end of 2011 as a permanent body in order to come into place for the Commission of Customs Union. It is an independent institution, where decisions are mandatory for the member-states.18 At the moment it is the only supranational organ of the community, nevertheless other common institutions such as Eurasian Congress of Industrialists and Entrepreneurs and Eurasian Assembly, a place for parliamentary

12 Treaty establishing the Single Customs Territory and Customs Union. Available in Russian at: http://tsouz.ru/Docs/IntAgrmnts/Pages/D_sozdETTiformTS.aspx [Retrieved 2013-04-20]

13 RiaNovosti, March 17, 2011. Russian, Kazakh leaders to discuss bilateral ties, international issues in Moscow. Available in English at: http://en.ria.ru/russia/20110317/163046434.html [Retrieved 2013-04-20]

14 Interfax, October 27, 2009. Тарифы Таможенного союза сформированы в основном на основе российских пошлин – Шувалов. Available at: http://www.interfax.by/news/belarus/64049 [Retrieved 2013-04-21]

15 C. R. Saivetz, “The ties that bind? Russia’s evolving relations with its neighbors” in Communist and Post- Communist Studies, Volume 45, 2012, p. 408

16 О вступлении в силу соглашений по созданию Единого экономического пространства. Available in Russian at: http://archive.is/pNx0 [Retrieved 2013-04-17]

17 V.Putin, “A new integration project for Eurasia: The future in the making” in Izvestia, 4 october 2011. Available at: http://www.rusemb.org.uk/press/246 [Retrieved 2013-04-13]

18 Article 5 of the Foundation Treaty of Eurasian Economic Community. Available in Russian at: http://www.customs-union.com/ договоры / договор - о - еэк [Retrieved 2013-04-17] debates19 (Nazarbayev, 2011), are planned to be created after 2015 when, as noticed above, the Eurasian Economic Union should be established. The Eurasian Economic Union will imply coordinated macroeconomic, fiscal and competitive policy; the joint launching reforms in the markets for goods, services, labour and capital; as well as creation of common transportation, telecommunication, and energy routes between the member-states.20 In addition, the issue of a single currency within the community is currently under development, nevertheless, its future and final creation date are not decided yet.21 The CES and the future EEU is an open organisation that favours other countries to join it, especially Kyrgyzstan and Tajikistan, alliance partners within EurAsEC that continue to function, and Ukraine, with which the CES countries are economically interdependent. Eurasian integration in a view from around The Eurasian integration is not discussed in foreign academic circles and in the mass media as widely as in domestics ones. Nevertheless, it is a mistake to say that the group’s colleagues from abroad have ignored it. Another matter is how it is broadcasted and interpreted. In some aspects, integration in the post-Soviet region is represented by the Western political experts differently from the way it is viewed by Russian, Kazakhstani and Belarusian scholars. For instance, at this time it is seen as an inevitable protective measure for the participating states against the increasing influence of Chinese entrepreneurs in the region22 (Lewis, 2012), while in accordance with the high officials of the group, the P.R.C. is one of its strategic partners, with whom it has been establishing close relations. In addition, the countries maintain friendly relationships with China on the political and military levels within the Shanghai Cooperation Organization (SCO) and Conference on Interaction and Confidence- Building Measures in Asia (CICA)23 (Nazarbayev, 2011).

19 N.Nazarbayev, “Eurasian Union: From Idea to the History of the Future”, 2011. Available in English at: //personal.akorda.kz/en/category/statyi/1428 [Retrieved 2013-04-15]

20 Declaration on Eurasian Economic Integration from November 18, 2011. Available in Russian at: http://news.kremlin.ru/ref_notes/1091 [Retrieved 2013-04-17]

21 RiaNovosti, July 15, 2012. Единая валюта ознаменует окончание формирования Евразийского союза. Available in Russian at: http://ria.ru/economy/20120615/673865470.html [Retrieved 2013-04-17]

22 Eurasian Economic Commission of Russia, Belarus and Kazakhstan is good for all Available in English at: www.telegraph.co.uk/sponsored/russianow/opinion/8992290/Eurasian-Economic-Commission-works.html [Retrieved 2013-04-15] and D.Lewis, “Who’s Socializing Whom? Regional Organizations and Contested Norms in Central Asia” in Europe-Asia Studies, Routledge, University of Glasgow, Volume 64, Number 7, September 2012, p. 1226

23 See, N.Nazarbayev, 2011 Another controversial point is that some scholars abroad consider Eurasian integration to be exclusively Russia’s project that hides its imperial ambitions24 (Saivetz, 2012; Brzezinski, 2012). In the CES countries, the opinion is different. The very ideas of Eurasianism are rooted in the works of the Russian clerisy of 1920-s, its origins are associated with the names of Nikolai Trubetzkoy, Petr Savizkiy, Georgiy Vernadskiy and others. Later, their ideas were developed by Nikolai Gumilyev in some of his major works such as Ancient Rus and the Great Steppe and From the Rus to Russia, and nowadays his name firmly identifies with the concepts of Eurasianism25 (Gumilyov, 1993, 2008). He argued that historically, culturally and ethnically Russia is close to Central Asian nations and they are those with whom it should create common future. Today among post-Soviet countries, it is widely recognised that N.Nazarbayev is the main initiator of the integration, because he was the first who attached great importance to it and has been promoting the Eurasian way of cooperation since 1994. Therefore, eurasianism is not only the course of economic development it is a mode of thought, philosophy that concerns different aspects of social life. As for Russia’s imperial ambitions, CES countries’ leaders have consistently affirmed that this integration community does not allude to the reincarnation of the USSR, but it is caused by pragmatic, rational decisions of its member-states that will benefit them all. As the President of Kazakhstan has noted, it is necessary to get over fears caused by the word “union” which is associated with Soviet past and re-emergence of empire and consider the future Eurasian Union as a fundamentally different integration group. Despite the evident leadership of the RF in the community, it is a mistake to accuse it of having intentions to limit its neighbour states’ sovereignty. For instance, in NAFTA consisting of the USA, Canada and Mexico, the U.S. is an unchallenged leader, too, nevertheless, nobody mentions possible problems that may be related to their imperial designs26 (Nazarbayev, 2011; Putin, 2011). The same should be applied in case of CES. The Eurasian Economic Union in the world community The integration group took guidance within their planning from the European Union planning and therefore the creation of this supranational organisation should be similar to the EU.27 This distinctive feature sets it apart from other regional trade blocks because the majority

24 See, C. R. Saivetz, 2012, pp. 401-403 and Z. Brzezinski, “Balancing the East, Upgrading the West. U.S. Grand Strategy in an Age of Upheaval” in Foreign Affairs, Volume 91, No 1, January/February 2012, p. 99

25 See, Н.Гумилев, Древняя Русь и Великая Степь, Москва, Мысль, 1992 and Н.Гумилев, От Руси до России, Москва, Айрис-пресс, 2008

26 See, N.Nazarbayev, 2011 and V.Putin, 2011

27 C. R. Saivetz, 2012, p. 409 of them pursue primarily economic interests with law concernment in political close cooperation. Most of contemporary integration communities pursue the way known as open or new regionalism. It is characterised by a priority for respecting sovereignty, non-interference in the internal affairs, openness to cooperation with third countries, avoidance from supranational bodies, equality of all member-states, and consensual decision-making28 (Murray, 2010). The classic examples of the open regionalism are ASEAN and NAFTA. For example, the ASEAN member-states, in spite of the relatively long-lasting history of this project that has been in operation since 196729 (Murray, 2010), signed the Charter of the organisation only in 200830(Murray, 2010). This fact obviously demonstrates the countries’ disinterest in close integration that can spill over from economics to politics. That model could not be copied in full by the CES countries regardless of some scholars, who argue that they should follow the East-Asian way of open regionalism31 (Vasilyeva and Lagutina, 2011), the only feature that both integration groups have in common is their openness to external cooperation. The CES and the planned EEU are not designed in order to close its internal market and protect it from external rivals, on the contrary it is an association opened to the integration into the world economy. It is obvious that the advantageous geographic position of the community between highly-industrialized West and dynamically developing East makes impact on its further evolution. That statement has been repeatedly declared by states’ officials. Thus, Vladimir Putin in his article A new integration project for Eurasia: The future in the making, which was considered as part of his presidential campaign and found broad resonance in the world mass-media as well as in academic circles, pointed out that the organisation will serve as a “bridge” between Europe and the Asia-Pacific region32 (Putin, 2011). In this regards, the transport corridor West Europe-West China, the Trans-Eurasian highway, which is currently under construction, could be considered as a physical manifestation of the idea of the Russian President33 (Nazarbayev, 2011). In parallel, CES has a strong interest in further trade liberalisation with neighbour states. Thus, Russia proposed the creation of a free-trade zone between the EU and the future Eurasian Economic Union that will expand from Lisbon to

28 Ph. Murray, “East Asian Regionalism and EU Studies” in Journal of European Integration, Volume 32, No.6, November 2010, p. 599

29 Ph. Murray, 2010, p. 599

30 Ph. Murray, 2010, p. 600

31 Н.А. Васильева, М.Л. Лагутина, 2011, p. 171

32 V.Putin, 2011

33 N.Nazarbayev, 2011 Vladivostok34(Putin, 2011), “an integration of integrations” as the President of the Republic of Belarus Alexander Lukashenko has noted35 (Lukashenko, 2011). There are too many cooperation projects launched by the Eurasian group that could be covered in only one paper. Nevertheless, it is clear that close collaboration with third countries is an indispensable condition of CES success. Conclusion Eurasian integration has great value for its member-states not only on the regional level but also on the international scale. It is a way in which they project themselves. Moreover, it enables them to take a well-deserved position in the global market and become one of the poles in the world arena36 (Putin, 2011). Establishment of the EEU is a highly demanding task, but its success will lead to the creation of a prosperous region, mutually beneficial cooperation and confidence – the one thing they need most of all.

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34 V.Putin, 2011

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