What is the Eurasian Economic Union?

The presidents of Russia, Belarus and Kazakhstan signed the Eurasian Economic Union Treaty yesterday. It will come into force on January 1, 2015, taking integration to a higher level. Members of the Eurasian Economic Union (EaEU) will guarantee free trade of products, services, capital and labour force, coordinated policy in energy, industry, agriculture and transportation. A market of 170 million consumers will be formed, becoming a major center for economic development.

"Our Union has great reserves of natural resources, including energy resources. A fifth of world gas reserves and about 15% of oil belong to it. The three countries have advanced industry and industrial base, a powerful, intellectual and cultural potential. Our geographic position allows us to create transportation and logistical routes on a regional and global scale, binding the mass trade streams of Europe and Asia," said Vladimir Putin.

Russian Vice Prime Minister Igor Shuvalov has not ruled out chances of the EaEU forming a financial and a currency union in the future.

The principle of consensus is an important element at all decision-making levels. "Thus, the voice of every country will be decisive. The staff policy of the Union's structure will be formed taking into account equal representation of the sides and based on the contest to attract the most qualified specialists to the work," clarified Nursultan Nazarbayev.

The majority of experts says that the EaEU is a promising project. "The forming union is being created on equal conditions and all the countries included should receive certain dividends and benefits. In the future, success and positive experience will affect expansion of cooperation in the economic field in the Eurasian space and new countries joining the EaEU. Then the market will expand to the advantage of all member-states," Andrey Smirnov, vice president of the Eurasian Cooperation Development Foundation, told Vestnik Kavkaza.

He reminded that the main goal of the EaEU is to unite the markets of the three states. "The Treaty contains such key terms as free movement of the labour force. It will help put labour migration in order and simplify financial accounts between countries in all aspects. This is attributed to trade relations of member-states. The Eurasian Economic Union was formed to simplify interaction of economies in such a way so that if the Treaty caused any new obstacles or borders, I think, there would be no need to spend so much time working on settlement of all disputes and signing of the document," Smirnov supposes.

Belarusian President Alexander Lukashenko said: "We had to hear all kinds of accusations and complaints: that integration meant a revival of the Soviet Empire, that it meant loss of sovereignty and that it was a burden for Russia, Belarus, Kazakhstan and so on. Belarus was the most criticized of them. Even now, the press causes a fuss: "Lukashenko demands concessions, he bargains bonuses for Minsk. (I am quoting this.) Either Russia or Kazakhstan would again take the burden of Belarusian economic problems. I want to tell these people: guys, calm down! Together with Russia and Kazakhstan we are participants in a joint and fair process. And if we put a burden on each other's shoulders, it is done on a fair basis, it is a friendly union of ours."

Sergey Kizima, a Doctor of Political Sciences, a Belarusian political analyst, considers the EaEU a project beneficial for all its member-states: "It will help recreate the economic conditions needed for economic activities that Kazakhstan, Russia and Belarus had in the Soviet Union. The point is extremely simple: if the Customs Union meant lifting customs barriers, the Common Economic Space meant lifting other barriers in movement of the labour force, goods and services, the Eurasian economic integration contemplates, at least in theory, the highest level of barrier lift to form a good atmosphere for regional economic development. So that the economies of Belarus, Russia and Kazakhstan would resemble a single integration association.

Kizima pointed out that the member-states of the EaEU will need to go a long way towards reaching such an economic ideal: "The problem of waivers arose during the negotiations preceding the signing of the Eurasian Economic Union Treaty. The waivers stay for a long period, in particular, Kazakhstan demands waivers to stay in transportation services until 2025. So Russia and Belarus will have to develop other options for integration in this sector within the framework of the Allied State on their own, excluding Kazakhstan. Unfortunately, the problem of lifting custom fees for Belarus has not been fully resolved. In their latest negotiations, the Russian and Belarusian presidents talked about lifting 50% of custom fees for petrochemical products made from Russian oil and imported beyond the Belarusian Republic after January 1, 2015. Moreover, a loan was promised to partly compensate the frustrated hopes the Belarusian side had in forming the EaEU.

Sergey Kizima praised the influence the EaEU had on business in Belarus: In general, Belarusians are enterprising people, and now our businessmen are enjoying integration into the economic circles of Russia and Kazakhstan, especially considering that Belarusian products, including the ones made by private companies, are very popular on the markets of those countries. You can be confident that their further expansion in the Russian and the Kazakh markets will be successful. I must note that the main obstacle here is the economic recession, both in post-Soviet space and in Europe. In order for all these integration benefits to have a positive effect on development of business in the member-states, a serious economic rise, including one in Europe, is needed. Sadly, the Ukrainian crisis hinders this and threatens prospects of the European Union and Russia achieving a serious level of economic growth.

The document is based on the legal foundation of the Customs Union and the Common Economic Space. Their norms have been optimized, modernized and harmonized with the World Trade Organization. Kyrgyzstan backed the road map project for its membership in the Customs Union, passed at a session of the Supreme Eurasian Economic Council. Nonetheless, it asked for support. Armenian President Serzh Sargsyan said that his country wanted to join the EaEU before June 15.

Alexander Iskandaryan, the director of the Caucasus Institute, believes that membership in the Eurasian Economic Union will be an extension of the Customs Union membership process, because the EaEU is a logical extension of the Customs Union. "Concerning the basics, it is quite a big volume of technical work. There are agreements on many points that need approval. The process is continuing quite intensively. It always seems that a treaty is to be signed at some moment, at some meeting, only to fail all the time. Personally, to be honest, I doubt that it can be done before June 15, but it cannot be discarded nonetheless. It depends on the points that still need discussing," Iskandaryan said.