Eurasian modernization project. Part 3

Political Science Center "North-South"

The report "Prospects for economic cooperation between Russia and Azerbaijan in the conditions of formation of the Eurasian modernization project", prepared by a group of Russian and Azerbaijani experts under the auspices of the Political Science Center "North-South", was presented at the third Russian-Azerbaijani inter-regional forum "Russian-Azerbaijani Dialogue - 2012" in Baku.

The analytical report is devoted to an analysis of prospects of cooperation between the Russian Federation and the Azerbaijani Republic in the context of Eurasian integration. Promising directions of cooperation between Russia and Azerbaijan were considered separately. Development of a mutually-beneficial format of economic cooperation between the states of the Eurasian project and Azerbaijan was justified.

Vestnik Kavkaza continues to publish fragments of the analytical report.

Advantages of economic cooperation with the EEP states for Azerbaijan:

-          Cooperation with the EEP will give Azerbaijan an opportunity to improve access for Azerbaijani products to the Customs Union market (participation in government purchases, price regulation)

-          The quality of Azerbaijani products and services will improve after accepting the technical and phytosanitary rules of the CU.

-          Prospects for innovative production and joint projects on “new industrialization” will appear (for example, production of a technological basis for alternative energy at the Sumgait Technological Park).

-          New opportunities for experience exchange on management organization and preparation of a management staff reserve will appear.

-          Advantages of the general currency regulation will become clear in the next decade.

By 2022 the Customs Union might shift to a common regional currency. Probably a supranational currency will appear, which will be emitted by a supranational bank, just like it was in Europe with the euro.

Extension of the huge Russian regional market to neighboring countries will be a big advantage for Azerbaijan, as elimination of customs borders between countries and regions leads to decreasing transaction costs. As a result, consumers benefit. In addition, competitiveness will be expanded: new products appear, their quality increases. If the participants of Eurasian integration agree on monetary policy and establish a common central bank emitting a common supranational currency, common fiscal policy will be first on the agenda.

Considering the fact that in the last two decades the participants of the EurAsEU have been developing in their own directions, it is difficult to elicit differences in the short term. Thus, the Russian Central Bank viewed calmly supranational currency fluctuation within 20%. In Kazakhstan the fluctuations were within 2%. The monetary policy will have to be corrected. Russia and Kazakhstan have almost equal levels of inflation, but in Kazakhstan the base interest rate is 6.5% per annum, while in Russia it is 8%. During the crisis, the Bank of Russia gave banks unsecured loans, and Kazakhstan didn’t do that. There are different approaches to control. In Kazakhstan you need $70 million to open a new bank, in Russia this limit is much lower.

Therefore, time is needed for gradual development of the game rules which would be accepted by all the countries participating in the Customs Union and the integration union, despite their number. By 2020, currency, monetary, and control policies should be similar. International standards will ground monetary policy. A lot of questions arise in the sphere of relations between pension funds and funds of guaranteed deposits. They don’t exist. In Kazakhstan the pension age differs from that in Russia: for women – 58 years, for men – 63 years. In addition, Kazakhstan has a compulsory stoker system, and its share in GDP is more than 10% - more than $18 billion. This sum is almost equal to the amount in the population's bank deposits. Russia has also discussed the idea of reform, but it didn’t result in anything. Azerbaijan can start preparation of the pension reform on the model of the CU participants even today.

Partner status in the Eurasian process should give Azerbaijan an opportunity:

-          to promote its industrial, commercial, and cultural brands on the markets of the Eurasian Union;

-          to have guarantees of investments by the participants of the EAU into Azerbaijani social projects;

-          to gain necessary opportunities for preparing specialists and staff in the sphere of post-industrial services and in special branches of industry;

-          to gain significant capacity for new production.

The Eurasian integration project is aimed at decreasing the deficit in socio-economic cooperation between Russia and the states of the former Soviet area: integration will increase the potential of bilateral relations in the social sphere. Considering the close cooperation at the level of citizens, participation of Azerbaijan in the Eurasian project will positively influence citizens’ perception of the policy of their state, due to a rise in living standards in the Eurasian area.

Healthcare cooperation projects

This segment of the Eurasian cooperation programs should be distinguished for two reasons. First of all, the health care system directly influences the ability of the state to support not only a high standard of life in the country, but also the ability to compete with other states in general. As for the Eurasian projects, the modernization resources of the healthcare system become prestigious elements for all participants of the union.

The sphere is still an unengaged resource of bilateral integration at government level. At the same time, all the CIS countries declare and strive for qualitative strategic development of their healthcare service systems. Within the Eurasian core research and practice, bonds in certain healthcare branches (oncology, ophthalmology, surgery) will be established. These bonds can be quickly restored due to common principles of scientific and medical practice which remain since the Soviet period.

A list of proposals to Baku:

1.      Under partnership cooperation with the WHO, Russia should propose organization of training courses for doctors with the participation of Russian experts in the CIS capitals (and in agricultural regions too). The project can be started within the bilateral cooperation treaties between the Academy of Medical Education of the Ministry of Health and Social Development of Russia and the Ministries of Health of the CIS countries (Azerbaijan carries out training courses for doctors on various profiles). Special programs on innovative healthcare systems should be developed.

2.      At the bilateral level, organization of joint Centers of Higher Medical Technologies in the CIS regions should be discussed in the spheres of: oncology, cardiovascular diseases, traumatology, orthopedy and endoprosthesis replacement, and ophthalmology.

3.      Considering extension of transport flows between Azerbaijan and the CU, it is necessary to prepare the program of arrangements on development and improvement of emergency healthcare in traffic accidents along Russian borders and major highways with the participation of helicopters and special machinery, including winter items (similar to 911).

4.      The Eurasian Union will develop documents on cooperation in the social sphere, form mechanisms of cooperation within the problem of the spread of viral infections, participate in development and be an initiator of documents regulating healthcare to citizens of the CIS countries in future years.