Alexander Nagiba exclusively for Vestnik Kavkaza
Last week at the 9th international conference “Eurasian Economic Integration”, which was organized by the Eurasian Bank of Development (EABD), representatives of member countries of the EABD, members of international organizations and integration unions, representatives of scientific circles of the CIS and leading experts on the topic. The goal of the conference was revealing directions of further development of Eurasian integration ahead of establishing the Eurasian Economic Union.
Natalya Korzhova, the Executive Secretary of the Ministry of Finances of Kazakhstan, noted that economic integration of the countries of the Customs Union enabled them to encourage mutual trade and investments and decrease the unemployment rate. According to her, since the CU had been established, investments in Kazakhstan grew by 34% - up to $28 billion. “Participation in the union means development of one of the most important directions for Kazakhstan – development of manufacturing industry,” Korzhova stresses.
Sergey Glaziyev, an Advisor to the President of Russia, spoke about seven problems of Eurasian integration. According to Glaziyev, the first problem is maintenance of the founders of the EurAsEC in the process of Eurasian integration. They gathered 14 years ago to found the Customs Union and the common economic space. He meant Kyrgyzstan, for instance.
However, according to Glaziyev, public support for integration has fallen in Kyrgyzstan. “It fell because we restrained the accession of Kyrgyzstan to the CU and the common economic space for too long,” the Advisor of the President said.
“Another participant of the EurAsEC withdrew from the organization for political reasons. This is Uzbekistan. However, it is well known that public support for Eurasian integration is growing in Uzbekistan. Our task is to help Uzbekistan to realize the benefits and profits to the Uzbek economy which could be brought by full-scale participation of Uzbekistan in Eurasian integration.”
The second problem is stagnation of mutual trade. “I hope that mutual trade will grow at least due to shadow turnover. Unfortunately, there is no growth in officially-registered trade turnover. The reason for this is that we are moving slowly along the path of combining advantages, I mean founding joint companies and corporations,” Glaziyev noted.
The third key problem is decrease of industrial effectiveness. Glaziyev thinks that “the question of possible extension of the EABD as the main instrument of the investment process should be discussed; investments should be taken to a higher level. And there are opportunities for this, despite economic sanctions.” To increase investment activity in all our countries, the states should show business strategic directions of development, Glaziyev says. “When the EurAsEC is closed, it will be important to maintain the experience which was accumulated by the organization in the sphere of intergovernmental target programs,” Glaziyev stressed.
The fourth problem is consequences of the economic disaster in Ukraine. No doubt, this prevents extension of Eurasian integration. “According to our forecasts, Ukraine fell off the line which could lead to stability and stepped into a territory of a drastic decrease. And $100-120 billion are needed to reach any stability,” the Advisor said.
According to him, if Ukraine doesn’t maintain such a situation, its GDP will fall to 50%, the investment process will be stopped, and collapse of the Ukrainian economy will take place. Glaziyev thinks that, without the Customs Union, Ukraine has no chances of providing its economy with stable development. He forecasts that a default is inevitable in Ukraine.
The fifth obvious problem is the economic sanctions. At the moment they are directed only against Russia, but they touch on Belarus and Kazakhstan, no doubt. “Sanctions are directed at destruction of Eurasian integration, let’s be honest. The whole situation with forced involvement of Ukraine into an association with the EU is a response by Washington to Eurasian integration processes,” Glaziyev stated.
The sixth problem is accession of Kazakhstan to the World Trade Organization. After Kazakhstan’s accession to the WTO, current customs rates will need corrections. “All effects of the change should be seriously considered and compensating measures should be developed,” the Advisor stressed.
The seventh problem is the formation of a common market of capital. A final decision on the issue has been delayed to 2020. “It doesn’t mean we shouldn’t move in this direction. We should act according our mutual interests. I don’t know why Belarus is imposed on by agreements on the exchange market where liabilities of all our states are registered. Why do we need liabilities to other countries in our agreements? We agree among each other. We shouldn’t have any restrictions on capital flows, labour force flows, and flows of goods and services. We should have a full-scale common market. Why do we need a trilateral agreement in which we are obliged to open our countries to other states? I don’t understand it, and this is the main obstacle to the integration process.”
