How to turn from the road to a civilizational abyss

By Vestnik Kavkaza

On Monday rumors spread about a trade war between Moscow and Astana: in the context of the devaluation of the ruble, Kazakhstan has launched an embargo on Russian oil products and has withdrawn some products from distribution networks; while Rospotrebnadzor has found violations in Kazakhstan’s imports. Moscow and Astana have already stated that there is no trade war. The issue of an embargo on Russian oil products and other goods will be discussed on April 28-29 between vice premiers at a session of the EAEC Council. “We remember how the tenge has devaluated; there were similar problems with Russian goods. Similar consequences followed fluctuations of the Belarusian ruble,” Alexei Likhachev, the deputy head of the Ministry of Economic Development, said. “I can say the steps are understandable. Some countries take administrative measures on protection of some goods on their markets. It will continue for a long time. However, I should stress that it is not a rule, but an exception,” RIA Novosti cites Likhachev.

A member of the Public Chamber of the Russian Federation, Iosif Diskin, thinks “there is very hard work on the approximation of the mechanisms of economic functioning. Deep economic integration is only just beginning. Some mismatches are inevitable, especially in the context of foreign shocks. One currency goes through deeper devaluation than the other. And of course there is a question, no one was talking about a trade war or about an investment war, when two years ago a large number of Russian companies quickly registered in Kazakhstan. Everyone looked at this process and said, okay, yes, it is necessary to adapt the investment climate in Russia in order not to create such incentives.”

According to Diskin, a similar situation is being established today: “A deep devaluation of the ruble is occurring, which is now being compensated for, though giving serious external economic advantages to some companies. The market is the market, everyone reacted, rushed to buy Russian products. Naturally, in the presence of such price shocks, the country is trying to mitigate this situation and protect its national interests.”

Diskon reminds that somewhere in the mid-60s to mid-80s the European Union was involved and that snuffed out a variety of such shocks. “And we need to be ready for this, not turning it into a battlefield. Better debug the mechanism, debug the compensation mechanisms and so on. The main criterion by which we should judge the economic integration.”

Returning to the roots of Eurasian integration, Diskin recalls that in 1992 he was working as President Nazarbayev’s advisor. They discussed that it was impossible to build an economy on only raw materials and agriculture, as the spheres did not create a demand for culture and science. “This is the road to a civilizational abyss. It is necessary to develop engineering, applied science, and so on. What is needed here is a market of at least 200 million people. Right now it's just a standard global settlement. In the automotive industry a billion people are needed, which is why this situation is occurring with the automotive industry in Russia,” the economist says.

Hence, according to him, the imperative of hard Eurasian economic integration. And hence the desire of the leaders of Russia and Kazakhstan to develop deeper economic integration in order, and this is the main criterion, in order to ensure the potential development of civilization, the development potential of human and social capital. It is necessary to measure these parameters as the final result of economic integration.