The EEU: Towards a World of Team Players – Economy Matters

He who drives along the motorway from Russia into Belarus or vice versa will see no control posts either for cargo, vehicles or persons at the border. Further southeast, control posts between Russia and Kazakhstan are at an advanced stage of being dismantled. Together with Kyrgyzstan and Armenia, they make up the Eurasian Economic Union, a block of states within which all barriers concerning trade, investment, human employment and other economic transaction are lifted.

EEU-Volledig

One of the (many) misunderstandings” regarding the EEU is the misconception that the new trade block has been formed at the initiative of the Russian Federation, or, as often suggested by Vladimir Putin in person, with the aim of “re-establishing the USSR” as a dominating political power house on the territory of the former Soviet domain. None of this bears an inch of truth: it was in fact Kazakhstan’s President Nursultan Nazarbayev who first came up with the idea more than a decade ago, after having seen several similar attempts strand. Moreover, if the USSR’s main aim was to keep free, private enterprise out, the EEU aims to get it in and develop it in a joint effort.

“A powerful long-term vector of peace”

“The year 2015 will go down in history as the beginning of the new stage of Eurasian integration. The Treaty on the Eurasian Economic Union that incorporates Kazakhstan, Russia, Belarus, Armenia and Kyrgyzstan, will come into force on January 1. For the first time in history, an economic union with a powerful natural and resource potential, strategically important in terms of global and regional transport, energy and technology systems is being created on the vast expanses of Eurasia on a voluntary, equal and mutually beneficial basis,” Nazarbayev was quoted by the Kazakh independent newsreel Tengrinews as publicly declaring on the occasion. “We have combined our economic potentials in response to the challenges of the XXI century,” the Kazakh head of state continued. “The Eurasian Economic Union is created primarily for the ordinary people and their vital interests. On the vast territory stretching from the Baltic to the Pacific, from the Arctic to the Tien Shan mountains, more than 180 million citizens of the member states are gaining equal opportunities for business, free trade and employment, use of communications, expansion of interregional cooperation and humanitarian cooperation. Today, we are defining a powerful long-term vector of peace, harmony, mutual support and benefits for our countries. At the same time, integrating economically, all member states shall strengthen the immutable principles of political sovereignty and independence, cultural and linguistic uniqueness of our peoples. Of course, volatility of the world markets, economic sanctions, failing trust between the major powers of the world, threats, aggravation of military and political situations – all this will affect the processes of formation of the Eurasian Economic Union. We are taking these challenges into account.” Dixit et fecit.

 Goods, services, capital and work force 

In spite of what most western mass media have suggested all year long in a lengthy and exhaustive statement published by the Kremlin on the occasion of the signature of the EEU treaty in Astana towards the end of 2014, Vladimir Putin frankly explains the new Union’s advantages but also its limits and restrictions. “The Agreement we signed is a truly historical milestone that opens up broad prospects for the development of our economies and improving the well-being of our countries’ citizens,” the text reads. “Russia, Belarus and Kazakhstan are moving towards a completely new level of cooperation by creating a common space where goods, services, capital and work force can move freely. The three states will follow a coordinated policy in such key branches of the economy as energy, industry, agriculture and transport.” Similar statements have been disseminated concerning the entry of Kyrgyzstan and Armenia, which took place in the course of 2015.

The spectre of a “reborn USSR” on the rise, much-suggested by western political pressure groups and their media outlets is categorically wiped off the table by the EEU leaders and representatives. “A new economic organisation has appeared on the international arena, one that has full juridical personality and acts based on the principles of the World Trade Organisation,” Putin stated. “It is important that the transfer of certain authority to supranational agencies of the Union is of no detriment to the sovereignty of our states. Mutual benefit from integration has already been demonstrated in practice. The economic ties between Russia, Belarus and Kazakhstan are expanding, their trade structure is improving, the share of high-tech goods in the overall trade structure is increasing and our countries are becoming ever more economically competitive in the world. In the past three years trade turnover within the Customs Union has gone up by 50 percent – that is by $23 billion (in 2013 it amounted to $66.2 billion). Belarus and Kazakhstan together come in third in the overall trade balance of the Russian Federation (after the EU and China).”

Keep provisions flowing

The most remarkable thing of it all is that so far the process has taken place in a perfectly serene manner.  Thousands of officials in all corners of the Union are working feverishly on the giant task of harmonising quality and label procedures. Especially in cash-strapped Kyrgyzstan, this was needed badly. The country will profit from its entry in the form of support for its state budgets for 2015-2018 to keep the deficit within acceptable limits, prevent debt accumulation and keep basic social provisions flowing.

 

Meanwhile, the EEU continues to spread its wings and to consolidate its position in the word. Trade pacts with China, Vietnam, Egypt, Israel and the Latin-American bloc Mercosur are expected to be inked and ratified this year, and in repeated statements state leaders have declared that the door for the EU is wide open. Brussels remains under pressure from Washington not to engage with the EEU, but in the end advantages may well prevail over political demagogy. Several European governments are already in such a mood. For Europe, the advantages will be enormous: it will have its food export market back, profitable investment opportunities will return and tourists will come by the million on both sides of the current fence.

 

BY CHARLES VAN DER LEEUW

WRITER AND NEWS ANALYST

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