Prospects for Eurasian Integration

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Prospects for Eurasian Integration 08.04.2020 10:23



The initiative put forward in December 2015 by Russian President Vladimir Putin to form an economic partnership between the EAEU member states, the Association of Southeast Asian Nations (ASEAN) and the SCO in the format of the “Greater Eurasian Partnership” significantly enhances the role of Eurasian integration and requires establishing between them close interaction. Including in the territory of the post-Soviet space, where simultaneously with the activities of the EAEU, the Chinese initiative One Belt, One Road (OBOR) is being implemented (its special case was the Silk Road Economic Belt project (SREB).

In practice, the formation of the “Greater Eurasian Partnership” is largely dependent on Russian-Chinese interaction in Eurasia. Thus, the formation of the SCO's economic “basket” is mainly determined by the Chinese side, which is interested in implementing not multilateral, but bilateral projects, mainly in the economic sphere. Moreover, China is trying to use SCO as a shield for realizing its OBOR initiative. In such circumstances SCO has no significant influence on the Eurasian integration.

Formally, the activities of the EAEU and the implementation of the SREB are coordinated by pairing. But in practice, this is carried out only in the field of trade on the basis of the Agreement on Trade and Economic Cooperation of the EAEU with the PRC. Beijing is extremely interested in opening the Union market for its goods, but this will have a negative impact on manufacturers from EAEU member countries. As a result, this agreement is a framework in nature.

The Russian Federation and other member states of the Union are interested in obtaining loans from the PRC, modern technologies and the creation of transport infrastructure on their territory. However, the Chinese, as a rule, refuse technological cooperation, express their readiness to create transport infrastructure only on concession terms, and provide loans on very stringent conditions. At the same time, they consider Russian territory as one of the possible routes for the movement of Chinese goods. The only exception is the Northern Sea Route, where Russia has yet to solve many technological and other tasks.

On the other hand, Beijing’s initial plans for SREB were substantially adjusted, including the creation of environmentally harmful industries in Central Asia with Chinese engineering and technical personnel. In Beijing, they cannot ignore the growth of anti-Chinese sentiments in Kazakhstan and Kyrgyzstan. This creates additional opportunities for the Eurasian integration process.

EAEU cooperation with ASEAN countries and other Eurasian states is developing through the formation of free trade zones (FTAs). On October 27, 2019, a temporary three-year agreement of Iran with the EAEU on the establishment of an FTA came into force. Since that time, more than 500 Iranian goods have preferential terms of trade in the Eurasian space. EAEU member countries will also receive preferences. In October, similar agreements were signed with Singapore and Serbia.

From a formal point of view, the process of Eurasian integration is developing successfully. So, at the meeting of the Supreme Eurasian Economic Council, which was held on October 1, 2019 in Yerevan, not only the President of the Republic of Moldova Igor Dodon was present, but also the President of the Islamic Republic of Iran Hassan Rouhani.

At this meeting, the Concept for the Formation of the EAEU Common Financial Market was approved. This will simplify the access of citizens of the member countries of the Union to financial instruments and make this market segment unified and transparent.

Among the successes of Eurasian integration in 2019, the following achievements can be distinguished.

By 2025, the formation of a common electric power space is expected at the same time as the creation of union markets for gas, oil and oil products. One of the obstacles for this is the lack of unification of the legislation of the EAEU member states in the field of gas supply and transportation.

The creation of a single market for services continues. Already unified rules in 53 service sectors, which makes up more than 50% of the total volume of services provided within the EAEU.

In accordance with the Main Directions for the Implementation of the EAEU Digital Agenda until 2025, infrastructure is being formed and personnel are being trained for the single digital space of the Union. Funds in the amount of 143 million rubles are provided for the implementation of priority digital projects in the EAEU budget for 2020.

The barriers in the framework of trade and economic cooperation of the EAEU member countries are being consistently removed. So, from May 30, 2019, the veterinary and sanitary control (supervision) was canceled on the Kyrgyz-Kazakh section of the state border. Previously, this was used, for example, to ban the import into Kazakhstan of cheaper and higher-quality dairy products from Kyrgyzstan.

At the same time, the process of Eurasian integration is quite controversial. Firstly, the USA, the EU and, to a lesser extent, China hinder the expansion of the membership of the EAEU. As a result, in the near future, only Uzbekistan can join the Union as an observer country.

Secondly, the EAEU Customs Code (2018) operates with a large number of exemptions, especially in relation to Kazakhstani goods.

Thirdly, making profit from the counter-sanctions of Russia, Belarus is actively using its territory to re-export European and Ukrainian goods to the Russian Federation. This is happening against the backdrop of difficult Russian-Belarusian relations and the appointment of Mikhail Myasnikovich as Chairman of the Board of the Eurasian Economic Commission (EEC).

Fourth, the unresolved Ukrainian crisis significantly weakens Eurasian integration. So, in September, Kazakhstan filed a complaint with the ECE about the creation by Russia of obstacles to transporting coal to Ukraine. At the end of October, the Russian Federation allowed the transit through its territory of 140 thousand tons of coal per month, but this did not cover the request of Kazakhstani coal exporters in full and, in their opinion, led to the disruption of such supplies.

Fifth, the transit potential of the Eurasian space is not being used effectively enough. So, in the EAEU, the share of transport in the cost of goods is about 30%, while in the EU it is only 10%. It is obvious that new technologies and digitalization will help in the space of the Union fight against bureaucratic obstacles and counterfeit goods.

Thus, in difficult conditions, the process of Eurasian integration continues to develop with the goal of forming a “Greater Eurasian Partnership”. Its positive dynamics is mainly determined by the activities of the Russian Federation with hidden resistance from Belarus and Kazakhstan regarding the creation of supranational structures and political institutions. In 2020, the coronavirus pandemic and the revitalization of the United States in the post-Soviet space will have a negative impact on this process, this is confirmed by the recent visit of US Secretary of State Michael Pompeo to Belarus, Ukraine, Kazakhstan and Uzbekistan, including holding a regular meeting on February 3, 2020 in Tashkent in C5 + 1 format.

In view of the foregoing, we consider it appropriate:

1) to intensify work with the Tajik leadership on the republic's accession to the EAEU (Dushanbe should be offered significant financial and economic incentives);

2) to convince the leadership of Uzbekistan to join the EAEU as an observer country;

3) qualitatively review for a significant reduction in the number of exemptions from the EAEU Customs Code (2018);

4) continue to exert pressure on Minsk in order to stop re-export of sanctioned European and Ukrainian goods to the Russian Federation.