The newly formalized Eurasian Economic Community (EEC) represents the most ambitious effort to create a customs union and free trade zone among Newly Independent States since the break-up of the Soviet Union. Kazakhstani President Nursultan Nazarbayev has been chosen to guide the organization's critical early phase of development, which seeks to avoid the pitfalls that have hampered regional cooperation initiatives during the last decade. One of Nazarbayev's chief challenges will be ensuring that Russia does not assume disproportionate influence over the organization.
On May 31 in Minsk, Nazarbayev, once a prominent Kazakh Communist and popular Soviet politician, became the head of the EEC's coordinating State Council. Russian president Vladimir Putin nominated Nazarbayev, and the heads of Belarus, Tajikistan, and Kyrgystan endorsed the nomination. So this long-time advocate of blending economic alliances and national sovereignty now finds himself charged with coordinating the EEC after 10 years of post-Soviet economic trial and error.
Since signing the EEC integration treaty in Astana in the fall of 2000, member states have ratified a package of 18 supplemental implementing documents. Modeled in part upon successful integration efforts such as the European Union, the North American Free Trade Agreement (NAFTA), and Mercosur, the treaty draws its primary inspiration from a decade of abortive experiments among the former Soviet states.
The 1991 treaty creating the Commonwealth of Independent States (CIS) includes language about a "common economic space." But this was more problematic than many expected, and countries have struggled to establish mechanisms for moving people, goods, and services across borders. The past decade's jump in international trade and investment largely bypassed the economies of the CIS. What's more, lacking coordinating mechanisms, CIS countries started trading less with each other: trade among members declined as a proportion of CIS total trade. Nationalism and one-upmanship, as well as bureaucratic obstacles, fostered a climate of protectionism and economic hostility.
To combat this syndrome, CIS agreements have long sought to further coordinate monetary, customs, employment, tax and investment policies across the region. CIS countries have been formally pledged to a free trade area since 1993, when they signed an Economic Union Treaty to reduce internal tariffs, create common external tariffs, and establish a system for payments and settlements. This treaty and its many successor agreements, though, incorporated few effective sanctions or enforcement powers. And the neo-colonial flavor of Russia's early dealings with the CIS made many nations suspicious. So energy-rich states like Turkmenistan and iconoclasts like Uzbekistan began favoring bilateral agreements.
The EEC grew out of a reiteration of the CIS principles by Belarus, Kazakhstan and Russia. These trade-motivated states declared a customs union in 1994 that effectively endorsed existing trade provisions. Kyrgystan signed on the next year, and Tajikistan joined in 1999. The EEC augments the customs union with sanction and enforcement powers.
Integration arrangements only work when they can equitably spread burdens and benefits. In the early days of the CIS, Russia appeared to be ready to assume the role of integrator. But Russia's CIS neighbors reacted charily to even well intentioned overtures. The states needed a structure in which members could sanction or punish each other and small states could resist Russian machinations. Enter Nazarbayev.
Kazakhstan, a landlocked, export-oriented state rich in minerals and oil, has strong impetus to improve regional trade and integration. Dissatisfied with the failures of CIS cooperation, Nazarbayev in 1996 set up an Integration Committee, headquartered in Almaty, Kazakhstan, to develop a framework to coordinate financial markets, services, commodities, labor, and regulations. The committee studied the formation of ASEAN and NAFTA in hopes of coordinating a new system. The result the EEC treaty could fulfill Nazarbayev's long-standing vision of national independence closely linked to free market-based inter-state economic cooperation.
Unlike the initial customs union, the EEC seeks to survive as its own decision-making body. It has its own court and the power to boot members who refuse to play by its rules. It also gives itself some negotiating responsibilities within other international organizations such as the WTO. And while the EEC is not intended to limit the sovereignty of its member states, it seeks recognition from the United Nations as a regional international organization.
Of course, Russia will exercise 40 percent of the voting rights and will be responsible for meeting 40 percent of the organization's operating expenses. (Belarus and Kazakhstan each have 20 percent of the shares. Kyrgyzstan and Tajikistan each have 10 percent.) But the EEC Charter specifies that a vote on major policy issues will require two-thirds agreement, so Russia would have to have at least two other states supporting it to win a vote on a major issue. On the other hand, Russia seems likely to exercise veto power on major initiatives.
For this reason, critics argue that the EEC amounts to Soviet-era "pokazuka," something convenient that only addresses perceptions rather than structures. Uzbekistan President Islam Karimov, who also attended the CIS Heads of State meeting in Minsk, was quoted in the Russian press as denigrating the EEC, observing that similar arrangements had been tried before and failed. He noted that not even the EEC proponents could distinguish it from the earlier attempts at forming a customs union and free trade area. But there are reasons to believe that the EEC is different.
For one thing, Russia's position in the region has changed. After many years of trying to create a sphere of influence in Central Asia, Russia found many Central Asian countries distancing themselves. And those countries gained leverage in other ways. The ruble devaluation following the financial collapse of 1998 made Central Asian consumers a hungrier (and more important) market for Russian manufactured goods. More important, Russia's imbroglio in secessionist Chechnya, with its guerilla attacks on civilians, made Russia eager to curry favor with moderate Muslim leaders of the Central Asian governments. But the EEC's new sanctioning and steering powers are designed to prevail even when Russia feels expansive. It will have substantially stronger coordinating powers than its predecessors and will have the ability to impose sanctions on non-cooperating members.
Nazarbayev's "Eurasianism" must steer the CIS away from the economic nationalism of the early
Gregory Gleason teaches international politics at the University of New Mexico.