Eurasian Union Hunts For Silver Linings

The summit of leaders from Eurasian Economic Union member states in Astana this week brought much grumbling with it, but there are some incremental signs of progress.

Kyrgyzstan’s President Almazbek Atambayev set the tone on May 31 by pointing out problems on the border with Kazakhstan.

“Despite the positive aspects of integration, including the elimination of customs controls on the Kyrgyz-Kazakh border, the improvement of conditions for [Kyrgyz labor] migrants in Russia and other [EEU] states, I would like to note a number of problems. These are the matters of the harmonization of railway [transit] tariffs, the ban on the export of Kyrgyz potatoes to Kazakhstan, [phytosanitary-veterinary] controls on the Kyrgyz-Kazakh border, the transit of goods in Russia and a number of other things,” Atambayev said in remarks cited by Sputnik news agency.

There is a lot to unpack there, and even the good news Atambayev offered needs to be qualified.

Although custom controls were indeed lifted at the Kyrgyz-Kazakhstan border, it was only for them to be replaced with more stringent inspection regimes aimed at quashing the activities of unregistered traders exploiting differences in prices for various goods in the respective countries. Lengthy waits are still the norm for motorists and it will be a long time before the EEU becomes the kind of border-free space one sees in western Europe.

Still, there was some movement in addressing Atambayev’s complaints. Kazakhstan’s President Nursultan Nazarbayev on June 1 ordered an end to the ban on Kyrgyz potato imports, which was imposed in May amid fears of worm infestations. In another significant concession from Astana, Kazakhstan will now allow Kyrgyz citizens to remain on their territory for up to 30 days, an increase from the previous five days, without registering with the authorities. 
Kyrgyzstan is eager to further exploit railway routes to export to EEU markets, but has complained of unfairly high transit costs.
“At the moment, when transporting goods, it is necessary to pay transit fees that raise the cost of goods. So Kyrgyzstan wants to reduce the tariffs payable for the use of railway network in the EEU,” Kyrgyz energy minister Danil Ibrayev said in remarks cited by KyrTag news agency in late March.

Ibrayev complained at the time that when Kyrgyz exporters send their wares through Kazakhstan, they often found themselves paying far higher transportation fees than Kazakhstani companies would face. In mid-March, the EEU’s executive arm adopted a decision to harmonize railway tariffs, but the technicalities and conditions have evidently not been resolved.

Whatever concessions are being negotiated reflects the fact that EEU members must be coming to terms with the sobering realization that trade within the bloc has actually been falling. Belarusian President Alexander Lukashenko put it most starkly when he complained in Astana that conditions were not equal for everybody within the EEU and that more work was needed on eliminating internal barriers.

The latest figures show that the value of mutual trade in the EEU fell by 16 percent in the first quarter year-on-year. The contraction for the whole of 2015 was 26 percent. EEU officials like to point out, however, that this depressing picture is due in large part to the calculations being made in dollars. Then again, while Belarus, Kazakhstan and Russia have seen 10 percent, 20 percent and 18 percent drops, respectively, in the value of their intra-EEU exports in the first quarter of this year, Armenia, whose currency has also taken a battering, actually saw exports double in that period.

If anybody was looking for reassurances from the man at the head of the table, Russian President Vladimir Putin, they need not have held their breath. Putin said the EEU could help, but only up to a point.

“We don’t expect any magic windfalls from our cooperation, but it will undoubtedly help us overcome current difficulties. I have little doubt about this,” Putin said on May 31.

What becomes obvious with every one of these summits is that EEU was created and then expanded with a haste that did not allow for the complexity inherent in creating a trade bloc between grossly unbalanced partners. The EEU has made few fans among the populations of its Central Asian members, so good news is needed sooner rather than later.

Eurasian Union Hunts For Silver Linings

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