Baku, Azerbaijan, Aug. 7
By Elena Kosolapova - Trend:
In the next few days, Kyrgyzstan will become a full member of the Eurasian Economic Union. The treaty on Kyrgyzstan's accession to the Union has been ratified by all parties. Customs control is to be removed on the border between the Republic and Kazakhstan - the only country of the Eurasian Economic Union, which borders with Kyrgyzstan.
There are different opinions about the consequences of Kyrgyzstan's joining the Eurasian Economic Union. The Russian experts and officials assure that the integration with Russia, Kazakhstan, Belarus and Armenia will be beneficial for the economy of the country and will be a great benefit for Kyrgyz labor migrants working in Russia and Kazakhstan.
The Western experts predict a sharp rise in prices in Kyrgyzstan and movement towards full political dependence on Russia.
Most likely the country should expect both.
Of course, after joining the Eurasian Economic Union, Kyrgyzstan will have to undergo a difficult period of adaptation. It is enough to recall the experience of Kazakhstan while joining the integration union with Russia and Belarus to understand the difficulties. So, after Kazakhstan's joining the Customs Union, the price of almost all goods, especially those imported outside the integration association, increased in the country and were similar to the Russian ones. Customs duties on these goods greatly increased.
Moreover, the free transportation of goods has created big problems for Kazakh producers unaccustomed to big competition.
Cheaper and better quality Russian goods have flooded the market of Kazakhstan, leaving more and more local producers out of business. As a result, Kazakhstan has repeatedly urged restoring the trade barriers on the border with Russia to protect local businesses. For some Kazakh producers, primarily operating in the border areas with Russia, the possibility of free movement of goods provided the impetus for the development of business, and they were able to reach and gain a foothold on the Russian market. However, overall, import from Russia and Belarus to Kazakhstan grew much faster than export to these countries from Kazakhstan.
Kyrgyzstan will also experience all of these problems. In Kyrgyzstan, these problems will be even worse. Kyrgyz business is even less competitive than the Kazakh one. Therefore, the Kyrgyz producers, with few exceptions, shouldn't rely on the fact that their products will find a place on the Russian market. In addition, Kyrgyzstan has no common border with Russia, and means that Kyrgyz goods have to pass through the territory of Kazakhstan to enter the Russian market. But Kazakhstan in this case is much more interested not in the transit of goods but in the export of its products, and it will be lobbying for its interests. Moreover, almost everything that Kyrgyzstan can offer is produced in Kazakhstan. For the same reason, one shouldn't expect a significant increase in export from Kyrgyzstan to Kazakhstan.
With regard to the increase in customs duties on goods imported from countries outside the EEU, for Kyrgyzstan this will also be more disruptive than for Kazakhstan.
Previously, most of the goods were imported to Kyrgyzstan at a very low cost from China. Customs duties were very low, and the border was very poorly controlled, and in the result, the smuggling of goods was common. Now, given the increasing border controls and fees, the purchase of goods from China will become unfavorable for Kyrgyz citizens.
However, despite all the difficulties that Kyrgyz people will face when joining the EEU, possibly integration with Russia and Kazakhstan is for them at the moment the only way not to die from starvation. Kyrgyzstan has simply no choice. Those sources of income, at the expense of which the country lived since independence, are being blocked more and more.
Re-export of cheap Chinese goods to neighboring countries, which gave a stable income to Kyrgyz citizens for many years, is more and more difficult to carry out in recent years. The boundaries of neighboring Kazakhstan and Uzbekistan became better controlled, and it became harder to transport goods by smuggling. It is unprofitable to transport the Chinese goods under the law due to the rather high customs duties in the neighboring countries.
Another source of income for Kyrgyz families, remittances from migrants working abroad also became impoverished. Starting from early 2015, Russia has toughened requirements for foreigners wishing to find a job. Now, in order to obtain work permits, they need to pass a mandatory exam on the Russian language, history and legislation bases, issue voluntary medical insurance policy and purchase a patent for a job.
All these are paid. Given the crisis in Russia, job cuts and the fall of ruble, these expenditures often do not pay off. With Kyrgyzstan's accession to the Eurasian Economic Union, Kyrgyz labor migrants will get rid of fulfilling these requirements and this will enhance their protection by the law. It is a very positive factor for Kyrgyzstan, taking into account that over 500,000 of its citizens (official data) work in Russia.
It is still highly likely that in the case of joining the Eurasian Economic Union, Kyrgyzstan will become dependent on Russia. Kyrgyzstan doesn't have sufficient resources to resolve the existing problems on its own and always has to seek outside help. Russia plays the role of outside helper most often and accordingly, demands loyalty in return. In this sense, little will change for the country.
Moreover, with "formalization of relations", Kyrgyzstan will have more chances to get Russian investments. Earlier, Kyrgyzstan's President Almazbek Atambayev said that in accordance with the signed agreements, Russia would invest $7-8 billion in the country's economy in the next four to five years.
However, the volume of Russia's assistance to Kyrgyzstan strongly depends on Russia's economic situation, which is currently far from optimistic.
Edited by CN
Elena Kosolapova is Trend Agency's staff journalist, follow her on Twitter: @E_Kosolapova