Customs Union on verge of expansion

Azerbaijan, Baku, Oct. 11 / Trend /

Trend commentator Elena Kosolapova

After the March presidential elections in Russia, some experts predicted the intensification of negotiations on extending the Customs Union of Russia, Kazakhstan and Belarus, connecting it with Vladimir Putin's return to the presidential post. One can say as of the first five months since the day of his inauguration, that these predictions have come true.

During this period, Russia launched wide propaganda on the Customs Union within the organisation and towards potential new members. Putin himself during this period held a number of meetings with colleagues on this economic unification, as well as with the leaders of neighbouring countries. Discussing the Customs Union's activity is on the agenda of the negotiations.

Kazakh President Nursultan Nazarbayev is not behind his Russian counterpart. Certainly, Kazakhstan's political and economic influence in the world is not so great compared to Russia, but this Central Asian country's viewpoint is rather significant in the region. Therefore, President Nazarbayev actively urges the neighbours to join the Customs Union which can rightly be considered as his brainchild (Nazarbayev proposed the idea of integration association, similar with customs union, a few years before its establishment).

Belarusian Presidential Alexander Lukashenko also voiced positive comments on the Customs Union and its prospects. Moreover, Belarus is a good example of the Customs Union's positive impact on the country's trade balance. While significantly losing its partners in the Customs Union in terms of the economy, Belarus has gained much benefit from joining the organisation.Belarus increased its export to Russia from $6.719 billion in 2009 to $14.509 billion in 2013. Export to Kazakhstan rose from $313.4 million to $673.9 million in this period.

Therefore, the Customs Union countries are actively working to expand the integration association. Of course, Russia and other members of the organisation are interested in expanding the borders of the Customs Union in the long term and the Eurasian Union in the future at least up to the limits of the former Soviet Union. However, emphasis is primarily focused on Ukraine, Kyrgyzstan and Tajikistan in the near future.

There is every reason to believe that Kyrgyzstan will be the next member of the Customs Union. Bishkek, as well as Russia and Kazakhstan show interest in Kyrgyzstan's accession to the Customs Union.

President Bishkek has repeatedly stated his country's desire to join the organisation. Moreover, Tajikistan has recently voiced its desire to join the Customs Union. Its joining the organisation will only be possible if there is a common border which will appear only after Kyrgyzstan joins. Therefore, there is reason to believe that concessions will be made to Kyrgyzstan and the process of its joining the organisation will be accelerated.

The deteriorating relations between Bishkek and Minsk in connection with the case of Kyrgyz ex-President Bakiyev complicate this issue. However, Belarus's voice in this issue is unlikely to be decisive.

Regarding the prospects of Tajikistan's joining the Customs Union, it is necessary to take into account that Russia and Kazakhstan are major economic partners for Tajikistan. Around 20 and 13.6 per cent respectively of the total volume of foreign trade of the Republic fell to them in January-August 2012. Moreover, joining the Customs Union will allow Tajikistan to receive a significant discount on energy resources imported from Russia and Kazakhstan and save up to $350 million per year on imports of petroleum based fuels.

Tajikistan's accession to the Customs Union will also simplify the conditions for the registration of Tajik migrants in Russia. Thus, Tajikistan's economic benefits from joining the Customs Union are obvious. However Tajikistan will become a burden for Kazakhstan and especially Russia from the economic point of view due to the weakness of its economy, but the political interests of the parties play their role in the region.

Ukraine is the most desirable, yet at the same time the least probable candidate for accession to the Customs Union. Ukraine's accession would be very beneficial for Russia, Kazakhstan and Belarus because of Ukraine's economy, its geographical location, as well as established economic ties. Russia is ready to pay for such a union and Gazprom promises to reduce the price of imported gas by the Ukraine twice if it joins the Customs Union.

However, despite the economic preferences offered by Russia, Ukraine is looking toward Europe. Joining the Customs Union will force Kiev to abandon old plans to join the European Union, but the Ukrainian political elite are not ready yet.

One must await the actions of Russia, Kazakhstan and Belarus to improve the economic attractiveness of their integration association. Only in this case, the Customs Union will be able to hope for joining strong and economically prosperous countries.

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