Weekly actual topics in Azerbaijan (Jan. 21 – 25 )

Arab Spring countries at crossroads of interests

Summer came after spring, autumn came after summer, then winter and spring again came, but as opposed to the laws of nature, normal economic development will not return to the Arab world countries suffering the so-called 'Arab Spring'.

According to the latest estimates in the international media, the economic damage from the so-called 'Arab Spring' will amount to at least $225 billion. According to IMF estimates, Libya suffered the most serious financial losses, followed by Egypt, Tunisia, Bahrain and Yemen.

Arab Spring countries with their devastated economy fail to achieve any progress in their economies on their own. They are looking for financial help from stronger countries. Firstly, great hopes are pinned on neighbours who did not suffer a wave of unrest, (as a rule, Saudi Arabia and other members of the Cooperation Council for the Arab States of the Persian Gulf), Western powers, as well as the international financial institutions (World Bank, IMF and others).

Gratuitous assistance rendered to these countries by the UN or other countries is like a drop in the ocean, because billions are required to reconstruct destroyed economies. Most have not received money promised from the rich powers or the international financial institutions. The main reason is that the suffering sides have not been able to determine the priorities in their development. And those countries rendering assistance adhere to the rules that by giving money, can dictate their terms and instead require compliance with their interests. The international financial institutions are not in a hurry to give loans fearing risks, but this form of assistance which would be able to stabilise the domestic economy for a while, will burden the external debt of the Arab countries as a credit debt.

It is expected that Egypt will get the majority of financial assistance on offer among the countries suffering from the Arab Spring. Saudi Arabia has allocated $500 million to support the Egyptian budget and $3.75 billion are planned to be spent for these purposes in the future. Qatar's authorities decided to increase financial aid to Egypt up to $5 billion.

The EU and associated financial institutions proposed giving Egypt aid to the same amount in the form of grants and soft loans. U.S. is ready to write off $1 billion from Cairo's three billion debts and to allocate millions of dollars for other types of assistance to strengthen Egypt's economy. As for aid to Egypt from the international organisations, the agreements on loan delivery were reached with the IMF, the World Bank and the IDB.

Other countries of the same composition of donors suffering from the 'Arab Spring' will receive financial assistance. Only Turkey can be added to this list which renders active assistance in the region, both in terms of investment and credit investments. Thus, Turkey has allocated a loan to develop the Egyptian economy to the amount of $2 billion. At present, Turkey is implementing a project to restore the electric infrastructure in Libya. It intends acquiring new oil fields on the Fizan block. Turkey has also approved allocating a loan worth $250 million to Tunisia.

In general, the analysis of financial assistance to Arab Spring countries has shown that today the economic and geopolitical interests in these countries have not been changed and as before, they are being formed under a trilateral influence from the Arab 'players' (in this case, Saudi Arabia), Middle Eastern countries (Turkey) and extra-regional powers (U.S. and EU).

Therefore, the historically formed combination of interests in the region must soon break the current situation in the Arab world and put those countries suffering from the Arab Spring on the route of necessary political and socio-economic changes.

Central Asian countries to benefit from WTO membership only through joint participation.

This year, the Central Asian countries will join the ranks of members of the World Trade Organization (WTO).

Thus, Tajikistan received approval from the WTO on December 10, 2012, and will become a full member of the organization by June 7, 2013. Tajikistan took 11 years to become a WTO member.

Last week, Kazakhstan received an encouraging message from the WTO Director-General Pascal Lamy, expressing the possibility of Kazakhstan's accession to the WTO this year. According to Lamy, Kazakhstan is at a fairly advanced stage of membership negotiations. Kazakhstan is a country that has been exhibiting maximum initiative to join the WTO for over 17 years.

Turkmenistan will also start negotiations for accession to the WTO this year, although previously it had no interest in the organization. Turkmen President Gurbanguly Berdimuhamedov stated the need to study the issue of Turkmen accession to the WTO at a Cabinet meeting last week. In this regard, Berdimuhamedov ordered the preparation of a proposal for the establishment of a special government commission and the start of negotiations with the heads of the WTO.

Uzbekistan acquired observer status in 2001.

Among all Central Asian countries only Kyrgyzstan is a WTO member and has been since December 20, 1998. Considering that the negotiation process began in 1996, one can say that the country has broken the world record for the shortest time period for entry into the organization.

The entry of new Central Asian countries to the WTO will increase the region's share of global trade, stimulate investment projects and have a positive impact on the economic development of the region as a whole. It should also be noted that the positive effects underlying the concept of the WTO appear only when the national economy has an optimal level of preparedness for the new conditions of trade. If not, the benefits of joining the WTO will be possible only in the long run, whereas, in the short term, the country is to deal with losses only.

Following the sad example of neighboring Kyrgyzstan, which headlong joined the organization in the most unfavorable conditions, other Central Asian countries have become more cautious. It is known that in the process of negotiations with the WTO, Kyrgyzstan didn't even ask about receiving developing country status, and in addition, displayed maximum compliance with general obligations in law-making areas, and concerning the rates, was ahead of all countries in terms of commitment to liberalism.

In the end, the entry of Kyrgyzstan to the WTO didn't usher in the expected results. The wide open "door" for imported goods prevented investors from entering the Kyrgyz market. Trade with major neighboring partners (Kazakhstan, Uzbekistan), who are non-WTO members, encountered discriminatory measures. Recall that in response to Kyrgyzstan's accession to the WTO, Kazakhstan and Uzbekistan introduced discriminatory measures against imports from Kyrgyzstan. Kazakhstan set a 200-percent duty on Kyrgyz food exports and explained these actions as an attempt to prevent the filling of its market by imports from Kyrgyzstan. Kazakhstan and Uzbekistan still occasionally impose increased customs duties on imports of various goods from Kyrgyzstan. These discriminatory measures against Kyrgyzstan will apply as long as its neighbors don't accede to the WTO.

If the aforementioned measures were taken towards Kyrgyzstan by WTO member countries, the latter would thereby have violated its obligations under WTO agreements and Kyrgyzstan would be able to challenge such actions in the WTO. Thus, the obvious conclusion is that WTO membership provides real benefits only when major trading partners are also members of the WTO.

Therefore, the entry of other Central Asian countries to the WTO will relieve current tensions in regional trade and economic relations and commercial interests will be protected through international mechanisms. For example, with the entry of Russia last year (and Kazakhstan in the future), WTO members will account for nearly 90 percent of Kyrgyzstan's foreign trade turnover. The same goes for Tajikistan, three of the four major trading partners of which, excluding Kazakhstan, are already members of the WTO (Russia, China, and Turkey).

China, an active player in the WTO, supports the accession of neighboring countries into the trading organization, as there is an ongoing process of practical implementation of large and strategically important joint economic projects between China and the Central Asian countries. Thus, the value of Kyrgyzstan as a transshipment base for Chinese consumer goods especially increased when the two countries became members of the WTO. This was followed by Chinese products entering Kyrgyzstan in the progressive scale and virtually unhindered. Upon entering the WTO, Russia also played a role in supporting Central Asian countries in their involvement in global trade, especially given that Russia is also connected to those countries through regional trade organizations.

WTO membership for the countries of Central Asia is attractive in terms of participation in transit projects as well, due to the region's prime location between Russia, China, Iran and the Caucasus. Recall that membership in the WTO provides guaranteed transit through the territory of all other WTO members. Regional investment projects will also be given impetus to. But again it should be noted that the Central Asian countries will benefit from these privileges of the WTO only through joint participation in the organization, otherwise the region will become futile in the global economic system.

Electricity consumption in February amounted to 1.6 bln kWh in Kyrgyzstan
Electricity consumption in February amounted to 1.6 bln kWh in Kyrgyzstan
Prices for fuels and lubricants increase in Kyrgyzstan 10-15% in one month
Prices for fuels and lubricants increase in Kyrgyzstan 10-15% in one month
Electricity consumption in February amounted to 1.6 bln kWh in Kyrgyzstan
Electricity consumption in February amounted to 1.6 bln kWh in Kyrgyzstan
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