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Eurasian Locomotive

Once again in Moscow the future of the Eurasian Economic Cooperation was at stake...

Eurasian Locomotive
Context:

At a regular summit of the EurAsEC the leaders of member and observer countries got down to it seriously and unlike previous times they have determined the proper motion vector. Firstly, they have specified formats of the future Eurasian economic integration, and secondly, undertook to study the issue of more effective coordination within the institutions of the Eurasian Economic Union created.

Once again in Moscow the future of the Eurasian Economic Cooperation was at stake. It was the first meeting of the Interstate Council of the Eurasian Economic Community and the Supreme Eurasian Economic Council since the beginning of functioning on January 1 of the Common Economic Space between Russia, Kazakhstan and Belarus.

At the talks in a narrow (member countries) and extended format (jointly with observer countries) the question of the Eurasian Economic Community reorganization was considered. According to the speakers, it will significantly optimize the structure’s activities. Simply speaking, it will make it possible to reach a higher level of cooperation and simply the understanding.

It is noteworthy that this time, not only presidents of all five member countries of EurAsEC - Kazakhstan, Russia, Belarus, Kyrgyzstan and Tajikistan came to Moscow but also the heads of observer states - Armenia, Moldova and Ukraine. It’s no secret that the latter two countries, regularly claiming the priority of European integration over the Eurasian had previously often ignored such summits. Observers note that this is due to the power change in Russia - the leaders have come to not only see Medvedev in presidential rank for the last time, but also to answer the bell. For example, the President of Kazakhstan Nursultan Nazarbayev noted the great contribution made by Dmitry Medvedev to the formation of the Customs Union, the Common Economic Space and the Eurasian Economic Union.

After the niceties of protocol, the attendees came down to the main agenda. As it should be, the tone was set by the members of the Three, acting in the literal sense as an engine of uniting processes. In particular, during the meeting a decision was announced: a comprehensive treaty on the establishment of an association will have been developed and signed by January 1, 2015.

To speak figuratively, the Eurasian Economic Union is a pinnacle, and the Eurasian Economic Community is a base of the pyramid, a foundation. At the time of the EurAsEC creation in 2001, all the member countries were at its foot, but later, guided by the principles of various-speed integration, each went to their height. Kazakhstan, Russia and Belarus are moving almost at the same level, what was the basis for closer cooperation. In 2012, 17 Single Economic Space agreements came into force. A Eurasian Economic Commission was created to provide conditions for functioning and development of the Customs Union and the Common Economic Space. The EurAsEC Court was formed. All this makes it possible to carry out a coordinated fiscal, monetary and credit, currency and financial, trade and customs policy, free movement of goods, services, capital and labor.

So, in a determinate sense, the last summit is unique. It has clearly fixed an evolutionary transition of the EurAsEC countries to a new orbit of cooperation. And these are not banal lofty words, but the most real things.

However, substantial work has been also done in anticipation of the summit. In February, the Eurasian Economic Commission started work. The supranational body began to control the integration processes, and in this connection the question of reorganization and optimization of the existing structures came up. Then the parties agreed to charge the Eurasian Economic Commission governments and board with going into the issue of the integration institutions more effective activities and giving it an adequate urge, so that they function on the more compact basis. It is important that personnel working in parallel structures do not duplicate each other.

To speak about further expansion of cooperation, we can’t fail to mention the prospects of possible accession to the Three of the rest of the EurAsEC countries - Kyrgyzstan and Tajikistan. However, this will happen only when their economies are ready for this. Put simply. These two countries have gained a powerful incentive for political and economic reforms at home. True, Dmitry Medvedev made a reservation speaking for itself at a concluding press conference: the observer states in the EurAsEC will have received certain privileges in case of accession to the Customs Union.

By the way, as is known, the Ukrainian authorities have repeatedly stated they are not ready to finally join the Customs Union. Therefore, they decided to give a hostile reception to the Russian President’s statements. Thus, First Vice Premier of Ukraine, Valeriy Khoroshkovsky said that Ukraine will reorient to other markets in case of restrictions on Ukrainian goods from the neighboring countries.

The reasonable question now arises of whether this is blackmail? And blackmail is absolutely unjustified at that. The global crisis has taken out most of the needs of the Europeans, coming from the strengths of the Ukrainian economy. In many countries of Europe their citizens are now trying to hold vacancies of street cleaners, nannies and nurses, rather than inviting Ukrainians. However it brought before billions of dollars annually into the economy of Ukraine. Moreover, 70% of European investors believe in the inevitability of a second wave of crisis or recession. A Ukrainian economy is clearly not an engine that is able to pull Europe out of crisis.

Firstly, it is not adapted to the latest requirements. While in the EU the sectors of the so-called fifth technological mode are dominated - innovative technologies, the basis of Ukraine’s economy remains the sectors of the third technological mode - metallurgy, coal mining, chemicals, heavy engineering.

Secondly, foreign investors are alienated from an unattractive investment climate. The Ukrainian tax system is considered as one of the most difficult and inefficient in the world.

Thirdly, the Ukrainian economy is heavily dependent on exports, and hence the demand in foreign markets. Reduction by 60% -80% of metallurgical and chemical industries exports in the crisis years has led to a 15% drop in GDP The current sliding of the European economy will sooner or later cause landslide of petrochemicals and metals prices.

Thus, after the Greek epic, it is inconvenient for the EU to saddle itself with burden of another country.

Whereas within the Common Economic Space of Kazakhstan, Russia and Belarus, the integration is more than successful. New opportunities appeared in business. Any company registered on the territory of one of these countries will enjoy the privileges of the three states at once, including agricultural subsidies and transportation rates.

After the disappearance of customs barriers mutual trade has sharply increased. At last year end alone the trade turnover between Kazakhstan and Russia exceeded US$23.5 billion, what is almost 43% more than in 2010, with exports from Kazakhstan rising by nearly half. Opening of multimillion-dollar markets for Kazakh businessmen is not only a benefit, but also a healthy competition.

The geopolitical project, which once seemed elusive and unattainable, now acquires real features. For the first time after the collapse of the Soviet Union there is an objective opportunity for the republics fled in different directions to pool their economic, resource, intellectual and spiritual potentials. And they are quite able to create a powerful supranational association, capable to link the east and west of the Eurasian continent, to become one of the poles of the modern world. It is now important to build on success achieved and not to miss the chance given by the history.

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