On May 19, 2020, a meeting of the Supreme Eurasian Economic Council was held via videoconference. The focus of the discussions was on the development strategy of the Eurasian Economic Union (EAEU) until 2025. The summit was held on the eve of the fifth anniversary of the union and against the backdrop of the complicated situation in international politics and the world economy, which is not favorable for the development of interstate cooperation institutions. Assessments of the meeting results by observers have ranged from disappointment and panic to enthusiasm. The most attention was given to the speech of President of Kazakhstan Kassym-Jomart Tokayev, who noted the need for additional elaboration of the strategy. Consequently, the summit participants generally approved the draft document but decided to work it out more thoroughly. The meeting demonstrated an important element of any integration process – the need to find a compromise. Sometimes it is more important to slow down integration as this allows for more stability.
In this regard, it is interesting that for media other contentious issues that were discussed at the meeting remained under the shadow of President Tokayev’s speech. One of these issues was the natural gas trade. The parties were unable to agree on a pricing mechanism for the transportation of natural gas. Both President of Belarus Alexander Lukashenko and Prime Minister of Armenia Nikol Pashinyan consider the current price high and suggest switching to a single union tariff, which will be closer to the domestic Russian price [CIS Internet Portal, 2020]. President of Kyrgyzstan Sooronbay Jeenbekov supported his colleagues, noting the need to use non-discriminatory approaches in setting the price for transportation [President of the Kyrgyz Republic, 2020]. Interestingly, the Belarusian leader raised the issue of lowering gas transportation prices shortly before the online summit meeting. Then he even noted that the lack of flexibility on the part of Russia undermined the stability of the EAEU and did not contribute to integration [Lenta.ru, 2020]. It appears that all three countries are likely to join forces and try reaching a compromise with Russia. At the moment, the Kremlin’s position is rather tough as Moscow believes that a single tariff requires deeper integration with unified budget and taxation systems [President of Russia, 2020]. In the absence of such conditions, gas prices must be formed by the market. This position demonstrates Russia’s reluctance to sponsor integration. President Putin understands that the EAEU member countries will not consent to such a deepening of integration, which provides Russia with a good position in future negotiations. Moreover, Moscow’s tactical goal is to prevent other members of the union from speaking together on this issue, so in the future, we may see differing approaches of Armenia, Belarus and Kyrgyzstan in gas price negotiations.
Returning to President Tokayev’s speech, his criticism boils down to the fact that the strategy involves expanding the areas of integration, while unresolved economic issues remain. Kazakhstan hopes that the EAEU members will resolve the issue of restrictions on the transit and re-export of goods that are under the Russian import ban. For example, there is a problem of coal supplies from Kazakhstan to Ukraine. In addition, Tokayev expressed his hope that the member states would find a compromise in the field of customs and sanitary measures. The removal of these and other non-tariff barriers is very important because they have increased the cost of intra-union trade by an average of 32% [Kofner, 2019]. Another interesting proposal of the leader of Kazakhstan is to create a common distribution network with interested member countries of the union [Akorda, 2020]. Most likely, Kazakhstan hopes to become a hub where agricultural products from/to Central Asia will be accumulated and then distributed to their final destinations. Therefore, Kazakhstan needs to eliminate all the existing non-tariff obstacles. At the same time, Kazakhstan should first resolve its trade contradictions with Kyrgyzstan, which lead, in particular, to difficulties with crossing the border for commercial vehicles. In this regard, it is worth noting the remarks of the head of Kyrgyzstan, who noted that for the effective removal of the barriers in the domestic market of the member states the powers of the Eurasian Economic Commission and the EAEU Court should be strengthened [President of the Kyrgyz Republic, 2020].
Among other issues, President Tokayev criticized the inclination of the Eurasian Economic Commission to go beyond its mandate and try to regulate the social and humanitarian field [Akorda, 2020]. At this point, Kazakhstan’s position on the deepening of cooperation in the field of science and education is connected with other factors. Education in an open market is a very competitive sphere. For any state, therefore, it is necessary to make this sphere more competitive. To date, Kazakhstan has been losing this competition, and it is not in Kazakhstan’s interest to lower the barriers to the free flow of students, because now there is a significant outflow of high-school graduates from Kazakhstan to Russia. Besides, it is important to remember that the worldview of a person largely depends on education, and it should be in the national interests of Kazakhstan to offer quality education to its young citizens.
To conclude, we must remember that any integration is a tool in the hands of participating countries. They decide how it will develop. Integration is a complex and multifaceted process, and at the initial stage, national interests are always in the first place. For all the seriousness of the discussions at the summit, they have only demonstrated that the union is evolving. The EAEU members have not rejected the idea of adopting a development strategy until 2025, but demonstrated that they want it to reflect their interests. There is no basis for expectations that the union will fall apart. The Eurasian Economic Commission is already fully in charge of most trade policies of the EAEU member states and its sphere of reach grows steadily as integration deepens and penetrates new industries and sectors. Moreover, the COVID-19 pandemic has showed a high level of trust between the EAEU countries. This experience of overcoming the pandemic and its consequences can be an important factor in improving the integration process and EAEU institutions. It can also help the EAEU member states in strengthening political trust among themselves and teach them how to integrate interests of the partners into their national interests.
References:
Akorda (2020). President Kassym-Jomart Tokayev took part in the session of the Supreme Eurasian Economic Council. Retrieved from http://www.akorda.kz/en/events/international_community/foreign_other_events/president-kassym-jomart-tokayev-took-part-in-the-session-of-the-supreme-eurasian-economic-council. Accessed on 26.05.2020.
CIS Internet Portal (2020). The EAEU Summit, May 19, 2020. Speeches by the Presidents. Retrieved from https://e-cis.info/news/566/86979/. Accessed on 26.05.2020.
Kofner, Jurij (2019). Did the Eurasian Economic Union (EAEU) create a common market for goods, services, capital, and labor within the Union? Retrieved from https://www.institutfuersicherheit.at/did-the-eurasian-economic-union-eaeu-create-a-common-market-for-goods-services-capital-and-labor-within-the-union/. Accessed on 27.05.2020.
President of Russia (2020). The meeting of the Supreme Eurasian Economic Council. Retrieved from http://kremlin.ru/events/president/news/63367. Accessed on 27.05.2020.
Lenta.ru (2020). Lukashenko demanded German gas prices from Russia. Retrieved from https://lenta.ru/news/2020/05/14/nechestno/. Accessed on 25.05.2020.
President of the Kyrgyz Republic (2020). Photoreport – the regular EAEU summit in the videoconference format. Retrieved from http://www.president.kg/ru/sobytiya/novosti/16719_fotoreportagh_ocherednoy_sammit_eaes_vformate_videokonferencii. Accessed on 26.05.2020.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.