EEU: Are countries ready to step back?

EEU: Are countries ready to step back?

22 December, 09:54 231
EEU: Are countries ready to step back?

The Eurasian Economic Union (EEU) has serious achievements, but there are also unresolved questions about which the chairman of the board of Eurasian Development Bank (EDB) Dmitry Pankin told at a meeting with the faculty and students of the Eurasian national university named after L. N. Gumilev in Astana, correspondent reported.

Achievements and shortcomings

Creation of the Eurasian Economic Union is a real achievement of its participants after several "integration false starts" of 1990-2000. Work on the markets of medicines, completion of the Customs code, creation of the total electrical power market, the single finance regulator, the total markets of oil and gas represents components of one process which is rather difficult and conflictual, D. Pankin considers.

The head of EDB assumed that final decisions will represent result of a compromise of EEU participants.

"The 25 anniversary of Kazakhstan independence indicated by good indicators. If to compare the level of a gross income per capita, then the beginning of transformation of Kazakhstan, after disintegration of the Soviet period was about 60% of the level of the Russian Federation. Now Kazakhstan was, practically, made equal, even for 1% exceeds the Russian Federation. We see that 25 years are a successful development, especially in 2010 – very high rates of economic growth. Now the picture of growth of development of the country in recent years is rather brightly visible," the chairman of integration bank said.

During the meeting the speaker made a start from works of classics of the economic theory where in some of them – process of integration of the countries represents a row as benefits, and in others shows on the contrary.

"All of us know David Ricardo's "The theory of comparative advantages" which says that the countries which openly enter trade exchanges with other countries will receive an economic prize because specializes in the most profitable, in the most effective production and products. A conclusion is that if to make a free trade regime, the mode of lack of any restrictions, then the greatest economic effect will be reached. But, it appears, to be not so. These processes lead to the fact that a number of the countries gets huge competitive advantages, and other countries on the contrary, turn into certain raw appendages, into chronic suppliers of natural resources and poorly processed goods. Zones of stagnant processes are created," D. Pankin notes.

Here the speaker relies on Pyotr Savitsky's theory, one of founders of the theory of the Eurasian integration who noted in the works that consolidation of the countries positively influences the countries which have an exit to the sea.

"We have in EEU actually five countries which don't have an exit to the sea, just these countries lose from a free trade regime. They have no open entry to seaports, cargo transportation, is much heavier than goods and is more expensive therefore if to build the free trade regime, then growth rates will be lower. What conclusion  was made? The countries which don't have an exit to the sea shall look for an exit not in specialization of open trade with the whole world, and to try to develop cooperation communications among themselves, to try to create the most regional associations" D. Pankin added.

In such situation, integration processes with neighboring countries are necessary for Kazakhstan as for the country remote from seaports.

The chairman of bank, noted that the strongest economic neighbor of Kazakhstan is China. However, integration with China conducts to the fact that Kazakhstan will specialize in an oil supply, ores and raw materials production.

Ability to agree

"Russia and Kazakhstan are close on structure of the economy and here we can create more balanced group of the countries where there will be no specialization that someone on production of raw products, and someone on mechanical engineering. There are facts on investments, on joint businesses, here more uniform distribution and industry specialization happens between the countries. Except an economic component also a certain historical community, culture, traditions is important," the chairman of bank noted.

At the same time, D. Pankin told that an important task and a problem at the same time is ability to agree.

"This year in November the countries came for adoption of the single Customs code of EEU, the document is very difficult, about 1,500 notes were to the first text, in November the decision on start of pharmaceutical products was made. Historically in many countries there is a concept that there is one point of view and it is correct. All other points of view are wrong. With such approaches it is extremely difficult to leave in mutually acceptable decisions. What is an exit to single customs space? It is when each country make concessions," D. Pankin noticed.

For example, according to the speaker, Kazakhstan made concessions that customs duties on many goods in the country were significantly lower, than in the Russian Federation. So, customs duties were lifted and became to the single level of the EEU countries.

Where to move further?

Successful example of integration D. Pankin notes the European Union which created the relevant political institutes. In this regard the speaker asks a question whether it is necessary to hurry consolidation of the countries.

"Whether we shall speak about the fastest integration, about political integration, about forming of general parliament. Whether we shall speak about entering of common currency in the territory of EEU. In my opinion you shouldn't hurry. Process shall be gradual, it isn't necessary to try to broaden the number of the countries, to come to political arrangements. Consequences can be very unpleasant. There will be most serious economic problems. Crises in this or that country. Now I wouldn't begin to speak about entering of common currency, single Central Bank. Each step is difficult," the head of EDB emphasized.

D. Pankin noted that it is necessary to conduct work on market grouping of energy resources.

"Let's say single market of the electric power. We know that in Soviet period all our energy resources were girdled. Let's allow excess of the electric power which is generated in one regions where powerful hydroelectric power stations, they were consumed in power scarce regions. Now, there is not such thing. Power supply systems aren't reported with each other," he told.

Work on forming of the financial market, task - by 2020 is also planned.

At the same time, the chairman of EDB noted that, while creating the Union, it is important not to separate from other countries "fortifications".

"The EEU is 180 million people, these are about 3% of GDP made in the world, from the point of view of industrial production it isn't enough. Our countries won't be able to exist from other market, forming, interaction of trade, commercial ties with other integration associations is necessary," D. Pankin noted.

The speaker considers that rules of world trade undergo tectonic changes, and is very frequent not for benefit of the countries of EEU and systematic work on forming of network of the free trade areas (FTA) similar to the FTA with Vietnam can become the decision in the current situation.

The head of EDB is sure that the prospects of mutually beneficial cooperation of EEU and the People's Republic of China shall give an additional serious impulse to regional development, transport, energy and financial interaction in Central Asia, Siberia and in the Far East.

Continuing the subject «Kazakhstan»