Safety is more important than economy

Safety is more important than economy

Daria Zelenskaya

Anti-Russian sancti-ons ricocheted acr-oss the entire post-Soviet space. More than ten years ago, Russia, Belarus and Kazakhstan, having saved each other from additional duties on goods, united in the Customs Union. Later it was renamed the EAEU – Armenia and Kyrgyzstan also joined. Today, the Eurasian partnership is being tested for strength. Will the organization survive the geopolitical crisis, RIA Novosti investigated.
Kazakh business counts losses
Kazakh businessmen expressed their doubts about the expediency of the economic association more than once. And now, when Moscow and Minsk are under sanctions, they are talking about it even louder.
Many people have long been concerned about the distribution of customs duties for imports from th-ird countries. Back in 2010, the members of the union agreed to collect these amounts and then distribute them among the budgets. Since the largest imports went through Russia, it received 85.3 percent of payments, Kazakhstan – 7.1, Belarus received – 4.5, Armenia and Kyrgyzstan – a little more than a percent.
Timur Zharkenov, chairman of the Union of Indust-rialists and Entrepreneurs ISKERMEN, explained with a specific example: the Panfilov district in the Alma-Ata region is on the border with China. Although a huge amount of money passes through the customs office, the region itself is quite poor.
“This is a very large, industrialized region. The Western Europe-Western China transport corridor runs through its territory. The lion’s share of the payments collected at the Kh-orgos checkpoint do not end up in the republican b-udget, but go into the Russian economy. The regi-on itself just killed, the ro-ads are in a terrible state, although only one “Kho-rgos” could make the whole area golden and feed everyone,” Zharkenov believes.
In his opinion, the Kazakh authorities should achieve a revision of the standards: “We need to carefully weigh the pros and cons, soberly assess the situation, taking into account the interests of Kazakhstan. We are a partner, an independent state and we receive a lot of negativity because of the situation in Russia. It is important for us not to get under sanctions. Here you need to think pragmatically and discard all sentimentality.”
Kazakhstan exports iron ores, inorganic chemicals, food and agricultural products to Russia. At the same time, almost 70 percent of all goods are purchased in Russia – paper, wood, industrial and household equipment.
However, business diss-atisfaction has not yet rea-ched the government level. President Kassym-Jomart Tokayev is ready to cooperate within the EAEU to c-ope with the crisis. “A w-orking group should be created to assess the risks and develop economic measures aimed at mitigating the negative consequences,” he said at a meeting with the heads of government of the economic union.
Kyrgyzstan looks at the “big brother”
In Kyrgyzstan, some entrepreneurs share the Kazakh sentiment: Russia and Belarus are practically isolated, which means that their share in the percentage of customs duties needs to be reviewed. “We have people opposed to the Customs Union. They hold rallies near the Russian embassy. But there is also a pro-Russian part that organizes its own actions. We see that society is extremely polarized,” said Mars Sariev, a political scientist from Bishkek.
One of the main advantages of the EAEU is that labor migrants do not need to apply for a patent to wo-rk in Russian cities. Today, a third of Kyrgyzstan’s GD-P is made up of guest workers’ remittances. Some of them have already received Russian citizenship.
“The situation is not very good,” Sariev continues. “The authorities have taken a neutral position on the events in Ukraine, fearing that Russia might expel our citizens, who provide a significant boost to the budget. On the other hand, Kyrgyz society is largely shaped by the West, which makes the leadership look back on European countries. Now Kyrgyzstan is closely watching the pro-cesses initiated by Kazak-hstan, and if they decide to leave the EAEU, it will follow their example.”
Kyrgyzstan mainly exports agricultural products, vegetables, fruits, dairy products and textiles to Russia. Buys – petroleum products, wood, oil, cereals and finished products from grain. That is why the rise in prices in the Russian market instantly affected Bishkek.
So far, the authorities are trying to control pricing manually. But if the situation is not resolved in the near future, this will push the republic to withdraw from the EAEU in favor of partial integration with Western states, Sariev believes.
“It is important to develop both a dialogue format of cooperation and trade and economic relations with third countries by signing trade agreements in order to enter new promising markets, including the countries of Southeast Asia, the Middle East and the Indo-Pacific region, North Africa, as well as Latin American continent,” President Sadyr Japarov said in an address to the heads of the EAEU member states.
Safety is more important than economy
Armenia has been in fact in a trade blockade for a long time. Infrastructure projects were built between Istanbul, Baku and Tbilisi, Yerevan watched from the sidelines. After the country joined the EAEU in 2015, a huge sales market opened up before it.
The main exports of Armenia are copper ore, gold, tobacco, ferroalloys, diamonds and food. About 28 percent of goods produced in the republic are purchased by Russia, while Yerevan imports Russian oil and gas. It is difficult to find an alternative to this cooperation. The borders of Azerbaijan and Turkey are closed for Yerevan, and the potential of Georgia’s transport route is not endless.
“Sanctions against Russia in the medium term will have a negative impact on the republic. There is quite deep cooperation between the countries, and it will be very difficult for Armenia to reorient itself to other markets. The situation is also serious in terms of the return of labor migrants not only from Russia, but also from Ukraine,” – explains the head of the Armenian branch of the Institute of CIS Countries Alexander Markarov.
Armenia’s dependence on Russia is largely not economic, but military. There are Russian peacekeepers in Nagorno-Karabakh who ensure security in the region. “And from this point of view, it is clear that Russia retains its position as the main political ally,” Markarov points out. Considering these factors, the opinion on the revision of the EAEU, and even more so the withdrawal from the structure, is extremely unpopular in Armenia. “Obviously, we are going through a very sensitive period, sensitive geopolitical tectonic changes, and in this context, of course, the Eurasian Economic Union is an important format for the development of our economies,” said Prime Minister Nikol Pashinyan.
EAEU switches to rubles
The head of the Ministry of Economic Development of Russia, Maxim Reshetnikov, previously reported that the EAEU countries would switch to national currencies for customs settlements, but the bulk of the volume would be in rubles. The attitude to this in the republics is ambiguous.
“About a third of Kyrgyzstan’s GDP is migrant remittances. They were in dollar terms. Now the country will have a mass of rubles with which something needs to be done. It is reasonable to spend it in Russia. The countries of Central Asia will begin to look for specific demand, and most likely there will be cereals, butter, sugar, fish, clothes. If earlier all of Central Asia consumed 99 percent of Chinese and Turkish products, now it will be unprofitable,” political scientist Denis Berdakov explains.
He cites Uzbekistan as an example, which has fully launched the production of clothing: “If they could, I think we will all be able to start production on a number of items together.”
And Kazakhstan, under sanctions pressure on Russia and Belarus, could even act as a trade bridge between Moscow and the West. For example, after the annexation of Crimea to Russia in 2014, Minsk assumed this role, receiving considerable benefits.
“Kazakhstan’s business should hold on to the EAEU with its hands and feet, since now a niche has formed for the supply of goods and economic activity. Withdrawal from the union will hit the economy much harder than the current echo of anti-Russian sanctions,” said Associate Professor of the Basic Department of Eurasian Economic Integration of the IPiNB RANEPA under the President Russian Sergey Rekeda.
The Eurasian Union was indeed built around the Russian economy. And as soon as Moscow ran into problems, it was reflected in the rest. But it would be unfair to say that the association is unprofitable – during its existence, all states have significantly expanded trade opportunities, increasing profits. And if the countries join forces and act together, then the Eurasian Union will become a strong structure, as it was originally intended. So far, at least at the official level, all members of the EAEU are well aware of this.

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