Tag Archives: Eurasian Economic Union

Kazakhstan joins the WTO and pressures EEU import tariffs

NOV. 30 2015 (The Conway Bulletin) — After nearly two decades of negotiations Kazakhstan joined the World Trade Organisation (WTO), a move that pleased Kazakh president Nursultan Nazarbayev but also pressured the Eurasian Economic Union to cut its import tariffs.

It has been a long-held ambition of Mr Nazarbayev to secure WTO membership for Kazakhstan and he scheduled a state-of-the-nation address on the eve of the accession to hail it as “a milestone in the history of independent Kazakhstan.”

But Kazakhstan’s WTO membership will have wider implications.

Kazakhstan is the first member of the Eurasian Economic Union (EEU) to enter the WTO since the Kremlin- led trade bloc came into existence on Jan. 1. This means Kazakhstan’s bilateral agreement with the WTO will effect the entire EEU.

The EEU includes Russia, Armenia, Kyrgyzstan — which joined the WTO before the EEU existed — and Belarus which is not a WTO member.

The WTO accession document specified that the new rules to which Kazakhstan has committed should also apply to the rest of the EEU.

“There are 23 commitments which contain measures to be undertaken by Kazakhstan and/or the competent bodies of the EAEU (Eurasian Economic Union),” the WTO said in Kazakhstan’s accession documents.

This means that the EEU’s high import tariff regime will have to be lowered to meet the agreement that Kazakhstan signed up to.

Fortunately, complying with WTO rules appears to be in line with the EEU’s aspirations.

Russian President Vladimir Putin said in October 2014 that the EEU would adapt to work with the WTO and in October 2015 EEU heads of states said they wanted to harmonise their tariffs to Kazakhstan’s new commitments under the WTO.

Molly O’Neal, a professor at the Johns Hopkins University, said reducing the tariff gap between the WTO and the EEU was one of the most important implications of Kazakhstan’s WTO membership.

“Kazakhstan had already agreed [with the WTO] to binding its tariffs on certain products at levels below the common tariff of the EEU,” Ms O’Neal told the Bulletin.

WTO accession should also mean dropping domestic regulations that favour Kazakh companies. This is particularly important in Kazakhstan’s extractive sectors.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Tajikistan moves towards EEU

DEC. 2 2015 (The Conway Bulletin) – Tajikistan’s parliament ratified a treaty that guaranteed investment protection for members of the defunct Eurasian Economic Community, a precursor of the Kremlin-led Eurasian Economic Union (EEU). The treaty itself is of no significance but signing it does signify Tajikistan’s determination to join the EEU.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Russia-Turkey row splits Central Asia + S.Caucasus

DEC. 3 2015 (The Conway Bulletin) – Russia is piling pressure on its partners in the Eurasian Economic Union (EEU) to join it in blocking Turkish trade across the region, a move that could fracture regional alliances.

After a Turkish fighter-jet shot down a Russian fighter-jet over Syria last month, Russian President Vladimir Putin promised revenge. This included a ban on Turkish exports to Russia.

To tighten the ban, Mr Putin needs his allies in the EEU — Armenia, Belarus, Kyrgyzstan and Kazakhstan — to stop Turkish goods transiting through their territories into Russia. But it’s a clarion call which is likely to prove divisive for Central Asia and the South Caucasus where Turkey has strong cultural, trade and diplomatic links.

Of the EEU members, Belarus is a natural ally of Russia and will support Moscow. As will Armenia, which has strained relations with Turkey.

For Kazakhstan and Kyrgyzstan the issue is more complicated. They have good relations with both Turkey and Russia and will likely try to appease both sides as Kazakh foreign minister Yerlan Idrissov has said.

“Emotions are running high, but my president, knowing Mr Putin very well personally and knowing his great potential to be constructive and knowing personally (Turkish) President Erdogan, believes and hopes they will think strategically in this very difficult situation,” he told Reuters in an interview.

Outside the EEU, Turkey is likely to find more supporters. Turkmenistan sees Turkey as a natural ally and has been building up a rapport with Ankara while its relations with Moscow have worsened. It wants to pump gas to Europe and this means crossingTurkey.

With its 2008 war with Russia still fresh in the memories, Georgia naturally leans towards Turkey.

Azerbaijan, though, is Turkey’s biggest ally in the region. The countries are close culturally, politically and economically. Their militaries also often train together.

Although relations with Russia have improved over the past couple of years, it didn’t take long for Azerbaijan to rally to Turkey’s cause.

Azerbaijan cut by 20% cargo tariffs for Turkish trucks travelling from Baku across the Caspian to Kazakhstan and Turkmenistan, a move that will irritate the Kremlin and exacerbate regional tension.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Business comment: Eurasian Bank Council

NOV. 27 2015 (The Conway Bulletin) — Central Banks in the South Caucasus and Central Asia have had a rough year. Keeping up with the strengthening dollar and the falling rouble while monitoring inflation has been a tough test.

In an attempt to stick together during the economic downturn, some of the central bankers appear to have decided to use old infrastructure to continue their meetings and coordinate policies.

Confusion, however, clouds the various structures that are still in place.

The new body which met in Almaty this week was renamed the Eurasian Council of Central Bank Chiefs and is a spin-off of the now- defunct Eurasian Economic Community (EurAsEC).

It doesn’t overlap with the Eurasian Economic Union (EEU) because Armenia is not in it and is no longer representative of the old EurAsEC, which officially closed down last year, as Uzbekistan is not a member.

And this says a lot about just how confusing economic integration has been in the region.

Since the EurAsEC was disbanded, the Eurasian Economic Union (EEU) has become the integrationist body. Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia are part of the EEU.

So why brand it as EurAsEC? Why is Armenia out of the picture?

“Pressing economic questions” are the rationale behind this new body, according to Kazakhstan’s Central Bank.

The countries that form the new body are all in the midst of an economic crisis, but so are other countries that were not invited to the Eurasian banking council.

With the EEU in place and Tajikistan lined up to become a member, the decision to revive such a strange body, rather than another, is difficult to understand.

ENDS

(News report from Issue No. 258, published on Nov. 27 2015)

Armenia-EU finalise deal

NOV. 18 2015 (The Conway Bulletin) – Armenia could finalise a deal with the EU before the end of the year, Armenian foreign minister Edward Nalbandian was quoted as saying. For the EU a framework deal with Armenia, a member of the Kremlin-lead Eurasian Economic Union, would be an important victory, especially after the rejection of the Association Agreement in 2013. For Armenia, close links with the EU are important to maintain.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kazakhstan’s trade turnover with Eurasian Union states drops

NOV. 13 2015 (The Conway Bulletin) – Kazakhstan’s trade turnover with member states of the Eurasian Economic Union – that’s Russia, Belarus, Armenia and Kyrgyzstan – has dropped by nearly 26% to $12.1b in the first nine months of this year compared to the same period in 2014, its statistics agency said.

The data is more evidence of the sharp downturn in the region’s economy. It is particularly jarring for Kazakh president Nursultan Nazarbayev who has been one of the main architects and biggest supporters of the Eurasian Economic Union. It was hoped that the trade bloc would stimulate trade but instead, by anchoring outlying economies to Russia, it has hampered it.

A sharp drop in oil prices and Western-imposed sanctions have tipped Russia into a recession and forced its rouble currency to drop in value.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kyrgyzstan troubles with EEU

NOV. 19 2015 (The Conway Bulletin) – There are still hundreds of teething problems that Kyrgyzstan has to overcome to successfully complete its integration into the Kremlin-lead Eurasian Economic Union (EEU), the country’s representative on the EEU’s board, Danil Ibraev, told media. Kyrgyzstan joined the group, which also includes Belarus, Kazakhstan and Armenia, in August. Kyrgyz business owners have complained about bureaucracy.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Eurasian Dev Bank to give Armenia $300m crisis loan

NOV. 4 2015 (The Conway Bulletin) – The Almaty-based Eurasian Development Bank is close to agreeing a deal to lend the Armenian government $300m to help it through the economic malaise enveloping the Central Asia and South Caucasus region.

If it is agreed, the first $100m is due at the end of this year with the outstanding $200m handed over by the end of 2017.

Like other countries in Central Asia and the South Caucasus, Armenia has been trying to deal with the fallout of the drop in oil prices and a recession in Russia which have combined to tip the entire region into an economic depression.

“Current macroeconomic actions have been agreed with the Armenian government,” Dmitry Pankin, the EDB CEO, told the Armenpress news agency.

“The project has been approved by the expert council and is now being considered by the Eurasian Stabilisation and Development Fund. After the official decision, the final conditions will be agreed upon.”

The Eurasian Development Bank is an overtly political organisation. It’s membership mirrors the membership of the Kremlin-led Eurasian Economic Union — Russia, Kazakhstan, Belarus, Kyrgyzstan and Armenia — with the addition of Tajikistan.

It was set up before the Eurasian Economic Union to give the trade bloc extra weight.

It also acts as a kind of sweetener. Armenia is reliant on Russia for economic and political support. It joined the Eurasian Economic Union at the start of this year under duress from Russia but can now access cheap loans to keep its economy running.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

Smuggled petroleum flows into Kyrgyzstan

OCT. 28 2015 (The Conway Bulletin) – The amount of smuggled petroleum products flowing into Kyrgyzstan from Kazakhstan has increased enormously since the country joined the Kremlin-led Eurasian Economic Union in August, Melis Turgunbayev, director of state-owned energy company Kyrgyzneftegaz, said. He said the flood of smuggled goods had halved the trade in legally imported petroleum products.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

We will not block Armenia-EU deal, says Russia

OCT. 26 2015 (The Conway Bulletin) – Russia said it would not block Armenia signing an agreement with the European Union that will deepen bilateral relations.

This is important because the deal has been drawn up to replace the Association Agreement that Armenian president Serzh Sargsyan ducked out of signing at the last moment two years ago.

Back then the West accused Russia of interfering by giving Armenia sweeteners to ditch the EU for the Kremlin-led Eurasian Economic Union, which is joined this year. The Kremlin pulled a similar trick with Ukraine, although this led to a public outpouring of anger, street demonstrations and, eventually, a revolution.

Russian news agencies quoted Vasily Nebenzya, a Russian deputy foreign minister, saying that the Kremlin would not try to stop the deal this time.

“I think that [the planned EU-Armenia accord] does not contradict partnership with the Russian Federation,” he said.

The deal that Armenia and the EU hope to sign this year is not as deep as the Association Agreement of 2013 was intended to be but it is an important step for EU-Armenia relations.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)