ORIENTAL REVIEW republishes the full text of outstanding article written by the Russian leader Vladimir Putin last week. There are already many speculations in the international press regarding his intention to establish Eurasian Union on the part of post-Soviet space. It is always reasonable to study the original source before arguing…
January 1, 2012, will see the launch of a key integration project, the Common Economic Space of Russia, Belarus and Kazakhstan.
This project is, without exaggeration, a milestone for our three countries and, in fact, for all post-Soviet states.
The road to this milestone has not always been easy and straight. It started 20 years ago, when the Commonwealth of Independent States was established after the collapse of the Soviet Union. Essentially, it was a model that helped us preserve a myriad of cultural and spiritual ties connecting our peoples, preserve industrial, economic and other links without which life would be simply impossible.
Say what you will about the effectiveness of the CIS, its internal problems and failed expectations – no- one can deny that the Commonwealth remains an indispensable mechanism for bringing our positions closer and working out a common approach to the key problems our region is facing. All members receive real, tangible benefits from the CIS.
Furthermore, it was our experience with the CIS that helped us launch multi-level and multi-speed integration processes among the former Soviet republics and establish such useful formats as the Union State of Russia and Belarus, the Collective Security Treaty Organization, the Eurasian Economic Community, the Customs Union and, finally, the Common Economic Space.
Because of the global financial crisis, nations are looking for new sources of economic growth. This has made integration processes even more relevant. We are really facing the need to seriously upgrade our partnership principles, both in the CIS and in other regional alliances. We are focusing primarily on developing trade and industrial cooperation.
Essentially, we need to turn integration into a stable and long-term project that will be easy to understand and attractive to people and businesses and that will not depend on ever-changing political – or any other – circumstances.
This was exactly what we had in mind when we established EurAsEC in 2000. It was the desire for close and mutually-beneficial cooperation and the realization of the fact that we share the same strategic national interests that prompted Russia, Belarus and Kazakhstan to form the Customs Union.
Since July 1, 2011, we have removed all border controls for the circulation of goods within our three countries, which signaled the emergence of a full-fledged customs union with clear prospects for implementing even the most ambitious business initiatives. Now we are taking it a step further, moving on from the Customs Union to the Common Economic Space. We are setting up a huge market with some 165 million consumers, with harmonized laws and with the free circulation of capital, services and manpower.
It is crucial that the CES be based on coordinated efforts in key institutional areas: macroeconomics, fair competition, technical regulations, agricultural subsidies, transport, and natural monopolies’ tariffs. In time, we will also harmonize our visa and migration policies, which will enable us to cancel border controls on our internal borders. In other words, we will have our own version of the Schengen Area, which proved to be very helpful to the Europeans themselves and to all the people coming to the EU to work, study or travel.
We no longer need to maintain security along the 7,000 kilometer border between Russia and Kazakhstan. Furthermore, we will now have much better conditions for developing cross-border cooperation.
Once migration, border control and other restrictions (such as the “labor quotas”) are removed, people will be completely free to choose where to live, study and work. Incidentally, even in the Soviet Union, people were not as free to move because of the residence permit system.
We will also significantly increase the amount of goods one can bring in for personal use without paying customs duties. Thus, people will not have to queue at customs; neither will they have to undergo humiliating inspections.
There will also be new opportunities for businesses. By that I mean new, dynamic markets with common standards and requirements for goods and services. Furthermore, many of those standards have been harmonized with European ones. This is crucial, because we are making a transition to modern technical regulations, and by coordinating our policies we can avoid technical differences and simple incompatibility between our products. Moreover, the companies of each CES member-state will be treated as domestic producers by other members. This includes privileged access to government procurement programs and contracts.
Of course, transition to an open market means that businesses will have to improve their efficiency, reduce their costs and invest in modernization. Consumers can only benefit from that.
At the same time, we are going to see a real “rivalry between jurisdictions,” with real competition for business. From now on, every Russian, Kazakh or Belarusian businessman can choose in which of the three countries he will register his company, where his business will be located and where he will clear customs. This should really motivate national bureaucracies to improve market institutions and administrative procedures and enhance the business and investment climate. In short, they will have to work on the shortages and defects they have not had time to fix. National legislation should be on a par with the world’s and Europe’s best practices.
It took Europe 40 years to go from the European Coal and Steel Community to the full-fledged European Union. The Customs Union and the CES have evolved much faster, because we are taking into account the experience of the EU and other regional alliances. We are aware of their advantages and shortcomings. This gives us a clear advantage. We can avoid repeating the same mistakes, introducing unnecessary supranational bureaucracy.
We are also conducting regular consultations with the leading business associations of the three countries at which we discuss controversial issues and listen to constructive criticism. For example, we had a very helpful discussion at the Customs Union Business Forum that took place in Moscow in July.
I repeat: it is crucial for us that the general public and business communities of our countries see the integration project not as bureaucratic games that don’t go beyond government offices but as a living organism and a good opportunity to realize initiatives and achieve success.
A decision has been made to start codifying the legal base of the Customs Union and the Common Economic Space in the interest of business, so that market players do not have to wander through a forest of numerous clauses, articles, and reference rules. They will only need two baseline documents – the Customs Code and the Codified Agreement on matters of the Custom Union and the Common Economic Space.
The EurAsEC Court will start full-scale work on January 1, 2012. Not only states, but business entities as well will be able to apply to the court on all matters connected with discrimination and unfair or unequal competition.
The presence of supranational institutions is among the key distinguishing features of the Customs Union and the Common Economic Space. Such features also include the basic demand to minimize bureaucracy and to focus of the real needs of the people.
We think that the role of the Customs Union Commission, which has significant powers even today, must increase even further. As of today, the commission has about 40 powers, while there are going to be over 100 of them in the future, within the CES. Those will include the authority to make decisions on competition policy, technical regulations, and subsidies. Such complex tasks can only be completed by establishing a full-scale permanent structure: compact, professional, and efficient. This is why Russia came up with an initiative to establish a Board of Customs Union Commission, with representatives of the three states working on it as independent international officials.
The establishment of the Customs Union and the Common Economic Space lays the foundation for the formation of a future Eurasian Economic Union. At the same time, the membership of the Customs Union and the Common Economic Space will grow gradually with the full-scale accession of Kyrgyzstan and Tajikistan.
Not wanting to stop there, we are setting ourselves the ambitious task of going to the next level of integration: the Eurasian Union.
What prospects and perspectives do we see for this project?
First of all, it is not about recreating the USSR in any form. It would be naïve to try to restore or copy what is already a thing of the past. However, close integration on a platform of new values, politics, and economics is what is currently called for.
We are suggesting a model of a powerful supranational union that can become one of the poles of today’s world while being an efficient connecting link between Europe and the dynamic Asia-Pacific Region. This also means that, on the base of the Customs Union and the Common Economic Space, we need to achieve closer coordination of currency and economic policies and establish a full-fledged economic union.
The combination of natural resources, capital, and strong human potential will make the Eurasian Union competitive in the industrial and technological race and the race for investor money, new jobs, and advanced production facilities. Along with other key players and regional institutions such as the EU, the USA, China, and APEC, it will ensure the sustainability of global development.
Second, the Eurasian Union will serve as a sort of center for further integration processes. That is, it will be formed through gradual blending of existing structures: the Customs Union and the Common Economic Space.
Third, it would be a mistake to set the Eurasian Union in opposition to the CIS. Each of these structures has its place and its role on the territory of the ex-USSR. Together with its partners, Russia is ready to work actively on perfecting the institutions of the Commonwealth and enriching its practical agenda.
In particular, we are talking about launching clear-cut and appealing initiatives and joint programs. We have great prospects in humanitarian cooperation, in science, culture, and education, and in joint work on employment market regulation and the creation of a civilized environment for labor migration. We inherited quite a lot from the Soviet Union, including the infrastructure, an established production specialization, and a common language and cultural space. Jointly using those resources for development is in our common interest.
Furthermore, I am convinced that the economic foundation of the Commonwealth should rely on trade that is as liberalized as possible. As per Russia’s initiative during its chairmanship of the CIS in 2011, a new Free Trade Treaty was drafted. It is based, by the way, on the principles of the World Trade Organization and is aimed at the large-scale removal of various barriers. We also expect significant progress in the coordination of positions on the Treaty during the upcoming CIS Summit, which takes place later this month.
Fourth, the Eurasian Union is an open project. We welcome other partners – CIS countries first of all – to join it. At the same time, we are not rushing into the project or pushing anyone else to do so. It must be a sovereign decision of a state driven by its own long-term national interests.
I would like to touch upon a topic here that I see as very important. Some of our neighbors explain their unwillingness to take part in advanced integration projects on the territory of the former USSR by the fact that it allegedly goes against their European ambitions.
I think this is a false dilemma. We are not going to fence ourselves off from anyone or to confront anyone. The Eurasian Union will be based on universal integration principles as an indispensable part of a Greater Europe, united by common values of freedom, democracy, and market laws.
As early as 2003, Russia and the European Union agreed to form a common economic space and coordinate the rules governing their economic activity without the creation of supranational structures. In a bid to develop this idea, we suggested to our European partners that we think together about prospects for creating a harmonious economic community on a territory from Lisbon to Vladivostok, about a free trade zone and more advanced forms of integration. We suggested drafting a coordinated policy in the sphere of industry, technology, energy, education and science and, finally, removing all visa restrictions. These proposals did not go unheeded. Our European partners are discussing them in detail.
Now, the Customs Union and a future Eurasian Union will become new participants in the dialogue with the European Union. In this way, entry into the Eurasian Union will allow each participant, in addition to all direct benefits, to integrate with Europe faster and on a stronger footing.
Furthermore, an economically logical and balanced system of partnership between the Eurasian Union and the European Union can create real conditions for changing the geopolitical and geo-economic set-up of the entire continent that would undoubtedly have a positive global effect.
It has now become apparent that the global crisis that broke out in 2008 was systemic. We are still seeing its serious repercussions today. Globally-accumulated imbalances are the root cause of all the problems. Models of post-crisis development are being worked out with difficulty. For example, the Doha round of talks has practically stopped dead in its tracks. There are objective difficulties inside the WTO. The very principle of free trade and open markets is facing a serious crisis.
We believe that common approaches worked out “from below” may show the way out of this deadlock. First of all, solutions should be found at the regional level within organizations like the European Union, the North American Free Trade Agreement (NAFTA), APEC, ASEAN, etc. After that, these organizations should start a dialogue with each other. It’s exactly these “bricks” of integration that could add more stability to the global economy.
For example, two major alliances on the European continent – the European Union and the Eurasian Union, which is still evolving – can objectively, including through relations with third countries and regional structures, spread free trade principles from the Atlantic to the Pacific if they build their interaction on free trade rules and compatibility of their regulation systems.
In this connection, I would like to emphasize that the Customs Union set up by Russia, Belarus and Kazakhstan has already started talks for the creation of a free-trade zone with the European Free Trade Association (EFTA). Topics like trade liberalization and the removal of barriers to economic cooperation will feature high on the agenda of the APEC forum that will gather in Vladivostok next year. Russia is going to push for a common and coordinated stance of all the participants in the Customs Union and the Common Economic Space.
That will bring our integration processes to a fundamentally new level, open up new prospects for economic development and create additional competitive advantages. Such consolidation of our efforts will not only help us integrate into the global economy but will also enable us to have a real say in making decisions that set the rules of the game and lay down the foundation for future relations.
I am convinced that the creation of the Eurasian Union and effective integration are the only way that will help its members to occupy a decent place in the complicated world of the 21st century. It’s only together that our countries can become leaders of global growth, enhance our civilization and achieve the ultimate goals of success and prosperity.