On June 11, 2020, IWPR and CABAR.asia held an online event inviting experts from Russia, Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan to discuss issues related to the EEU strategy amidst the crisis.
COVID-19 was a serious test not only for individual countries but also for regional associations like the EEU. What are the stands of various countries on fostering the EEU development amidst the crisis? What are the prospects for the EEU expansion during the pandemic? What is the future of the Union? To address these questions, the Representative Office of the Institute for War and Peace Reporting (IWPR) in Central Asia and its regional analytical platform CABAR.asia organized an online event on June 11, 2020. The event brought together experts from Central Asia and Russia that discussed “What will the EEU strategy look like amidst the coronavirus crisis?”.
The discussion moderator – Program manager/editor at IWPR in Tajikistan Lola Olimova opened the discussion and gave the floor to the first speaker Dr. Stanislav Alexandrovich Pritchin, a Senior Research at the Institute of World Economy and International Relations (IMEMO), Russian Academy of Sciences (Russia). He discussed the Russian Federation’s approaches to the EEU development in the context of the pandemic – induced economic crisis.
“Considering the international community’s practices in the fight against the COVID-19 pandemic, we might say that the world did not pass a cross-border cooperation test and in fact became more fragmented and disparate than before the pandemic. Generally, we see poor mutual assistance and cooperation, weak efforts standardizing general recommendations and preventive measures in the fight against the epidemic.
The cooperation between the post-Soviet states had appeared to be a rare exception. First, there was coordination at the Eurasian Commission level that hosted meetings, consultations on economic dimensions, and border closures. Moreover, Russia, in partnership with the EEU countries, sent out 100 thousand coronavirus testing kits. Russia unilaterally started facilitating the regulation of foreign citizens on its territory. Given the large number of labor migrants working in Russia that are obliged to monthly obtain a work permit, the government of the Russian Federation had suspended patent requirements until June 15, 2020, and raised the limit of their authorized stay for the duration of the quarantine. This arrangement has enabled the stay of foreign citizens, unemployed or unable to leave the country due to borders closure, in Russia without fines and additional costs. The countries have also been sending humanitarian aids. Uzbekistan stands out in this matter, sending humanitarian aid to neighboring Afghanistan, Tajikistan, and Kyrgyzstan in the efforts to mitigate the economic impact of the pandemic. Kazakhstan began has also actively been involved in humanitarian assistance. In general, the Eurasian countries exemplify a high level of commitment to help neighbors in difficult circumstances.
Despite the challenges and economic cooperation limitations amidst the coronavirus pandemic, Russia continues to initiate and promote deeper EEU integration initiatives. In this new environment, the EEU has maintained its discussion on both coordination and assistance measures amidst the pandemic and plans for the future. For instance, during an online meeting in late May, the EEU Supreme Council has discussed the “EEU Development Strategy until 2025” – a document, which was to be a “road map” of the Union growth in the next 5 years.”
In the second session, Lidia Parkhomchik, an expert at the Institute of World Economy and Politics (IMEP) under the Foundation of the First President of the Republic of Kazakhstan, Elbasy, made a presentation on the “Further Development of the EEU: Kazakhstan Approach”.
“The COVID-19 pandemic proved to be quite a challenge for all mankind, testing not only nation-states but also regional associations like the EEU.
The entire union’s macroeconomy became secondary as it has been displaced by the need for a coordinated approach to the fight against coronavirus. That, in its turn, has led to the formation of a separate track of the Eurasian Economic Commission’s activities.
So, on March 16, the ECE Council decided to exempt goods that are imported in the prevention of the COVID-19 spread from the customs duty. On March 31, the EEC Board decided to establish a temporary ban on the export of certain food products from the EEU countries. The Board had approved a list of vital import goods that are subject to tariff preferences. The Intergovernmental Council had revoked various conformity assessment procedures for medical supplies, had established a “green corridor” for the vital import goods, and temporarily reduced or zeroed import customs duties on production materials for certain economic sectors.
Having analyzed the EEU development strategy until 2025, it is worth emphasizing that Kazakhstan, who was very critical of the Strategy, remains committed to the goals and objectives of the EEU. It would be completely wrong to claim, “that the EEU doesn’t have a bright future ahead, when the State, which proposed the idea in the first place, itself is no longer an EEU believer.” Development within the EEU remains a priority for Kazakhstan.
Assessing the EEU’s future, we can conclude that 2020 will be a year of a dramatic decline in terms of economic indicators and trade volumes. A considerable loss would take place, nonetheless. Hypothetically, the EEU collapse would have a major economic impact compared to the persistence of joint sustained integration efforts. Therefore, consultations with partners should not be abandoned – the EEU must again be attractive for other countries to join.”
Mirsulzhan Namazaaly, the founder of the Central Asian Free Market Institute (CAMFI) from Bishkek, evaluated the relationship between Kyrgyzstan and the EEU during the crisis and discussed whether the EEU future would be more of the expansion or contraction?
“The expectations that Kyrgyzstan, following its accession to the Eurasian Economic Union (EEU), would experience a dramatic increase in trade were most likely erroneous. Besides, the novel coronavirus pandemic – induced crisis has demonstrated that the EEU is nothing more than a geopolitical configuration with a minimum economic benefit for its members.
The pandemic particularly affected Kyrgyzstan. The country needed support for unhindered trade as never before, but those hopes were dashed.
First, the EU’s crisis response almost entirely depended on restricting the export of personal protective equipment (PPE) and staple food. And not to forget zero duties imposed on the import of PPE and medical equipment. The EEU did this when the Kyrgyz Republic has already taken these measures. Therefore, Kyrgyzstan could have instituted those measures on its own, with or without the EEU.
Second, the Supreme Eurasian Economic Council has decided “On the main guidelines for the macroeconomic policy of the EEU member states for 2020–2021,” only in late April 2020. The 80% of the document is based purely on the description of the situation in the region and the world, whereas the three last pages list recommendations, which nation-states already seek to fulfill.
The third thing to notice is that the EEU country leaders, on April 14, adopted a Joint Supreme Eurasian Economic Council Members Statement in connection with the COVID-19 pandemic. The only practical and coordination-worthy thing in the document is the “green corridor” for vital goods.
Fourth, the reality was different from the paper. Hundreds of trucks haven’t been able to drive through the Kyrgyz-Kazakh border for a long time. Even the Kyrgyz President, Sooronbai Jeenbekov, criticizing an enhanced control and imposed restrictions on shipments did not help. On June 3, the Jogorku Kenesh’s Committee on International Affairs took all the EEU – related issues from the agenda and refused further to consider ratifying the EEU documents until the problems on the Kyrgyz-Kazakh border are resolved.
The fifth point of mine is the Kyrgyz Parliament questioning the EEU effectiveness in early April. MP Abdyvahap Nurbayev suggested that the Kyrgyz government ask the EEU to temporarily make importing goods from third countries duty-free. His colleague Altynbek Sulaymanov supported Nurbayev, having said that the EEU provisions are already being violated within the organization, highlighting the case of Kazakhstan that recently introduced restrictions on the sale of grain and cereal products.
And finally, the Kyrgyz government rested its hopes on $ 260 million, owned by the joint intergovernmental Russian-Kyrgyz Development Fund, to support farmers. However, Russia refused to direct these funds to the Kyrgyz Republic; instead, Moscow placed these funds in securities on the Russian market.
All these actions from the EEU partners are indicative. In a crisis, Kyrgyzstan has to fight the battle alone, while continuing to beg the EEU countries to open borders. Just as Kyrgyzstan requested to open borders before its EEU accession.
Considering the Kazakh President Kassym-Zhomart Tokayev’s critique of the 2025 EEU development strategy and Kyrgyzstan’s experience being the EEU member (so far negative), in my opinion, expanding the EEU membership is pointless. On the contrary, while previously no Kyrgyz politician has questioned the EEU, now it makes many of them. The future of the organization is vague. It is well known that the EEU had been created and expanded faster than it could overpower. Therefore, all EEU decisions of recent years are made to extinguish fires, displacing the proactive measures for the benefit of its members.”
Dr. Bahrom Radjabov, an expert on political economy and development in post-Soviet countries, discussed whether Uzbekistan should join the EEU as a full member.
“The fact that EEU cooperation is being discussed in Uzbekistan sends a positive signal, as the issue was not previously raised in an extensive manner. I would like to note that the pros and cons of the accession to the EEU have many dimensions. It can and should be studied from different perspectives, as the opinions vary.
Some experts believe that the EEU has not yet emerged as an economic union. As for the effect of free trade, in theory, there is little agreement among researchers. Experts highlight both the positive and negative consequences of free trade. There is even an academic belief that free trade is harmful to develop countries, while protectionism could come to help. Perhaps a greater number of economists adhere to a different opinion, considering free trade a positive factor for the economies of developing countries.
Center for Economic Research and Reform conducted a survey “Assessing the Impact of Uzbekistan’s Possible Accession to the EEU and the WTO”. The survey results suggest that 74% of respondents support Uzbekistan’s accession to the EEU, while 16% oppose it. The social diversity must also be taken into account. Many experts, on the contrary, do not share this view and believe that we need to shift the focus on the Central Asian integration, as trade with Russia, neighboring countries, and partners outside the EEU have already been arranged.
Some experts argue that Uzbekistan’s observer status is, in fact, a delayed accession to the EEU. I fail to deem this to be a “delayed accession”, but rather namely the observer status. This has to do with objective economic circumstances that do yet provide for Uzbekistan’s complete EEU accession and obligations before the Union. Among those circumstances are the natural monopolies in the country and free trade within the EEU. And here I must say that Uzbekistan, in fact, has already signed a free-trade agreement for the time being, so the broader integration is yet to be on the agenda.”
And finally, Dr. Uktam Dzhumayev, Associate Professor and country expert of the International Budget Partnership, evaluated the forecasts for the Republic of Tajikistan and the EEU’s priority development.
“For Tajikistan, it is a rather instructive example of how the EEU was able to create a single coordinated policy between the EEU member countries in combating a pandemic by integrating the health sector and providing social assistance to the population. Tajikistan might also benefit from this in case of its EEU accession. We might as well consider that economic losses, rising inflation, and unemployment rates have exposed the national economy to the looming crisis. Looking for a way out, Tajikistan might get forced to join the EEU. Many experts argue that the country’s EEU accession would create incentives to improve the situation with migrants, raise their incomes, and eventually remittances sent to the country, while also facilitating agricultural exports.
With all the positive sides of Tajikistan’s EEU entry, we should also discuss the threats. The country’s economy is poorly represented in export potential, therefore, free trade between member countries and access to free trade markets is not an incentive for Tajikistan’s EEU integration. The country’s accession would compel the authorities to revise the policy regulating foreign and domestic trade. The latter is now comprised of sector monopolies, while the customs duties make up the budget revenues. Experts think that the Tajik authorities are yet to find an alternative to these aspects. Tajikistan’s participation in other integration groups, trade agreements, and regional projects such as Belt and Road Initiative, CASA-1000 and others enable the country’s access to international investment, technology, and the market, while also discouraging the EEU accession. The active investment policy of the PRC and the USA form other paths for Tajikistan’s development by creating alternatives to the EEU. And the EEU itself is yet to form as a full-fledged integration mechanism, with many internal conflicts of interest between its members. Besides, according to experts, Moldova’s “refusal of interest” for joining the EEU, “weak economic dividends” from Kyrgyzstan’s participation in the EEU could become “case studies” for Tajikistan when deciding to join the union. ” An active investment policy of the PRC and the USA contributes to the formation of other vectors of development of Tajikistan by creating alternatives to the EEU. And the EEU itself has not yet formed as a full-fledged integration mechanism, where there are internal conflicts of interest between the members of the union, which poses a threat to Tajikistan’s accession. Besides, experts believe that Moldova’s “disinterest” in the EEU accession, “weak economic dividends” from Kyrgyzstan’s EEU membership could become “case studies” for Tajikistan when deciding to join the union.”