Publication: Monitor Volume: 8 Issue: 96

The CIS summit, just held in Moscow, turned out to be a rump forum. Only six delegations came to Moscow from the eleven member countries. Russian President Vladimir Putin chaired a meeting of the heads of state signatory to the CIS Collective Security Treaty–Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan–and, separately, hosted a summit of the Eurasian Economic Community (EAEC), which consists of the same countries minus Armenia.

The EAEC’s chairman in office, Kazakh President Nursultan Nazarbaev–whose country alone enjoys rapid economic growth and soaring foreign investment–provided a candid assessment of the EAEC’s situation. For illustration he selected four sets of problems. First, the member countries, catering to their internal producers, are hitting each other with protectionist tariffs and “antidumping” sanctions on a bilateral basis. Despite agreements reached last year to avoid such measures in the EAEC, the member countries are currently resorting to those measures on an even larger scale, Nazarbaev observed.

Second, certain countries impose prohibitive tariffs for the railway and road transport of goods traded by the other EAEC member countries. This is a perennial Kazakh, Kyrgyz and–at the other geographic end–Belarusan complaint against Russia, whose immense distances raise the price or reduce the profit margins on those three countries’ goods. The Russian government, however, is apparently loath to factor that situation into the transit rates it charges to EAEC partners.

Third, while the EAEC’s decisions are theoretically obligatory on member countries, the organization has no mechanism for the adjudication of commercial disputes. Earlier, the CIS had an economic court, based in Minsk and long since disbanded. (Its then-chairman, Viktar Hanchar, is one of the opposition politicians who “disappeared” two years ago and are feared dead in Belarus.) The EAEC was supposed to have formed its economic court last year, but has failed to do so. Meanwhile, according to Nazarbaev, the EAEC’s secretariat “is having a good time with bureaucratic matters.” Nazarbaev turned down the proposals to increase the secretariat’s size as “totally unacceptable.”

Fourth, the EAEC lacks a functioning policymaking and coordinating body. Nazarbaev, whose country nominally chairs that body–the Integration Committee–remarked that Russia and Belarus have failed to appoint their representatives on it. Some countries are not paying their dues, which are supposed to support the Integration Committee, the General Secretariat and other EAEC central bodies. Nazarbaev did not publicly name the laggard countries, but their motives can easily be guessed, and are not limited to poverty. The EAEC’s charter provides for weighted voting–the sole such case in the CIS–in proportion to each country’s fixed share of membership dues. Those shares are theoretically fixed at 60 percent on Russia, 20 percent on Belarus and Kazakhstan each, and 10 percent each on Kyrgyzstan and Tajikistan. With that, Russia is entitled to cast 60 percent of the votes on any decision. This mechanism discourages Russia’s partners–who are impoverished in the first place–from paying their dues.

The heads of state took two main decisions. First, they created a commission to ensure that member countries find a reasonable middle ground between defending their internal producers and hurting each other with protectionist tariffs and “antidumping” measures. The presidents tasked the EAEC General Secretariat’s head, Grigory Rapota–a Russian security police general, who is close to Putin–to lead that commission. Second, they decided that each country–except Kyrgyzstan, which is a WTO member already–will seek to negotiate admission to the World Trade Organization on the basis of the conditions that the WTO is prepared to offer Russia.

This issue is traditionally a vexed one in the EAEC and its CIS-spawned predecessors. Member countries negotiated with the WTO individually, while Russia sought collective negotiations and group admission to increase Moscow’s own bargaining power with the WTO. Since September 11, the Kremlin expects that the WTO and the Bush administration might compromise the WTO’s standards and admit Russia as a political favor, accepting Russia’s protectionist practices and also its special role in the EAEC. Moscow now encourages the other EAEC countries to seek admission to the WTO on Russia’s coattails and on the same lowered standards (Interfax, RIA, Strana.ru, Gazeta.ru, May 13-15; see the Monitor, March 20).