Publication: Monitor Volume: 7 Issue: 107

The Minsk summit officially terminated the CIS Customs Union (CU) and replaced it with the Eurasian Economic Community (EAEC). The member countries are the same: Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. The EAEC is the fourth CIS project of this type, after the CIS-wide Economic Union (1992), the CU (1994) and the Free Trade Zone (FTZ, 1996), none of which ever came to life. The EAEC was formally launched at the October 2000 summit in Astana of CU member countries, which however had stopped short of disbanding the CU.

Moscow’s goals are: first, to dominate the EAEC’s “internal” market by erecting barriers to international trade around the member countries; second–and inconsistently with the first–to negotiate special terms of accession of the EAEC countries as a group to the World Trade Organization, of which Kyrgyzstan the only member among the EAEC countries; and, third, to seek recognition of the EAEC as an “international organization,” empowered to represent its member countries in international economic relations, for example with the European Union. The result would be a Russian-led economic bloc and the insertion of a Russian-dominated central bureaucracy between the EAEC countries and the international trade system. The chances of success are scant. Moscow’s hope for international recognition of the EAEC recalls the vain quest for international recognition of the Soviet-era Council for Mutual Economic Assistance.

The Minsk summit stopped short of spelling out the commercial advantages to Russia’s partners in the EAEC. The four non-Russian member countries–as well as those watching with a possible intent to join–are mainly interested in three types of benefits. First, guaranteed access to the Russian market for their less competitive goods, so as to leave these countries free to export their cash-earning goods on international markets. Second, preferential tariffs on Russia’s transport arteries, taking into account the immense distances that often separate EAEC’s member countries from Russian and third-country end users. And, third, lower Russian tax surcharges on Russian oil and gas exports to resource-poor countries (Kazakhstan being the exception). There is no indication that these issues were discussed, much less resolved, at the Minsk summit. Almost certainly, protracted negotiations lie ahead.

This summit focused instead on the EAEC’s hierarchical order and bureaucratic structure. Pursuant to the Astana decisions, it introduced weighted voting and sovereignty-delegation in the EAEC. This is an unprecedented–and indeed precedent-setting–procedure in the CIS. Under a formula dubbed “4-2-2-1-1,” Russia will cast four votes, Belarus and Kazakhstan two votes each, and Kyrgyzstan and Tajikistan one vote each in the EAEC’s bodies. Member countries’ governments are to “voluntarily delegate” certain decision-making functions to those bodies. Those are: an Interstate Council, nominally the top policymaking organ, to convene periodically at the level of heads of state; an Integration Committee as the standing policymaking organ in Moscow; and an Interparliamentary Assembly, the competence of which remains to be clarified.

Russian President Vladimir Putin nominated his Kazakh counterpart Nursultan Nazarbaev as the first holder of the Interstate Council’s rotating chairmanship. The post of executive secretary is to be held permanently by a representative of Russia. Yet, Putin offered that post also to Kazakhstan on an interim basis. These gestures are meager sops to Nazarbaev for his acceptance of weighted voting and of siting the Integration Committee in Moscow, instead of dividing it between Moscow and Astana. As a cost-cutting measure, the conclave decided to reduce the EAEC’s staff by 40 percent, compared to the CU’s staff. The Moscow-based staff will be collectively financed, yet heavily Russian. Nazarbaev therefore allowed himself the further consolation of proposing to cut their pay. That matter is being deferred for further consideration.

The five countries have decided to draw the “EAEC’s external borders” and to set up thirty-nine official crossing and customs points. These measures seem, however, likely to be delayed by funding problems, by protests on the part of CIS countries outside the EAEC, and in some cases by EAEC member countries themselves if such demarcation disrupts preexisting trade patterns. “EAEC borders” would, for example, imply erecting customs barriers between Kazakhstan on the one hand and Uzbekistan and Turkmenistan on the other, or between Belarus and Ukraine. Hardly any leader in Astana or Minsk would go along with that.

The next summit of the EAEC has been tentatively scheduled for May 2002 in Dushanbe at the request of Tajik President Imomali Rahmonov. This suggests that the EAEC plans to hold only one summit annually, compared to at least two held annually by the CIS and its bodies and subgroups. That means a low profile for the EAEC by the criteria of the CIS, and more pertinently it means postponing decisions on the problems left unresolved by the Minsk summit (RIA, May 31, June 1-2; Izvestia, Kommersant, Ekspress-K (Almaty), May 31; Asia-Plus, June 1; see the Monitor, October 10-11, 2000).