EXIT CIS CUSTOMS UNION, ENTER EURASIAN ECONOMIC COMMUNITY?

Prime Ministers Mikhail Kasyanov of Russia, Uladzimir Yarmoshin of Belarus, Kasymzhomart Tokaev of Kazakhstan, Amangeldy Muraliev of Kyrgyzstan, and Okil Okilov of Tajikistan approved on October 6 the founding documents of a “Eurasian Economic Community” (EAEC)–a new organization is to be created “on the basis of the CIS Customs Union” (CU), of which these five countries are members. The Kremlin initiated and pushed this project, with the Russian government as main drafter of the documents. The five presidents are due to sign the documents at a special ceremony in Astana today.

The EAEC’s stated goals are to “bring the CU to fruition by establishing, on its basis, a single economic space, a functioning common market and coordinated economic policies.” The CU–a scaled-down version of the abortive CIS Economic Community–has existed since 1994 on paper only. It would seem that the CU is being, though not abandoned, certainly sidelined.

The communiques from Moscow and Astana stop short, however, of clarifying whether the CU will die altogether and, if so, whether a transition period with specific goals and targets is envisaged from the CU to the EAEC. Official Russian pronouncements suggest that that a two-tier arrangement is being introduced, at least for the time being. Decisions will, apparently, be taken both at the CU level and at the EAEC level by collective bodies specific to each.

This arrangement, if it goes into effect, could only spawn a new bureaucratic layer on top of the existing ones and exacerbate the dysfunctions characteristic of every CIS body, including the CU. The dysfunctions stem from both organizational incoherence and contradictory interests among nominally close allies.

Above any economic considerations, however, Moscow’s initiative seems designed to use the EAEC as a means of political control over the member countries’ economic policies and external relations. Those goals are clearly discernible in the three main documents, approved by the prime ministers at Russian insistence.

The first document, unprecedented–and indeed precedent setting–in the CIS, introduces sovereignty-delegation and weighted voting in CIS executive bodies. The old, lethargic CU executive body at the deputy prime ministers’ level, known as the Integration Committee (IC), is being upgraded and expanded as the executive standing body of the EAEC. Member countries will “voluntarily delegate” to the IC certain functions of the national governments, in the interest of common economic policies and that of the performance of IC’s duties.

The IC’s decisionmaking procedure elevates Russia to a position more equal indeed than that of the others. It institutes a voting formula dubbed “4-2-2-1-1.” In any vote taking, Russia will cast four votes; Belarus and Kazakhstan, two each; and Kyrgyzstan and Tajikistan, one each. Kasyanov and Deputy Prime Minister Viktor Khristenko argued that this formula was more than fair to the other four countries. Russia’s economic power, they stated, should have entitled that country to an “eight to two” formula involving eight votes to Russia and two for the rest. That argument indicates that some member countries–almost certainly Kazakhstan, for one–had to be cajoled into accepting the 4-2-2-1-1 formula.

The IC’s decisions are to be submitted to the Interstate Council–the conclave of the CU countries’ presidents–for approval. The Interstate Council’s decisions will continue to be based on the consensus principle, rather than on majority voting. But any president of a non-Russian country should find it difficult to withhold consensus to a decision reported out of the Integration Committee with a heavy stamp of Russian and allied approval on it.

The second document casts the EAEC as an “international organization,” empowered to represent its member countries in international economic relations–specifically, in negotiations with “other” trade groups such as the European Union or the World Trade Organization (WTO). In practice, that would mean interposing a Russian-dominated central bureaucracy between EAEC’s individual member countries and the outside trading world.

That way, Moscow could line up these countries behind it in negotiating the terms of accession to the WTO. The Russian government had all along sought to form such a grouping and play a stronger hand in negotiating special terms for WTO membership. In the medium term, Moscow would undoubtedly seek to deal with the EU on the collective behalf of the EAEC as an “international organization.” But Moscow was unable to form such a group through the Customs Union. At the CU’s summit in April of this year, President Vladimir Putin failed to persuade at least some member countries to go along with his plan to confer the status of an “international organization” on the CU–that is, empower its executive bodies to speak for the constituent countries. But Moscow’s leverage on the CU’s Central Asian countries seems to have increased in the interim.

The third document is an agreement to negotiate common terms for the access of goods and services from “other countries” to the markets of the CU/EAEC countries. Past CIS practice suggests that such negotiations among member countries can drag on indefinitely. But Putin’s Kremlin displays greater resolve than Boris Yeltsin’s ever did to bring these countries to heel. And the intent of this third document is to create a Russian-led economic bloc, one that would restrict the member countries’ ability to join the international economic system, and which may ultimately erect trade barriers in order to ensure Russian dominance on these countries’ markets.

Kyrgyzstan is the only one of these countries to be a member of the WTO. Kazakhstan is an aspirant, actively negotiating for membership. The Kyrgyz prime minister, Amangeldy Muraliev, hoped aloud during this meeting that WTO membership and EAEC membership would not turn out to be incompatible. He could not say just what would ensue if Moscow decided that they were (Itar-Tass, RIA, Habar, October 6-8; see the Monitor, September 17, October 11, 1999, January 28, May 25, June 23, 2000; Fortnight in Review, October 8, 1999, February 4, 2000).

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