Publication: Monitor Volume: 3 Issue: 197

Presidents Boris Yeltsin of Russia, Alyaksandr Lukashenka of Belarus, Nursultan Nazarbaev of Kazakhstan, and Askar Akaev of Kyrgyzstan are meeting in Moscow today. They hope to "break the deadlock" over the four countries’ Customs Union, Yeltsin’s foreign policy coordinator and chief spokesman Sergei Yastrzhembsky announced yesterday. The Kremlin expects "a rather complicated summit" because "a real Customs Union has not yet been achieved," Yastrzhembsky said.

The four presidents form the Customs Union’s Interstate Council, whose meeting today is the third since the union’s creation in March 1996. The union’s executive organ, the Integration Committee, which is headed by deputy prime ministers, has been meeting more frequently but also in vain. Russia’s chief delegate to that body, Deputy Prime Minister Valery Serov, admitted yesterday that the "the main question is how to breathe life into the quadripartite agreements on the Customs Union." Serov called for "prompt decisions" to coordinate customs, excise, and value-added dues and taxes in trade among the four countries and between them and foreign partners. More tersely, two senior officials of Russia’s State Customs Committee said that agreements to that effect "exist, but only on paper." One of these officials targeted Kazakhstan and Kyrgyzstan for erecting barriers to Russian and Belarusan imports; but the other official conceded that Russia has set the highest customs tariffs within the customs union. Kyrgyz foreign minister Muratbek Imanaliev commented that "the Customs Union is now in a frozen state."

Lukashenka, who currently holds the Interstate Council’s rotating chairmanship, and CIS executive secretary Ivan Korotchenya have jointly drafted for this summit a set of recommendations on creating a "unitary customs territory" of the four countries. Lukashenka further proposes that he be succeeded as chairman by the president of Kazakhstan "in order to decentralize the integration process." (Russian agencies, October 20-21) The recommendations, even if formally adopted, will probably remain on paper as previous documents of this type have. With the partial exception of Belarus, the Customs Union’s non-Russian countries have an overriding interest in trading with countries outside the quadripartite union and in encouraging Western investments. These three countries invoke the Customs Union when criticizing Russian protectionist measures against some of their "traditional" exports to Russia. However, the same countries are not about to privilege Russian goods at the expense of their own domestic producers or of their international trade. Lukashenka for his part is successfully manipulating the Customs Union in taxing the transit trade bound for Russia via Belarus. His suggestion to elect Nazarbaev as chairman in order to "decentralize" the organization amounts to an indirect jab at Yeltsin.

That recommendation seems also to overlook Nazarbaev’s outspoken criticism of the Customs Union. The Kazakh president has even released First Deputy Prime Minister Nigmatzhan Isingarin from his post, notwithstanding that Isingarin is the incumbent chairman of the Customs Union’s Integration Committee; the move demonstratively downgraded Kazakhstan’s participation in the union. According to Isingarin, overall trade turnover among the four member countries — the "internal trade" as it would be termed in a real customs union — dropped by 30 percent in the first half of 1997 compared to the same period last year. Isingarin attributed the drop to differing national legislations, absence of a transport union, and the failure of member countries to coordinate their respective trade relationships with nonmember countries. Akaev for his part complained last week that inordinately high tariffs on Russian railroads and highways make it prohibitive for Kyrgyzstan to trade with the European area of the Customs Union and the CIS in general. (Itar-Tass, October 11, 15)

Moreover, and despite its inherent limitations, the CIS Customs Union is impeding trade between its two Asian countries and European CIS countries that do not belong to the Customs Union. On an official visit to Kazakhstan and Kyrgyzstan last week, Ukrainian president Leonid Kuchma and his hosts Nazarbaev and Akaev jointly and publicly criticized tariff and other barriers erected by Russia, in the name of the customs union, against trade between Ukraine and the two Central Asian countries. Akaev said his country wants to import Ukrainian sugar, which Russia accepts only in limited quantities (the cause of a major trade dispute between Moscow and Kyiv). And Nazarbaev offered to export substantial amounts of oil to Ukraine and via Ukraine to Central Europe. But all three presidents complained that Russian tariff and transport practices stand in the way of such plans. Kuchma, Nazarbaev, and Akaev described Moscow’s use of the Customs Union for restricting trade as incompatible with normal relations within the CIS and as undermining the latter. And they implied that Russian restrictions on third countries’ bilateral trade amount to "political pressure" upon their countries. (Russian and Ukrainian agencies, October 14-16)

Ukraine, Kazakhstan, and Kyrgyzstan asked in vain for remedial measures at the recent meeting of the CIS prime ministers in Bishkek, which ended inconclusively. Kuchma, Nazarbaev, and Akaev last week jointly agreed to this set of issues at the October 22-23 CIS summit in Chisinau. The Customs Union’s Moscow meeting provides an inauspicious overture to the CIS summit.


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