Publication: Monitor Volume: 4 Issue: 16

Statements made over the weekend by presidents Alyaksandr Lukashenka of Belarus and Nursultan Nazarbaev of Kazakhstan, and by Kremlin foreign policy coordinator Sergei Yastrzhembsky, provide some explanations for the failure of the January 22 summit of the CIS Customs Union (Russia, Belarus, Kazakhstan, and Kyrgyzstan). Despite their deliberately obscure character, the statements suggest that political and economic considerations led the Russian and Belarusan sides to reject Nazarbaev’s project of a Single Economic Space (SES) and his related plan for "Ten Simple Steps to Benefit Ordinary People."

Russian president Boris Yeltsin and Lukashenka concerted their stance in a bilateral meeting that preceded the quadripartite session and, according to Moscow observers, predetermined that session’s outcome. Explicitly, the presidents faulted Kazakhstan’s proposals for being designed to benefit "only one country." Implicitly, they criticized the lack of accompanying proposals for political integration. In their common view, acceptance of the Kazakh economic proposals would have weakened the Russia-Belarus Union — which is political as well as economic. Yeltsin, moreover, appeared especially reluctant to open Russian markets to Kazakhstani goods. Lukashenka seemed anxious to retain his country’s privileged access to the Russian market and the special legal treatment enjoyed, at least on paper, by Belarusan citizens in Russia.

Kyrgyzstan, which was barely heard from at the summit, would have shared some of SES’s intended benefits. But on January 3, President Askar Akaev had aired several proposals to reform the quadripartite Customs Union consistent with Nazarbaev’s SES.

The SES, to be carried out in two stages of three years each, envisaged, among other things, four achievements: abolition of trade barriers among the four countries, free access to each other’s markets, transit facilities on a reciprocal basis, and a common agricultural market.

The "Ten Steps" aimed at facilitating the acquisition of citizenship or residency by citizens of one member country moving to another; would have equated such people’s access to employment, education, and social services; and would have substantially simplified border crossing procedures for private travel and the shuttling small trade.

In rejecting the two plans, the summit used the customary CIS formula of "returning it for further work" at lower levels — in this case to a quadripartite commission of experts that is to report by February 4. Yeltsin also claimed that the SES plan had been submitted too late for consideration. Nazarbaev countered — "with surprise" and "a bitter feeling," he said — that he had sent the plan to the Kremlin two months earlier, but did not receive a first reaction until January 19.

The presidents further announced, without elaborating, that they declined to examine a draft agreement on the mutual assessment of indirect taxes on reciprocal trade. They also said that they removed from the agenda an exchange of information on the four countries’ negotiations with the World Trade Organization. Yeltsin termed both matters "major strategic tasks." In an apparent sop to Nazarbaev, the summit decided to move to Kazakhstan the headquarters of the Integration Committee — the Customs Union’s executive organ. (Russian agencies, January 23-25)

The preceding summit, held in Moscow on October 21, (see Monitor, October 22 and 23) had witnessed an announcement by Yeltsin that value-added taxes on reciprocal trade would henceforth be assessed in accordance with the country-of-destination principle. The other three countries hailed the proposed measure as the first step toward turning the Customs Union into something approaching reality. As it turned out, Yeltsin’s was a spontaneous gesture, poorly coordinated with the government and resisted by vested economic and bureaucratic interests in Russia. From one summit to the next, the CIS Customs Union continues to exist mainly on paper. The Russia-Belarus Union now adds to the factors that stunt the Customs Union’s development.

Warm Glow of Russia-Belarus Union Summit.