Tweet
INTEGRATION PROSPECTS OF POST-SOVIET STATES ON THE EXAMPLE OF KIRGIZIA AND UKRAINE (EXPECTATIONS AND CONCERNS)
http://www.noravank.am/eng/articles/detail.php?ELEMENT_ID=7103
03.06.2013
Sergei Sargsyan
Deputy Head of the Center for Political Studies, "Noravank" Foundation
Coming forward on the post-Soviet space of a new integration project -
Eurasian Economic Union (EAEU), initiated polemics, discussions and
blazing rows on the issue of viability of the project itself as well
as on possible advantages and disadvantages of joining it.
The alternative offer of Russia, Kazakhstan and Belarus stirred
up negotiating activity of the "Eastern partnership" programme
member-countries in the European direction too. This is mostly
noticeable on the example of Ukraine, with which the European Union
can sign the "Association Agreement" in November 2013.
The prospects of joining the Customs Union in the Central Asia
states, which are geographically located between two geopolitical
power centers - Russia and China, are discussed no less tensely.
Despite the fact that the treaty on Eurasian Economic Union must be
ready by May 1, 2014 and on January 1, 2015 it should start functioning
as a new international organization, a number of experts, politician
and culture experts still remain skeptical on the very possibility
of creation of a supranational structure by three states.
At the same time its economic basis in the form of the Customs Union
is already functioning and this allows estimating rather accurately
economic prospects of possible joining the project by one or another
country, revealing its strong and weak sides in regard to each separate
branch of economy.
Many applied researches, which allow the ruling elites of the
interested countries to orient in this situation and elaborate
the policy in regard to the European and Eurasian Unions, have been
carried out. The expectation from their joining one or another project,
the problems they may face and reasons, which cause most concern,
are of definite interest for Armenia.
Among the positive sides of Kirgizia's joining of the Customs Union
mentioned by a number of the economists is the competitive growth of
the Kirgiz goods as compared to the Chinese import in consequence of
imposition of curtain duties. At the same time the absence of inner
customs duties in the CU and the access of Kirgizia to the markets
of Russia, Kazakhstan and Belarus will make the deployment of the
industrial and agricultural objects on its territory commercially
viable.
It especially concerns the production of the agricultural complex of
Kirgizia, which is assessed as the second important and prospective
item of export to the CU markets1. Direct positive and, which is
important, immediate effect is anticipated in the customer goods
industry, which export potential is demonstrating some growth
even now. As for ore industry, under the current investments flows
from China and Canada, drawing companies from the CU countries on
advantageous terms will cause the growth of competitive attractiveness
of the objects of this sector, which will also have a good effect
on its development pace. In the future achieving of the acceptable
balance of interests between the old and new investors is forecasted.
Specialization of Kirgizia on some clusters of the ore industry against
the background of the branch cooperation with profile objects of the
CU states in a mid-term prospect will cause even bigger growth of
the profitability of the local production. And the further prospects
of the country on joining the Common Economic Space in future will
provide free movement of capital, investments and the work force. At
the first stage the labor migration (according to some estimations
up to 2 million citizens of Kirgizia2), first of all to Russia and
Kazakhstan, have to stabilize the level of unemployment, increase the
level of the life in the country and to some extent it will decrease
the social tension. At the same time, as the results of the public
opinion polls show, most of the respondents among the labor migrants
are resolute to return home at the earliest opportunity in case if
the workplaces are opened3.
As it is expected, the Common Economic Community will initiate
development of the tourism industry too; it will increase a possibility
of drawing additional large investments there. At the same time
joining the Customs Union, growth of the average rate of the customs
duties up to 10% will cause, at least in a short-term perspective,
a decrease of the customs dues approximately at one third and will
greatly affect a considerable segment of Kirgiz businessmen who are
dealing with the re-export of the Chinese goods (and it is about 70%
of the goods coming from the PRC). In the social aspect it means growth
of the prices on Chinese production of everyday use and general growth
of retail prices4.
Opening of the Kirgizia's market for the Chinese goods, which
was lobbied by the Beijing on the official level, brought to the
substitution of the local products and now restoration and support
of the local producers will not be an easy task for the leadership
of the country.
As for Ukraine, the advantages and disadvantages of its joining
Customs Union can be vividly observed by the alternative prospects
of implementation of the Association Agreement between Ukraine and EU.
In the opinion of the supporters of Ukraine's integration into the
EAEU who take as ground the data provided by a number of different
researches (in particular, a study carried out in 2010-11 by a working
group headed by the Deputy Minister of Economics of Ukraine Prof.
V.Muntian), in case of joining the Customs Union Ukraine can have -
for the whole of the economics - 3-3,5% gain in production, GDP growth
at a level of 2,5%, and the forecasted additional growth of the budget
income at a level of 9,4 billion grivna per year (about $1,2 billion).
And this does not include tariff, energy and other privileges5.
As the editor-in-chief of "Folio" publishing house (Kharkov)
A.Krasovitsky believe, small and medium business of Ukraine, which can
broaden its presence on the Customs Union's vast market, and the common
population of the country are interested in the integration with the
CU. And the political elites and big business are not interested in
joining CU, though their representatives in iron and steel, chemical,
oil industries and energy production may face serious problems after
the entry into a force of the EU Association Agreement.
In particular, in the appendix to the Agreement reservations on
regulating "limits of the emission for the existing plants" are made.
It means that Ukraine will have to take urgent measures on installation
of the cleaning systems. Taking into consideration the age of the
industrial objects, it is not excluded that some of them will have
to be closed.
Nevertheless, according to the president of the Center for System
Analysis and Forecasts R.Ishenko, for the 20 years of independence
Ukraine has managed to preserve only 30% of its industrial potential
as compared to the level of 1991. Back in 2012 40% of iron and steel
capacities was closed and in 2013 it is planned to close 30% of the
coal producing enterprises and mines6.
Besides, Ukraine cedes in its investing attractiveness to Russia,
and as a result the Ukrainian businessmen move their works to Russia.
Thus, Peter Poroshenko - the "chocolate king" - moved its chocolate
business and the plant on producing "Bogdan" buses to Russia.
The supporters of the integration of Ukraine with the EU have the
arguments of their own. Thus, according to official data, the stance
of this country, e.g. on agricultural production market of the EU
is only getting stronger - for the first quarter of this year the
commodity turnover between Ukraine and EU countries has been up by 46%
and reached the level of $2.5 billion. According to the Minister of
Agricultural Policy and Food of Ukraine Nikolai Prisyajnyuk, joining of
Ukraine to European Neighbourhood Programme for Agriculture and Rural
Development (ENPARD) is also prospective: "In Europe this programme
has already produced results. Europe has already elaborated programme
which provides technical, financial support for the creation of the
cooperatives. And we, after we liquidated collective farms, need to
offer an efficient form of management in the rural areas"7.
At the same time, in accordance with the Agreement all kinds of the
export agricultural production of Ukraine will be strictly regulated.
For example, instead of 3 million tons of wheat, which have been
exported to Europe from Ukraine for the recent several years, its
quota will be decreased up to 1 million tons; it stipulates 10 times
shrinkage of sugar export - from 300 thousand to 30 thousand tons.
Besides, according to the WTO accession treaty Ukraine has been obliged
to impose a ban on selling meet, fat, butter and milk produced in
the private households. Now the ban is spread upon kraut, salting,
soaked apples, natural oil, veal rum steak, honey, etc. "Directive
on the common catalogue of varieties of agricultural plant species"
provides an exact list of the species grown in Ukraine that can go
to the market.
Besides, in the first years after signing the Agreement Ukraine will
have to fully substitute the system of standards - there are more than
20 thousand of them - on European one. According to the estimations of
the experts of the Federation of the Employers of Ukraine, due to the
differences in the systems of standards with the CU member countries,
their country will lose no less than $15 billion annually8. And they
can hardly substitute this market by the European Union's market.
At a bottom Ukraine faces a fateful selection - either to stay at a
usual post-Soviet space market, or to radically reform or in fact to
start creating almost new economy and try to win new markets.
The point is whether it will manage to avoid default and social
explosion in the transition period. Under the global economic crisis
its condition, as compared to the countries which joined EU in the
1990s, is less favourable and prospects are vaguer. At least because
those countries had a guarantee of entering the European Union and
for Ukraine signing of the Association Agreement is only a beginning
of the first (and not the last) "stage of rapprochement", which will
last at least ten years.
Of course every post-Soviet state has its own unique relations
with the European Union, and their relations with a newly forming
Eurasian Economic Union are built up in different ways. But, as
it would seem, scrutiny of the experience of other countries can
and must help Armenia to avoid many disappointments and mistakes,
to orient more confidently and to participate in the integration
processes with maximum efficiency.
1 Labour export is an income item number one for Kirgizia.
2 - ×ÓÔÕÐÌÅÎEÅ ëEÒCEÚEE × ôo: ÚÁËÒÙÔÙÊ
ÓEÔÕÁÃEÏÎÎÙÊ ÁÎÁÌEÚ. ea , 26.03.2013.
http://www.regnum.ru/news/1640314.html.
3 Only 6% of respondents want to stay on permanent residency in Russia
and 9% - in Kazakhstan. The public opinion poll was carried out within
the framework of "Aftermaths of Kirgizia's joining Customs Union
and Eurasian Economic Partnership for the Labor market and human
capital of the Country" project. Center for Integration Studies,
Saint-Petersburg, 2013.
4 - ×ÓÔÕÐÌÅÎEÅ ëEÒCEÚEE × ôo: ÚÁËÒÙÔÙÊ
ÓEÔÕÁÃEÏÎÎÙÊ ÁÎÁÌEÚ. ea , 26.03.2013.
http://www.regnum.ru/news/1640314.html.
5 .
http://rusedin.ru/2013/02/20/ukraina-i-tamozhennyj-soyuz-vremya-diskussij-zakanchivaetsya/.
6 Ibid.
7 , 30 ÁÐÒÅÌÑ 2013C.
http://www.kommersant.ua/news/2182837.
8 ,
http://vybor.ua/article/economika/neskolko-voprosov-k-ukrainskoy-vlasti.html,
03 ÍÁÑ 2013C.
"Globus" analytical journal, #5, 2013
Another materials of author INTENSIFICATION OF RUSSIA-TURKEY
INDIRECT MILITARY AND POLITICAL CONFRONTATION[25.02.2013] GEORGIA:
AN ATTEMPT TO MANEUVER IN A NARROW GAUGE[14.01.2013] SOME ASPECTS
OF THE DEVELOPMENT OF MILITARY AND POLITICAL SITUATION ROUND THE
NAGORNO-KARABAKH CONFLICT [02.08.2012] "IT IS NECESSARY TO RAISE
ENERGY EFFICIENCY", - says the deputy head of the Center for Political
Studies of "Noravank" Foundation Sergei SARGSYAN in his interview
to "Golos Armenii"[26.07.2012] TRANS-CASPIAN GAS PIPELINE: GOALS,
PROBLEMS AND RISKS [25.06.2012] TURKEY IN THE US MISSILE DEFENCE
SYSTEM: PRIMARY ASSESSMENT AND POSSIBLE PROSPECTS[13.10.2011]
ARMENIA AT THE INTERSECTION OF THE INTERESTS OF THE MILITARY AND
POLITICAL BLOCKS[05.09.2011] SHALE GAS GHOST[08.02.2011] GAS FROM
IRAQI KURDISTAN FOR NABUCCO: TURKISH INTEREST [15.12.2010] AZERBAIJAN:
SEARCHING NEW FOREIGN POLICY BALANCE[27.10.2010]
http://www.noravank.am/eng/articles/detail.php?ELEMENT_ID=7103
03.06.2013
Sergei Sargsyan
Deputy Head of the Center for Political Studies, "Noravank" Foundation
Coming forward on the post-Soviet space of a new integration project -
Eurasian Economic Union (EAEU), initiated polemics, discussions and
blazing rows on the issue of viability of the project itself as well
as on possible advantages and disadvantages of joining it.
The alternative offer of Russia, Kazakhstan and Belarus stirred
up negotiating activity of the "Eastern partnership" programme
member-countries in the European direction too. This is mostly
noticeable on the example of Ukraine, with which the European Union
can sign the "Association Agreement" in November 2013.
The prospects of joining the Customs Union in the Central Asia
states, which are geographically located between two geopolitical
power centers - Russia and China, are discussed no less tensely.
Despite the fact that the treaty on Eurasian Economic Union must be
ready by May 1, 2014 and on January 1, 2015 it should start functioning
as a new international organization, a number of experts, politician
and culture experts still remain skeptical on the very possibility
of creation of a supranational structure by three states.
At the same time its economic basis in the form of the Customs Union
is already functioning and this allows estimating rather accurately
economic prospects of possible joining the project by one or another
country, revealing its strong and weak sides in regard to each separate
branch of economy.
Many applied researches, which allow the ruling elites of the
interested countries to orient in this situation and elaborate
the policy in regard to the European and Eurasian Unions, have been
carried out. The expectation from their joining one or another project,
the problems they may face and reasons, which cause most concern,
are of definite interest for Armenia.
Among the positive sides of Kirgizia's joining of the Customs Union
mentioned by a number of the economists is the competitive growth of
the Kirgiz goods as compared to the Chinese import in consequence of
imposition of curtain duties. At the same time the absence of inner
customs duties in the CU and the access of Kirgizia to the markets
of Russia, Kazakhstan and Belarus will make the deployment of the
industrial and agricultural objects on its territory commercially
viable.
It especially concerns the production of the agricultural complex of
Kirgizia, which is assessed as the second important and prospective
item of export to the CU markets1. Direct positive and, which is
important, immediate effect is anticipated in the customer goods
industry, which export potential is demonstrating some growth
even now. As for ore industry, under the current investments flows
from China and Canada, drawing companies from the CU countries on
advantageous terms will cause the growth of competitive attractiveness
of the objects of this sector, which will also have a good effect
on its development pace. In the future achieving of the acceptable
balance of interests between the old and new investors is forecasted.
Specialization of Kirgizia on some clusters of the ore industry against
the background of the branch cooperation with profile objects of the
CU states in a mid-term prospect will cause even bigger growth of
the profitability of the local production. And the further prospects
of the country on joining the Common Economic Space in future will
provide free movement of capital, investments and the work force. At
the first stage the labor migration (according to some estimations
up to 2 million citizens of Kirgizia2), first of all to Russia and
Kazakhstan, have to stabilize the level of unemployment, increase the
level of the life in the country and to some extent it will decrease
the social tension. At the same time, as the results of the public
opinion polls show, most of the respondents among the labor migrants
are resolute to return home at the earliest opportunity in case if
the workplaces are opened3.
As it is expected, the Common Economic Community will initiate
development of the tourism industry too; it will increase a possibility
of drawing additional large investments there. At the same time
joining the Customs Union, growth of the average rate of the customs
duties up to 10% will cause, at least in a short-term perspective,
a decrease of the customs dues approximately at one third and will
greatly affect a considerable segment of Kirgiz businessmen who are
dealing with the re-export of the Chinese goods (and it is about 70%
of the goods coming from the PRC). In the social aspect it means growth
of the prices on Chinese production of everyday use and general growth
of retail prices4.
Opening of the Kirgizia's market for the Chinese goods, which
was lobbied by the Beijing on the official level, brought to the
substitution of the local products and now restoration and support
of the local producers will not be an easy task for the leadership
of the country.
As for Ukraine, the advantages and disadvantages of its joining
Customs Union can be vividly observed by the alternative prospects
of implementation of the Association Agreement between Ukraine and EU.
In the opinion of the supporters of Ukraine's integration into the
EAEU who take as ground the data provided by a number of different
researches (in particular, a study carried out in 2010-11 by a working
group headed by the Deputy Minister of Economics of Ukraine Prof.
V.Muntian), in case of joining the Customs Union Ukraine can have -
for the whole of the economics - 3-3,5% gain in production, GDP growth
at a level of 2,5%, and the forecasted additional growth of the budget
income at a level of 9,4 billion grivna per year (about $1,2 billion).
And this does not include tariff, energy and other privileges5.
As the editor-in-chief of "Folio" publishing house (Kharkov)
A.Krasovitsky believe, small and medium business of Ukraine, which can
broaden its presence on the Customs Union's vast market, and the common
population of the country are interested in the integration with the
CU. And the political elites and big business are not interested in
joining CU, though their representatives in iron and steel, chemical,
oil industries and energy production may face serious problems after
the entry into a force of the EU Association Agreement.
In particular, in the appendix to the Agreement reservations on
regulating "limits of the emission for the existing plants" are made.
It means that Ukraine will have to take urgent measures on installation
of the cleaning systems. Taking into consideration the age of the
industrial objects, it is not excluded that some of them will have
to be closed.
Nevertheless, according to the president of the Center for System
Analysis and Forecasts R.Ishenko, for the 20 years of independence
Ukraine has managed to preserve only 30% of its industrial potential
as compared to the level of 1991. Back in 2012 40% of iron and steel
capacities was closed and in 2013 it is planned to close 30% of the
coal producing enterprises and mines6.
Besides, Ukraine cedes in its investing attractiveness to Russia,
and as a result the Ukrainian businessmen move their works to Russia.
Thus, Peter Poroshenko - the "chocolate king" - moved its chocolate
business and the plant on producing "Bogdan" buses to Russia.
The supporters of the integration of Ukraine with the EU have the
arguments of their own. Thus, according to official data, the stance
of this country, e.g. on agricultural production market of the EU
is only getting stronger - for the first quarter of this year the
commodity turnover between Ukraine and EU countries has been up by 46%
and reached the level of $2.5 billion. According to the Minister of
Agricultural Policy and Food of Ukraine Nikolai Prisyajnyuk, joining of
Ukraine to European Neighbourhood Programme for Agriculture and Rural
Development (ENPARD) is also prospective: "In Europe this programme
has already produced results. Europe has already elaborated programme
which provides technical, financial support for the creation of the
cooperatives. And we, after we liquidated collective farms, need to
offer an efficient form of management in the rural areas"7.
At the same time, in accordance with the Agreement all kinds of the
export agricultural production of Ukraine will be strictly regulated.
For example, instead of 3 million tons of wheat, which have been
exported to Europe from Ukraine for the recent several years, its
quota will be decreased up to 1 million tons; it stipulates 10 times
shrinkage of sugar export - from 300 thousand to 30 thousand tons.
Besides, according to the WTO accession treaty Ukraine has been obliged
to impose a ban on selling meet, fat, butter and milk produced in
the private households. Now the ban is spread upon kraut, salting,
soaked apples, natural oil, veal rum steak, honey, etc. "Directive
on the common catalogue of varieties of agricultural plant species"
provides an exact list of the species grown in Ukraine that can go
to the market.
Besides, in the first years after signing the Agreement Ukraine will
have to fully substitute the system of standards - there are more than
20 thousand of them - on European one. According to the estimations of
the experts of the Federation of the Employers of Ukraine, due to the
differences in the systems of standards with the CU member countries,
their country will lose no less than $15 billion annually8. And they
can hardly substitute this market by the European Union's market.
At a bottom Ukraine faces a fateful selection - either to stay at a
usual post-Soviet space market, or to radically reform or in fact to
start creating almost new economy and try to win new markets.
The point is whether it will manage to avoid default and social
explosion in the transition period. Under the global economic crisis
its condition, as compared to the countries which joined EU in the
1990s, is less favourable and prospects are vaguer. At least because
those countries had a guarantee of entering the European Union and
for Ukraine signing of the Association Agreement is only a beginning
of the first (and not the last) "stage of rapprochement", which will
last at least ten years.
Of course every post-Soviet state has its own unique relations
with the European Union, and their relations with a newly forming
Eurasian Economic Union are built up in different ways. But, as
it would seem, scrutiny of the experience of other countries can
and must help Armenia to avoid many disappointments and mistakes,
to orient more confidently and to participate in the integration
processes with maximum efficiency.
1 Labour export is an income item number one for Kirgizia.
2 - ×ÓÔÕÐÌÅÎEÅ ëEÒCEÚEE × ôo: ÚÁËÒÙÔÙÊ
ÓEÔÕÁÃEÏÎÎÙÊ ÁÎÁÌEÚ. ea , 26.03.2013.
http://www.regnum.ru/news/1640314.html.
3 Only 6% of respondents want to stay on permanent residency in Russia
and 9% - in Kazakhstan. The public opinion poll was carried out within
the framework of "Aftermaths of Kirgizia's joining Customs Union
and Eurasian Economic Partnership for the Labor market and human
capital of the Country" project. Center for Integration Studies,
Saint-Petersburg, 2013.
4 - ×ÓÔÕÐÌÅÎEÅ ëEÒCEÚEE × ôo: ÚÁËÒÙÔÙÊ
ÓEÔÕÁÃEÏÎÎÙÊ ÁÎÁÌEÚ. ea , 26.03.2013.
http://www.regnum.ru/news/1640314.html.
5 .
http://rusedin.ru/2013/02/20/ukraina-i-tamozhennyj-soyuz-vremya-diskussij-zakanchivaetsya/.
6 Ibid.
7 , 30 ÁÐÒÅÌÑ 2013C.
http://www.kommersant.ua/news/2182837.
8 ,
http://vybor.ua/article/economika/neskolko-voprosov-k-ukrainskoy-vlasti.html,
03 ÍÁÑ 2013C.
"Globus" analytical journal, #5, 2013
Another materials of author INTENSIFICATION OF RUSSIA-TURKEY
INDIRECT MILITARY AND POLITICAL CONFRONTATION[25.02.2013] GEORGIA:
AN ATTEMPT TO MANEUVER IN A NARROW GAUGE[14.01.2013] SOME ASPECTS
OF THE DEVELOPMENT OF MILITARY AND POLITICAL SITUATION ROUND THE
NAGORNO-KARABAKH CONFLICT [02.08.2012] "IT IS NECESSARY TO RAISE
ENERGY EFFICIENCY", - says the deputy head of the Center for Political
Studies of "Noravank" Foundation Sergei SARGSYAN in his interview
to "Golos Armenii"[26.07.2012] TRANS-CASPIAN GAS PIPELINE: GOALS,
PROBLEMS AND RISKS [25.06.2012] TURKEY IN THE US MISSILE DEFENCE
SYSTEM: PRIMARY ASSESSMENT AND POSSIBLE PROSPECTS[13.10.2011]
ARMENIA AT THE INTERSECTION OF THE INTERESTS OF THE MILITARY AND
POLITICAL BLOCKS[05.09.2011] SHALE GAS GHOST[08.02.2011] GAS FROM
IRAQI KURDISTAN FOR NABUCCO: TURKISH INTEREST [15.12.2010] AZERBAIJAN:
SEARCHING NEW FOREIGN POLICY BALANCE[27.10.2010]