Russia-Belarus-Kazakhstan form Economic Union, expand Customs and Postal Union

Hoping to achieve full economic integration by 2015, CES Presidents Dmitry Medvedev, Nursultan Nazarbayev, and Alexander Lukashenko met in Moscow and signed joint agreements for formation of an Eurasian region Common Economic Space, including a Declaration on Eurasian Economic Integration, the Treaty on the Eurasian Economic Commission, and the Resolution on the Eurasian Economic Commission Regulations.

L-R: CES Presidents Lukashenko, Medvedev and Nazarbayev.

The three Presidents of Belarus, Kazakhstan and the Russian Federation met in Moscow to announce the ongoing transition to the next stage of integration: the Common Economic Space (CES). The CES hopes to ride Russia’s coattails into the World Trade Organization and confirmed the goal of moving all three states’ into the WTO.

The Common Economic Space provides for further integration of the customs and postal unions, ensuring the effective functioning of the common market for goods, services, capital and labour; the formation of a coherent industrial, transport, energy and agricultural policy; further harmonization of national parliaments; and cooperation in developing a common currency.

The Declaration states that the CES will be open to other regional states that share the goals and principles of the Union. Russia, Belarus and Kazakhstan have pledged to implement the Union by January 2015. This work will include a common monetary policy and reforms of the labour, capital, goods and services markets along with the creation of Eurasian energy, transport and telecommunications networks.

Signing of the integration documents took place in the Kremlin Grand Palace, in the same hall where treaties had been signed by world leaders Reagan, Gorbachev and Thatcher.

The three presidents then answered questions from reporters after signing the treaties in the historic Kremlin Grand Palace.

Regarding the idea of “Union” of the Common Economic Space:

(Russian President Medvedev): I thank Mr Nazarbayev, who, to be perfectly honest, was the initiator behind this whole idea back during the difficult 1990s, when the word ‘integration’ was seen as a leftover from Soviet-era vocabulary and a sign of poor taste. But for all of the obstacles in the way back then, Mr Nazarbayev spared no effort in his calls to build and develop integration in the post-Soviet area. This took a long time, but steady effort always helps to accomplish even the most complicated tasks. What we see today is the result of this work that went on at many levels, work the historic significance of which I hope will win the appreciation it deserves now and in the future.

(President of Kazakhstan Nursultan Nazarbayev): In my article in newspaper Izvestia, I gave a detailed account of the history of my proposal to create the Eurasian Union, an idea that goes back to a speech I gave at Moscow State University in 1994. That was a time of collapse, a time when what had been a single country fell apart. We were all fragments of that whole, like pieces of a shattered plate. The result was complete stagnation. It seemed to me then that we were to make use of the things we had built up over those decades, the shared mentality and common economy, to somehow save our ordinary people from disaster.  

Despite the years that have passed, my view has not changed. Any integration project begins above all with creating a common free trade zone, then a customs union, then a common economic space, and finally, an economic union with the eventual possibility of a common currency. This is the classic road that we are taking.

All round, this is a very powerful grouping that brings together 170 million people: 144 million in Russia, 16 million in Kazakhstan, and more than 10 million in Belarus. With a population of 170 million this is a market with the kind of self-sufficiency to get by on its own if the need arise. This is what we are working towards, what we are proposing, and everything is moving in the right direction.

CES Presidents Nazarbayev, Medvedev and Lukashenko tour VTB bank, Moscow.

On the “Customs Union” between the three countries:

(Russian President Dmitry Medvedev) I remind you that as of July 1 this year, the Customs Union between Belarus, Kazakhstan, and Russia has been working in full-fledged operation. Work continues today to improve its mechanisms and strengthen its legal foundations. As I discussed just now with my colleagues, this union is not merely about making the paperwork easier, creating new organisations, or even simplifying regulations, but is something that has given a real and substantial boost to our reciprocal trade. Our trade is growing rapidly, which is very good to see. This was our goal, the objective we all pursued. Our aim is to make our economies work better.

The next step is the establishment of the Eurasian Economic Union by 2015.

Questions on whether the CES formation would eventually negate the idea of a unified Russia & Belarus:

(President of Belarus Aleksandr Lukashenko) The Allied State project may dissolve, if we do not progress or fail to develop the Allied State of Belarus and Russia project, while this current project, the Common Economic Space, moves forward very quickly. Then, perhaps, the Common Economic Space will become as integrated as Russia and Belarus currently are. And then, we will have the right to ask ourselves whether we need a parallel Allied State as we are currently calling it.

But for now, the situation is such that the Allied State has advanced significantly, even given all the shortcomings in our efforts, and the degree of integration is quite high. Suffice it to state the clear fact that when shaping the regulatory and legal framework of the Customs Union and then of the Common Economic Space, we employed various elements from our experience of building the Allied State.

Moreover, I have already said that the Common Economic Space is our very important brainchild in the economic sense, financially, etc. But the Common Economic Space, which we are designing now, or the Customs Union, they are still far from the degree of integration that we have in the Allied State. For example, currently we draft joint balances for energy and food supplies and many other positions, as Russia’s Economic Development Minister present here may explain in more detail.

The citizens of the Russian Federation and Belarus have absolutely equal rights; we do not have any borders. If you go to Minsk or Moscow, you won’t find any border patrol on the way from one to the other, nobody will stop you. We removed all border control formalities back in 1996 or even 1995 so now Russia and Belarus don’t have that.

Today, within the framework of unification of Belarus and Russia, we are coordinating not only domestic policy, but foreign policy issues as well. We also have a common defense space and have well advanced in that respect. We have a common air defense system which is managed from one command centre (Moscow) and, God forbid, in case of a conflict or war, will be employed.

Presidents Lukashenko, Medvedev and Nazarbayev on 62nd floor of Moscow's Federation Tower.

When questioned on how this integration will impact the average citizen:

(Kazakhstan President Nursultan Nazarbayev) We, the Presidents, are elected by our peoples. Our main objective is to improve the well-being of our citizens. After all, developing the economy is not an end in and of itself. The goal is to improve people’s lives. The economy earns money so that people gain these benefits. That is precisely why we are doing all this. We are opening the market. In the last decade, before the crisis, Kazakhstan was developing at rates of about ten percent. This year, we will end at 7.5 percent. Without these rates, the economy does not grow. The economy is producing goods and hence growing. Where are these goods going? We supply these goods to 16 million people [of Kazakhstan]. Where do we go next? The markets we are opening to one another by removing customs barriers, obstacles to the free flow of capital, labour force, and so on will boost the growth of all three economies and result in improvement in our people’s living standards. So the question is well put. That is what our integration is all about.

(Russian President Dmitry Medvedev) We have declared free movement of goods, services, capital and labour force and have practically ensured relevant conditions. Isn’t this done for the benefit of our peoples? Of course it is. The facts speak for themselves.