Something About CU

By Mark Rubin

Many countries consider the Customs Union (CU) of Russia, Kazakhstan and Belarus as a "plum", the place where you can deliver the goods as well as export raw materials from it. Taking into account the new tariff rates of this "triple" the last option is much more profitable. Integration association that was set up in record short time, learns the lessons of the EU, and therefore, following the beaten track, is developing a tremendous success.


And so, the integration association, established almost in one year, initially was perceived by skeptics as another organization, which de facto will not be able to influence the current situation in the political nor economic spheres. During the first years of its existence ("trio" counties officially announced the launch of CU area on January 1, 2010), the union has given an impetus to the development of not only participating countries, but also has sought to globally position the region as a bridge between Europe and Asia-Pacific countries. For example, the development of transport systems in the direction from China to Europe as a result can shorten the transportation of goods by at least 4 times.


CU market with a population of 170 million people is of interest primarily in terms of natural resources. Even the international recognition of Russia as an energy superpower speaks volumes. Alliance with a country that has the world's largest natural gas reserves, the second-largest oil producer and the eighth - by coal reserves, promises a lot of benefits for partner countries.


Kazakhstan also has an enviable potential - 3.2 percent of global oil reserves (this statistics for proved reserves) and the largest reserves of natural gas, coal and uranium include this central Asian country in the category of energy powers.


Common principles of the CU created the conditions for the largest joint ventures in all areas. For example, in the energy sector it was signed an agreement for the sale of the second 50 per cent of "Beltransgaz" block of shares with the Russian corporation "Gazprom". Russian monopoly not only bought five billion shares of "Beltransgaz", which is higher than their market value, but also recharged $ 2.5 billion into the account of the Belarusian government over the last block of shares. As the result of the agreement it was also an increase in the transportation of Russian gas through Belarus to the EU in 2012 to 4 billion cubic meters, bringing it to a record of 35.3 billion.


Active cooperation between the countries manifests also in the financial sector. One of the most striking examples - providing of the soft loan of "Sberbank of Russia" and the Eurasian Development Bank to Belarus in the amount of one billion dollars.


The association promotes the free flow of capital, labor and investment. In this regard, the union of the three countries, whose economies are complementary, caused great interest on the part of the states which participation was not expected even before the creation of CU.


In July 2010, the possibility of accession of Syria to the free trade zone between Russia, Belarus and Kazakhstan was declared by Syrian President Bashar Assad, Vietnam has shown its great interest, it will possibly be signed an agreement on free trade zone between the Customs Union and New Zealand. But this list does not include the former Soviet Union states, whose leaders have periodically returned to the issue of entering the Union of Kazakhstan, Russia and Belarus (including Kyrgyzstan, Ukraine, Tajikistan and Armenia).


Thus, the energy potential of the "triplet" is not in doubt. A significant role in the integration was given to a financial model that can be used as a basis for interaction of these countries. While at the highest political level it is discussed the creation of the single currency (the President of Kazakhstan Nursultan Nazarbayev has proposed to call it euras), experts estimate the potential to attract investment, which has increased markedly.


Abolition of customs barriers and consequently the decrease of business costs led to boost trade between the «triplet» countries and it increases every year.


Through the adoption of common arrangements the rail services have declined. In addition, now it is actively being discussed the establishment of the Unified Transport and Logistics Company (UTLC) operating in the field of railway transport. Value created by the logistics company will be approximately 2-2,25 billion.


These results, achieved just in three years of the CU existence, largely became possible by the coordinated efforts and the introduction of the best practices of such integration associations. It took 40 years for Europe to create such a full-fledged union that comprises 400 million people for today. The Union reflects the experience of the EU and other regional organizations in an effort to avoid the mistakes and learn from the positive side.


Moreover, in contrast to the EU, the countries of the Customs Union have their own zest. All three countries at the time came from the Soviet Union, and therefore have common historical roots, a common language and that is important - same kind of mentality and virtually single issue, which could not be overcome by any of the countries in more than 20 years of independence.


Abundant natural resources, a strong human potential, the capital integration allow countries of the Eurasian Economic Space (EES) to be competitive in the field of investment, along with other key players and regional structures, including the EU, USA, China, Asia-Pacific Economic Cooperation (APEC).