Kazakhs weigh gains from customs pact
By Daulet Kanagatuly
ALMATY - Kazakhstan’s economy could become more vulnerable to Russian
competitors following the country's joining of a regional customs union at the
start of the year, analysts warn.
A customs union agreed by Russia, Kazakhstan and Belarus came into force on
January 1, with the three states adopting common customs tariffs as the first
of several steps towards creating a common economic area by the end of 2012.
Customs
controls on Russia's long frontier with Kazakhstan will continue until next
year, in contrast to the checkpoints on its western border with Belarus, which
are scheduled for closure as early as this July.
The long-discussed customs union between these three former parts of the Soviet
Union was signed in late November last year when their presidents met in the
Belarusian capital, Minsk. The decision to set it up was taken in 2007 at a
meeting of the Eurasian Economic Community, EurAsEC, a grouping that also
includes Kyrgyzstan and Tajikistan.
The customs union is not intended as a substitute for membership of the World
Trade Organization (WTO), which Moscow applied to join in 1993. The three
countries have made it clear they will continue efforts to join, either
coordinating their separate bids or, as they suggested last summer, as a
tripartite bloc.
Officials in Kazakhstan are predicting that their country will reap benefits
from increased trade, a better investment climate and the other advantages
created by the free movement of labor and capital within the customs-union
states.
In his New Year address to the nation, Kazakh President Nursultan Nazarbayev
said the planned common economic area would "strengthen our economy, open up
new prospects, and improve the standard of living of Kazakhstan's citizens".
Some analysts are not so optimistic, at least regarding the short-term benefits
to Kazakhstan. They argue that lifting trade barriers could bring a flood of
imports, undermine domestic producers and drive inflation upwards.
"I think Kazakh businesses need to prepare themselves for strong pressure from
Russian entrepreneurs," a political analyst, Dosym Satpaev, told the Institute
for War and Peace Reporting.
Russia's huge natural resources and its comparatively well-developed industry
and competitive products are likely to gain the advantage in the next three or
four years, he said, noting that the smaller Kazakh economy was some way behind
in the quality, design and marketing of such items as farm and dairy products.
In its current shape, Satpaev said, "We are not ready for integration processes
of this kind."
A sociologist, Gaziz Nasyrov, shares Satpaev's skepticism, saying that although
parallels have been drawn with the European Union, the comparison does not
really work as the former Soviet republics are at a lower stage of economic
development, so richer states cannot afford to subsidize the poorer ones.
"I doubt the customs union is going to lead our countries to prosperity," said
Nasyrov. "In Europe, before joining the union, the countries had gone a long
way and had attained a certain level of prosperity, so that they could afford
the process of leveling out for the sake of common values."
Eduard Poletaev, editor-in-chief of the magazine Moy Bizness Kazakhstan,
believes Kazakhstan's leaders had political as well as economic considerations
in mind when they formed a customs union with their large and powerful
neighbor, Russia.
"It was above all a political act," he said.
Nazarbayev has worked hard to maintain cordial relations with Moscow since the
Soviet Union broke up in 1991. Part of his strategy has been to ensure that the
large ethnic Russian community concentrated in the north of the country feels
it has a future in the new Kazakh state.
Poletaev suggests that one benefit of the customs union will be to prevent
people feeling the need to emigrate from one state to another, since economic
conditions will tend to converge.
As Satpaev pointed out, the Kazakh leader has always been a strong advocate of
maintaining and strengthening ties with former Soviet neighbors, when others
have been lukewarm.
"Nazarbayev regards himself as the father of integration within the
Commonwealth of Independent States, and he views the customs union as his
brainchild," said the analyst.
However, Moscow may also have a geopolitical interest in aligning itself with
Central Asia's most successful economy.
"Kyrgyzstan will soon join the other three members of the customs union, and
Tajikistan will follow," said Satpaev. "Then we'll be able to say Moscow is
rebuilding its status in the region."
Kyrgyzstan joined the WTO in 1998, but membership of the customs union could
offer it additional benefits, given that Kazakhstan and Russia are key trading
partners, investors and political allies.
Daulet Kanagatuly is an IWPR-trained journalist in Kazakhstan.
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