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EAEU at 5: A long way to full integration?

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The year 2019 will the mark the five-year anniversary of the Treaty on the Eurasian Economic Union (EAEU) and 25 years since the idea of Eurasian integration was first pitched in 1994 by Kazakh President Nursultan Nazarbayev. On May 29, Kazakhstan’s current President Kassym-Zhomat Tokayev was meeting in the capital Nur-Sultan with his Russian counterpart Vladimir Putin on the fringes of an anniversary meeting of the Supreme Eurasian Economic Council.

Notably, the Commission on Cooperation between the upper house of the Russian parliament, the Federation Council, and the Kazakh Senate, has been working for more than seven years now.

“[The Commission] handles issues of cross-border cooperation, issues that can be effectively addressed by our MPs,” Oleg Tsepkin, a member of the Federation Council’s Committee on Constitutional Legislation and State Building, and of the Commission on Cooperation between the Federation Council and the Kazakh Senate, said during a Moscow – Nur-Sultan television linkup discussing “EAEU interaction and Russian-Kazakh relations.”

According to Oleg Tsepkin, during a May 24 Commission meeting in Almaty, Kazakhstan, Russian and Kazakh senators discussed measures of digitalizing oversight and supervisory  activities, exchanged views and expertise, and reviewed the youth policy of Kazakhstan and Russia.

“There are many things being done in Kazakhstan that we could emulate, including digitalization of official oversight and supervision work,” Oleg Tsepkin noted.

When describing the situation current existing within the EAEU, Murat Laumulin, chief researcher at the Kazakhstan Institute for Strategic Studies, pointed to numerous hurdles hampering trade between member-countries, above all in border areas. He added that, as evident from the EU experience, the main problems still lie ahead, especially when it comes to the issue of a single currency. He emphasized, however, that within the EAEU economic issues prevail over politics.

“This is something all members of this integration association fully agree on,” Laumulin noted.

Echoing the expert’s opinion, Alexander Gusev, director of the Institute of Strategic Planning and Forecasting, and senior researcher at the Russian Academy of Sciences’ Institute of Sociology, said that the EAEU’s focus now is more on regulatory and economic issues, rather than political ones.

“The political component will obviously prevail in the future, since the EAEU was created with an eye to the future and the full integration of the post-Soviet states. Full-scale integration is still way off though,” Alexander Gusev emphasized. He believes that the Union is absolutely capable of  solving the problems it is facing today, despite what is going in the post-Soviet countries and tensions with the West, especially the sanctions pressure on Russia and Belarus. Alexander Gusev also said that at their upcoming summit, the EAEU leaders are going to sign a number of agreements with non-member states.

“Some of these agreements will be discussed and are most likely to be inked as part of the Union developing ties with China, the United States and the EU member-states,” Alexander Gusev noted.

Zhumabek Sarabekov, an expert with the Institute of World Economy and Politics under the Foundation of the First President of the Republic of Kazakhstan, believes that as the phase of the rapid integration of the post-Soviet countries is almost over now, there is a growing need for improving the quality of integration institutions, which calls for complex and compromise solutions. Still, all EAEU members have a vested, strategic interest in promoting the process of Eurasian integration.

 Zhumabek Sarabekov underscored the need for intensifying work to facilitate the member-countries’ access to the common market.

“The EAEU countries tend to better protect their domestic markets, with each member widely applying non-tariff restrictions,” the expert emphasized. According to EEC statistics, at the end of March 2019, there were 71 hurdles existing in the EAEU single market, 11 up from just two years ago. All this meaning that each country is trying to protect its producers and its domestic market. According to Zhumabek Sarabekov, Russia is high on the list of EAEU countries with the greatest number of barriers erected on the way of mutual trade.

The expert singled out industrial cooperation as another thing that deserves serious attention.

“One of the objectives pursued by the EAEU is the creation of common production chains, which will eventually help unlock the industrial potential of each member of the Union. However, the rate of cooperation in the real sector remains pretty slow,” Zhumabek Sarabekov added.

The situation is exacerbated by bilateral contradictions between EAEU members, including Russia and Belarus, which often dominate the EAEU agenda.

Zhumabek Sarabekov underscored the need for a further expansion of the EAEU, both institutional (creation of common markets, a single currency) and geographic. However, this process should not be rushed.

“As we have seen, the inclusion of still unprepared new members into the EAEU has led to numerous problems. We should have in mind just how the new entrants are economically ready for this,” he added.  

According to Yelena Kuzmina, who heads the sector of Belarus, Moldova and Ukraine at the Center for Post-Soviet Studies of the Yevgeny Primakov National Research Institute of World Economy and International Relations of the Russian Academy of Sciences, with the primary effect of the countries’ entry into the EAEU almost exhausted now, the situation calls for greater integration within the Union.

“The EAEU provides great opportunities for its member-countries in economic production, trade, and, to a degree, in transit, which significantly contribute to their economic potential. What worries Russia the most, however, is the variety of administrative, non-tariff restrictions,” Yelena Kuzmina noted.

When discussing the priority areas of cooperation within the EAEU, experts mention the digitization of the economy, the reduction of trade barriers, raising the quality of trade relations, the labeling of goods, as well as introducing changes to the EAEU Treaty and the customs code agreement. Energy regulation, above all in the area of nuclear power generation, is a big priority for the Union. According to Alexander Gusev, Russia has offered to build a nuclear power plant in Kazakhstan, which by 2030 will start experiencing serious shortages of energy. He added that Kazakhstan is one of the world’s three leading producers and processors of uranium with an annual production of 24,000 tons. There are six joint Russian-Kazakh uranium extraction and enrichment companies currently operating on the territory of this former Soviet republic.

“The volume of enriched uranium [Russia] is getting from Kazakhstan is large enough to keep our nuclear reactors running,” Alexander Gusev concluded.

From our partner International Affairs

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Central Asia

Poverty Continues to Decline, but Pace of Poverty Reduction is Slowing in Central Asia

MD Staff

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Although poverty rates in Central Asia continue to decline overall, the pace of poverty reduction is slowing, according to new data released by the World Bank. High levels of poverty remain in pockets of rural and remote areas, which also suffer from lack of employment opportunities, say new Poverty Outlooks for Central Asian countries, released ahead of International Day for the Eradication of Poverty on 17 October.

“The good news is that Central Asia continues to make progress towards eliminating poverty,” says Lilia Burunciuc, World Bank Country Director for Central Asia “However, poverty reduction is happening much less quickly than before. Rekindling inclusive growth should therefore be among the region’s most urgent priorities.”

Since the 2000s, all Central Asian countries have made significant progress in reducing poverty, but most of this progress occurred in the first few years of that decade. In the eight years from 2002 to 2009, the poverty rate dropped an average of seven percentage points per year in both Tajikistan and the Kyrgyz Republic – down from nearly 70 percent to 25 percent in Tajikistan and to 20 percent in the Kyrgyz Republic. Since then, however, poverty rates have fallen much more slowly: by only one percentage point per year on average in Tajikistan (from 25 percent to a projected 13 percent in 2019), and by nearly zero in the Kyrgyz Republic, stalling at about 20 percent from 2009 through to today.

Poverty in Kazakhstan was already lower in the early 2000s and declined at a rate of four percentage points per year from 2002 to 2009, at which point the country had almost eliminated poverty, as measured by the low-middle-income indicator of $3.20 per day. However, when measured by the upper-middle-income indicator of $5.50 per day, the poverty rate in Kazakhstan reached its lowest point in 2013, at about 6 percent, and since then has remained stuck above 7 percent.

The slowing rate of poverty reduction in Central Asian countries reflects several economic challenges, as well as difficulties securing jobs with decent incomes for vulnerable groups of the population.

Youth and women in the region are most likely to struggle with unemployment or low incomes. In Uzbekistan, World Bank data shows that over 25 percent of women aged 15-24 were unemployed in 2018, compared to 13 percent of men in the same age group. In the Kyrgyz Republic, 15 percent of women aged 15-28 were unemployed at that time, compared to only 9 percent of men in the same age group.

Recently published poverty maps for Central Asian countries reveal that many of the remaining poverty hotspots in the region are in rural areas that lack close integration with urban growth centers. This is especially pertinent for parts of Tajikistan and the Kyrgyz Republic, where poverty rates are above 40 percent in the most remote districts.

The analysis also finds that the middle-class in Central Asia is almost entirely concentrated in and around a handful of big cities: Nur-Sultan, Almaty, Tashkent, and to a lesser extent, in Dushanbe and Bishkek. One of the main challenges faced by all countries in the region is ensuring that people are not excluded from these dynamic labor markets.

The World Bank recommends policies that provide greater employment opportunities for people, expanding the availability of affordable housing in growing and prosperous cities, encouraging faster wage growth, and supporting vulnerable groups so they can be more competitive in the labor market.

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Central Asia

Eurasian Economic Union Might Expand

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As the strained Russia-EU relations somewhat softened recently, and a rising cooperation is being seen over questions such as Ukraine and Moldova, Russia is on the economic offensive throughout the former Soviet space.

Valentina Matviyenko, a high ranking Russian official, announced recently that Uzbekistan had already decided to join the Russia-led Eurasian Economic Union (EEU) and that final preparations are taking place in that regard.

Uzbekistan is arguably the most important country in Central Asia as it is the only state bordering all four “stans” (Kazakhstan, Tajikistan, Kyrgyzstan, and Turkmenistan) of the region. From a purely geographic perspective, influence over Uzbekistan would increase Russian clout throughout the entire Central Asia.

Uzbekistan’s importance is also maximized by the fact that it possesses a pretty competitive industrial sector capable of producing various machinery and other vital products.

Uzbekistan’s membership of the EEU will also be a win for Moscow because of the latter’s quiet competition with the Chinese over the region, specifically in the economic and slightly military realms. As China rolls out its flagship Belt and Road Initiative, Uzbekistan is of primary importance to Beijing.

True, membership of the EEU will not mean cutting off trade between Uzbekistan and China, and the latter will certainly continue investing in the Uzbek economy. However, though no open animosity exists between Beijing and Moscow on Central Asia issues, Tashkent’s choice to become a member of the EEU will serve as a certain limit to rising Chinese ambitions.

On the other crucial front of Russia’s borderlands, Moscow is seemingly close to reaching a higher level of integration with Belarus (a country already an EEU member) by 2022. Though Minsk has officially refuted Russian plans on economic integration, it is clear that pressure from Moscow is indeed mounting and it is becoming increasingly difficult for Belarus to withstand various Russian moves.

Both events, which, at least according to the open source material, are likely to take place in the near future, will strengthen Russia’s position in Eurasia. It will also increase the EEU’s position and make the bloc economically more attractive for non-member former Soviet states such as Azerbaijan and potentially for Middle East powers (Iran and Turkey).

Though the expansion is a good indicator of Russia’s fortunes, in the long run it shows the limit of the EEU and Moscow’s strength. Still without Ukraine, the EEU is a constrained market, solely dominated by Russia, both economically, militarily and in terms of population numbers. In fact, as I have written in several articles for GT, nowadays the expansion of Russian economic (i.e. geopolitical) interests in Belarus and Uzbekistan is logical, as avenues for Moscow’s active foreign policy are limited to Central Asia and Belarus. Elsewhere (Ukraine, Moldova and Georgia), the Russian influence reached a certain limit, going beyond which would see Moscow needing to increase its military pressure in those countries.

Thus, Economic competition around Georgia and in wider Eurasia is intensifying, with large states increase their efforts to get smaller ones into their respective economic zones. All this is likely to build up geopolitical tensions in the super-continent.

Author’s note: first published in Georgia Today

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Central Asia

Unjustified Hope of Iran’s Central Asia Policy

Uran Botobekov

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The Washington factor has been and remains, if not the main obstacle, then at least a deterrent to Iran’s strengthening in Central Asia over the past thirty years. The former Soviet Central Asian Muslim republics – Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan – collectively known as the “Five Stans”, is a scene of the big game and intense rivalry. In view of geopolitical and geo-economic conditions, these countries have experienced ups and downs in collaboration with Iran. Amid the background of the intensifying Iranian crisis, this article presents a brief analysis of the cooperation between Iran and Central Asian countries, whose people are regional neighbors and have close linguistic, historical and cultural commonalities.

Iran’s “soft power” in Central Asia

After the collapse of the Soviet Union in 1991, Iran was among the first countries to recognize the independence of the five Central Asian republics, intending to spread its influence through cultural, historical and religious commonalities. The establishment of the first diplomatic relations fell on Iranian president Ali Akbar Hashemi Rafsanjani, who was identified in Central Asia as a relatively moderate leader. He was well aware that after 80 years of communist influence, these “Stans” secular regimes would not accept any Islamic ideology. Therefore, in the late 1990s, his government sought to consolidate the foundations of cultural and historical ties as a tool of “soft power” of Iran’s Central Asia policy.

The main executive body for promoting Iranian “soft power” in the region has become the Islamic Culture and Relations Organization (ICRO), a parastatal agency that is subordinate to the Ministry of Culture and Islamic Guidance. This organization was considered Iran’s de facto public diplomacy organization and is under the control of the Supreme Leader’s office. By opening Iranian cultural centers in all Central Asian capitals, it has sought to institutionalize elements and patterns of its Persian language and culture in the region. Today, leading Central Asian faculties sufficiently promote Persian language courses that are supported by the Islamic Republic embassies.

In the light of the objectives of the present study, particularly Tajikistan case is seen as a tool of Iranian ‘soft power’ to create a “bridge” between Tehran and Central Asia and become a regional leader. These two ethnicities are considered relatively close, sharing the same Persian roots and constituting the basis of the “Great Persian World.”

Accordingly, with the financial support of Iran’s government, Research Projects such as the Tajik-Persian Culture Research Institute, the “Alhoda” bookstores and “Payvand” magazine have also had an important role in the regional influence. In accordance with the agreement on cooperation in the field of higher education, Tehran funded Tajik students to study at Iranian universities, especially in the modern Persian language and literature. In addition, in 2009, the Iranian state-run Persian News Agency opened its first office in Dushanbe. Correspondingly, Iran was able to represent itself as the main defender and provider of Persian heritage to the Tajik nation. 

Additionally, Iran has solidly invested in the Tajik economy, ranking itself as the second foreign investor after China. This was particularly seen during the rule of conservative president Mahmoud Ahmadinejad, who due to the growing confrontation with the West, preferred cooperation with the northern post-Soviet countries of Central Asia and the Caucasus. His government funded the construction of the Anzob/Istiqlol tunnel through the Pamirs, and the Sangtuda-2 hydropower plant. Alongside its economic support, the Tehran government has been trying to implement its own nuclear project and receiving political support from Tajikistan.

A single geographical territory in the past made these countries to have closer cultural, economic and political integration. Mahmoud Ahmadinejad sought to use the national-cultural identity as a starting point for creating a Union of Persian-Speaking Nations: Iran, Afghanistan and Tajikistan. Its first joint summit was held in Dushanbe onJuly 2006, when they decided to establish a jointly-run Persian-language TV channel called “Navrooz-TV”. Also Ahmadinejad’s initiative, the three states established the Economic Council of the Persian-Speaking Union in March 2008.

Regional Implications

The shift of political soft power is taking place at a time of intensified geopolitical uncertainty for Iran. Therefore, it is imperative to question whether Tehran’s ambitions to break out of international isolation was indeed successful. At first, the person spearheading this debate the most was none other than Afghanistan’s former president Hamid Karzai, when the U.S. and NATO forces ensured country’s military, economic and financial stability of the country. Therefore keeping excessive close ties with Iran would damage its connections with powerful western partners. Secondly, Russia’s President Vladimir Putin was negatively viewed at the new Persian Union as it has military and political leverage in Tajikistan. Consequently, Russia was firm in ensuring that Tehran would not strengthen its role in the region. Moreover, Iran’s activities in the Middle East, which caused inter-religious tensions between Sunni and Shia Islam, also affected the sentiments of Central Asian Muslims. Saudi Arabia, Iran’s historical rival, has taken active steps to reach out to Sunni Tajiks to bring them to its side. Over the past thirty years, the Gulf monarchy has spent billions of dollars on spreading radical Islam in the “Five Stans” and Iran’s retention.

Tit for tat

Relations between Tajikistan and Iran seriously deteriorated in 2015 as Tajik authorities accused Iran of supporting the opposition Islamic Renaissance Party of Tajikistan (IRPT), attempting a coup d’état in the country and training Tajik Islamic militants in Iran. Iran incurred Tajikistan’s profound rage in December 2015, when Iran’s top leader Ali Khamenei received IRPT leader Muhiddin Kabiri, who left the country due to political persecution of the authorities. Dushanbe saw the hand of Iran in a terror act on July 2018, in Danghara where 4 foreign tourists were killed. Notwithstanding, Iran has diplomatically rejected the accusation, which deteriorated the relationship between the two Persian-speaking states.

The growth of anti-Iranian sentiment, accompanied by demonstrations in front of the Iranian embassy in Dushanbe, putting an end to Tehran’s initiative in creating a Union of Persian-Speaking Nations based on close linguistic, historical and cultural commonalities. Due to the opposition of regional players and the absence of a broad Shia base, Iran failed to implement the project of the “Great Persia” in Central Asia, as it tries in the Middle East.

As a result of growing tensions, Iran significantly reduced investment in the Tajik economy and closed its economic and cultural offices in the north of Tajikistan. To hold on to its strong lineage of refuting sanctions, Tajikistan banned the import of Iranian food and goods “due to poor quality”, abolished a simplified way of obtaining visas for Iranians, and closed the branch of the Imam Khomeini Relief Committee.

After reaching the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), and partial withdrawal of the international sanctions, the Rouhani government sought to resume broken relations with the European Union, Japan, South Korea, and East Asia. The result of this policy was a significant reduction in Iran’s trade with all the countries of Central Asia since 2016. According to official data, trade between Tajikistan and Iran decreased substantially more than three times, while Iran’s trade with Kazakhstan and Kyrgyzstan experienced a significant loss in numbers.

Iran’s nuclear agenda in the Central Asian multilateral cooperation

The “diplomatic quarrel” and a “trade war” between Tajikistan and Iran negatively influenced Tehran’s ambition to join the Shanghai Cooperation Organization. Even though Iran filed a formal application for membership in 2008, Tajikistan twice vetoed its admission and promptly placed its harsh posture against Iran. At the last SCO summit in the Kyrgyz capital Bishkek on June 2019, Russia and China firmly supported Iran and stated that the other members, despite the U.S. withdrawal from JCPOA, should respect the nuclear deal. Now that the temperature of tension between Tehran and Washington has reached its highest point, as the SCO has become one of the international platforms for Iranian President Rouhani, who accused the US of “serious” threat to regional and global stability.

Governments of the “Five Stans” seek to maintain a middle position on the Iranian nuclear issue, affirming the right of Iran to use nuclear technology for peaceful purposes. Today, as the Trump administration’s “maximum pressure” policy has cornered Iran and its economy has been in terrible pain, the new president of Kazakhstan, Kasymzhomart Tokayev, called for the resolution of nuclear contradictions through diplomacy. Being the country’s top diplomat and Prime minister in the 90s, Tokayev played a key role in eliminating Kazakhstan’s nuclear arsenal, inherited from the USSR, and gaining the status of a non-nuclear power. In the past, Kazakhstan has repeatedly called Iran to follow its example.

In addition, Iran and the Central Asian countries also cooperate within the framework of the OIC, the ECO and the CICA, whose platform Iran uses to accuse “American imperialism” and defend its nuclear ambition.

Conclusion

The ups and downs of bilateral and multilateral cooperation of Iran with the “Five Stans” over the past quarter-century have shown that Tehran failed to establish its zone of influence in Central Asia, in the same way as it has created Iranian proxy Shia groups in the Middle East. The main reason for Tehran’s inability to prove itself as an attractive economic partner in Central Asia is the US long-term strategy to contain Iran through economic sanctions and its confrontation with the West over its nuclear program. Therefore, despite the advantages of geographic, religious and cultural commonalities, Iran remains unable to open a “window” to Central Asia in conditions of international isolation and emerge as a regional power.

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