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Interview by the Chairman of the EEC Board V. Khristenko to Itogi Magazine: “Political euphoria from the accession of new members will not produce a long-lasting positive effect”

Interview by the Chairman of the EEC Board V. Khristenko to Itogi Magazine: “Political euphoria from the accession of new members will not produce a long-lasting positive effect”

2/18/2013
 

One year has passed since the Eurasian Economic Commission (EEC), a supranational body of Russia, Belarus and Kazakhstan, started to function in Moscow. It is tasked to achieve smooth operation of the Customs Union and bring integration to the level of the Eurasian Economic Union. The initiators of Eurasian integration are not confused with the fact that their example for imitation, the European Union, is having hard times. The Chairman of the EEC Board Viktor Khristenko shared his views on this issue with Itogi Magazine.​​

 - Mr. Khristenko, experts argue that no real union can be without Ukraine...

- Who argues? It is just as in the joke: those who ever tried potassium cyanide say that it has an immediate action. At this stage, I am more concerned with the depth of economic integration rather than with expansion of the union. We have to tackle a most difficult task as soon as practicable: achieving free movement of goods, services, capital and labour in the Common Economic Space of rather different economics of Belarus, Kazakhstan and Russia. It is this very mistake that the European Union made. We understood by their example – political euphoria from the accession of new members will not bring a long-lasting positive effect.​

 - But Ukraine is a more important partner for Russia than Kazakhstan or Belarus.


- The common market of Belarus, Kazakhstan and Russia is much more important for Ukraine itself. In 2003-2004, Ukraine was actively involved in integration. The framework for integration comprising approximately 40 agreements was developed back at that time. However, later on, the dilemma arose, facing which Ukraine stopped and remained in this position up until now. The thing is that membership in any structure, whether the European Union or the Eurasian Union, will require a whole range of relevant obligations. In Kiev, however, they want to be partially here and partially there, accepting only those commitments they like. It won’t be possible. Just as staying aside – the world has changed and even prosperous and influential states no longer stay alone, all countries set up alliances in this or that way.

 -Do they understand that in Kiev?

- In September, Nikolay Azarov (Prime-Minister of Ukraine – Itogi) and I signed two memorandums of cooperation in the area of technical regulation and trade. Yet it is not only Ukraine that matters. In 2000, the Eurasian Economic Community (EurAsEC) was set up by five states, and only three states ventured to create the Customs Union, followed by the Common Economic Space. The Eurasian Economic Commission was set up to coordinate all this. The Eurasian Economic Union, which will start operating on January 1, 2015, will be the next stage. Kirghizia and Tajikistan are the first candidates for accession.​

- Why didn’t you let them in at the very beginning?

- They did not state their readiness back at that time, but today we have such an application from Kirghizia. It is clear that their legislation considerably differs from that of the three states. However, we will have an action plan by November.​

- By the way, Kirghizia is a WTO member…

- Kirghizia acceded the WTO long time ago, and on the terms different from Russia’s commitments. Yet it is Russia’s commitments that are being implemented today by the Commission and applied throughout the Customs Union territory. It is not clear who and in what way would compensate changes that would be inevitable in case of accession by Kirghizia. Yet, as people say, walk and you shall reach.​

- You discuss this issue recently with the WTO Director-General Pascal Lamy, didn’t you?

- Among other things. We were rather frank in voicing our positions to each other. The WTO sees the problem, but it does not refuse to address it and does not deny that it can be resolved. Mr. Lamy and I have been acquainted with each other for a long time, since the late 90-s. He not only recognizes our union, but also is interested in cooperation. We started from staff training: more than 60 of our specialists have already passed training in the area of trade, technical regulation and sanitary measures. In the near future, we will present the Commission and its activity in Geneva. Although Russia has become a WTO member, due to the creation of the Customs Union it may not unilaterally, for example, change tariffs or address issues related to technical regulation or protective measures – all these have been delegated to the supranational level, to the Commission. Now, everything is dealt with by the three states. However, all resolutions are verified for compliance with the WTO rules. As a result, Belarus and Kazakhstan, not being WTO members, are in fact living by its rules. Compliance in not the only thing that matters, what is more important is getting involved in the WTO reformation process. The WTO faces huge challenges today. The world has changed. Some time ago, a group of developed countries could impose their will on others, while today they all have competitors.​

- Does Russia push Kazakhstan and Belarus to join the WTO?

- Kazakhstan is already on the homestretch. I am sure its accession is an issue to be resolved during this year. Minsk, however, is in a more difficult situation, facing more barriers, primarily political ones.​

- Do they really need it? May the WTO disappear?

- I will put it differently: the two processes shaping the outlook of economy in the past century – globalization and regionalization – no longer go in parallel. Today, they sometimes contradict each other, especially after the first wave of the crisis. It is clear that globalization with a single center cannot continue, while regionalization is gaining momentum. I believe that the effectiveness of recovery from the crisis and formation of a new outlook of global economy will depend on strong regional structures and effective communication between them.​

- The most successful one, the European Union, is on the verge of collapse...

- I don’t believe it. The consequences will be so catastrophic that I don’t know any politicians who would be stupid enough to venture upon this. And vice versa, the European policy makers are talking about a deeper integration. A man who stumbles walking downstairs tries to run forward. It is the only way to avoid a broken nose. I think that the European Union made a mistake early in the 2000-s, when, feeling satisfaction with their good economy growth rates, they made politically motivated decisions to expand.

- What was your Commission doing during this year?

- We adopted more than 300 resolutions having affecting directly the territory of the three states, and also worked to deploy 17 basic agreements to establish the Common Economic Space. We aim at creating conditions to ensure the operation of four free spaces: goods, services, capital and labour. In pursuance of these agreements, we need to adopt about 52 more documents as soon as possible. A lot needs to be done: the Customs Union itself is subject to certain exceptions from supranational regulation, with drug products, medicinal products and alcohol regulated by national authorities. We exert every effort to get rid of such exceptions.

- What prevents you? 

- The answer is also rooted in the field of interaction between the national and supranational bureaucratic machines. Creating common rules always means creating a common supranational competency. No one is willing to delegate their powers, though. However, I am sure that we will pass through this stage.

- Will the Eurasian Union have a president?

- This issue is not on the agenda at the moment. The Supreme Eurasian Economic Council at the level of member-states’ presidents is the governing body. I am of the view that it is an adequate structure that enables us to develop and make key decisions within a short period of time. Political will is the key enabler! We also cooperate with national authorities: a commission responsible for a particular area has advisory committees, in which the national governments are represented, usually at the level of deputy ministers. This makes it possible to take into account the interests of the three states. Sometimes, however, decisions are made, which will not appeal to this or that party. Nevertheless, every party may put a veto on any decisions, if it finds appropriate arguments.

- How often has anything like that happened?

- Never.

- Who benefited most from the Customs Union?

- It’s Belarus, taken specifically. Processing and machine building industries form the largest share of Belarusian economy. These industries benefit most from integration. Kazakhstan is the leader in terms of SME registration dynamics. Trade between Belarus and Kazakhstan has been up 2.5 times. Competition started between jurisdictions and administrations, competition for efficiency. And it’s really good. Actually, it is not quite correct to make any strict calculations of profits and losses at the moment, because we have a long-term systemic project.

- Do conflicts occur often? To whom are most of claims addressed?

- To a certain extent, every decision of the Commission is a result of hard work and approval process. As far as claims are concerned, everyone has claims against the others. There are several aspects here. We, as a commission, jointly with the national governments are responsible for implementing the agreements signed by the three states. If we see that the provisions of an agreement are not observed, we are entitled to point out that to the party at fault and demand that violations be rectified. Such decisions have not been numerous so far, although there have been some. We have EurAsEC Court to handle claims of economic agents. So far, we, i.e. the Commission, have been the main defendant at court. For example, the most recent application was filed by Russian coal producers. As a result, we cancelled a decision made by the Customs Union Commission, our predecessor, and suggested that the Russian government should do the same.

Do the national governments agree?

It is a project of the leaders of the three states. The thing is not whether or not they are willing to do this: targets have been set and they have to be achieved.

- Will the Customs Union disappear, just as the Soviet Union, after the leaders leave?

- Do you think that other leaders will come and destroy everything? I remember how the agreement on the Commission was ratified by the Russian Parliaments – by majority. That agreement, however, was not an easy thing, and one could just mill about, winning political rating. But economic integration, as our surveys showed, can bring even a higher rating. Living isolated is impossible today. To be competitive, we need to cooperate. The only question is with whom to cooperate. Here, every country makes its reasonable choice to become more effective, stronger and more competitive on the global scene.​​