Kazakhstan and the eaeu: current state and trends

Abstract. January 1, 2018, marked three years since the founding of the Eurasian Economic Union (EAEU). The Customs Code of the EAEU entered into effect the same day. This article considers major changes which took place in and around the EAEU during the same period, as well as the prospects for Eurasian economic integration in the coming years.

Prospects for Interregional Cooperation

In our opinion, there is an alternative to the revival of a world divided into hostile blocks and a slide towards a new Cold War. The alternative is the creation of a common economic and Irmnanitarian space; a security space from Lisbon to Vladivostok, including free trade spaces between the EAEU and the European Union (EU); and Eurasian security in accordance with the Astana Declaration of the OSCE. (Astana, 2 December 2010).

Many European politicians support this project.

Thus, in the Declaration of the leaders of Germany, Russia, Ukraine and France, in support of a complex of measures executing the Minsk Agreements, adopted on February 12, 2015, the following was underlined: “The leaders are still Coimnitted to the creation of a common humanitarian and economic space from the Atlantic to the Pacific Oceans based on full respect for international law and the principles of the OSCE”. (Declaration in support of the complex of measures in execution of the Minsk Agreements, adopted on February 12, 2015. Minsk, February 12, 2015.- http://www.kremlin.ru).

On January 19, the head of European diplomacy, Federica Mogherini, spoke out in favor of a dialogue between the EAEU and the EU, stating that she considered it important for the EU to create a free-trade zone from Lisbon to Vladivostok; and to develop trade and economic Cooperationbetweenthe EU and the EAEU [1].

In 2016, the President of the Republic OfKazaklrstan, N. A. Nazarbayev, agreed with the chairman of the European Coimnission, Jean-Claude Juncker, to hold a joint forum on the topic of “Eurasian Economic Union - European Union” in the autumn of the same year [2]. Tliis meeting was later postponed for an indefinite period of time.

Unfortunately, the aggravation of relations between Russian and West lias frozen the idea of Emasian cooperation and security.

Nevertheless, given that the Eurasian region is an important geopolitical and geoeconomic factor in world politics, at the intersection of the interests of both global and regional players, Kazaklistan has been consistently advocating Constructivization of the processes in the Eurasian space and the reduction of potential conflict through deepening cooperation and integration. In tliis connection, on April 1, 2016, in Wasliington, the President of Kazakhstan, N.A. Nazarbayev, put forward Iiis next initiative - the creation of the Common Eurasian Economic Space [3].

The Russian President, Vladimir Putin, developed tliis initiative by proposing the creation of the Great Eurasian Space at the International Forum “One Belt and One Road” (Beijing, May 14, 2017) by adding the potential of the EAEU, the “One Belt and One Road” project, the Shanghai Organization of Cooperation, the Association of Southeast Asian Nations, with the participation of the states of the Emopean Union. In tliis case, Vladimir Putin believes, it will be possible, for the first time in Iiistory, to create a Iiannonious, balanced and comprehensive common space of cooperation from the Atlantic to the Pacific Ocean [4].

However, today the prospects for establishing cooperation between the EAEU and the European Union need to be considered through the prism of US global interests. Tliis was recalled by the Minister of Foreign Affairs of Russia, S. V Lavrov, speaking at the “Government Hour” in the Federation Council of the Federal Assembly of the Russian Federation (Moscow, December 15, 2017). According to Sergey Lavrov, the key to establishing cooperation with the EU is not at all in Europe, but in the US, as “the prospects for relations with the European Union remain hostage to the anti-Russian line of a narrow group of countries within the EU, virtually, acting in the interests of the US, but not Europe. Meanwliile, promoted by the Bmssels bureaucracy - on direct orders from overseas - the sanction spiral caused serious damage to European business (primarily Gennan business), which lost some of its positions in the Russian market” [5].

Tliis position of the Brussels bureaucracy was explicitly expressed by the Ambassador of the EU in Russia, Markus Ederer, who stated on February 15 of tliis year in an interview with the newspaper “Kommersant” that the current state of affirs between West and Russia is even more dangerous than during the Cold War [6].

Emopean entrepreneurs have a slightly different position on the issue of cooperation with Russia and the EAEU, who are trying to split economic feasibility and political ambitions into different “baskets”.

Thus, on January 18 of tliis year, at the opening of Berlin International Agricultural Fair “Green Week”, the Minister of Agriculture and Food of the FRG, Cliristian Schmidt, urged the European Union to resume food trade with Russia. According to C. Sclunidt, it is good time to restore relations in the field of agricultural supplies.

In Iiis turn, the president of the German Fanners' Association (DVB), Joacliim Rukvid, also advocating the abolition of trade restrictions, recalled that prior to the sanctions, Russia, along with the United States and Switzerland, was one of the tluee largest export markets from the EU. At that time, Russia annually bought in the European Union’s meat, fruit and vegetables for about 1.6 billion euros. “We have been building tliis market for many years. It will take years to rebuild it”, J. Rukvid underlined [7].

Indeed, the holy place is never empty. The niches liberated in the markets of the EAEU by European businessmen are being actively pursued by their more enterprising counterparts from Cliina, India and OtherAsian countries. The documents of the Eurasian Economic Commission (EEC) note that in 2017 the growth of imports from the countries of the Asia-Pacific region exceeded the growth of imports from the European Union. So, for the first 4 months of 2017, the trade growth of the EAEU with China, compared to the same period in 2016, was 34%; and with Vietnam it was 22.5%. In fact, trade with the United States grew by 28.4% over the same period.

Tliis scenario causes growing concern in European think tanks. Thus, in its expert forecast, the Mercator Institute for Cliina Studies (MERICS) report pointed out that it was not Russia but Cliina that represented the greatest long-term threat to the interests of Europe. According to German experts, Greece, the Czech Republic and Hungary are actively using Cliinese investments and are the main customers of Cliina in Emope. In its turn, Cliina directs its investments to buy up key sectors of the economies of the small countries of the European Union [8].

In tliis regard, it should be recalled that in November 2017 in Budapest, the 6th meeting of the heads of government of Cliina and Central and Eastern Europe (“16+1”) was held, which was tasked to bring cooperation between Cliina and 16 countries in Central and Eastern Europe to a Iiigher level.

On March 5 of tliis year, the ex-Chairman of the Bulgarian National Assembly, Mikhail Mikov, told the Xinhua news agency about the need for Bulgaria, as the country presiding in the EU, to promote the active participation of Emopean states in the construction of the Cliinese project “The Belt and the Road” [9].

Relationsliip of the EAEU and the Economic Belt of the Silk Road

As readers will be aware, on May 8, 2015, Vladimir Putin and Xi Jinping discussed during talks in Moscow the relationship of the Eurasian Economic Union and the Cliinese project of the Economic belt of the Silk Road (EBSR), which implies the creation of a common economic space in Eurasia [10].

Over the years, much work has been done in tliis direction. To date, the PRC has invested $26 billion in the economy of the EAEU states. The Cliinese side plans to allocate at least $40 billion for the implementation of tliis project.

According to the Minister of the EEC, D. Ibrayev, “now there is no longer a question as to whether there will be a pairing of two integration projects: the Cliinese Silk Road and the EAEU. We have the task to determine in which areas and on what projects it is possible to establish cooperation”. According to D. Ibrayev, at present the priority for the EEC is the development of regulatory mechanisms and the development of criteria for projects, Wliichthe project participants are interested in [11].

Kazakhstan supports the integration of the EBSR project with the EAEU, hoping to turn our country into a link between East and West.

Conjugation of the Kazakhstani “Nurly Zhol” Project andthe Economic Belt of the Silk Road

The Ieadersliip of Russia and the Eurasian Economic Commission (EEC) of the EAEU considers the interface between the interests of the EAEU and the EBSR, primarily through the prism of implementing infrastructure projects in the Eurasian space. At the same time, the EEC reasonably believes that European countries are actively seeking access to the markets of Cliina and Asia. In its turn, Cliina, being afraid of a possible naval blockade by the US and its allies, is interested in land routes to enter the markets OfEuropean countries.

The Ieadersliip of Kazaklistan, supporting in general the interface of the EAEU and the EBSR, put forward its own version of the interface. Namely the plan of integrating the “Nurly Zhol” program with the EBSR, in which several other priorities are placed.

The first “Nurly Zhol” conjunctions with the EBSR were agreed during the visit of the Head OfKazaklistanto Cliina in September 2015, within the framework of which a number of relevant intergovernmental agreements were signed.

The need to deepen bilateral cooperation was confirmed at the talks of N.A. Nazarbayev and Xi Jinping in Astana on June 8, 2017. At the talks, it was noted that over 25 years of Kazakhstan's independence Cliina has invested $43 billion in the Kazakhstani economy. Witliin the framework of tliis visit, the Development Bank of the People's Republic of Cliina concluded agreements with Kazaklistan partners for a total of $6 billion [12]. The leaders of the two countries spoke in favor of speeding up the conjugation of Kazaklistan¹S development program “Nurly Zhol” with the “The Belt and the Road” initiative in order to “deepen the integration of the development strategies of the two states” [13].

In January-December 2017, the volume of trade between Kazakhstan and Cliina (according to the data of the Cliinese side) was $18 billion, an increase of 37.4% compared to 2016. At the same time, the volume of exports from the PRC to the RoK was $11.64 billion, the volume of imports from the RoK to the PRC was $6.36 billion [14].

In the field of transit transport, the emphasis is made on the development of the transport corridor “Western Cliina - Western Europe”, which provides for the construction of automobile and railway corridors, the creation of transport and logistics centers. In tliis regard, the transition of the Trans-Eurasian railway Chongqing - Xian - Lanzhou - Urumqi - Kazakhstan - Russia - Belarus - Poland - Duisburg (Germany) into operational mode becomes important. The total length of tliis railway is 11,179 kilometers. Travel time is 14-16 days, while freight transportation by sea takes 45-50 days.

In 2016, the number of container trains in the Cliina - Europe - Cliina direction has more than doubled (from 581 to 1,212 trains) [15]. In 2017, their number reached 3,673. According to the Director General of the German Foreign Trade and Investment Agency, J. Friedricli, over the several years container trains have taken their place in the field of goods transportation between Cliina and Europe due to “increased speed, efficiency and reliability”, and strengthened the ties of German Duisbmg and Hamburg with Cliina, Europe and Central Asia [16].

Currently, after preliminary negotiations between the Russian Railways and the Ieadersliip of the Kazakh and Cliinese railways, a project to build a high-speed railway called “Eurasia” along the Beijing-Astana-Moscow- Berlin route is being worked out. The length of the main route is 9.5000 km. According to forecasts, the total cost of the project is 7.84 trillion rubles; and the Russian site will cost 3.58 trillion rubles. In general, the main route can be built in 8-10 years, and will be paid off after 16 years of operation. By 2050, passenger traffic may reach 36.9 million people and the volume of traffic will be 12.6- 20 million tons. The maximum speed will be 350 km/h and the average speed 250 km/h. Thus, a passenger can travel from Beijing to Berlin in 40 hours.

The Cliinese side supports the early opening of transit cargo Sliipments along the road towards Cliina - Kazakhstan - Russia, as well as automobile routes between the Xinjiang Uygur Autonomous Region of the PRC, the East Kazakhstan Region of the RoK and the Omsk Region of the Russian Federation. [17]

The creation in 2017-2020 of joint industrial projects in metallurgy, chemistry, fertilizer manufacturing, and macliine building is an equally important priority of the Kazakli-Cliinese economic cooperation. OnApril 2017, at the 8th meeting of the Kazaklistan-Cliina Cooperation Committee in Astana, it was noted that currently 51 projects in the field of industry, innovation, transport and logistics for a total of $27 billion were being implemented [18].

As a result of the Fourth meeting of the Kazakhstan- China Business Council (Astana, June 8, 2017), 22 commercial and framework agreements were signed for a total of about $7 billion. Bilateral agreements were reached on the implementation of investment projects for the production of methanol and ammonia on the territory of the SEZ in the Atyrau region, as well as the launch of the production of caustic soda in the territory of the SEZ in the Zhambyl region. A memorandum on the implementation of projects for the construction of wind power stations in the Shelek corridor of the Almaty region and a memorandum on the expansion of the wind park in the area of the town OfEreymentau were also signed [19].

In the area of cultural and Iimnanitarian cooperation, cooperation in the field of education and science is a priority. There are 5 Confucius universities in Kazaklistan, including 2 in Almaty. Currently, about 14 thousand Kazakhstani students study in Cliina. In 2017-2022, the Chinese side will allocate an additional 200 grants for Kazakhstani students. In turn, about one thousand students from Cliina study in Kazakhstan, most of whom are ethnic Kazaklis from Xinjiang UygliurAutonomous Region. In 2016, the Govermnent of the People's Republic of China directed 85 Cliinese students to study in Kazaklistan, all of whom study in Almaty.

Kazakhstan-EAEU

Taking into account incessant criticism from the national populists, the Ieadersliip OfKazakhstan regards the EAEU as an economic association with uniform rules for the movement of goods, services of capital, labor resources. At the same time, while reassuring the Western alliance, the President of the Republic of Kazaklistan, N.A. Nazarbayev, repeatedly stressed that there was no question of any re-establishment of the USSR. At the same time. Western partners' attention was drawn to the need to eradicate the stereotypes of the Cold War, which prevented them from looking to the future [20].

Despite the West's aversion to the Eurasianintegration in general, the majority of the population of Kazakhstan nevertheless supports integrated cooperation with Armenia, Belarus, Kyrgyzstan and Russia, with whose peoples we Iiave been connected for centuries through economic, Iiistorical, cultural and humanitarian ties of cooperation.

Tellingly, the integration feelings in Kazakhstan are supported not only by representatives of older generations, most of whose lives were coincided with the USSR, but also by young people.

On January 1, 2018, the new Customs Code of the EAEU entered into force. In Kazakhstan, with the participation of representatives of government bodies and the business community, the necessary explanatory and organizational and preparatory work was conducted in a timely manner. In particular, Kazakhstan submitted 552 amendments (38% of all amendments), 65% of amendments were accepted. The new Customs Code was synchronized with a number of laws OfKazakhstan: amendments were made to the Tax Code, the Enviromnental Code, the Code of Administrative Offenses, etc.

The results of the economic development of the EAEU in 2017 indicate an increase in industrial production by 1.7%; agricultural products by 2.5 %; freight turnover by 5.6%; and passenger turnover by 6.8% [21].

Foreign trade turnover of the Republic OfKazaklistan in January-December 2017 amounted to $77,646.8 million, an increase of 25.0% as compared to the same period in 2016. Tliis included exports $48,342.1 million (an increase of 31.6%); and imports of $29,304.7 million (an increase of 15.5%).

At the same time, mutual trade between the Republic of Kazaklistan and the EAEU states amounted to $17,359.6 million, i.e. 22.36% of the total foreign trade turnover of the Republic of Kazakhstan. The growth in trade with the EAEU states in January-December 2017 compared to the same period in 2016 amounted to 25.9%. Tliis included exports $5,118.3 million (30.2% more); and imports of $12,241.3 million (24.1% more).

Trade turnover between Kazaklistan and Russia in January-December 2017 amounted to $15,988.1 million, i.e. 20.59% of the total foreign trade turnover of the Republic of Kazakhstan.

Tliis included exports to the Russian Federation in January-December 2017 of $4,515.2 million (31.1% more compared to January-December 2016),; and imports of $11,472.9 million (23.5% more) [22].

Since 1991, the volume of Russian investments in Kazaklistan has exceeded $10 billion, and Kazakhstan's to Russia $3 billion. 93 joint investment projects worth over $20 billion have been implemented in various fields of the economy, in particular, in energy and transport, mining and metallurgy complex, macliine building, shipbuilding, chemical industry, agriculture, etc. [23].

The level of trade with other members of the EAEU is much lower. For example, Kazaklistan¹S trade with Kyrgyzstan in January-December 2017 was $758.4 million; with Belams $604.1 million; and WitliAnnenia $9 million.

For comparison, the trade turnover between Kazakhstan and all the EU states in 2017 was about $30 billion. But, for example, our country's trade with one of the leading EU’s locomotives, France, was only $3.39 billion (exports of $2.86 billion and imports of $535 million) in 2017.

The above statistics somewhat cooled the hot heads of the “Eurasian-pessimists” who tried to prove the hopelessness of Eurasian economic integration, based on data on the decline in the trade between Kazakhstan and the members of the EAEU in 2015-2016, including with Russia. At the same time, they ignored the true reasons for the fall in mutual trade, caused mainly by the global fall in prices for energy carriers and commodities, i.e. external factors.

It is also necessary to take into account such an important external factor as the consequences of the neo- Islamic direction of development of Turkey, recently selected by the president of this country, Erdogan. Tlris led, on the one hand, to Ankara's tense relations with the West, and, on the other, to the weakening of the support for the project of the so-called non-ottoman (Turkish) integration that was carried out by Turkey but directed by Wasliington - in order to discredit the EAEU’s project.

However even today we observe such agitational “outbreaks”, which are a reflection of the struggle among the political elite of Kazakhstan. It is alarming that such information attacks occur regularly and increasingly. For example, on February 1, 2018, an information outburst occurred in Kazaklistani media that “Russian officials are discussing the possibility of receiving compensation from manufacturers of flat rolled products from Kazakhstan” to a total of $800 million [24].

It is comforting that the country's top Ieadersliip adheres to a clear position on the issue of cooperation within the framework of the EAEU. In particular, the President, Nursultan Nazarbayev, at a meeting with Russian President, Vladimir Putin, (Moscow, December 27, 2017) said: “Today, Cooperationwitliinthe framework of the Eurasian Economic Union shows that it is a necessary and opportune tiling”. Our attention was drawn to the following thesis of the Head of Kazaklistan, oriented to the future: “I consider it my task to strengthen our relations and continue, and then forward it up the chain” [25].

Tliis position is sliared by top Kazakhstani officials, who really assess the situation, and do not go against some anti-Russian publicists. For example, the chairman of the Majilis of the Parliament of the RoK, N. Nig- matulin, at a meeting on February 7, 2018, responding to deputy inquiries and appeals to the Parliament from representatives of the domestic business, sectoral business associations, stated that Kazaklistani officials did not fully protect the rights and legitimate interests of domestic Coimnodity producers within the framework of the EAEU. As an example, N. Nigmatulin cited the situation around the supply of Kazakhstani cement to Russia. According to liim, Russian producers annually export to Kazakhstan about 700 thousand tons of cement without restriction, and Kazakhstan enterprises experience serious difficulties in supplying the same cement to Russia. The reason for this N. Nigmatulin sees not in the machinations of Russia, but in the fact that Kazaklistani representatives in the integration bodies did not respond in a timely manner to the introduction of new standards and new certification rules in the Russian Federation, thereby placing domestic producers in unfavorable conditions.

Conclusions

Given the continuing global financial instability and growing geopolitical tensions, not one state in the world, even the largest and most successful, can develop on its own. Therefore, the world community shows interest in the activities of the EAEU and consider it as a well-established, successfully operating international economic association. Moreover, there is already a positive experience of such cooperation. Thus, Vietnam, which created the first free trade zone (FTZ) with the EAEU, for the first 9 months of 2017 increased exports and imports by 30%. Currently, work is under way to prepare an agreement on the FTZ with Iran, the agreements are under discussion on the establishment of the FTZs with Singapore, Israel, India, Egypt and Serbia.

In the face of the changing situation in the world, the economic and geopolitical importance of membership in the EAEU increases for Kazakhstan. Objectively, for Kazaklrstan, which does not have access to the world’s oceans and, therefore, to international trade routes, the most optimal option is to create integration alliances with countries that Iiave such opportunities, since 80% of the world industrial potential is concentrated in coastal zones.

Thanks to the EAEU, Kazaklistan will be able to use its transit potential with unified transport tariff's in a common customs space. It is the developed transport infrastructure that will have a positive impact on the expansion of industrial production within the country, and thus on the raising the material well-being of the population.

If one is to speak about concrete results achieved by the EAEU activities after three years, one can look at the following examples.

The Agreement on the Customs Code of the EAEU entered into force. Many processes are transferred into electronic form, which will significantly improve the business climate in the EAEU, and Coimnunication between entrepreneurs and customs will be reduced to a minimum.

Since January 1, 2015, a common market operates for services in 43 sectors of the economy. A unified labor market is formed for citizens of all states that are members of the EAEU: now you can get a job without additional licensing procedures.

Unified requirements and conditions for income and taxation of individuals are established. Social conditions and medical care are common across all five countries.

Since January 1, 2016, the diplomas of all universities issued in Armenia, Belarus, Kazaklistan, Kyrgyzstan and Russia are recognized. Exceptions: medicine, pharmaceutics, jurisprudence, education. These sectors still require negotiations.

In May 2017 a general market for medicines and medical products was launched.

The concepts of forming a common electricity market, a coimnon market for oil and oil products and a common gas market were approved.

As you can see, a lot has been done. But even more needs to be done, first of all, to allow ordinary people to feel the advantages of the EAEU. We need to form as soon as possible a truly unified “barrier-free” economic space of the EAEU, i.e. overcome “non-integration”.

In our opinion, the emergence in Germany of a movement of entrepreneurs and experts who are in favor of establishing strong contacts between the European Union and the Eurasian Economic Union deserves special attention. In particular, in Berlin, a Working Group has been created with the remarkable title “Common Economic Space from Lisbon to Vladivostok”, headed by the famous German businessman, Ulf Sclmeider, founder of the Sclmeider Group and owner of the economic magazine OstContact, as well as one of the leading German experts, Alexander Rahr. The seventh meeting of the Working Group was held in January tliis year in Almaty, on February 8 in Moscow (with the participation of the EEC representatives), the ninth is planned to be held in Brussels (with the participation of representatives of the European Commission) in March-April tliis year.

German businessmen turn to European politicians in Brussels with a persistent request: initiate an official dialog with the EAEU on the harmonization of rules and regulations governing international business and trade and economic activities, taking into account the interests of all trading partners of both economic zones. Pragmatic Gennans say: “Let's divide politics and economy. Let’s leave political slogans to politicians and give business people the opportunity to create a coimnon market of the EU and the EAEU with a population of 700 million people”. Intliis regard, representatives Ofbusiness circles recall the Astana Declaration of the OSCE, signed in the capital of Kazaklistan on December 2, 2010. Then, as is known, for the first time the President N. A. Nazarbayev’s idea of implementing Euro-Asian security was supported.

Proceeding from tliis, German businessmen believe that it is the Head OfKazakhstan, N. A. Nazarbayev, who could become the coordinator of the negotiations on the creation of the “Coimnon Economic Space from Lisbon to Vladivostok”. Therefore, they appealed to the leader of our country with an official letter, in which they ask Iiim to start practical work in tliis direction. Tliis initiative was supported by the leading German concerns, such as Siemens, Bosch and others.

Tliis initiative is receiving increasing support in the FRG. Thus, recently, the Chairman of the Eastern Committee of the German Economy, Wolfgang Biichele, stated that Germany continues to regard Russia as a “strategic partner” and strives to establish a coimnon economic space “from Lisbon to Vladivostok” [26].

Moreover, Gennanbusinessmenbelieve that it is possible to extend tliis bridge of cooperation to Cliina. Then the fonnula becomes wholly universal: “EU + EAEU + Economic belt of the Silk road”. In tliis super market, Kazaklistan will own one of the leading places, given its transit opportunities.

We are only at the beginning of a long journey. In tliis situation, to our opinion, the Cliinese proverb is quite appropriate, which states: “A journey of a thousand miles begins with a single step”

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