Tag Archives: Eurasian Economic Union

Kyrgyz businesses say the odds are stacked against them in the EEU

BISHKEK, FEB. 25 2016 (The Conway Bulletin) — Kyrgyz farmers and exporters of agricultural products have said that the Eurasian Economic Union (EEU), a group centred around the Kremlin that was supposed to boost its members’ economies, has undermined their businesses by exposing them to unfair competition.

The insight collected by The Conway Bulletin’s correspondent in Bishkek, undermines claims by President Almazbek Atambayev that joining the EEU in August was a positive move for Kyrgyzstan.

Sergey Ponomarev, head of the business lobby group AMTSS and a former PM adviser, said that cheaper Belarusian goods had hit Kyrgyzstan’s key export market in neighbouring Kazakhstan.

“In Belarus, prices for animal feed are largely subsidised by the state, which makes their products cheaper on the Kazakh market,” he said. Mr Ponomarev said that the Belarus government subsidises its farmers’ animal feed, something the Kyrgyz government doesn’t do.

Data released by Kyrgyzstan’s state statistics committee last month showed that in 2015 exports of clothes fell by 50%, fruit and vegetables exports fell by a third and tobacco exports by 28%.

This has partly to do with the worsening economic conditions in the region but also because of the more competitive export markets created by the EEU.

Tilek Toktogaziyev, the owner of a greenhouse in Bishkek. which sells various fruit, vegetables and berries, said: “Local farmers cannot trade their vegetables, and some of them have stopped farming altogether.”

Previously, business owners have complained of extra red tape after joining the EEU but they hadn’t complained of excessive competition.

One business owner, though, was more positive. Dastan Omuraliev, the manager of Organic, a company producing fruit juices, said: “With entering the Eurasian Economic Union, it became easier to pass our goods through the Kazakh border.”

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kyrgyz business blames EEU for poor outlook

FEB. 5 2016, BISHKEK (The Conway Bulletin) — Frustrated Kyrgyz businessmen and company owners are blaming a worsening economy on joining the Russia-led Eurasian Economic Union (EEU) last year.

The criticism of the EEU, whether it is accurate or not, is a major problem for Kyrgyzstan’s leadership which dragged the country into the trade bloc despite deep-rooted unease from ordinary Kyrgyz. Also in the EEU are Russia, Kazakhstan, Belarus and Armenia.

In Bishkek, Azamat, who was selling cars, said Kyrgyzstan had aligned itself with the wrong countries.

“While we are in the Customs Union we will have nothing to develop,” he said.

The Customs Union is the old name for the EEU, which analysts have said was dreamt up by the Kremlin to extend its political control.

Western sanctions and a collapse in oil prices have tipped Russia’s economy into a recession. It has cancelled overseas projects, including a hydropower plant in Kyrgyzstan, and remittance flows from Kyrgyz workers in Moscow have fallen by around 40%. Inflation is rising in Kyrgyzstan and economic growth rates are being cut – a familiar story across the region.

Emil Umetaliev, a former Kyrgyz economy minister who now owns a travel company, told The Conway Bulletin that the EEU has been a major hindrance to small and medium sized companies, rather than the help that had been promised.

“The Eurasian economic union tends to organise countries’ interdependence on resources,” he said. “It does not encourage small and medium enterprises to develop and does not have a friendly investment climate.”

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Critics say the Kyrgyz-Russian Fund is failing

BISHKEK, JAN. 26 2016 (The Conway Bulletin) — Businesses, company owners and lobby groups in Kyrgyzstan have criticised the Kyrgyz- Russian Investment Fund, launched with great fanfare in 2014 ahead of Kyrgyzstan’s entry into the Kremlin- led Eurasian Economic Union, as ineffective.

The criticism will sting as it comes after Russia withdrew support for a $2b hydropower project in Kyrgyzstan. It also underlines the Kremlin’s waning influence in Central Asia.

“The Kyrgyz-Russian Investment Fund does not have enough resources to keep the economy stable, as it cannot substitute a drop in remittances which used to come from Kyrgyz labour migrants in Russia and

revenues from re-exporting Chinese goods through Kyrgyzstan,” Uluk Kydyrbayev, head of the National Alliance of Business Associations lobby group, told The Bulletin.

An anti-crisis plan presented by the government on Jan. 26, which placed the Fund at its core, triggered an outpouring of frustration by businesses.

The Kyrgyz-Russian Investment Fund measures around $500m and was supposed to act as source of cheap credit for Kygyz businesses. At least some of this cash, though, has been used to bail-out mortgage holders who have seen their debts spiral with the devaluation of the som against the US dollar.

Like the rest of the region Kyrgyzstan is trying to navigate its way through a worsening economic crisis. One of the consequences is a fall in remittances from Russia.

Tilek Toktogaziyev, head of an organic food company, said that the Kyrgyz-Russian Fund had been a failure and had favoured big business over small business.

“The credits are only given to big companies who have break-even activities in past three years and have been present in the market for a long time,” he said.

He said the lowest credit the Fund gives is $3m. To win this loan, the company owner also has to make a contribution of 20%.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

Armenia and EU starts negotiations

DEC. 7 2015 (The Conway Bulletin) – Armenia and the European Union started negotiating a new treaty that would deepen bilateral relations in trade, energy, the environment and transport. The negotiations are particularly poignant as Armenia is now a member of the Russia-led Eurasian Economic Union. Two years ago, too, Armenia rejected a deal to deepen ties with the EU.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Kazakhstan joins the WTO

DEC. 1 2015 (The Conway Bulletin) – Kazakhstan officially joined the World Trade Organisation. The deal to join the WTO will force changes to the Kremlin-led Eurasian Economic Union.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakhstan joins the WTO and pressures EEU import tariffs

NOV. 30 2015 (The Conway Bulletin) — After nearly two decades of negotiations Kazakhstan joined the World Trade Organisation (WTO), a move that pleased Kazakh president Nursultan Nazarbayev but also pressured the Eurasian Economic Union to cut its import tariffs.

It has been a long-held ambition of Mr Nazarbayev to secure WTO membership for Kazakhstan and he scheduled a state-of-the-nation address on the eve of the accession to hail it as “a milestone in the history of independent Kazakhstan.”

But Kazakhstan’s WTO membership will have wider implications.

Kazakhstan is the first member of the Eurasian Economic Union (EEU) to enter the WTO since the Kremlin- led trade bloc came into existence on Jan. 1. This means Kazakhstan’s bilateral agreement with the WTO will effect the entire EEU.

The EEU includes Russia, Armenia, Kyrgyzstan — which joined the WTO before the EEU existed — and Belarus which is not a WTO member.

The WTO accession document specified that the new rules to which Kazakhstan has committed should also apply to the rest of the EEU.

“There are 23 commitments which contain measures to be undertaken by Kazakhstan and/or the competent bodies of the EAEU (Eurasian Economic Union),” the WTO said in Kazakhstan’s accession documents.

This means that the EEU’s high import tariff regime will have to be lowered to meet the agreement that Kazakhstan signed up to.

Fortunately, complying with WTO rules appears to be in line with the EEU’s aspirations.

Russian President Vladimir Putin said in October 2014 that the EEU would adapt to work with the WTO and in October 2015 EEU heads of states said they wanted to harmonise their tariffs to Kazakhstan’s new commitments under the WTO.

Molly O’Neal, a professor at the Johns Hopkins University, said reducing the tariff gap between the WTO and the EEU was one of the most important implications of Kazakhstan’s WTO membership.

“Kazakhstan had already agreed [with the WTO] to binding its tariffs on certain products at levels below the common tariff of the EEU,” Ms O’Neal told the Bulletin.

WTO accession should also mean dropping domestic regulations that favour Kazakh companies. This is particularly important in Kazakhstan’s extractive sectors.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Tajikistan moves towards EEU

DEC. 2 2015 (The Conway Bulletin) – Tajikistan’s parliament ratified a treaty that guaranteed investment protection for members of the defunct Eurasian Economic Community, a precursor of the Kremlin-led Eurasian Economic Union (EEU). The treaty itself is of no significance but signing it does signify Tajikistan’s determination to join the EEU.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Russia-Turkey row splits Central Asia + S.Caucasus

DEC. 3 2015 (The Conway Bulletin) – Russia is piling pressure on its partners in the Eurasian Economic Union (EEU) to join it in blocking Turkish trade across the region, a move that could fracture regional alliances.

After a Turkish fighter-jet shot down a Russian fighter-jet over Syria last month, Russian President Vladimir Putin promised revenge. This included a ban on Turkish exports to Russia.

To tighten the ban, Mr Putin needs his allies in the EEU — Armenia, Belarus, Kyrgyzstan and Kazakhstan — to stop Turkish goods transiting through their territories into Russia. But it’s a clarion call which is likely to prove divisive for Central Asia and the South Caucasus where Turkey has strong cultural, trade and diplomatic links.

Of the EEU members, Belarus is a natural ally of Russia and will support Moscow. As will Armenia, which has strained relations with Turkey.

For Kazakhstan and Kyrgyzstan the issue is more complicated. They have good relations with both Turkey and Russia and will likely try to appease both sides as Kazakh foreign minister Yerlan Idrissov has said.

“Emotions are running high, but my president, knowing Mr Putin very well personally and knowing his great potential to be constructive and knowing personally (Turkish) President Erdogan, believes and hopes they will think strategically in this very difficult situation,” he told Reuters in an interview.

Outside the EEU, Turkey is likely to find more supporters. Turkmenistan sees Turkey as a natural ally and has been building up a rapport with Ankara while its relations with Moscow have worsened. It wants to pump gas to Europe and this means crossingTurkey.

With its 2008 war with Russia still fresh in the memories, Georgia naturally leans towards Turkey.

Azerbaijan, though, is Turkey’s biggest ally in the region. The countries are close culturally, politically and economically. Their militaries also often train together.

Although relations with Russia have improved over the past couple of years, it didn’t take long for Azerbaijan to rally to Turkey’s cause.

Azerbaijan cut by 20% cargo tariffs for Turkish trucks travelling from Baku across the Caspian to Kazakhstan and Turkmenistan, a move that will irritate the Kremlin and exacerbate regional tension.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Business comment: Eurasian Bank Council

NOV. 27 2015 (The Conway Bulletin) — Central Banks in the South Caucasus and Central Asia have had a rough year. Keeping up with the strengthening dollar and the falling rouble while monitoring inflation has been a tough test.

In an attempt to stick together during the economic downturn, some of the central bankers appear to have decided to use old infrastructure to continue their meetings and coordinate policies.

Confusion, however, clouds the various structures that are still in place.

The new body which met in Almaty this week was renamed the Eurasian Council of Central Bank Chiefs and is a spin-off of the now- defunct Eurasian Economic Community (EurAsEC).

It doesn’t overlap with the Eurasian Economic Union (EEU) because Armenia is not in it and is no longer representative of the old EurAsEC, which officially closed down last year, as Uzbekistan is not a member.

And this says a lot about just how confusing economic integration has been in the region.

Since the EurAsEC was disbanded, the Eurasian Economic Union (EEU) has become the integrationist body. Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia are part of the EEU.

So why brand it as EurAsEC? Why is Armenia out of the picture?

“Pressing economic questions” are the rationale behind this new body, according to Kazakhstan’s Central Bank.

The countries that form the new body are all in the midst of an economic crisis, but so are other countries that were not invited to the Eurasian banking council.

With the EEU in place and Tajikistan lined up to become a member, the decision to revive such a strange body, rather than another, is difficult to understand.

ENDS

(News report from Issue No. 258, published on Nov. 27 2015)

Armenia-EU finalise deal

NOV. 18 2015 (The Conway Bulletin) – Armenia could finalise a deal with the EU before the end of the year, Armenian foreign minister Edward Nalbandian was quoted as saying. For the EU a framework deal with Armenia, a member of the Kremlin-lead Eurasian Economic Union, would be an important victory, especially after the rejection of the Association Agreement in 2013. For Armenia, close links with the EU are important to maintain.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)