Currently, a new architecture of the world economy is being built. The recently established Eurasian Economic Union (EEU) of Kazakhstan, Russia and Belarus is to become its integral part that is very likely to play quite a significant role in the future. The fact that the two more nations, namely Kyrgyzstan and Armenia, have entered the Union this year will give some additional impulse for its further development.
President Nazarbayev of Kazakhstan has been very vocal about his vision of the role and place of the EEU. Speaking at the Supreme Eurasian Economic Council meeting held in Moscow in 2013, he predicted that the year 2015 would be the beginning of a new stage of the Eurasian integration. As Nazarbayev rightly noted, the establishment of the Eurasian Economic Union was the first time in history of
Eurasia when an integration project was being implemented on a voluntary, equitable and mutually beneficial basis. Moreover, the countries that are being united, according to Nazarbayev, possess the immense natural resources and a transport, energy and technological system of strategic importance on the regional and global scales.
President Nazarbayev, however, noted that there was understanding in Kazakhstan and elsewhere throughout the Union that the genuine economic integration would take time and that the maximum positive impact would not come soon. Understandingly, the integration to be a success in terms of the improvement of the popular wellbeing and the standards of living would make the economies of the participating states undergo a period of adaptation to the new conditions that would mean greater and harsher competition.
The slowdown of the macroeconomic indicators and the current difficulties faced by the economy of Russia are quite alarming. The inflation in Russia and the weaker ruble probably will have some impact on the economies of the other EEU member states as they are more interdependent now than ever before via the mutual trade and investment. At the same time, it is important to realize that there is always a possibility of crisis in any member state and that the capacity of the economies of the other EEU states to mitigate its negative impact depends on the characteristics of these economies. The major factors here are the balance of payments, the international reserves, the external debt, the structure of GDP as a whole and of the exports and imports in particular, these differ from country to country in the Union. Accordingly, the impact on their economies from the external shocks will also differ.
Given all these, it is important to remember that one of the ultimate goals of the EEU is to enhance the capacities of the national economies of its members to resist the negative external impacts and to increase their economic stability through using the advantages of the EEU single market and via creation of the favorable conditions for the better domestic economic development on the perimeter of the Union and beyond.
It is also important that within the Eurasian Economic Union, each state carries out its independent macroeconomic policy and currency regulation. The EEU member states are sovereign in terms of their fiscal policies, the exchange rates and other regulations of their financial sectors according to their own long term interests.
The other advantage of the membership in the EEU is the opportunity to realize comprehensive programs of industrialization; the Union facilitates the measures to support the domestic manufacturers that shall also contribute to the further economic growth of the EEU member states. Kazakhstan, for instance, is consistent in realization of the measures aimed at boosting economic diversification and enhancing the competitiveness of the domestic producers in order to minimize the possible negative external impacts on the national economy.
Speaking on the external factors that could be potentially negative, it is important to take into account that the global economy continues to live under the consequences of the crisis of 2008 and that the changes it brought are both cyclical and structural of a profound institutional and technological nature that alter the basis of the global economy. However, like any economic phenomenon, the crisis had both negative and positive effects.
The emergence of a new model of economic growth may be considered as one for the positive effects of the crisis pushing for structural modernization in both the developed and developing countries, encouraging the search of new technological drivers. The history shows that after the crisis some industries and sectors of the real production are more likely to emerge, that, in turn, mean new challenges and necessity to find new instruments of economic policy.
In other words, the current conditions resulting from the recent crisis can lift the global economy to a new qualitative level of efficiency and productivity and the chances are that the Eurasian Economic Union may successfully integrate itself into the process.
It is important to realize that the crisis of a systemic nature such as the recent one cannot be overcome using only the measures of macroeconomic character. As the world economy is undergoing the stage of building of a new technological basis, the national economies shall be modernizedia the institutional and structural changes. Through the crises of such kind may also create the opportunities for certain states to make a economic breakthrough that, otherwise, would not have been possible. The better chances to the considerable advance are in those countries that have been able to understand the nature of the challenges they are facing and to find the best solutions that very often mean structural changes. These were previous systemic crises that made some nations advance immensely in terms of their economic development having elevated them to the new level. No matter how hard the crisis hits, the market economies shall always emerge from it being even more powerful and competitive.
Given all that, amidst the post-crisis world, the states like those of the EEU, which are determined to advance their economies, shall consolidate their efforts, work out comprehensive strategies and take concrete moves aimed at not only mitigating the negative influences but enabling to make a genuine breakthrough in terms of their economic development.
The other advantage the EEU counties have is that their approach to the anti-crisis measures is rather offensive. In other words, they are to build the basis for the future economic breakthrough despite the current conditions in the world economy that are very unfavorable. For instance, the governments of Kazakhstan and Russia are developing a series of anti-crisis economic programs providing for the direct state support to deter the negative impact of the external factors.
In this context, the Nurly Zhol new economic strategy that has been articulated by President Nazarbayev of Kazakhstan is especially relevant and timely for a number of reasons. Firstly, the Nurly Zhol is a strategy of overcoming the current crisis via, among other measures, using of the resources accumulated in the National Fund (707.5 billion KZT in 2015). Secondly, the Nurly Zhol stipulates a comprehensive infrastructural reform that coincides with the second stage of the realization of the National Program of the Rapid Industrialization meaning that 232.9 billion KZT will be allocated in 2015-2017.
Kazakhstan is planning to use the funds mainly for realization of a number of infrastructure projects such as road building, construction of new railways, houses and utilities, repairing of the school and hospital and others. The infrastructural projects of this kind are to make a direct and immediate positive effect on the economy through the development of such branches as building and construction, manufacturing of the contraction materials, transportation, metallurgy and a number of other related goods and services.
The successful cases of the regional integration show that it is very important for the countries to continue their overall engagement into the world economy. The regional integrated structures shall not prevent the member states from participating in the global market. In this respect, the common economic space the Eurasian Economic Union is to build may serve as a link between the East and the West. Kazakhstan, for instance, is very active in terms of finding the additional integration opportunities
that would be developed simultaneously with the EEU. The possible vectors of such development are the countries of Central Asia and China’s Silk Road.
The analysis of the preliminary outcomes of the Eurasian integration during 2010 - 2013 shows that the member states were able to lay down the major cornerstones on which the future sustainability of the EEU shall be based. This process of consolidation of the Eurasian integration underwent the following stages:
- supranational body (Eurasian Economic Commission /EEC) was established and began functioning;
- Eurasian Economic Community (EurAsEC) was reformed;
- CIS Free Trade Area was formed;
- WTO entry.
Summing up, it is important to note that Kazakhstan has always had the Eurasian economic integration as a part of the overall strategy of its development.
The essence of Kazakhstan’s approaches to the purposes and principles of the Eurasian integration as well as those of our EEU partners was very clearly stated by President Nazarbayev of Kazakhstan at the meeting of the Supreme Eurasian Economic Council held on December 24th, 2013.
Firstly, the Union being built is not an attempt to restore the Soviet Union despite a commonly shared opinion of its foreign critics. The return to the past is neither possible nor desirable for the all founding members of the EEU. Therefore, the Union is aimed at the better future.
Secondly, the establishment of the EEU resulted (to a certain extent at least) from the 21st century trends of both globalization and regionalization. However, the integration in Eurasia has its own historical explanation and reasons. The participants in the process are not willing to copy the models of the European Union or any other regional organizations.
Thirdly, the Union being built is voluntarily and is aimed at consolidation of the potentials of the member states for the common good.
The fourth point made by Nazarbayev was that the membership in the Union should not be considered as an opportunistic move to gain any privileges and preferences.
The fifth argument was that the sovereignty of the member states should not be impeded by their membership in the EEU; on the contrary, the Union should enhance their chances to become genuinely potent actors on the international arena.
Thus, the next point was that the enhancement of statehood of the nations involved into the Eurasian economic integration was its ultimate goal because stronger economy should bring stronger state.
Moreover, the united efforts of the Union member states should bring the benefits for all in the long run such as further economic development, security, wellbeing of the people living in the EEU.
Finally, Nazarbayev stated that the Eurasian Economic Union was not an alliance aimed at confrontation with any other state or international organization. On the contrary, the members of the Union were, according to the President of Kazakhstan, committed to the maximum cooperation with the globalized world.
Thus, Kazakhstan, Belarus and Russia established the Eurasian Economic Union in the spirit of trust and friendship for the purpose of the strategic partnership within the organization based on the following principles: economic pragmatism; respect for the national sovereignty of the all member states; voluntariness; equality and consensus in all decisions; openness of the membership in the Eurasian Economic Union to all states sharing its purposes and principles.