Director of Kazakhstan’s Institute for Strategic Studies Bulat SULTANOV:
CREATION OF THE EURASIAN ECONOMIC UNION IS NOT DOGMA BUT GUIDANCE FOR ACTION
In the next few days the signing of the treaty on the Eurasian Economic Union by Russia, Belarus and Kazakhstan is expected. In an interview with Interfax-Kazakhstan Bulat Sultanov, director of Kazakhstan's Institute for Strategic Studies under the Kazakh President, talked on how further relationships would develop between the countries.
-In your view, how will the relations between the countries develop after the signing of the treaty on the Eurasian Economic Union?
-With regard to the Eurasian Economic Union one should clearly assume the fact that the creation of this integration project isn’t dogma but guidance for action. This is a live process because in the framework of this integration organization, first of all, each state will protect its national interests what is fully understandable but by protecting national interests one should assume there must be a certain corridor in order not to kill off this integration association while protecting national interests.
That’s why I reckon that this will be a creative process; problems will turn up all the time which will need to be jointly resolved. For the 23 years of independence our countries have notably drifted away from each other both economically and legally. And so there shouldn’t be much euphoria but there shouldn’t be much pessimism either. The process is creative; we need to bring together the economies.
In many instances, this process will depend on the performance and skills of our negotiators on the supranational bodies. I consider that we have representatives who are sufficiently qualified.
The only thing is that one should turn attention to these kinds of issues in a calmer manner without being nervous and worrying about that. The working process is getting underway and there will working moments in this process and they should be resolved given mutual interests.
-What pluses and minuses will the Eurasian Economic Union have?
-We have already repeatedly spoken of the pluses. I can point out many of them. I can point out one of the main pluses in my opinion. Kazakhstan has a very convenient geographical location. And we must make the most of our strategic location between Asia and Europe.
In light of current international developments based on the transition from the unipolar world to the multipolar world and the crisis of international law, China is trying to access the EU and the Middle East markets by land. After the break-up of the Soviet Union Europe was keen to get through Central Asia and Kazakhstan to the markets in China and South East Asia. Various projects were devised but Europe’s project continually faced problems with Yugoslavia and in the end of the day Europe failed to resolve these problems both economically and financially. Now the project is coming from the East, which, I think, is cohesively linked to the Customs Union and the Eurasian Economic Union.
Cargo container haulage is designed for speedy delivery. And the creation of the Customs Union removed customs checkpoints between Kazakhstan and Russia, Russia and Belarus and speeds up container cargo deliveries by road from China straight away to the EU border.
We are now talking about Kazakhstan joining 30 leading counties, not only leading, but the world's top 30 prosperous countries. So the richer the country, the better solution to social issues. Thus, joining the world's top 30 prosperous countries is a vital objective. These days we have joined the top 50 countries, none of those 50 countries want to slip down, in other words, Kazakhstan’s path for to the group of the top 30 countries won’t be “rosy”. There will be the toughest competition.
I reckon that we need to success in manufacturing high quality goods on the basis of advanced technologies in order to join the worlds’ top 30 countries. These goods are much more expensive, we could allocate more funding for the solution to social problems selling these goods.
But the creation of innovative enterprises requires huge capital investment. Money could be raised from abroad as part of foreign investment, however nobody will put big moneys in Kazakhstan’s economy because its market capacity is only 17 million people, that’s why we need a vast market to attract investment. We are setting up the Eurasian market, the Eurasian market needs goods and these goods could be produced thanks to foreign investment. If we want our people to live better, then for this purpose we need to create a competitive economy and big investment is needed to create it while such investment comes there where there is a market.
As for the development of small and medium-sized business – we are building a transit road from China through the Customs Union countries to Europe and this road would require a huge amount of assets and services: this is food and water, petrol filling stations, hotels and other facilities. This is just another Klondike for small and medium-sized businesses. This transport corridor passes through Almaty, Zhambyl, South-Kazakhstan regions and thereafter through Aktobe region, that is this road provides ideal conditions for the development of small and medium-sized business in our regions. However it should be done so that distribution of services and participation in the highway services can be fair, transparent and not corrupt in order for us avoid a scandalous corrupt project instead of improving living standards.
-You have told us of the pluses, but there will be apparently minuses as well.
-There are minuses and probably it would be silly not to point them out. Especially at the initial stage there will be issues related to that fact that residents in southeastern Kazakhstan are linked to the Chinese market - the market of goods shipped to Kyrgyzstan from China and then from Kyrgyzstan to Kazakhstan. Participation in the Eurasian Economic Union will now result in reducing access to cheap Chinese goods. In addition, one should understand that access to durable and luxury goods from western Europe, Asia and the U.S. will be restricted and those who import used cars to here will also have problems.
All these issues, of course, should be solved. Now Kazakhstan is organizing the car assembly domestically but not in that way how our oppositionists are trying to ridicule it; we are in cooperation with not only Russian carmakers but also with South Korean, Japanese and European automotive companies. Now we are assembling cars domestically and will export them to the Eurasian Economic Union’s vast market. We will resolve the problem with cars. As for cheap goods from China and Turkey, I think as the living standards of Kazakhstan's residents rise our consumers will look for more expensive goods with better quality, so we will also sort this issue out.
- Oppositionists repeatedly oppose this kind of integration as integration that cripples Kazakhstan's sovereignty. They worry that this carries an economic and political threat to Kazakhstan's independence. In your opinion, how will this impact on Kazakhstan's sovereignty?
- When our opponents say Kazakhstan must not join the Eurasian Economic Union and the Customs Union because that is dangerous, I always ask them: gentlemen, you always argue for Kazakhstan to stop being a mere supplier of raw mineral resources, but if you want Kazakhstan to stop being such a country, then the only option is its participation in the Eurasian Economic Union. In other words, if we make a logical chain - those who are against the Eurasian Economic Union - are against the rise of the economic well-being of Kazakhstan's citizens.
- Can sanctions imposed by the U.S. and the EU on Russia affect the Eurasian Economic Union?
- The Kazakh president since the formation of the independent Kazakhstan has adopted a right foreign policy called multi-vector that is we have been building up relationships with all countries. But one should understand that multi-vectorism does not mean equidistance. We within the framework of multi-vectorism have priority countries - border countries - for us like for any country. So the development of relations with China, Russia, and the Central Asian states are our priority. So within the framework of the Eurasian Economic Union we will build up relations with Russia, China, the Central Asian countries in the first instance, and then with the EU countries and the U.S.A. Sanctions are not targeting Russia's specific economic sectors or rather bear psychological nature - scaring off investors putting money in Russia' economy . That’s some sort of psychological noisy effect.
Now the global economy got so twisted that no country will go ahead with real economic sanctions because this country itself may bump into their backlash effect. Sanctions are not an argument. I can cite many examples, when sanctions were imposed on the Soviet Union to prohibit imports of locomotives, lathes, tools in the 1930s and even at the time there were possibilities to dodge them. Now in the age of globalism sanctions are some anachronistic tool - a left-over from the past. In the 21st century, it is totally ineffective for countries to talk to each other in the age of globalism using sanctions.
In addition, one should understand a simple thing: imposing sanctions on Russia, the West in fact pushes it to forge closer economic ties with China - something we are currently watching – the latest gas project is a clear proof of that. China will become the top country in a few years in terms of production in the world overtaking the USA, according to international experts. So sanctions against one country leads to a situation which prevents a country imposing them from developing its own economy. The global economy has not yet overcome the consequences of the latest world’s economic crisis. The whole European economy is balancing on the brink of recession and currently any negative impact undermining the economical growth may result in the global economic slump. For this reason I would advise everyone playing with sanctions to be careful.
-What new countries and when can they join the Eurasian Economic Union?
-My position is that there should be no rush to expand the Eurasian Economic Union. This organization must stand up firmly on its feet, God forbid, of course, to repeat the sad experience of the EU which had been heaven on Earth, the global economic base, but overexpanded to the east and south east as a result of ill-judged steps by the EU leadership and a push by the USA for political reasons. And now when in the recent elections in many EU countries nationalists have won they say that it was a mistake to admit the former Eastern Block countries to this organization. The European economy failed to digest the economies of the countries in eastern and southeastern Europe. So we should not rush.
The core of the Union - Kazakhstan, Belarus and Russia – should develop; as other countries get ready, and prerequisites are formed it would be possible to talk about admitting new members to the organization. It is necessary to set up associate membership. I think it will be a far-sighted move to have, for example, countries such as South Korea, India, Vietnam, Iran and others as observers or associate members of the Eurasian Economic Union, which could contribute positive elements to the development of the organization but as associate members initially. In other words, I regard the Eurasian Economic Union not as a state which must develop like the former Soviet Union, no; in general I am a supporter of the Eurasian Economic Union setting up a free trade zone with the EU. This is one of the prospective areas.
-Thank you for the interview.
May, 2014
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