Four integration tasks

Dec 04. Kazpravda. Almaty — Moscow – Almaty

By Alevtina Donskikh

Four integration tasksMutual investments in the CIS make over $ 54 billion.

Among the four most important tasks in the CIS integration, is to achieve freedom of movement of goods, services, capital and labor. -We are completing a set of activities related to ensuring the free movement of goods, said Viktor Khristenko- board chairman of the Eurasian Economic Commission at the VIII International scientific and practical conference in Moscow, themed “Deepening of the Eurasian integration”.

For the eighth consecutive year, the initiator and organizer of the forum is the Eurasian Development Bank. This year’s conference was attended by over 200 experts, economists, financiers, politicians of most CIS members, including the states-candidates for accession to the Customs Union.

As experts noticed, integration takes time and, understandably there are still only first sprouts of it. – Turnover is a very important aspect of integration, but trade is not the only indicator of our economic cooperation, it’s a short-term tactical goal to history,  — said Viktor Khristenko . – There are other areas to be tackled: financial, construction, transport services … And the most important thing at that is freedom of capitals’ movement. All that is associated with investments, with long-term strategic and systemic steps. And in this respect, alongside the legislative field, major projects are extremely important that in themselves are  indicators of the effectiveness of administrative systems, procedures, which we accepted.

In this sense, indicative are the funded projects in the EDB member-countries and the ones monitored by the Eurasian Economic Commission. Board chairman of EDB Igor Finogenov said that the size of the Bank’s investment already exceeds $ 5 billion, and the total number of implemented projects is 93. In 2013 alone, its investment portfolio increased by $ 1 billion.

But development of the integration process takes new projects, new investment, and most importantly — the rules and conditions that take into account the interests of all the parties of integration. Mutual claims, even within the CU are already in aplenty, particularly about infringements of national interests. Therefore, the Moscow forum seeks to obtain the information and subsequently develop the sound and practicable recommendations to further improve the integration tools.

Nevertheless, boost of the ties is traceable in the CIS framework, even under the present conditions of the external trade, it was noted. Starting in 2010, when investors and economic operators came to realize that Ukraine was not inclined to integrate into the CU and CES, trade and economic relations with it began to decline, but when the business saw that there are no economic barriers within the CU, it started re-orienting to the partners in the customs union.

– Especially this reorientation affects the branches with high added value, — stressed the prominent Russian economist, referring to the losses of the Ukrainian companies. Trade with Kiev falls, but inside the union it is growing. He believes this tendency will hold on, as these are market conditions, and it’s not a political, but an economic response.

Statistics on post-Soviet countries points to strengthening of economic ties as well.

– For a second year in a row we are monitoring the mutual investment in the CIS plus Georgia. Statistics showed that their volume as of 2012 end is 54 billion dollars.

– Sectoral layout of mutual investments in the CIS is good, — adds Evgeny Vinokurov – Director of the Centre for Integration Studies at the Eurasian Development Bank. — The share of oil and gas is relatively low — 20%. Another 17 % is the investment in the telecom , 7-8 % — in ferrous metallurgy , 4-5 % — in non-ferrous metallurgy , 5-6% in electricity . Analyzing data on projects throughout 3 years, we expect a few “green shoots” in diversified sectors of industry, pharmaceuticals, real estate and hotel business. Kazakhstan and Russia started investing in these areas. Investments went to railway engineering. But it will take another several years before they reach a significant scale. Transnational companies are only budding, but the potential is ample enough, and the investors have understanding of it, of a new reality.

The forum accepted complaints of Kazakhstan’s business, including about the de facto inequality in the promotion of wares to the border regions of neighboring countries. However, advantages were also named, such as increasing transit capacity, tariffs on the carriage of Kazakhstani goods on Russian railways.

The discussions are available on the website of the bank, and the most relevant reports of the forum will be published in the EDB journal Eurasian Economic Integration, in the annual Eurasian Integration Yearbook.