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'WTO membership as priority'

Thu 12 July 2012 04:43 GMT | 09:43 Local Time
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News.Az interviews Professor Julian Cooper, Centre for Russian and East European Studies, University of Birmingham.

Delegation of the Russian State Duma has visited Baku last week, Azerbaijan was invited to join the Eurasian Economic Union. What prospects can it have for Azerbaijan?

A Russian State Duma delegation does not have the authority to ‘invite’ Azerbaijan to join the Eurasian Economic Union and this Union does not yet exist. The Eurasian Economic Union is a long-term project for the economic integration of some countries of the ex-USSR. It is envisaged as the final phase of a process of several stages. First, there was the formation in 2000 of the Eurasian Economic Community, of which Azerbaijan is not a member. It was then decided to form a Customs Union of Belarus, Kazakhstan and Russia. This is now in operation and Kyrgyzstan is currently being considered for membership. It has been declared that from the beginning of 2012 a Common Economic Space is being formed on the basis of the Customs Union. In time this should lead to the free movement of goods, services, labour and capital, with some coordination of macro-economic policies.

This will form the basis of a future Eurasian Economic Union, envisaged as existing from 2015, although in my view this schedule is excessively optimistic. These initiatives for economic integration are founded on the principles of the World Trade Organisation, which Russia will now join within a month, the State Duma having yesterday ratified accession. Kazakhstan should also join soon and Belarus has stepped up its efforts to join in the expectation that working to the common rules of  the Customs Union should facilitate the process. It has been stated from the outset that the Customs Union and the future Economic Union will be open to any country wishing to join, but that country must have a common border with an existing member. On this basis, Azerbaijan would be eligible.

However, Azerbaijan is not yet a member of the WTO and in my view it would be sensible to make this a first priority. It will take some time before the Customs Union and the Common Economic Space, together with the new Eurasian Economic Commission, consolidate and the benefits, and costs, of membership become clearer. Also in time the nature of the future Economic Union, still more a vision than a concrete project, should be clarified. So, in a few years time, as a member of the WTO, Azerbaijan should be able to make a rational judgment of the prospects offered by this Eurasian economic integration project.

Head of the State Duma Committee for CIS affairs and ties with countrymen Leonid Slutskiy reported that Azerbaijan’s membership in the Eurasian Economic Union could be a point of No Return in formation of this union. What is the importance of Azerbaijan for the EEU?


I think Slutskiy was being polite to his Azerbaijani hosts, anxious to stress the importance for the future Union of potential membership of their country. In terms of economic weight, it is clearly understood that the country that Russia and the other two Customs Union members see as crucial to the project is Ukraine. However, other countries would also be welcome, Kyrgyzstan, Tajikistan, Azerbaijan and, possibly, in the future, Moldova and Armenia. Kazakhstan has even raised the possibility that in time Turkey could join.

The addition of any country will serve to increase the scale of the common market, currently about 170 million people, and, in principle, should increase the economic benefits for all members. However, there is an alternative, potentially complementary to the future Union, namely a CIS free trade area. But Azerbaijan has not signed up to this project, given new impetus last year when seven countries agreed in principle to its establishment.

What can be the political dividends of the country’s membership in EEU?


It is striking that the Customs Union, the Common Economic Space and the future Economic Union are being promoted by the member countries very much in economic terms, not in terms of politics. There is a new pragmatism and a determined effort to make it clear that these new initiatives represent a break from earlier policies that tended to put politics first, not least a tendency to pose the issues in terms of an existential choice – with Russia, or without, with echoes of the former USSR. In my view, there are two basic factors driving this new approach. Firstly, the experience of the global financial-economic crisis, that promoted a clear understanding of the vulnerability of Russia, Kazakhstan and other CIS economies in the face of external economic forces beyond their control. The urge to consolidate and integrate can be seen as a rational response, an attempt to build up defences to these forces.

Secondly, there is a keen awareness that a fundamental shift is taking place in the world economy, with the rapid rise of China and other Asian powers, and the relative weakening of the position of Europe and, possibly, the United States. The consolidation of a Eurasian economic bloc can be seen as a response to these changes, an attempt to enhance the economic strength and bargaining power of the countries between the European Union and the rising powers of Asia. If successful, the Eurasian Economic Union will have political outcomes for its members, but at present political consideration are not in my view the principal motivating factor.

What may the EU propose to countries like Azerbaijan instead EEU? And which of them is preferable?

I do not think it is necessary to pose a simple, binary, choice, either the EEU or the EU. In principle, it should be possible for any country of the region to have close engagement with both. For a long time Russia has been seeking a free trade area with the EU and one can envisage an eventual agreement of this kind between the Customs Union and the EU. Some in Moscow now see the possibility of an eventual pan-European/Eurasian free trade zone. But moves in this direction require an abandonment of thinking in binary terms, still widely met in both Brussels and Moscow and other capitals. A problem for Brussels now is that, with a few exceptions, the economies of EU member countries are not in a healthy state. This year, on average, there will be virtually no growth of GDP at all in the EU, but at least 4 per cent growth in the CIS economies. If this trend continues for some time, then the EU option may become less attractive, but such a development could promote more cooperative policies. 

Isn’t the Eurasian Economic Union itself an attempt to restore the USSR?

No, I think it is time to revise this widely prevalent stereotypical assessment. It is now over two decades since the collapse of the USSR. As indicated, the world is changing rapidly and the countries of the region have transformed in many respect, to the extent that it is not conceivable that something resembling the USSR could be restored, even if any nation, or nations, wished to do so.  The rules of the game have changed and so must attitudes and perceptions.

L.H.
News.Az

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