Wednesday, 07 January 2015

Tajikistan Paves the Way to Eurasian Union

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By Oleg Salimov (01/07/2015 issue of the CACI Analyst)

Tajikistan assesses its potential for joining the Eurasian Economic Union (EEU), which came into effect on January 1, 2015. Pressure on Tajikistan to reach a decision on membership increased with the inclusion of Kyrgyzstan as one of the EEU’s forthcoming members. Tajik president Emomali Rakhmon proposed an in-depth study of the benefits of EEU membership for Tajikistan during the Eurasian Economic Community meeting in Minsk on October 10, 2014. As a result, the Central Asian expert club Eurasian Development in Dushanbe prepared an analysis of priorities which would stipulate Tajikistan’s successful integration into the EEU.

The experts’ list of issues which Tajikistan must address in its consideration of EEU membership includes Tajikistan’s low production output; its lack of infrastructure and unreliable railroad communication with other EEU members; energy security and continuing disagreement with Uzbekistan; the security and interests of Tajik labor migrants; compensation for short-term losses in Tajikistan’s custom duties; the border dispute with Kyrgyzstan; the preservation of transit cooperation with China; and taking stock of Tajikistan’s tourism industry potential. The report overall emphasizes Tajikistan’s immediate economic concerns.

Eurasian Development executive director Guzel Maitdinova in her expanded commentary on the report and Tajikistan’s potential membership pointed out the EEU’s fundamentally economic basis. Maitdinova confronted the critics of Tajikistan’s EEU membership who suggest it will inevitably imply a loss of sovereignty for the republic. Maitdinova insisted that the EEU should not be compared with the European Union which, unlike the EEU, functions through a common parliament and pursues a single model of political development for all members. Another point is the equal ability of all members to block any decision or resolution of the EEU. Also, the EEU foresees equal representation for all members regardless of the country size or membership dues which are in turn divided proportionately. Currently, Russia pays 88 percent of the total membership dues, Kazakhstan 7.3 percent, and Belarus 4.7 percent. Favoring the EEU, Maitdinova stressed the importance of Tajik labor migrants for the country’s economy, which would lose the extensive EEU labor market to Kyrgyz migrants if Tajikistan refuses to join. Maitdinova believes that EEU membership will enhance Tajikistan’s transit cooperation with China as it opens unlimited opportunities of the Eurasian market for China.

The newly founded EEU is a successor to the Eurasian Economic Community (EEC) established in October 2000 by Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. The main task of the EEC was the formation of a Customs Union and creating conditions for a common free market zone among its members. October 10, 2014 marked the last day of the EEC. The agreement between Belarus, Kazakhstan, and Russia on the EEC was signed on May 29, 2014. The primary objective of the EEU, alongside free trade, includes a common labor and service market and unrestricted capital movement. Also, in addition to the existing common customs regulations, the EEU will develop a common monetary, taxation, and trade policy.

Armenia, which possessed observer status at EEC, and Kyrgyzstan rapidly decided to join the EEU (Armenia became a member on October 10 and Kyrgyzstan signed its association agreement on December 23, 2014). Tajikistan has reviewed and analyzed Armenia’s and Kyrgyzstan’s integration process. Armenia had to formally waive its territorial claims on the Nagorno-Karabakh region but received sizable custom duties privileges and Kyrgyzstan was able to secure US$ 1 billion assistance from Russia through the creation of a Russian-Kyrgyz Development Fund. The Eurasian Development report discusses the possibility of similar financial incentives for Tajikistan and expects increased engagement from other members in the resolution of its territorial disputes with Kyrgyzstan. Also, experts anticipate an EEU interest in developing Tajikistan’s hydroelectric power resources.

While other members of the EEU, Russia in particular, are supportive of Tajikistan’s admission, there is a lack of commitment to financial assistance. Russia’s ambassador to Tajikistan, Igor Lyakin-Frolov, only expressed hopes for Tajikistan benefiting from special custom duties status in a manner similar to Belarus and Kazakhstan or a development fund similar to that of Kyrgyzstan, otherwise remaining highly reserved on the outlook of financial assistance to Tajikistan. Olga Gavruk, Belarus’ ambassador to Tajikistan, primarily sees Tajiks as a labor force for other EEU members. Such a vision implies a further dependency of the Tajik economy on migrants’ remittances and the continuing stagnation of Tajikistan’s industrial complex.

Tajikistan has made the first steps towards integration with the EEU. However, the consequences of EEU membership for the republic are far from clear. Tajik experts have outlined major areas for comprehensive economic research, which must involve various governmental agencies, think tanks, and the business community. The process of EEU integration will include adjustment of specific domestic and foreign policies, legislative changes, considerable investments, and short-term losses. Eventually, Tajikistan’s dependency on Russia and Kazakhstan not only through labor migrants, but also through a significant amount of trade (according to the Tajik Statistics Agency, Russia and Kazakhstan respectively were first and second among Tajikistan’s trade partners in 2013) might persuade the country to opt for membership. 

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