Kyrgyzstan’s preparations to join a Russia-led economic bloc are proceeding at breakneck speed.
Wholesale changes to dozens of regulations are sailing through Kyrgyzstan’s parliament as a December 23 deadline for signing Eurasian Economic Union accession documents approaches.
The legislature can play host to stormy debates when it wants to, but when the subject is the finer details of the tax code and trade policy, it appears MPs can’t really be bothered. The amendments legislators are passing may have far-reaching implications for the local economy, however.
Moscow, upon whom Kyrgyzstan’s dependence grows by the day, has now confirmed it will provide up to $1.2 billion over the next two years to ease the country’s entry into the Customs Union and Eurasian Economic Union (which includes Armenia, Belarus, Kazakhstan and Russia), after Russia’s State Duma ratified the package November 26. Kyrgyz policymakers had talked up the aid package with little by way of confirmation from the Kremlin. The first $100 million, a grant, should be disbursed before the end of this year.
According to Russia’s state-run TASS news agency, the money:
…is designed to develop cooperation in [the] agro-industrial sector, the sewing and textile industries, processing, mining and metallurgical industries, transport, housing construction, development of entrepreneurship and infrastructure. A special development fund is going to be set up in the form of an international organization. Its status, functions, structure and rules of functioning will be defined in a separate agreement.
The $500 million fund, $500 million credit and a further $200 million to help the country implement its accession roadmap will be steered by a board of directors featuring three Russians and two Kyrgyzstanis. Kazakhstan has also promised its neighbor help – up to $177 million – in integrating into the protectionist bloc.
Key to the story of Kyrgyzstan’s inevitable accession – after signing the December 23 agreement, Bishkek should enter January 1 – is the extent to which the country’s membership of the Eurasian Economic Union will be full-fledged. Local businessmen complain they do not understand the rules and that their requests for clarifications from government officials go unanswered.
In Bishkek on November 28, Kyrgyz President Almazbek Atambayev met with member of the Eurasian Economic Commission (EEC) to discuss preparations for entry. Top of the agenda was “work on equipping and modernizing customs points at the state borders of the Kyrgyz Republic,” Vechernii Bishkek reported. That is significant since lightly taxed goods and pure contraband from China, not a member of the union, have reduced inflationary pressures in Kyrgyzstan as Russia’s economy tanks, and allowed for a significant, if declining trade in re-exports with neighboring Central Asian states.
While the post-entry realities of Kyrgyzstan’s Chinese border are anybody’s guess, the EEC’s minister for trade, Andrei Slepnev, has pledged to “create a regime that will keep supply of Chinese goods to the extent necessary for domestic consumption of Kyrgyzstan,” 24.kg quoted him as saying on November 24.
An official in Kyrgyzstan's customs service, moreover, said on December 1 that the import tariff would not come into force until some time after accession. "Up to this point all transportation will be performed according to the customs tariff of the Kyrgyz Republic," said Akylbek Borubayev, the senior customs official dealing with accession, in quotes picked up by 24.kg.