With Ukraine now a lost cause for the Customs Union, Russia’s Vladimir Putin has checked in with Armenian Prime Minister Tigran Sarkisian to see how Armenia's plans to join the Customs Union are coming along.
For Russia, Armenia is a poor substitute for Ukraine, but still a victory in Moscow's efforts to assert its broader economic clout through the trade bloc.
Prime Minister Sarkisian seems to have seized on that status to lodge a request with Moscow to keep the investments coming and to underwrite some of the legal and institutional changes that Armenia needs to meet the upcoming trade club’s membership rules by 2015. Yerevan also needs resources to keep selling Armenians on the idea of pushing the country into what many claim will be an economic throwback to the USSR.
How far Kocharian could go with this is unclear. Memories of the 2008 bloodshed under his administration do not endear him uniformly to Armenian voters. But his choice of topic could add at least some fuel to the fire.
The Russia-led Customs Union has never hid its protectionist mandate. It’s been called Vladimir Putin’s Soviet Union-lite for a reason: Formerly Soviet states that don’t sign up will be isolated or pushed around until they do. Just look at Ukraine.
Now, new regulations on car imports that came into effect last month will protect the car manufacturing industries in all three members – Belarus, Kazakhstan and Russia. But they will specifically hurt one of Uzbekistan’s few successful joint ventures, a GM plant in the Fergana Valley that has thrived off exports to Russia and Kazakhstan.
Uzbekistan has previously expressed only the most tepid interest in the Customs Union. For Tashkent, the new rules show that staying out can hurt.
Kazakhstan's Kolesa.kz online car-sales platform reported on February 20 that Customs Union technical regulations have banned imports of some of the bestselling cars in Kazakhstan, including the Uzbek-made Chevrolet Nexia and Matiz.
The regulations, which came into force on January 5, require imported cars to have at least one air bag, an anti-lock braking system, specific attachment points for child-safety seats, and daytime headlights, among other things. GM Uzbekistan’s Nexia and Matiz have none of these features, Kolesa.kz said.
Cars produced by Customs Union members are exempt from the regulations until 2015.
"We are now selling leftovers in warehouses,” Kolesa.kz quoted an unnamed Kazakh dealer of Uzbek cars as saying. “The [Uzbek] plant will hardly be able to reequip these models [to meet] these technical requirements."
The Kremlin wheeled out its soft power machine this week to make the pitch for Kyrgyzstan to join its Customs Union trade bloc. But if a recent talk by Kremlin evangelists at the American University of Central Asia in Bishkek was anything to go by, the machine could use some grease.
The main speaker at the February 19 event was Semyon Uralov, editor of a website close to United Russia, Vladimir Putin’s political party. While Putin has tried to assure potential members that the Customs Union – Belarus, Kazakhstan and Russia – is not a Soviet Union redux, Uralov seemed to do the opposite. Quoting Engels, Marx and Lenin during a forthright speech in which he extolled the virtues of state-sponsored industry, Uralov responded to a complaint about his tone: “I don’t hide it. I am an imperialist.”
And like Customs Union officials, he did little to address economic questions.
Moral and social degradation was a key theme in Uralov’s presentation. He described seeing people bribe a customs official at Bishkek’s airport for the privilege of flouting the building’s non-smoking policy. “Now tell me,” Uralov asked, “would it be possible to reach that kind of an agreement with a Belarusian customs official? A Russian customs official?” The assembled students murmured that it probably would be. “Well, clearly not for 20-30 soms [40 to 60 cents],” Uralov retorted. (Curiously, Belarus, with its highly inefficient command economy centered on manufacturing stood as something of a role model for the Russia-born, Ukraine-educated Uralov. In Transparency International’s latest Corruption Perceptions Index, Belarus ranks 123th, Russia 127th and Kyrgyzstan 150th out of 177 countries.)
Three women arrested for wearing panties on their heads were among nearly three dozen protesters hauled through the courts in Almaty this weekend, as last week’s devaluation of the tenge brought demonstrators out onto the streets of Kazakhstan’s commercial capital.
Zhanna Baytelova, Yevgeniya Plakhina, and Valeriya Ibrayeva were arrested at an anti-devaluation protest on February 16 after putting lace panties on their heads and trying to place them on a monument to Kazakhstan’s independence.
They were immediately tried on hooliganism charges and fined around $100 each. Their quirky protest was inspired by obscure regulations, due to come into force in July, that will govern the level of moisture absorption in underwear sold in Customs Union member states Kazakhstan, Russia and Belarus.
The action, Plakhina told EurasiaNet.org “is a symbol of the absurdity which is taking place in our country, including the recent tenge devaluation.”
“In Russian we have a saying, ‘giving one’s last underpants,’ which literally means becoming poor,” she explained. “This was a symbolic action.”
The three women were among five people arrested at the small anti-devaluation rally that drew around 30 people on Republic Square. That followed a larger rally the previous day, which riot police broke up after some 200 protesters marched to Republic Square.
Defending his choice to enter a Moscow-centered Customs Union, Armenian President Serzh Sargsyan commented on February 4 that Armenia joining the European Union was never part of Yerevan's game-plan, Public Radio of Armenia reported.
It has been lovely to work with the EU on democratization and human rights and all, but Armenia never considered committing to a more serious relationship, said Sargsyan, whose pro-Moscow choice last September took Brussels by surprise.
Speaking about another Western club with which Yerevan has had a standing flirtation, the North Atlantic Treaty Organization, Sargsyan expressed dismay that NATO, as he put it, had allowed member Turkey, Armenia’s bête noire, to take certain undefined "actions" that damage NATO's "security system."
That said, Armenia will not shy away from being "just friends" with the EU and NATO. Still, its "steady" remains Russia; namely, Moscow's Customs Union and Collective Security Treaty Organization. One provides duty-free access to the vast and nearby Russian market, while the other keeps hostile neighbor Azerbaijan at bay. (At least in theory. )
Yerevan announced on February 3 that it will complete the road map to membership in the Customs Union by year-end, and set January 1, 2015 as the date for its trade-nuptials with Russia, Kazakhstan and Belarus.
A Gazprom filling station in northern Kyrgyzstan. Kyrgyzstan's parliament has approved the sale of the nation's debt-ridden gas monopoly to the Russian state-run energy giant for $1.
Kyrgyzstan’s parliament voted to pass a controversial deal to sell the national gas company to Russian giant Gazprom for the knockdown price of $1 on December 11, local media reported.
Under the deal Gazprom snaps up the company and its property and gains rent-free use of land any facilities stand on. In exchange it takes on Kyrgyzgaz’s estimated $38 million debt and pledges some $600 million to improve Kyrgyzstan’s crumbling gas grid. That could in the long-term help streamline energy supplies and ease the dire power shortages the country experiences every winter.
Some parliamentarians had opposed the deal, agreed in July, seeing it as tantamount to handing a strategic national asset over to former colonial master Russia for a song, but Kyrgyzgaz CEO Turgunbek Kulmurzayev said there was “no other choice” than to sell to Gazprom, since the company is effectively “bankrupt.”
Kyrgyzstan is in any case doomed to gas dependence: It meets just 2 percent of its gas needs from domestic output and relies on imports from neighbors Kazakhstan and Uzbekistan, leverage that Tashkent sometimes uses to bully Bishkek by cutting off supplies.
The deepening crisis in Ukraine over whether to integrate economically with the European Union or Russia is both sowing worry and sparking anti-Russian defiance in Georgia, arguably the last steadily pro-Western Eurasian country east of Moldova. Yet, according to new Georgian Prime Minister Irakli Gharibashvili, the Ukraine situation will only serve to further Georgia's integration with the EU.
This year, Georgia has seen two fellow ex-Soviet republics drop out of the pro-Europe club. First, next-door Armenia made a sudden choice to join the Moscow-led Customs Union; now Ukraine has taken a time-out from plans to sign off on a landmark agreement with the European Union.
The loss of Ukraine, arguably the Slavic country with which Georgian ties are chummiest, leaves some feeling a tad vulnerable.
“Ukraine would have been a very serious partner for us at the Vilnius summit. You stand more steadily on your feet when you have such a large country by your side,” said Tina Khidasheli, a senior parliamentarian for the ruling Georgian Dream coalition, Interpressnews reported.*
Usually wary of Moscow-led initiatives, Uzbekistan has suddenly expressed cautious interest in joining the Customs Union of Belarus, Kazakhstan and Russia – the trade bloc Russian President Vladimir Putin has made a key feature of his foreign policy.
Senate Speaker Ilgizar Sobirov, the powerful head of the Uzbek parliament's upper chamber, showed interest in joining the Russia-led group on November 12 after meeting a delegation from the Russian parliament's upper chamber, the Federation Council, Russia's Itar-Tass news agency reported.
Sobirov reportedly said Uzbekistan holds a "positive" attitude toward possible membership in the trade body, which lately has been marked by increasingly rancorous internal disputes. “I think we shall support,” Itar-Tass quoted him as saying, in a report light on details.
Uzbekistan's interest in the Customs Union makes sense on paper. Russia is the country’s largest trade partner, according to statistics distributed in Uzbek media by the State Statistics Committee.
Russia is also the primary magnet for the millions of Uzbek labor migrants who sent about $5.7 billion home in remittances last year, or the equivalent of 16.3 percent of GDP.
Two panels this month, one in Washington and the other in Istanbul, illustrate the broad gap in thinking on Central Asia between foreign policy leaders in Washington and mid-level practitioners more closely linked to the region.
"The US must take initiative to create a long-term strategy for the region. It should bring the New Silk Road to the region, because if we do not, others [Russia, China] will fill the void," Adib Farhadi, a visiting Afghan scholar at the Central Asia and Caucasus Institute (CACI) at Johns Hopkins University, said, summarizing the sentiments of his fellow panelists in Washington.
Just a few days earlier in Istanbul, however, one panelist derided Washington's New Silk Road concept – unveiled by then Secretary of State Hillary Clinton in mid-2011 – to widespread agreement: "The New Silk Road was a strategy, then an initiative, now I guess it is a vision. It should be called an illusion and ignored. It was created by outsiders without reference to what is going on in the region."
The Atlantic Council and CACI jointly hosted the Washington panel, entitled "The New Silk Road Project: A New Strategy for Afghanistan and Central-South Asia," on October 9. The previous week, the US Congress-chartered Hollings Center for International Dialogue gathered 30 policy experts and development practitioners from Central Asia, Afghanistan, Turkey and the West for a dialogue on "Central Asia's Regional Challenges." The Hollings Center event on October 3-5 was held under the Chatham House Rule, thus participants’ names have been withheld.
The presidents of Russia, Kazakhstan and Belarus sat down on October 24 in Minsk to grapple with the thorny problems facing their free trade zone – from trade barriers to confusion over Customs Union expansion. It was a tense meeting.
President Nursultan Nazarbayev of Kazakhstan – usually a staunch Russian ally – was in a combative mood, accusing Moscow and Minsk of erecting unfair barriers to trade, describing the Customs Union’s Russian-dominated regulatory body as politicized, and urging caution in Moscow’s efforts to welcome new members.
Nazarbayev told Vladimir Putin and Aleksandr Lukashenka that he noted “positive results” from the Customs Union but urged an open dialogue on “shortcomings,” including “foreign trade disproportions” and “serious difficulties” for Kazakhstan to access Russian and Belarusian markets.
As EurasiaNet.org reported this month, there is strong opposition to Customs Union membership in some quarters in Kazakhstan. Upon accession in 2010, increased trade was touted as the chief benefit, but so far the result has been a flood of imports into Kazakhstan from Russia, plus a derailed bid to join the World Trade Organization.
Putin was conciliatory but vague, describing it as “necessary, of course, to work on eliminating all exemptions and all mutual preferences” and “necessary to create equal conditions.”