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Russia is first to have ratified Eurasian Economic Union treaty

October 06, 2014, 16:22 UTC+3 Alexandrova Lyudmila
© ITAR-TASS/Mikhail Metzel

MOSCOW, October 6. /TASS/. The trilateral treaty concluded by Russia, Belarus and Kazakhstan late last spring to establish a Eurasian Economic Union will be ratified by all signatories in the near future, although Belarus still has some objections regarding the taxes on the export of oil products, Russian experts believe. They are certain that Minsk and Moscow will settle their problems, precisely the way they did on many occasions in the past.

Russia is the first of the three countries to have finally ratified the treaty with Belarus and Kazakhstan to establish the EEU, which is expected to bring about a common market for the three member-countries. Russian President Vladimir Putin on Friday signed a law on the ratification of the treaty, concluded in Astana on May 29. The document envisages creation in ten years’ time of a new association under common economic control - the next phase after the Customs Union and the Common Economic Space.

The treaty, scheduled to take effect on January 1, 2015, will become operational only after ratification by all signatories. Whereas Kazakhstan’s lower house of parliament has already gave it a go-ahead, Belarus has warned it may postpone ratification until the issue of taxes on the export of oil products has been resolved.

“The question will remain suspended until Russia and Belarus have decided on how to compensate for Belarus’s losses from the redistribution of taxes,” the daily Kommersant quotes the speaker of the lower house of Belarus’s parliament, Vladimir Andreichenko, as saying.

The tax maneuver in the oil industry which Russia plans to carry out next year provides for a drastic reduction in oil export taxes and a simultaneous increase of the mineral resources production tax, the director of the International Trade Studies Centre under the Russian Economy and Civil Service Academy, Aleksandr Knobel, has said. This may bring about a significant increase in the price of oil in 2015 and slash Belarus’s incomes from the redistribution of export taxes, which, Minsk had hoped, would yield 1.5 billion dollars a year.

“One way or another, the parties will finally come to terms somehow,” the analyst said. “Incidentally, from the formal standpoint this has no bearing on the EEU treaty. Minsk has just taken advantage of the situation for plain economic bargaining, and its positions are rather strong, because Russia cannot afford to let ratification be disrupted.”

The director of the Institute of Strategic Analysis at the FBC company, professor of the Higher School of Economics Igor Nikolayev speaking in an interview to TASS called for looking back on the way such problems between the two countries were dealt with in the past. “As a rule they were resolved but at the same time caused certain material costs for Russia. It is beyond doubt that Belarus will manage to bargain something for itself again, but most probably it will get less than it is asking for.”

EEU membership is economically beneficial for the new participants, because it gives them access to a large market, low prices of gas, an opportunity to get direct budget support from Russia and a favourable labour migration regime, runs a report by experts of the Civic Initiatives Committee led by Russia’s deputy finance minister, Aleksei Kudrin.

The experts TASS has polled believe that for the time being the project is significant to Russia mostly from the political standpoint.

“For Russia the project is rather a political one, although the expansion of the market is of certain importance, too,” Nikolayev said.

“The text of the treaty may be cleared of all political clauses, but that does not mean that politics is absent altogether. The very instance of establishing the EEU will have political effects,” the analyst remarked.

“No new economic benefits are in sight yet,” says Knobel. “But there must be a long-term economic strategy - how should the EEU look like in 2050? So far there has been none.

 

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