Russia Moves Closer to Common Market With Belarus, Kazakhstan

By Patrick Henry

July 5 (Bloomberg) -- Russia took a step toward a common economic market with neighbors Belarus and Kazakhstan as the three countries' leaders signed a joint Customs Code in the Kazakh capital Astana.

"A lot of work remains before the formation of a common economic space," planned for Jan. 1, 2012, "but given that it really is a beneficial and interesting endeavor, I'm sure we can agree on everything," Russian President Dmitry Medvedev said in Astana today, according to the Kremlin website.

If the three former Soviet republics succeed in creating a common market, the adoption of a joint currency would be the "next logical step," Igor Shuvalov, a Russian first deputy prime minister, said in March. Russia has sought to promote regional currencies in trade and to diversify its reserves, the world's third-largest, to reduce risks posed by the dominance of the dollar.

Plans for the Customs Code to come into force on July 1 were derailed by differences on energy policy. Belarus, the smaller of OAO Gazprom's transit routes to Europe, has demanded to pay Russian prices for gas, which are lower than fees charged to other countries. The dispute with the Russian gas export monopoly over mutual debts led to a brief reduction of supplies to Lithuania last month.

Belarus still maintains that the customs union, which takes effect tomorrow, should eliminate export taxes on all goods, including energy, Interfax reported today, citing Shuvalov.

Russia insists that export duties can be charged until the common market comes into force, the Moscow-based news service said, citing Shuvalov.

The presidents of Kyrgyzstan and Tajikistan, Roza Otunbayeva and Emomali Rakhmon, said in televised comments that their countries are considering joining the customs union.

--Editors: Tasneem Brogger.


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