The Customs Union of Kazakhstan, Belarus, and Russia

By Bruno E Mitchell

The announcement of the formation of a customs union between Kazakhstan, Belarus, and Russia was delivered at Monday's Eurasian Economic Community (EurAsEc) summit of 2010 in Astana, the capital of Kazakhstan. Leaders of the three countries including Russia's President Dmitry Medvedev declared that the three countries, after many years of talks and consideration, have decided to take their first step towards a common, economic market.

Both Kazakhstan and Belarus were Soviet satellite states and suffered from economic backlashes as the Soviet Union began to fell apart until its death in 1991. Russia itself also sagged under its huge, monetary burden until the popular Prime Minister Putin relieved it.

This customs union would be economically benefitial to the countries involved. It is not surprising that such agreements are occuring between these three countries as these three were the original founders of EurAsEc which is made up of two other members, Tajikistan and Kyrgyzstan.

However, Belarus recently butted heads with Russia's Gazprom when Belarus refused to pay the full payment (including Russia's oil/gas tax) and instead offered payment in the form of commodities.

The Belarus-Gazprom disagreement, further fueled by the Russian government's involvement, delayed this announcement by five days. To try to calm the waters, Russia generously promised to relinquish its export tax on oil for Belarus by January 2012. This customs union agreement and possibly future proposals in this little circle will allow Belarus to change its economy, which is very Soviet-based, to an 'open' economy.

The President of Belarus, Alexander Lukashenko expressed satisfaction at the customs union. Kazakhstan's President Nursultan Nazarbayev stated that the customs union will allow a highly populated common market with a multi-trillion dollar economy with billions of what is equivalent to U.S dollars in trade.

Presidents Lukashenko and Nazarbayev were not the only ones celebrating; Russian officials were also pleased that this agreement came through. The three countries will be working towards making a market zone by 2011 and implementing the 'EU-like' model by 2012. Restrictions of trading between the three countries will be lowered which will significantly make way for all three economies.

Russia gets a delectable piece of the pie as the customs union allows Russia to easily be the central beehive for trade and finance in the region. According to Medvedev at a conference, steps will be taken for a "common economic space" the President also believes that the participating countries "will ultimately have a single-currency union".

Two other EurAsEc members, Kyrgyzstan and Tajikistan, expressed their want to join the customs union.


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