Economic Relations between Kazakhstan and Russia

Regional transit. Russian Federation is one of the basic countries of shaping and assignment of transit weights; on its share it is necessary about 26 % of shaping and 20 % of assignment of weights from total amount of all transit transportations.

Transcontinental transit. In the whole transit streams in directions Southeast and East Asia Europe are evaluated approximately in 330 - 400 billion of dollars. Thus up to 20 % of these streams can pass through region of Russia and Kazakhstan.

Taking into account in the whole size commodity circulation, iron roads of the Eurasian continent and primarily Kazakhstan and Russia have real potential for partial stylus orientations transcontinental good traffic with sea on railway routes.

For Kazakhstan in this direction of activity has a primary value a development of transportations on Northern corridor Trans Asian of a railway turnpike on a route  “China - Kazakhstan - Russia – Byelorussia Poland - Germany. Now Kazakhstan together with Russia Europe - Asia and back carries on active operation on shaping this terrestrial transport corridor by the message.

As a whole in transport-communication sphere before Kazakhstan the following tasks stand:

• Saving conditions for transit of the Kazakhstan power resources through region of Russia, maintenance at a necessary level of quotas on transit of oil for Kazakhstan.

• Scheduled magnifying of a channel capacity CPC.

• Decision of accumulating questions between the Ministry of means of communication of Russian Federation and CJSC of “Kazakhstan Temir Joli” on railroad rates and other questions.

• Creation of the share enterprises in transport branch.

• Realization share transport - communication of the projects on active use of transit potential of Kazakhstan and Russia.

2.                ABOUT A CONDITION OF FOREIGN TRADE BOTH  DEV’T OF THE JOINT / ENTERPRISES KAZAKHSAN AND RUSSIA

Indexes of foreign trade of RK with RF, 1995-2001

Russian Federation of the valid historically folded processes of an economic development is the basic trade partner of Kazakhstan and basic consumer of Kazakhstan production. The specific gravity of Russian Federation in volume of export in the countries of CIS annually makes not less than 91-93 %.

In 1997 the reorientation on a development of the foreign trade links with the countries of long-distance foreign countries began. In this connection a -percent ratio in volumes of export between the countries of Commonwealth essentially has varied. In 1997 there was cutting volumes of foreign trade between Russia and Kazakhstan, per consequent years this tendency continued to be magnified. On many goods occupying a powerful share in export of Kazakhstan production in Russia, there was a significant lowering of standard items.

In 2000 there was an essential heightening of volumes of export with all countries - basic trade partners from among Commonwealth. The foreign trade turnover of Kazakhstan with Russia in 2000 has approximated to a level of 1997. The export has increased as contrasted to 1999 in 1,5 times, the import has increased by 82 %. In 2001 as contrasted to 2000 of delivering in Russian Federation practically have remained at a former level (reduction by 1 %).

The share of Russia in total amount of export in 2001 has made 20,2 % (in 2000 -19,4 %).

The greatest specific gravity in structure of export in Russian Federation occupy:

Mineral products - 47,1 of % in 2001 (46,8 % in 2000): coal - 91 % of export coal from Kazakhstan, oil and gaseous condensate - 12 %, ores and concentrates iron, chrome, zinc -10,3 % (7,9 %); products of inorganic chemistry junction, inorganic and organic precious and rarely of metals of radioactive elements and isotopes 13 % (13,5 %): an oxide and hydracids of aluminum - 90 % of all outbound delivering; ferrous metals - 8,2 % (6,3 %).

In import from Russian Federation predominate: mineral products, machines and equipment.

In 2001 basic paper of import was: purchase of mineral fuel, oil and petroleum - 21,4 % (more than 77 % from common import of fuel, from them coke, diesel fuel, lubricant oils, electric power;the machines and equipment - 16,3 %, metallurgical production -14,5 %, vehicles -13 %, production chemical and industries, coupled to it,-12 %, plastic and work piece from it -4 % were imported.

On October 1 2001 in Republic of Kazakhstan 740 share and foreign enterprises created with participation of Russia (including 466 share and 274 foreign enterprises) with the authorized capital - 22,7 billion tenge operated. The share of the foreign founder in the authorized capital has made 1,3 billion tenge, or 5,94 %. From them 121 enterprises manufactured production, 72 - realized deliverings on export, 182 - had import receipts and 456 realized delivering on a home market. In 2000 in republic 461 enterprises, in 1999 - 325 operated.

The enterprises created together with the Russian partners, realize the following aspects of activity: production of crude oil, mounting of the process equipment, construction of civil engineering buildings, manufacture of the electric power both electro distributive and monitoring equipment, pharmaceutical products, copper, woolen and synthetic fabrics, flour, processing and conservator of production, rendering of different aspects of services and researches, maintenance and repair of automobiles, activity in the field of a wireless and television.

2.1 Some aspects of economic interaction Kazakhstan and Russia 

For adjustment and intensive development of mutually advantageous two-sided ratios within the framework of CIS Republic of Kazakhstan and Russian Federation have necessary objective premises. Russia and Kazakhstan make a basis of huge Eurasian region, in which historically there were steady geopolitical, economic, ethnic and cultural links of two countries and peoples. In many vital spheres the national interests of two countries are close or coincide, both countries hold on to course on saving of common defensive, humanitarian and information space and the stability and prosperity of two countries, further democratic of a society and success of market transformations are equally interested in hardening safety.

The interaction of Kazakhstan with Russia is a priority in external policy, external economic and military-strategic course of republic. A complex of the reasons conditions and factors having not tactical, but basic essence and long-time character stipulates it.

Today common balance of mutual relation between Kazakhstan and Russia has positive character, as consider each other as the strategic partners and it establishes the important premise for their mutual cooperating in the field of policy, economy, science, engineering and other spheres.

Kazakhstan-Russian economic partnership belongs to the most advanced regions of two-sided ratios between two states, as for this purpose both countries have premises for rapprochement. It in many respects defines character, both mutual relation, and other economic links, folding in the European direction, of Kazakhstan.

On today there are favorable and unfavorable factors inherent in Kazakhstan on a path to economic cooperating to Russia.

Alongside with the favorable factors of a development of two-sided economic ratioes exist as well unfavorable or constraining moment. The overcoming of economic barriers by means of restoring cooperation links will allow introducing the operations in frameworks EAEU (Euro-Asian Economic Union).

2.2 The factors of economic interaction of Kazakhstan and Russia

Favorable                  

a) Presence in Kazakhstan of large mineral operational lives.

b) Transit potential and favorable geopolitical position of Kazakhstan at the center of the Eurasian continent: on a crossroads of trade and transport paths from Europe in Asia: through China on Far East ports, Pacific Ocean of the state; through Iran and Turkey in the Mediterranean pool.            

c) Determination of Kazakhstan and Russia as basic trade partners on export and import.        

d) Retention of Kazakhstan in the majority large international architectures UN, Architecture of Economic Cooperating, Economic union Central Asian of the countries (together with Uzbekistan and Kyrgyzstan) and Central-Asian Bank of Cooperating and Development (CABCD); Great five Republic of Kazakhstan in frameworks of CIS (Russia, Kazakhstan, Belarus, Kyrgyzstan, Tadjikistan).       

e) The large region with the common boundary (more than 6.000 kms) with Russia, that has for two countries a serious value in matter of hardening of their national and collective safety.

f) The residing in republic of the large ethnic interlayer of the European origin (Russian, Ukraine, Germany) is one of the factors of rapprochement of Kazakhstan with the European civilization and culture.

Unfavorable

a) A close arrangement of Kazakhstan to the inconsistent states Central Asian of region.        

b) Support by Kazakhstan of multifactor policy in a ratio of transportation of the Caspian oil.

c) The boundaries Central Asian of the states from a point of view of international law properly not democratic of Republic of Kazakhstan; Kazakhstan has appeared as a matter of fact cut off from Western Europe

d) Increase of ecological crisis, that weakens its positions in region and world, narrows down opportunities of fast industrial growth.

e) Absence in Kazakhstan of a direct exit to World Ocean, exterior warm seas, that hampers links with the largest centers of a modern civilization.   

f) Support by the countries of trade wars (introduction of limitation on import of the goods, policy of an ascertaining dumping in relation to the exported goods, raw interdependence of the countries etc.).

            In the beginning 1990s. It seemed, that the revived democratic states within the framework of their new statuses would be and further dynamically to explicate the ratios, filling their contents, adequate to a new position. However it has not taken place and in basic for past years of two-way communications were characterized defined inertia.

As displays the analysis, the policy of Russia in a ratio of the states of Commonwealth for flowing out five years did not differ by a sequence.

There was a natural process of comprehension of key national-state interests attended by searching for new, as it seemed, more perspective partners.

Certainly, the today's level of economic integration does not answer necessities national economic of Republic of Kazakhstan and Russian Federation. Available on it is necessary to evaluate the today facts of economic interaction between two countries as insufficient and requiring in serious adjusting. The priority of a development of the Kazakhstan-Russian economic links is possible to support with existing numerous perspective directions of a development, it:

·        Trade-economic cooperating of Republic of Kazakhstan and Russian Federation;

• Frontier cooperating Republic Of  Kazakhstan and Russian Federation;
• Development of industrial-cooperation links in machine-building and chemical complexes, by means of creation of share financial and industrial groups;
• Cooperating and development fuel and energy of complexes of Russia and Kazakhstan;
• Cooperating in sphere of transport;

·        Cooperating of Kazakhstan and Russia in mastering vehicle launching of Baikonur;

• Cooperating in mastering natural riches of the Caspian sea;
• Scientific - technological cooperating;
• Cooperating in the market of agricultural production.

The historically folded trade ratios of the countries of the Eurasian region, including Russia and Kazakhstan from times “Silk road” - allow to hope for success in a development of economic cooperating in modern conditions.

At the same time it is necessary to mark the common tendencies, natural for the new independent countries. The orientation to the market of long-distance foreign countries makes production of raw in branches of the countries rarely for them raw refined in branches, as last valid by considerably lower, than world, efficiency of the manufacture can not acquire production first on world or close to world prices. Stronger links with the world market of branches of the states of Commonwealth inevitably preclude with their demand for production domestic resource refinery of branches by virtue of its non-competitiveness in the world market. It inevitably reduces different branches to of an economic development resource producers and resource refinery of branches in the countries of CIS.

2.3 Engaging the foreign investments

The participation of the foreign capital promotes the decision of the following tasks:

- Heightening of efficiency of an export potential, overcoming of its raw directedness and development import substitute of manufactures;

- Heightening of a scientific and technical level of production with the help new scientific of techniques, methods of management and selling of production;

- Magnifying of tax receipts in the state budget;

- Assistance to a development backward and depressive of regions and creation of new workstations in national economy;

- Use of modern industrial and administrative experience through tutoring and retraining of the staff.

It is necessary to mark, that the cooperating of Kazakhstan and Russia can explicate in different regions of economy. For power engineering and mineral operational life’s priority directions are: the opportunity of an effective shared use of mineral operational life’s, introduction new and development of available processing manufactures oriented on export to long-distance foreign countries, creation of a reliable system energy supply, development of the transport communications, which development is stipulated by presence of investment operational life’s.

Figure 1. Structure of the direct foreign investments in Kazakhstan in 2000

In structure of the direct foreign investments in Kazakhstan the share of Russian Federation makes 5 %. In spite of the fact that the Russian economy requires not less to investment means, the enclosure of the investments serves the factor of interest by Kazakhstan. The interests of Russia consist, first of all, in natural operational life (oil, coal, ore etc.), mastering and development.

2.4 Cooperating in the field of electric power industry

As other step which has strengthened a positions of power branch, it is possible to name creation on the basis of bankrupt CJSC “Ekibastuz Energy Center”, half of which shares the European Economic Community of Russia on account of cancellation of duties of Kazakhstan for the electric power was transferred to the Russian partners from the Russian Academy of Science.

Since 2000 the integrated power Grid of Kazakhstan works in a parallel condition from European Economic Community of Russia and grid system of the countries of Central Asia.

The parallel operation of electric power systems has allowed considerably to boost quality of electrical power and reliability of electro supply of consumers of Kazakhstan, Central Asia and Russian Federation, operatively to realize flow both transit of electrical power and powers, it is more rational to use power powers of electrical stations. The electric power system of Kazakhstan and Russian Academy of Science European Economic Community of Russia is called secure each other in case of crashes. It will ensure with the electric power not only Republic Of Kazakhstan, but also Southern Ural.

With the purposes of a heightening of efficiency of a parallel operation the measures on simplification of customs procedures are studied at migration of electrical power through the customs boundary.

The operation coal extraction of the enterprises is stabilized. In 2002 the production 78 mln of tons coal is forecast, from which more than 25 mln of tons will be exported.

2.5 Cooperating in the field of machine construction industry

The lowering of manufacture in machine construction industry and metalworking is called by aggravation of a financial condition of basic consumers of machine-building production, significant rise in price of import furnishing work pieces.

The cooperating of Russia and Kazakhstan in machine construction industry is possible at the expense of a shared use of available industrial potential for issue of competitive production. On basis Kentau excavator factory assembly manufacture of dredges together with joint-stock company Tver excavator a factory  and joint-stock company Sarex. On Pavlodar tractor together with joint-stock company the “Altay” motor factory. Barnaul and Sibzavod (Omsk) it is planned to adjust manufacture of new tractors, and the enterprises agricultural machinary of Kazakhstan together with Rostelmash can master assembly manufacture a grain and of combines.

Besides in machine building branch the creation JV on manufacture of diesel drives (planned on the basis of joint-stock company the “Kustanay” diesel factory and joint-stock company “Hurrah Laz”) and Transnational of financial and industrial group “Electropribor”.

2.6 Cooperating in the field of a uranium industry

Annually Kazakhstan extracts and sells about 3 % (1,5 thousand tons) from it Whole World of production. Production of the National company “Казатомпром” consumes Russia, USA, Western Europe, Southern Korea and other countries.

The company “Казатомпром” combines investigation, production and manufacture of uranium, and also accompanying rarely of elements. Into its structure go into: joint-stock company “Volkovgoelogy” one of highly professional in all CIS of the geological enterprises, joint-stock company “Stepgeology”. Three ore management “Central”, “Steppe”, “Sixth”.

The basic manufacturer of uranium fuel in Kazakhstan - Ulbinski a metal works. This versatile enterprise specializing on issue rarely metal and super conducting production, and also special material, used in an atomic industry, electron technology, instrument making, space engineering. The raw material - enriched uranium - is made in Kazakhstan or is delivered from Siberia, on Ulba make of it tablets and deliver them on the Russian factories, where make ready heat distributor of assembly for atomic power plants. Ulbinski the metal works occupies the important place in a nuclear-fuel cycle of Russia and Kazakhstan.

In the near past the nuclear -fuel complex of Russia and Kazakhstan made a single unit. To tear this line-up was it does not pay Russians, Kazakhstan.

Last years the Kazakhstan raw material in basic went on export, and the fuel tablets on Ulbinski factory were manufactured from the Russian raw material. Besides is acute there was a problem solvency. Russia paid for services by the consumer goods. An exit from the folded situation became the offer of the Kazakhstan side to the partners from Russian "«fuel element" of start-up of a new uranium line-up. As a result of the enterprise deliver each other necessary components, in particular from Kazakhstan in Russia - fuel tablets. The financial accounts between the countries are made at the end of a line-up in accordance with sale of products higher remake in the exterior market.

Within the framework of this cooperating, with the purposes of an ascertaining of the greater confidence the National company “Kazatomprom”, releases the gold share, which is transferred and gives it the right to superimpose the veto on such decisions of Kazakhstan,

As, for example, refusal to work in one nuclear-fuel cycle to not produce fuel tablets for Russian Atomic Electric Station or other irrational variations in the strategy and tactics of behavior in the market. In turn, Russia has given us assurances of a reliability and long term of the orders. It concerns uranium, but also tantalum raw material, beryllium etc. Durability of strategic interests of the sides by the plans on interchanging the shares Ulbinski factory on the similar shares of the enterprises of a nuclear -fuel cycle of Russia.

In October, 2000 the long-term contract for manufacture CJSC Ulbinski factory of dusts of uranium and fuel tablets for AES with their further annual delivering in Russian Federation up to 200 т of a dust and 300 т of tablets, on a period till 2005 inclusively is made.

Besides the arrangement on creation of the share enterprise on production of uranium on deposits “Zarechni and “Budenovski” in Southern Kazakhstan is reached.

Considering problems of integration of Russia and Kazakhstan, it is possible to conclude, that the activation of economic links between the countries directly depends on the decision of legal, political, economic and ecological problems precluding their more effective activity. The opportunities by wider attract in a long-term perspective appreciably depend on those political courses, which will be selected by both countries. According to our reckoning, the creation of the common market of Kazakhstan and Russia will allow to support steady solvency demand for production of real sectors of economy of the countries on the basis of the long-term target and selective contracts.

Thus, the necessity of effective economic interaction between the countries stipulates necessity of the further decision of existing problems and uses of every possible redundancy of premises of rise of manufacture.

3.         involvement in international organizations, kazakhstan and russia

For anybody not a secret, that creation and the operation of regional systems of safety in Central Asia was called by the following basic reasons:

First, inability of the states becoming in plants of aggressive plans of the international terrorist architectures, appearing under Islamic by the slogans and using financial support international extremism of architectures to give them effective defense;

Secondly, double standards of the conducting countries of West, including USA, Great Britain, in a ratio of operations of a series of terrorist architectures considered by them as battle groups national fight for freedom of driving. By characteristic development of double standards was, for example, the refusal of the American authorities to satisfy the request Ministry of Foreign Affairs Peoples Republic Of China about output gripped in captivities in Afghanistan of hits - citizens of Peoples Republic of China Uygur of a nationality. A motivation: the Washington does not consider Driving for independence East Turkestan as terrorist architecture;

Thirdly, the anti Soviet moods, cultivated in West by decades, in a defined measure were transformed in anti Russian, especially to first half 90 years. Therefore warnings of Russia, states of Central Asia, closely face with operations of the international terrorist gangs in Chechnya, in Batken, about real consequences of their activity were not heard.

It would be possible to explain creation of military-aerial basses of USA in Afghanistan, Kyrgyzstan, Tadjikistan, Uzbekistan still by war against a condition taliban. But there is a question, why these basses began to be established as a matter of fact after completion of an active military phase of rout taliban of a condition. Moreover, arranging of basses air force of USA not only in Afghanistan, but also in Kyrgyzstan, and also Tajikistan bordering with China, on defined reflections. In particular, involuntarily there is an idea: whether can these basses hypothetically and in a defined situation to be used as basis of a dual purpose - not only against hits in Afghanistan, but also against China or even against Russia.

After September 11 and especially after an overthrow reactionary taliban of a condition in Afghanistan and ascertaining of the American military presence in Central Asia basic; in essence there is a consideration of an opportunity of cooperating of these architectures from USA, for, without the account of policy of Russia, China and USA and understanding of principles of a guard by these states of the national interests, it is impossible to explain a situation in sphere of a safety in region.

Whether such script of a development of events in next China is necessary to Kazakhstan and other countries of region.

Uniquely - is not present. The consequences of disorder USSR, as is known, have done without in tens thousand life and millions refugees.

The important element of regional cooperating is the effective military-engineering cooperating between the countries by the members DKNB. Today any country of Central Asia is not capable in the nearest perspective to refuse from former Soviet, so, present Russian weapon and military engineering. Hence, the key role of Russia in this direction will be saved.

The important element of regional cooperating is the effective military-engineering cooperating between the countries - members DKNB Today any country of Central Asia is not capable in the nearest perspective to refuse from former Soviet, so, presents Russian weapon and military engineering. Hence, the key role of Russia in this direction will be saved. Though other points of view take place also:

a) In opinion of the Uzbek experts, principal reason of an exit of Tashkent from DKNB was ostensibly refusal of the Russian side to sell to Uzbekistan necessary arms and military engineering, when the country has exposed to attacks of gangs of the international terrorists.

In these conditions of Uzbekistan forced to convert to active cooperating from USA;

b) In mass - media the hearings, on the one hand, are persistently spreader that Russia ostensibly is not interested in maintenance vehicle launching of Baikonur, recognizing schedule to transfer all rocket start-ups on vehicle launching or to realize start-ups from tropics, and with another - that vehicle launching of Baikonur to Kazakhstan anything, except for harm, does not bring.

Tragedy of September 11 and military action, which has followed behind it, of USA in Afghanistan by a radical image, have changed a situation in our region. In this connection experts of Kazakhstan Contract, being the member, of collective safety, expected, that the states the members DKNB will consult among themselves on all questions of the international safety, including regional, but, unfortunately, such has not taken place also it once again speaks that one of the reasons of an inefficiency DKNB is an existing level of ratios between Russia and other sides of the Contract. On my sight, on the one hand, Russia till now is not ready to equal in rights partner to ratios with the new independent states, and, with another - in the countries FSU of space the suspiciousness and uncertainty is still saved in what policy Russia will realize further.

Therefore, on my sight, the special urgency is acquired now by necessity of amplification of mutual confidence, openness, knowledge, first of all, between Kazakhstan and Russia having on FSU space the special level of ratios and the best premises for creation of allied ratios.

Thus, at folding geopolitical the structure of regional systems of safety is necessary different level. In particular, Kazakhstan and Russia should not wait of operations on the part of other countries of region, by a phantom of the dollar help, and actively be shaded slide on a path not only economic integration in frameworks EAEU (Euro-Asian Economic Union), but also development of systems of safety in frameworks DKNB.

Similar situation in a ratio of cooperating with China within the framework of the Shanghai architecture of cooperating in a direction of struggle with terrorism, extremism and separatism

Appearing on January 25 this year at the extended meeting of the principals of the executive authority Republic Of Kazakhstan, the President N.Nazarbayev has formulated seven tasks facing to government, including in the field of exterior policy.

January 25, 2002 in Almaty the third session Integration of committee EAEU (Euro-Asian Economic Union) has passed, on which 28 questions were considered, from which on 27 the decision is accepted. The totals of operation of this session, unfortunately, have appeared unfavorable:

a) The participants still were not defined, in what direction it is necessary to explicate cooperating;

b) Each participant wants first of all to defend the interests, instead of interests of the partners. Therefore, in particular, customs duties till now are not strip-chart unified to establish a condition of preference for mutual trade;

c) The countries EAEU (Euro-Asian Economic Union) tend in WTO, supposing already others, and very rigid, condition, not having matched the positions.

Nevertheless of Kazakhstan appears for a development EAEU (Euro-Asian Economic Union), and also others (organization structures with participation of Russia, as such policy in finished the score answers interests without dangerous of our country.

3.1  The Eurasian Union: Realities and Perspectives

For five years already Kazakhstan, Russia, and other post-Soviet states, most of which are united in the Common­wealth of Independent States, have developed in the situation of a new political reality as equal agents of the world order. But the process of the formation of new independent states and open democratic social systems has just begun.

Without going into detailed critique of the CIS, let us note that all its activities and all the bilateral and multilateral efforts of its member states clearly show that the time has come for a more effective, deep, and diverse integration of the countries involved - the kind of integration that would achieve a stabilization of the situation in the economy and ensure its development on a qualitatively new basis. This applies above all to the economies of Kazakhstan and Russia, which might be­come the engines of future integrative processes in the post-Soviet space. There are also quite a few issues pertaining to cooperation in the military-political, scientific-technological, humanitarian, and other spheres, which are awaiting their solution in the framework of a more effective integration model. The idea of the formation of the Eurasian union of states proposed by President Nazarbayev is precisely such a model; it organically combines both the existing realities and the objec­tive needs of today and tomorrow.

Taking into account the differences between our coun­tries in the levels of development of market economy, in the democratization of political processes, we propose to estab­lish an additional integrative structure, the Eurasian Union, whose activities would be combined with those of the CIS. In doing so, the member states will take into account the diver­sity of integration scenarios and differences in the rate, form, and direction of CIS states’ development. Thus there is an urgent need for the formation of a new economic order in the CIS.

It can thus be said that the draft project for the formation of the EAU is in keeping with the natural aspirations of the peoples living in the post-Soviet space, the idea of new integra­tion. The project has not only acquired a great many supporters but has also proved that it is realistic, urgent, and vital.

Turning to the genesis of that integrative idea, it must be recalled that the Kazakhstan leader advocated the preserva­tion of good relations and re-integration on a new basis of the former Soviet republics from the very first days of the new states acquiring independence. President Nazarbayev stressed repeatedly that he never raised the idea of independence to the status of a fetish but rather endeavored to preserve old ties and create new ones. The idea of the Eurasian Union originates in the midst of life, in the simple and universal human needs.

From that moment, the debate on the idea of the EAU assumed a new tone. It accelerated the political crystallization on the choice between further disintegration and re-integration on a new basis.

Many participants in the hearings stated that the EAU project offers a chance for entering the 21st century in a civilized manner, and that it reflects the objective logic of development of the post-Soviet space and the consciously realized objective need for the development of integration processes.

In this way the initiative of forming the Eurasian Union was gaining momentum. The number of its adherents increased at scholarly events, in government offices, and in the diplomatic circles. An understanding and sincere approval of the EAU project was expressed, among others.

The proposals contained in the EAU project - to intro­duce unified visa procedures, to guarantee the freedom of movement, to make the ruble the settlement unit, to create a unified system of defense, parliament, legislation, and an executive com­mittee as an interstate organ - were at first guardedly received by some public figures. However, the numbers of adherents of inte­gration are growing. Clearly, their approaches to the problem differ, but their desire for integration remains strong.

On the question of the main principles of the EAU project, it must be stressed that the EAU is a union of equal, indepen­dent states aimed at the realization of the national interests of each member state and of the available integration potential. The EAU is a form of integration of sovereign states with the aim of consolidating stability and security and socioeconomic modernization in the post-Soviet space. Economic interests determine the foundations of the rapprochement among the independent states. The political institutions of the EAU must adequately reflect these interests and facilitate economic inte­gration.

The following principles and mechanism of formation of the Eurasian Union are proposed:

— National referendums or decisions of parliaments on the entry of states in the EAU;

— The signing by member states of a treaty on the setting up of the EAU on the basis of the principles of equality, noninterference in the affairs of each other, respect for sover­eignty, territorial integrity and inviolability of state borders. The treaty must lay the legal and organizational foundations for deeper integration, with the formation of an economic, cur­rency, and political union as its goal;

— No associated membership is permitted in the EAU;

— Decisions are carried in the EAU by the qualified ma­jority of four-fifths (4/5) of the overall number of member countries.

Independent states join the EAU, if the following pre­liminary conditions are satisfied:

— Mandatory compliance with endorsed inter-state agree­ments;

— Mutual recognition of the existing political institutions of the EAU member countries;

— Recognition of territorial integrity and inviolability of the borders;

— Rejection of economic, political, and other forms of pressure in inter-state relations;

— Cessation of hostilities among member countries.

New members enter the EAU after an expert evaluation is passed on their readiness to enter the EAU and all EAU members vote unanimously on it. An organ formed on parity terms by the states, which expressed their readiness to become EAU members, proposes expert evaluations.

EAU states may take part in other integrative alliances, including the CIS, on the basis of associated or permanent membership or in the role of an observer.

Every member can leave the EAU, giving notice not later than six months before the decision is made.

It is suggested to form the following supranational bodies:

— The Council of EAU Heads of State and Heads of Government - the highest organ of EAU political leadership. Each member state chairs the EAU for a period of six months in rotation according to the Cyrillic alphabet.

— The highest consultative and advisory body is the EAU Parliament. The Parliament is formed by delegating deputies of the member states' parliaments on the basis of equal represen­tation of each member country or through direct elections. Decisions of the EAU Parliament come into force after their ratification by the parliaments of the EAU states. Ratification must be effected within the period of one month.

— The main area of the activity of the EAU Parliament is coordination of the member countries' legislation to insure the development of a unified economic space, protection of the social rights and interests of individuals and of mutual respect for state sovereignty and civil rights within EAU states.

— The EAU Parliament creates a common legal basis to regulate the relations between the member countries' econom­ic agents.

— The Council of EAU Foreign Ministers, to coordinate the member countries' foreign-policy activities.

— The Inter-state Executive Committee of the EAU - an executive and supervisory body functioning on a permanent basis. The EAU heads of state appoints the head of the Executive Committee -a representative of the member countries — for a period defined by the heads. The Executive Committee's bodies are formed to include representatives of all the countries.

The EAU as represented by its Executive Committee must receive observer status in a number of major international or­ganizations, such as:

— The EAU Executive Committee's Information Bureau. The member countries must assume a special obligation or law not to permit unfriendly statements about the treaty's member states, which may damage relations between them.

— The Council for Education, Culture, and Science. The formation of coordinated policy on education, promotion of cultural and scientific cooperation and exchange, and joint activity on compiling textbooks and manuals.

— To achieve a deeper coordination and effectiveness of the activities of the EAU countries, it is deemed advisable to set up in each of them a State Committee (or Ministry) for EAU Affairs.

— Regular meetings and consultations on health servic­es, education, labor, employment, culture, combating crime, and so on, by ministers of EAU countries.

—                        Encouraging the activities of non-governmental orga­nizations in various areas of cooperation in accordance with EAU member countries' national legislation.

— The Russian language is the official EAU language, functioning side by side with the languages of legislation in the member nations.

— Citizenship. Free movement of citizens within EAU borders requires coordination of external visa policy with re­gard to third nations. On changing the country of residence within the EAU, an individual automatically receives the oth­er country's membership.

— One of the cities at the juncture of Europe and Asia, such as Kazan or Samara, might be proposed as the capital of the EAU.

In order to create a unified economic space within the EAU framework, it is proposed to establish a number of supra­national coordinating structures:

— A commission on the economy under the Council of EAU Heads of State to work out the main directions of eco­nomic reform within the EAU framework; the commission takes into consideration the interests of the national states and offers its proposals for endorsement by the Council of the EAU Heads of State;

— A commission on the raw materials of the EAU export­er countries to coordinate and endorse the prices and quotas for exported raw materials and fuel and energy resources, an appropriate inter-state agreement to be signed by the member countries; coordination of policy in the mining and sale of gold and other precious metals is to be envisaged;

— A fund for economic and technological cooperation formed with EAU members' contributions. The fund will fi­nance promising science-intensive economic, scientific, and technological programs and render assistance in the solution of a wide range of problems, including legal, tax, financial, and ecological issues;

— A commission on inter-state financial-industrial groups and joint ventures; — an EAU international investment bank;

— An inter-state EAU court of arbitration on economic problems, to resolve conflicts on a legal basis and to impose sanctions;

— A commission on the introduction of a clearance mon­etary unit (transfer ruble).

It is proposed to implement a number of measures to preserve the potential achieved in the previous decades and to enhance integration in the field of science, culture, and edu­cation:

— The setting up of common EAU research centers to carry out fundamental research in contemporary knowledge;

— The setting up of an EAU fund for the development of scientific research to unite the scientific collectives from vari­ous countries;

— The setting up of a committee on links in the field of culture, science, and education under the Council of the Heads of EAU Governments;

— Encouragement of the formation of non-governmental associations in the sphere of culture, education, and science;

— The setting up of a grants fund under the EAU Exec­utive Committee.

It is proposed to conclude the following accords on de­fense within the EAU framework:

— A treaty on joint actions to strengthen the national Armed Forces of the EAU member countries and to protect EAU external borders.

The EAU will establish a unified defense space to coordi­nate defense activities:

—                        The formation of joint peace-making EAU forces to main­tain stability and eliminate conflicts within the member countries and between them. The sending of peace-making forces to conflict areas on EAU territory - with the agreement of EAU member states and in accordance with international legal norms;

—                        The tabling of joint proposals by EAU member coun­tries at international organizations, including the United Na­tions Security Council, on lending EAU joint contingents the status of a peace-making force;

— The setting up of an inter-state center on problems of nuclear disarmament attended by representatives of interna­tional organizations.

— All EAU states except Russia maintain their nuclear-free status.

In the area of ecology, the following mechanisms must be formed in the nearest future, according to the EAU project:

— An ecological fund under the EAU Council of Heads of State, to realize ecological programs within the EAU frame­work, to be financed by all member states;

— Coordination of actions with international organiza­tions to reduce the extent of environmental pollution;

— Endorsement of short- and long-term programs for major problems of restoration of the environment and liquida­tion of the consequences of ecological disasters (the Aral Sea, Chernobyl, the Semipalatinsk nuclear testing ground);

— The endorsement of an inter-state EAU agreement on storing nuclear waste.

The Eurasian Union of States is thus based on three principal provisions:

— Joint supranational coordinating organs for the man­agement of the economy, defense, and foreign policy;

— A unified economic space;

— A common defense complex.

The supranational institutions include the highest organ of political leadership of the Union - the council of heads of state and heads of government; the highest consultative organ, the parliament; the councils of foreign and defense ministers;

And the interstate executive committee - a permanently func­tioning executive and controlling body whose head is appointed by the heads of government for a term which they them­selves define.

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