EDB indicators show progress towards integration

By bne IntelliNews October 5, 2010

Clare Nuttall in Almaty -

Integration within the post-Soviet space has accelerated recently, according to a set of indicators created by the Eurasian Development Bank.

The EDB's System of Indicators of Eurasian Integration (SIEI) tracks 10 years of disintegration and integration between the former Soviet countries. The data show that the uneven pace of integration for much of the post-Soviet era has been followed by several moves towards greater integration, in particular the establishment of the Customs Union between Russia, Belarus and Kazakhstan. The international economic crisis has also resulted in increasing ties within the region.

The SIEI was created by the EDB's research department to measure numerous aspects of integration within the CIS-12 countries - the 11 members of the Commonwealth of Independent States plus former member Georgia. Tracking integration within the region is important to the EDB, since part of its mission is to assist economic integration of its member states, all of which are CIS members.

The SIEI, which was devised using the experience of European and Latin American integration, consists of nine general and two consolidated indices to measure integration in the region. Different indicators have been developed to measure various aspects of the process, including the integration of trade and labour markets, and cooperation in the key areas of agriculture, education and energy.

Mixed progress

The first set of results, published in 2009, reveals wide variations in the degree of integration in different regions and spheres of activity. In a number of areas, integration has actually declined over the last decade, although within specific regions and around certain regional integration cores it has grown.

The consolidated integration index for CIS-12 suggests that the overall level of integration has decreased. At the same time, the EurAsEC-5, which consists of Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan, became more integrated during the 2000s. This is true to an even greater degree than with the core EurAsEC-3 countries - the three Customs Union members.

Evgeny Vinokurov, head of the economic analysis division within the EDB's strategy and research department, reports that the EDB's researchers "found very distinct spatial integration clusters in the CIS. "For example, the level of integration in the energy, agriculture and education sectors is higher in Central Asia than in the rest of the post-Soviet space. Integration in the post-Soviet space progresses at an uneven pace, both geographically and structurally," says Vinikurov. "In recent years, there was a sharp upturn in labour migration and student exchange, whilst integration in the trade, energy and agriculture sectors slowed down. The macroeconomic indices of post-Soviet countries were becoming increasingly divergent. It should understood, however, that these negative trends are partially attributable to the rapid growth of the post-Soviet economies."

Another key finding was that overall, the smaller countries in the region - Kyrgyzstan, Armenia and Tajikistan - were the most engaged in economic integration (in relative terms). At the other end of the spectrum, countries such as Russia and Kazakhstan, with larger, more export-oriented economies, the relative role of economic ties with other post-Soviet countries was less important.

Unsurprisingly, the research shows that in trade and labour migration, the most intensive interaction normally develops between neighbouring countries. However, it also occurs around regional cores. "Russia is certainly the most important, but not the sole, 'integration centre' in the post-Soviet space; for example, Kazakhstan has become a desirable destination for many migrant workers in Central Asia," says Vinokurov.

The Customs Union is a step towards the larger goal of a single economic area within the former Soviet Union, and it created a new "integration core" for other countries in the region. Kyrgyzstan and Tajikistan are already showing considerable interest in becoming members. However, the successful creation of the Customs Union has "put forward a whole set of sensitive issues to be addressed by the participating countries in a consistent and mutually acceptable manner," Vinokurov points out. These include access to energy resources , transport infrastructure and pipelines on a non-discriminatory basis, as well as strengthening cooperation in the financial sector.

Huddled together

With the onset of the international economic crisis, the region has come closer together, EDB research shows. Russia's role as the major donor for the region is undoubted - the country has directed massive financial aid to its neighbours, in particular Belarus, Kyrgyzstan and Armenia. Even more important has been the creation of the EurAsEC AntiCrisis Fund, which is managed by the EDB. The fund's aim is to help less-developed countries of the region to stabilise their economies and to finance major investment projects.

These are the steps within the former Soviet space. But the break-up of the Soviet Union in 1991 has opened the way for much wider integration in the Eurasian region. "Eurasian continental integration might become a crucial element of policy-making in the decades to come," says Vinokurov. "For the time being, there is still not enough recognition that the disintegration of the Soviet Union triggered a dramatic new process of economic integration across the entire huge Eurasian super-continent. It may involve the EU, the CIS states, China, as well as various states of west, south and southeast Asia."

This could be hugely beneficial in sectors such as transport, energy, telecommunications and agriculture, in addition to security cooperation to address region-wide threats such as drug and people trafficking.

The creation of a single, continental, supra-national integration organisation is unlikely, though, says Vinokurov, given the existence of the number of power centres within the region, including the EU, China, India, Russia and Turkey. He therefore forecasts a "spaghetti bowl" of multilateral agreements aimed at specific issues, with networking, corporate and informal links playing the key role.


#CustomsUnion #EEU

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