Kyrgyzstan still not yet in EEU, despite Kazakhstan’s consent to membership

By bne IntelliNews August 7, 2015

Naubet Bisenov in Almaty -


Kazakhstan has become the last member state of the Russia-led Eurasian Economic Union (EEU) to complete the ratification process of Kyrgyzstan’s entry to the free-trade bloc. Despite this and the Kyrgyz government’s optimistic announcements, the border between Kyrgyzstan and the EEU remains sealed off for free movement of Kyrgyz goods.

Kazakh President Nursultan Nazarbayev completed the process of ratification of May’s treaty on Kyrgyzstan's accession to the EEU on August 5. However, despite the clearance of the last hurdle and the Kyrgyz government’s hasty announcements of the opening of the customs border on either August 5 or 6 at a special ceremony, the border remains shut.

The Eurasian Economic Commission (EEC), the executive body of the EEU, said on August 6 that Kyrgyzstan would only be able to become a full member after the note of Kazakhstan’s ratification of the treaty reaches the commission “over the next few days”. “We expect this to take place over the next few days. In connection with this, all the necessary technical procedures at all levels are being carried out to ensure all the necessary measures, including the abolition of customs control from the moment of the deposition of this note in line with the treaty,” acting chairwoman of the commission and Commissioner for Integration and Macroeconomy Tatyana Valovaya said in a statement.

Following the news of Kazakhstan’s ratification, the Kyrgyz government rushed to announce that a ceremony to open the customs border between Kyrgyzstan and Kazakhstan would take place on August 6 or 7. This, however, has not yet materialised as the parties are reportedly engaged in deciding which officials from each countries should attend the ceremony.

The EEU, formed from the Customs Union of Belarus, Kazakhstan and Russia in January 2015, was initially designed, as the Kazakh government claimed, as a “purely economic union”, modelled on the European Union, providing free movement of goods, capital and people. Now however, Kazakhs fear Russia is trying to use it to pursue its ambitions to recreate the former Soviet Union in all but name.

Astana has been blatant in showing its irritation at the Kremlin’s unilateral decision to bring Armenia and Kyrgyzstan to the club: in May 2014 during the signing of a treaty on the establishment of the EEU, President Nursultan Nazarbayev torpedoed Yerevan’s signing of the treaty as a founding member, citing border disputes between Armenia and Azerbaijan over Nagorno-Karabakh. Armenia finally joined in January 2015.

The accession of Kyrgyzstan to the EEU will also have mixed consequences for Kazakhstan, as Astana is afraid of an uncontrolled inflow of Chinese goods to its territory facilitated by the dysfunctional Kyrgyz state institutions, as well as an inflow of migrant workers and competition from cheap Kyrgyz food products. Kazakhstan is already feeling the pinch from an inflow of cheap Russian products which have become extremely competitive on the Kazakh market on the back of a weak ruble, which has lost nearly 40% of its value over the past year.

One of the benefits of Kyrgyzstan’s membership could be the opening of the Kyrgyz market for Kazakh businesses but the significantly lower purchasing power of the Kyrgyz population would hardly encourage imports of Kazakh goods given the relative strength of the tenge. On the other hand, corruption in the neighbouring country would deter Kazakh businesses from investing in the Kyrgyz economy. In May the Kyrgyz authorities handed over the licence to develop the country’s second biggest gold mine – Jerooy – to a Russian company despite $549mn litigation between the government and former owners of the mine Consolidated Exploration Holdings, part of Kazakhstan's Visor Holding.

Now, despite solving all formalities for Kyrgyzstan’s full membership, Kazakhstan will have no formal reason for keeping the border closed, except for perhaps some technical or sanitary reasons.

There is a growing risk, however, that internal disagreements caused by the membership of Armenia and Kyrgyzstan, which was driven by politics played out by Moscow, will turn the EEU into a dysfunctional organisation, following in the footsteps of the CIS, which has become just a talking shop.

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