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Pundit Says Kazakhstan To Carry On Integration With Russia

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Pundit Says Kazakhstan To Carry On Integration With Russia

By Ruslan Bakhtigareyev

Regnum news agency, Russia - 11/11/2014

Political analyst from Kazakhstan Daniyar Ashimbayev: The EAEU needs

Kyrgyzstan for collection

There is just over a month left till the expected official launch of the Eurasian Economic Union. What problems are to be solved in this period? Will the number of the EAEU members increase and who are to become those lucky new members? How will the launch of the integration union impact business?

A Regnum correspondent has spoken about this and many other things with a known Kazakh political observer, editor-in-chief of the Kazakh biographical encyclopaedia "Who is Who?", Daniyar Ashimbayev.
[Q] The other day, Kazakhstan was visited by Kyrgyz President Almazbek

Atambayev. At the end of the meeting, [Kazakh President] Nursultan Nazarbayev said that Kazakhstan would provide the necessary technical, legal and other assistance to Kyrgyzstan to help it join the EAEU. At the same time, according to Atambayev, Kazakhstan is allocating 100m dollars in aid to Kyrgyzstan. Could Kyrgyzstan, after joining the EAEU, become something like Greece for the European Union, with the other countries constantly having to give it financial aid to the detriment of their own economies?

[A] Before answering your question, I would like to pay attention to one curious fact: when Kazakhstan is visited by the leaders of Russia, China or Uzbekistan, our president awards them the Altyn Kyran order (the Golden Eagle order, the highest mark of distinction in the Republic of Kazakhstan. The order is awarded for outstanding services to the Republic of Kazakhstan).
Askar Akayev (Kyrgyz president from 1990 to 2005) was awarded Dostyk Order of the 2nd Degree (Dostyk Order is given to citizens for fruitful work toward maintaining pubic accord, services to strengthening peace, friendship and cooperation between peoples).
Atambayev has been awarded Dostyk Order of the 1st Degree. In other words, it is a small demonstration of our attitude.
Further. When the Kyrgyz were proposed to join the CU [Customs Union] and EAEU, which they really need in the grand scheme of things since their economy is just the Dordoy market, which is a transit point for Chinese exports, they, in response, quite insolently set a rather long list of demands - build this and that for us, invest in some other thing and give us these many millions, and then we will consider your proposal.
To be honest, given these demands, I thought that the question of integration with Kyrgyzstan would die off completely. But the country's value is in its being in the centre of the Central Asian region (as it imagines itself) and it is some kind of an asset that everyone wants to have in their collections.
Economically, there is no point in investing in Kyrgyzstan. Their

industry is in an embryonic state, the outflow of workforce has gone

beyond all imaginable limits, while the local population's inclination

towards staging revolutions both for good reasons and for no reason

has already become a popular anecdote.
Besides, we are facing the issue of jointly running our energy systems,

the issue of Kyrgyz guest workers, smuggled goods passing through

Kyrgyzstan (whatever they may say, we understand perfectly well that

the Kyrgyz border is a very relative term).

Therefore, Kyrgyzstan's involvement in integration projects is just

a question of expanding a collection. So that there are not four

countries, Kazakhstan, Russia, Belarus and Armenia, but five. Five

sounds more serious and stylish. By the way, they could use a

five-pointed star as an EAEU emblem. Without Kyrgyzstan it would be

a square. Like in Malevich.

As for your question, the Kyrgyz economy is in essence like two-three

Kazakh or Russian regions. Therefore, it cannot make any kind of

global hole in our budget.
As for the transparency of borders, I think the issue is going to be

solved. If the Kyrgyz want to live in a civilized society, they will

have to play by the common rules. Nobody is going to make concessions

to them for too long, because any integration is more important for

Kyrgyzstan itself.
[Q] It is not just Kyrgyzstan who is expressing an intention to

join the EAEU, but also Tajikistan, and according to some reports,

Donetsk and Luhansk Republics. What is the probability of the EAEU

expanding through admitting these new participants, or could their

joining cost the main members worsening of relations with Kiev?
[A] Regarding Tajikistan it is a separate subject: is it ready to

enter the EAEU? Of course, it will sooner or later express a desire

to join. It is also clear that sooner or later Turkmenistan and

Uzbekistan too will catch up.

As for the DPR [Donetsk People's Republic] and the LPR [Luhansk

People's Republic], given their status of unrecognized republics,

and in order to avoid more tension with the other participants in the

Customs Union (Kazakhstan and Belarus), the question is not going to

be raised.
It's clear that the borders are going to be transparent, but issues

of their official joining one or another organization could only be

solved after their recognition by the countries, which, unfortunately,

will never do so.

It is like the question of [Nagorno] Karabakh [ethnic Armenian enclave

in Azerbaijan]. We are inviting Armenia to join the CU and EAEU,

and Armenia is ready to join, but the agreements required for that to

happen would mean an Armenia without Karabakh, and Yerevan would have

to accept that. It's clear that between Armenia and Karabakh there

is a formal border, but now there needs to be a customs border too.

Otherwise there will arise a huge number of questions.
Since the EAEU is only just shaping up, it would not be sensible to

implant into it such sore point as Donestk, Trans-Dniester [Region

in Moldova] and Karabakh.
[Q] Till when?
[A] Till the West beings to take into account Russia as a superpower.
[Q] When is it going to happen?
[A] I think we are talking about quite a distant future. Everything depends on Russia's leadership and its ability to ensure a working economy in conditions of global isolation and to restore the potential it had in the past. Unfortunately, it is not going to be a short or medium term thing, but I hope that the Russian leadership gets through this challenge with dignity.
[Q] What kind of time span we are talking about?
[A] I am hesitant to make forecasts, but I think it might take more than one decade because much decay happened in the 1980s, and too much was destroyed in the 1990s. To restore the potential they will need not only time but also fundamental efforts.
[Q] By the way, the leader of the Armenian party New Times, Aram Karapetyan, thinks that no matter what groups Armenia joins - the EAEU or the EU - it won't improve the situation in the country, but will only lead to deterioration because the country is led by a group of oligarchs.
Besides, lately there have been reports in various media that Armenia

is engaged in information war against Kazakhstan. Does it not mean

that somebody does not like the idea of Armenia's joining the EAEU?
[A] You should understand that like in Kazakhstan, in Armenia there

are official media outlets and media outlets owned by whoever who does

not like the ruling party. We are not going to judge Astana's official

position based on reports by a Kazakh opposition newspaper. And when

they say that Armenian media say this or that, you should always ask:

who exactly says it - tabloids, opposition or official sources?

They picked on Nazarbayev's remark that Armenia can join [EAEU] without Karabakh (like our media picked on Putin's remark about our statehood). We should understand that Karabakh, although it is de facto an independent state and has close ties with Armenia, and the prospects of its unification with Azerbaijan are practically non-existent, especially if we take into account Azerbaijan's defeats in military conflicts [over Karabakh].
And Armenia itself admits that it and Karabakh are not one single state, politically, from the legal point of view and so on, therefore de facto it is one thing but de jure it is another. And Nazarbayev in his remark stressed this point.
It should not be forgotten that Kazakhstan's trade turnover with Azerbaijan is much bigger than that with Azerbaijan. And we are separated from Azerbaijan only by the Caspian Sea. Therefore, Azerbaijan's opinion on the issue is important for Kazakhstan.
And as long as the issue of Karabakh's independence is not solved fully, Armenia's joining one or another integration organization can only be viewed along these lines. And the Armenian government understands it perfectly.
By the way, when it became known that Armenia intended to join the EAEU,

our national patriots raised the issue of the Armenian Mirzoyan (Levon Mirzoyan, Soviet statesmen and political figure, the first secretary of Kazakhstan's Communist party in 1937-1938) who allegedly shot Kazakhs. It's clear that it is complete nonsense but nonetheless Mirzoyan street in Astana has been renamed.

We have equally good relations with both Armenia and Azerbaijan.
Nursultan Abishevich in the past did a lot to settle the Karabakh conflict. Therefore we cannot favour any side in this issue. And nobody should interfere in it, but let the sides come to some agreement between them.
[Q] The EAEU begins to function on 1 January 2015. Its goals, as is known, are first of all to strengthen economic cooperation between the member countries. However, already today we can observe some kind of competition between Kazakhstan, Russia and Belarus. For example, the Kazakh AgroMashHolding [Agricultural Machinery Holding] has signed a contract to assemble cars with the Chinese company Geely, which already cooperates with the Belarussian company BelGee. It has already been announced that in connection with ruling No 72 of the High Economic Council on 29 May 2014 "On terms of using industrial assembly of motorized vehicles in the territory of the Customs Union and Single Economic Space", the Geely cars assembled in Belarus cannot be exported to Kazakhstan. Meanwhile, the head of the Rosselkhoznadzor [Russian Agricultural Control] Sergey Dankvert said at the end of October that Russia indents to ban transit of foodstuffs from Belarus and Ukraine to Kazakhstan because of an increased number of attempts to bring into Russia foodstuffs from the European Union. If such

situation can emerge today, what is going to happen after 1 January?

[A] There have been conflict situation and there will be more. Many of them will be given a political spin and blown up by the media in order to increase pressure on relevant governments on one or another issue.
It's clear that there are internal market interests. Clearly, there are separate interests of Russia, Belarus and Kazakhstan. But on the whole, integration within the EAEU framework will have a positive impact on the member countries' economies.
For example, let's take one simple issue - a single energy market.
Sooner or later we are going to come to it. But electricity charges in Russia are higher than in our country. And unification of our energy markets will automatically cause either outflow of capacity to the Russian market, or, which is already happening in some regions, we will have to raise our charges to the Russian level. Clearly, nobody in Russia is going to consider lowering their prices.
So adjustment will take a long time. And in the process of solving one or another issue there will emerge conflict situations. But if we are going to join the WTO, where the rules are tougher, we need to learn how to compete and produce good quality products which would be in demand in other markets. If we want to work for the world market, we need to learn how to work in our neighbours' markets.
[Q] On 29 September the deputy chairman of the board of the National Business Chamber of Kazakhstan, Rakhim Oshakbayev, during a Russian-Kazakh business council meeting in Atyrau, said that for the foreign companies operating in Russia it would be much more beneficial, because of the international sanctions [against Russia], to go to Kazakhstan especially because we have lower taxes and a better business climate, and then they could export their goods to Russia. Could this become a stumbling block in Kazakh-Russian relations?
[A] It will take years to attract investment to Kazakhstan, build an enterprise, launch it, begin to make profit and start exports. For example, look at Aziya-Avto. At the moment the factory is more or less known, but it took them years to come to this point, doing assembling with a screwdriver.
Are major companies interested in the Kazakh market, even if provides an opportunity to enter the Russian market? Of course, the remark made by Oshakbayev is right and necessary. But a remark is one thing, and realization is another thing.
[Q] By the way, will the anti-Russian sanctions have any impact on the EAEU on the whole?
[A] Clearly, any sanctions hinder normal development. But, on the other hand, big opportunities are opening up for us on the Russian market. However, the question is how are we going to take these opportunities? To buy stuff in Europe, change the labels and smuggle into Russia, or launch production to manufacture all the necessary goods? By the way, we have everything that is needed for that - facilities, tools, various international agreements and Kazakh state programs. There is everything we need, we only have to get down to work.
[Q] Is there much Kazakh business in Russia? Are there known names among them? Are there any officials? Could they start lobbying their interests once they understand that the EAEU represents a threat to them?
[A] Such things are not widely broadcast in our country. But I know that [Kazakh] investments have been made in the [Russian] oil and gas sector, in the transport sphere, in housing, there are many banking projects.
For example, pay attention to the Novaport company which manages a dozen of airports in Russia. Kazakh investors, including one national company head, former minister, and his business partners, own 50 percent in it.
[Q] Who do you mean?
[A] The end recipient is a firm linked to Sauat Mynbayev (Kazakh oil and gas minister in 2010-2013; since 3 June 2013 he is the chairman of the board of the national company KazMunayGaz [Kazakh Oil and Gas])
There are many Kazakh businessmen there, but they try to keep a low profile. You know that most Kazakh banks have branches in Russia.
There is Russian business in Kazakhstan too. Clearly, not a huge amount.
[Q] What can Kazakh business expect once the EAEU begins to operate at full capacity?
[A] The Kazakh government is so closely tied to Kazakh business that it is very difficult to separate government policy from the interests of some corporations.
Look, who has benefited from the devaluation [of the national currency, the tenge]? The metal and oil producers.
Many officials are shareholders in various companies or even affiliated with them. Clearly, there is going to be lobbying and it is good that they, using their status, even though in their own interests, are speeding up


[Q] What is the probability of Russian business coming to Kazakhstan after the launch of the EAEU and starting to pressure domestic business?
[A] Kazakh business in Russia is developing exactly because it is in Russia, not here. Of course, there are some projects which are facing certain problems. But they should be seen as problems of economic entities, not problems with bilateral relations.
Besides, the EAEU agreement simply legalizes the already existing forms. And the practice of Kazakhs buying assets in Russia, or Russians buying assets in Kazakhstan has long been flourishing.
[Q] Many link the recent appointment of former Astana mayor Imangali

Tasmagambetov as defence minister with the potential threat of deterioration of Kazakh-Russian relations. How grounded is this point of view?

[A] Do they think that Tasmagambetov is going to carry out a referendum

there and the Defence Ministry will leave for Russia?

(laughs) If seriously, Tasmagambetov's appointment has nothing to do with the Kazakh-Russian relations.
Our Defence ministry has long been marred with scandals, therefore it ould not hurt to sort thing out there. Because of all the scandals involving the ministry, I have the impression that the driving force behind the country's armed forces is corruption. It is a quiet type of corruption - steal, drink, go to jail.
So, the causes of Tasmagambetov's appointment are internal. The Defence Ministry is the Augean Stables, which you either manage to tidy up or it will be the place where you meet your end. For Tasmagambetov it is a challenge like for Krymbek Kusherbayev his appointment as governor of [southern] Kyzylorda Region: if they cope with it, they can cope with anything.
[Q] By the way, regarding human resources. Since the reorganization of government by the head of state, through creation of new ministries and abolishing some others, has the setup on the political Olympus changed? What politicians are in favour today and which ones should, on the contrary, expect to go down?
[A] In our country, the weight of top officials is defined not by their position but their name. Tasmagambetov, be he Astana mayor or defence minister, is still Tasmagambetov. Or [Adilbek] Zhaksybekov, no matter if he is state secretary, or defence minister or mayor, he is still Zhaksybekov.
Despite the reshuffle done by the president, we still have two vacancies - state secretary and secretary of the Security Council. It means that either these positions are being prepared for some certain people, or the president is organizing some kind of an examination in political alertness and management abilities [before filling the vacancies].
In a word, it is too early to sum up anything until all the squares on the chess board have been filled. Besides, I think that these vacancies are not going to be there for too long. One-two months at most.
After that we will be able to discuss the entire configuration. But for now the game is not over.
[Q] Will the new setup lead to Kazakhstan's changing its political line regarding Russia? If yes, in what way?
[A] All depends on who takes these two positions, which I just mentioned. But on the whole I think that it is a purely internal issue, which will hardly have any serious impact on the existing agreements.
The decision-making corridor is very narrow for our country. We have to make certain gestures towards China, West, the south, therefore we have very little room for manoeuvre.
For example, take the announcement about switching to the Latin alphabet. It seemed that the authorities outlined their position but in such a way that it is clear to everyone that it is never going to happen. But everyone has been reassured that we are going to move on from the Cyrillic. It is a purely PR gesture to calm down certain groups of people.
Therefore, there is no need to fear that some appointments might lead to our giving up the integration policy.
[Groong note: The above was translated from Russian]

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