Economic Relations between Kazakhstan and Russia

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.

As for the unified economic space, it may be built, e.g., on such a basis

as coordinating economic policies and mandatory programs; a common

legislative basis regulating relations between economic agents; a

supranational currency on the European ECU model; coordination of direct

links between enterprises; the setting up of joint and mixed industrial-

financial groups, transport firms, trade houses, and exchanges. The defense

and foreign trade complexes may be just as effective. The EAU as

represented by its executive committee must receive the status of an

authorized representative in all the leading interstate organizations of

the world.

The practical realization of the provisions of the EAU project in the

bilateral Kazakhstan!-Russian relations is excellent proof of the viability

of this program.

On January 20, 1995, a package of extremely important integration

documents was signed during the working meeting between presidents

Nazarbayev and Yeltsin. This package included a declaration on expanding

and deepening Kazakh-stani-Russian cooperation and an agreement on the

Customs Union, which was also signed by Belorussia. Both of these were

discussed in detail before. This last agreement opens the way to the

establishment of a unified customs space to be followed by a unified

economic space, as envisioned in the EAU project.

With the setting up of the Customs Union, the economic cooperation of

the three countries is built on the principles of free, non-discriminatory

trade; a common market of commodities, services, capital, and labor; and

close interaction in the production, investment, and financial spheres.

At present, the first stage in the formation of the Customs Union is

largely completed. The work done by the three sides is generally recognized

to be an important element of the realization of the foundations of the

Economic Union and the formation of the common market of CIS countries.

The legal acts on tariff and non-tariff regulation of foreign trade have

been unified. Kazakhstan and Russia have signed an agreement on unified

control of customs services. An agreement has also been reached on the

identity of trade procedures in both countries in relation to third

nations, and unified procedures have been introduced on the customs

statistics on foreign trade and customs registration of commodities subject

to excise. Customs controls on railroads and passenger air traffic between

the two countries are lifted step by step.

A treaty has been signed between the Republic of Kazakhstan and the

Russian Federation on joint efforts on the protection of outer borders, the

term “outer borders” taken to mean the sectors of the border between our

countries and the states that are not part of the CIS. The edict of the

president of Kazakhstan dated September 19, 1995 On the Lifting of Customs

Control on the Border between the Republic of Kazakhstan and the Russian

Federation concludes the first stage in the formation of the Customs Union

and orders the implementation of joint customs controls on the Kazakhstan

and Russian sectors of the outer borders of the Customs Union.

At the second stage of the formation of Kazakhstani-Russian-

Belorussian economic efforts to form a customs union, the most important

areas of cooperation are a closer coordination of economic reforms;

harmonization of civil and economic legislation; unification of currency,

tax, and price regulation by the state with the aim of leveling out the

economic and legal conditions for the activities of commodity producers

within a unified customs space; working out coordinated positions of the

members of the Customs Union in relations with third countries and

international organizations. At the meeting of heads of CIS countries in

November 1995, three more countries stated their desire to join the Customs

Union: Kyrgyzstan, Uzbekistan, and Tajikistan. Later, only Kyrgyzstan went

through with the necessary procedures and entered the Customs Union.

Another example of collaboration in the field of integration is the

agreement on the Baikonur space vehicle-launching site, which makes it

possible to use this great scientific and technological facility in the

interests of Russia and Kazakhstan, as well as documents on the issues of

citizenship signed by the presidents of Kazakhstan and Russian.

Let us consider in somewhat greater detail the problems of

citizenship, of which the solution on a bilateral basis was also outlined

in the draft project of the EAU.

Issues of citizenship became particularly prominent at the time of the

emergence and building of sovereign independent states after the

disintegration of the USSR, when tens of millions of former Soviet citizens

overnight ended up outside their "historical homelands." This problem is as

topical for Kazakhstan and Russia as for other CIS countries. More than

that, it often figures as one of the most important issues of bilateral

relations with Russia.

The more acute aspects of this problem were lifted as a result of the

signing in January 1995 by the presidents of Russia and Kazakhstan of a

treaty on the legal status of citizens of both countries living on the

territory of the other state and of an agreement on simplified procedures

for acquiring citizenship in moving from one country to another. Well-known

specialists from the two countries worked fruitfully on these documents.

Authoritative Kazakhstan! and Russian politicians and jurists believe that

these are innovative agreements without parallel in the world, and they are

a fairly rare example of regulating bilateral issues on a civilized basis.

The importance of these agreements both for progressive development of our

countries and for normal life of the citizens of Kazakhstan and Russia

cannot be exaggerated.

These documents envisage the introduction of maximally simplified

procedures for acquiring citizenship and for movement without visas; they

also offer possibilities for contract work and military service; assert the

rights of possession, use, and disposal of property; create conditions for

exchange of currency and transfer of sums of money by individuals and

corporate entities of Kazakhstan and Russia; and many other provisions

which reliably protect the rights and interests of the citizens of the two

countries.

Yet another sphere in which combining the efforts of all the

interested parties is needed is the legal status of the Caspian Sea.

The position of the Republic of Kazakhstan on this issue is based on

the need for an early drafting and signing of a convention on the legal

status of the Caspian Sea, of which a draft was worked out by the

Kazakhstan foreign ministry and sent out to all the interested states as

early as March 1994. Unfortunately, there has been no response to this

initiative for quite a long time now, and the agreement on regional

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