An expert from Kazakhstan spoke about how Uzbekistan's accession to the EAEU could affect the economies of the two countries

An expert from Kazakhstan spoke about how Uzbekistan's accession to the EAEU could affect the economies of the two countries

At the end of 2020, Uzbekistan joined the countries of the Eurasian Union as an observer. As the President of the Republic Shavkat Mirziyoyev noted, the EAEU members are the main trade partners of Uzbekistan, and the volume of mutual trade is growing. “It is important to use the potential of two countries, jointly remove barriers and obstacles in trade relations, and form new markets,” he said. What benefit Kazakhstan can derive from closer cooperation with Uzbekistan was assessed by Zarema Shaukenova, the director of Institute for Strategic Studies under the President of the Republic of Kazakhstan in the interview by “Eurasia Expert”.

- Zarema Kaukenovna, on December 11, the Eurasian Economic Council approved the observer status to Uzbekistan. Why did Tashkent decide to move closer to the EAEU? What benefits does the country expect?

- The largest countries of the CIS and the EAEU in terms of the size of their economies - Russia and Kazakhstan - are also the largest sales markets for exports from Uzbekistan, including the export of labor resources, which makes a very significant contribution to both the economy and social stability. At the end of 2019, Russia was the largest export destination of Uzbekistan, where products worth $ 2.1 billion were sent, Kazakhstan was the third (after China) with an indicator of $ 1.3 billion. The Kyrgyz market is also significant for Uzbekistan, the volume of exports to this country exceeded $ 600 million.

By deepening interaction with the EAEU countries will make it possible to strengthen cooperation in many areas, reduce barriers and reduce transportation costs of Uzbek products and services to the markets of the Union countries (which, according to expert estimates, can reach 20-30% of the cost of products). Accordingly, the prospects for increasing exports and foreign trade in general are improving. Also, it is important to mentions that the EAEU through its multilateral institutions - the Eurasian Development Bank and the Eurasian Fund for Stabilization and Development - can provide financing to increase the stability of the economy and implement large projects, which is especially important during the times of the strongest global crisis since the Great Depression.

In addition, as the experience of five years of the EAEU existence has shown, during the period of membership in this association, mutual investment activity noticeably increases, and the acceleration of the inflow of investments from the countries of the Union can also become a positive factor for the development of the Uzbek economy.

- President of Belarus, Alexander Lukashenko offered Uzbekistan to become a full member of the EAEU. What benefit can Kazakhstan and other participating countries receive from Tashkent's connection to Eurasian integration?

- These benefits are the same as in general from the creation of an integrative economic association for all its participants, they are universal for any country and region of the world.

These benefits are facilitated access to new sales markets (and Uzbekistan has a high potential for growth in demand as a country with a large population, entering to stable growing income and consumption), intensification of mutual trade, expansion of investment opportunities, and so on.

For Kazakhstan, these benefits can also be significant due to the geographical closeness of Uzbekistan and the high potential for economic cooperation in all key areas. It is no coincidence that the first president of Kazakhstan, Elbasy Nursultan Nazarbayev, who participated in the meeting of the Eurasian Economic Council on December 11 as an honorary chairman, noted the importance of the next stage in expanding the geography of the EAEU by adding Uzbekistan and Cuba with the status of observer states at the EAEU.

- How can Uzbekistan's accession change the balance of power in the EAEU? Can it complicate consolidated decision making?

- Observer status does not give Tashkent the right to vote. But it is likely that now Uzbekistan is not yet ready and does not seek membership. Obtaining observer status in the EAEU by Uzbekistan is the result of the influence of many factors. Large-scale reforms, which began at the end of 2016 as the new President Shavkat Mirziyoyev came into stage, reveal the great economic potential of this state. The Uzbek leadership set a step for openness to the outside world, began to actively participate in regional affairs, expand international trade and economic ties.

These changes had a positive effect on the general atmosphere of relations in Central Asia. Tashkent clearly demonstrates that it is interested in the implementation of various integration projects.

As the leader of Uzbekistan noted at a meeting of the Council on December 11, the EAEU countries are the main natural trading partners, and their economies largely complement each other. It is logical that Tashkent is interested in developing the economic potential of the Eurasian direction.

In turn, the President of Kazakhstan Tokayev during the December meeting of the EAEU Council stressed that Kazakhstan sees great prospects in increasing trade and broad cooperation with Uzbekistan, whose participation in the Eurasian project will harmoniously complement bilateral ties, as well as cooperation within the framework of the central – Asian region.

For its part, Uzbekistan can offer a developed system of transport communications and transit opportunities to South Asia. Disclosure of potential in terms of the use of labor resources within the EAEU is of no small importance for Uzbekistan.

Uzbekistan, interacting with the EAEU, pursues specific and pragmatic goals - the creation of sustainable production chains with high added value. I believe that these plans have many-sided benefits.

It should be noted that these tasks are long-term, therefore the Uzbek authorities do not force events. As an observer, they can study the situation in detail, analyze their capabilities, weigh the strengths and weaknesses of this international structure.

- What steps will Uzbekistan need to take to join the EAEU, and how long can the Republic's integration process take?

- This is a hypothetical question. In this case, it is better to address it to the Uzbek side and, first of all, to lawyers, since it is predominantly legal in nature - when joining the EAEU, it is necessary to combine the national regulatory framework in terms of those areas that are regulated by supranational acts in key areas of economic cooperation. However, it should be noted that the integration process can be significantly softened and simplified through the use of a transitional period and the clause of a number of exceptions for certain sensitive items, if any.

Translated by Musharraf Mir Akhmadova,

Lead Research Specialist at CERR

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