||Eurrasian Integration: Significance for India
November 01, 2013 | Ehtesham Khurshid Web Exclusives
, Ehtesham Khurshid, Eurasia
Ever since the fall of the Soviet Union in 1991, Russian foreign policy has placed Eurasian integration or integration of the former Soviet states on top of its agenda. This idea has dominated most Presidential elections in Russia since 1996, not only because of its popularity among the masses. It is important to note that President Vladimir Putin in 2005, in his address to the federal assembly referred to the disintegration of the Soviet Union, and introduced the concept of a new integration project for Eurasia, stressing the need for greater economic cooperation amongst the post Soviet states. However, this idea championed by Putin was essentially the brainchild of the Kazakh President Nursultan Nazarbayev who in his speech at the Moscow University in 1994, suggested the creation of an Eurasian Union. In a nut shell, he talked about a political and economic union of Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and other post-Soviet states. The idea was based upon the integration of the European Union
In this context, various attempts have been made towards greater integration in the post Soviet space. The first known initiative in this regard was the Commonwealth of Independent States (CIS) which came into existence in December 1991, as a successor entity to the USSR. Similarly, the Eurasian Economic Community (EurAsEC) that came into existence in October 2000, was another such initiative to promote economic and political cooperation in the region. In fact, one of the major goals of the EurAsEC was the formation of a Customs Union and a Common Economic Space that would essentially allow the free movement of capital, goods, services and labour within the erstwhile Soviet territory. However, despite the progress these organisations, never really succeeded in promoting deep political and economic integration.. It was around 2006-07, that a serious effort towards the establishment of a Customs Union of former Soviet states was made, when Russia, Kazakhstan and Belarus signed a treaty on 6th of October 2007 to set up a Eurasian Customs Union, following which the Customs Union between Russia, Kazakhstan and Belarus started operations, beginning January 2010. As a result, the common customs tariff was launched and the Customs Union Commission started functioning. The customs code and the common customs territory were launched in July 2010 and in 2011, elimination of all internal physical border controls was announced.
This Customs Union that exists right now between Russia, Kazakhstan and Belarus is the first successful manifestation of powerful Eurasian integration and thus adds a whole new dimension to world politics. This Union coupled with the Common Economic Space, which was inaugurated in 2012 by the three countries, is a precursor to a political and economic Eurasian Union. This kind of deepening economic integration in the form of the Customs Union has serious geopolitical and economic implications for the rest of the world. While Ukraine is already proving to be a battleground between Russia and the EU, Ukrainian leaders are finding it hard to decide between the EU and the Customs Union, considering the fact that they want to sign the association agreement with the EU but at the same time they are aware of the level of domestic support that exists for joining the Customs Union from major pro Russia parties including the Communist party. It is important to mention here that Ukraine was granted observer status in EurAseC in May this year, however, this in no way guarantees the fact that it will join the CU.
Amid all this, the role of an emerging power like India which shares great historical and traditional ties with Russia and Central Asia becomes crucial. The need for Indiaís deeper engagement with Eurasia derives not only from the fact that India had developed exceptional military and economic ties with the Soviet Union which continued with Russia as well but also because the Chinese have significantly and steadily expanded their strategic and economic influence in the region. The Chinese have made huge investments in Central Asia with the primary goal of ensuring greater access to the regions vast oil and gas reserves while simultaneously securing their energy supplies. Moreover, the Central Asian region has served as a huge market for cheap Chinese goods and has also allowed the Chinese to develop their troubled province of Xinjiang as a trade hub between the two and somewhat buy peace in that area.
In this context, and in the light of expanding Chinese clout, India has responded well by declaring its interest in signing a Comprehensive Economic Cooperation Agreement (CECA) with the Russian led Customs Union. . In addition to this, there is also a slight interest on the Indian side, in the prospect of joining the Customs Union altogether at some point in the future. Tajikistan and Kyrgyzstan are likely to join soon while Vietnam has already started talks on a free trade agreement with the Customs Union and is seriously considering the prospect of joining the Union also. These aforementioned developments lay the foundations for a strong Eurasian union. For India, it means that the next few years during which this Eurasian union plans to take off must be observed closely and the developments in the coming years be studied carefully considering the economic and strategic importance this region holds.
THE NEED FOR A CECA AND PROSPECTS FOR THE FUTURE
After the disintegration of the Soviet Union, relations between India and the members of the erstwhile USSR and the current members of the Customs Union ie Russia, Belarus and Kazakhstan suffered a temporary set back. The reason for using the word temporary is because the bilateral relations between India and the Russian Federation which emerged as the legal successor to the USSR, soon gained momentum and translated into higher levels of cooperation especially, after the visit of President Putin to India in the year 2000. In fact, the all important Indo-Russian military partnership evolved from a simple buyer-seller relationship to a relationship encompassing joint research, development and joint production of advanced defence technologies.
The Brahmos missile system and the joint production of the SU-30 aircrafts serve as important examples in this regard. In addition, India and Russia developed significant partnerships in areas of nuclear energy, space and technology. Similarly, relations with Kazakhstan and Belarus also improved with India making considerable investments in the vast oil and gas reserves of Kazakhstan and developing appreciable trade ties with Belarus. Against this rich historical backdrop and after the formation of the Customs Union, it was very natural for India to consider developing greater comprehensive economic ties with the Customs Union of Russia, Belarus and Kazakhstan. Thus the idea of a Comprehensive Economic Cooperation Agreement (CECA) between India and the CU started gaining momentum. The CECA which is being planned at present was first discussed between the Indian Prime Minister Manmohan Singh and the Russian President Dmitry Medvedev in December 2011. The agreement not only aims at the removal of trade barriers to facilitate free trade but it also seeks greater market accessibility for goods and services and the promotion of investment opportunities on both sides.
In this regard, the visit of the Chairman of the Eurasian Economic Commission Viktor Khristenko to India in April this year and the subsequent visit of the Indian Commerce Minister Anand Sharma to the St Petersburg International Economic Forum in June, represent considerable progress towards greater economic cooperation, wherein both India and the Russian led Customs Union agreed to set up a joint working group to conduct research and assess the likely impacts of the planned CECA on their respective economies. Although at present, the CECA is nowhere close to reality, it will however be very interesting to analyse its importance for an emerging economy like India. For instance, the annual Russian- Indian trade turnover was around $11 billion in 2012 while during the same period Russians traded $90 billion with the Chinese and plan to achieve the $200 billion mark over the next few years. Compared to this, India has set itself a modest target of achieving a trade turnover of $20 billion with Russia by 2015. Thus in this context, the CECA becomes very crucial for India to expand its own sphere of influence and match up to the rising economic influence of the Chinese in the Eurasian region. From a security perspective also, it is important for India to have strong friendly ties with the Central Asian countries in Eurasia, considering both of them have significant stakes in ensuring security and stability in neighbouring Afghanistan. Similarly the economic opportunities that will follow the formalisation of the CECA are far too many to ignore for India.
Firstly, Eurasia especially its major constituents like Russia and Kazakhstan have one of the largest reserves of oil and natural gas in the world and despite the fact that India has got a stake in the Sakhalin-1 oil field in Russia and has also managed to obtain a stake in the Satpayev oil field in Kazakhstan, it has still not managed to achieve the level of energy security that is crucial to the needs of a rising economic power when compared to the level secured by China. Thus, amid all this, the CECA becomes crucial to securing Indian interests in the region. Through this agreement, India will look to avoid export duties on supplies of oil and gas from Eurasia and will also seek duty free market access for its major export products like pharmaceuticals to the Eurasian markets. In addition, greater investment opportunities for its businesses and easier access to the regionís job market for its professionals will also be high on Indiaís agenda during its discussions on the CECA. Russia on the other hand sees the CECA as likely to have a positive impact on its machine building industry.
Russian machine products are in great demand in India and will receive a great competitive advantage in the Indian markets once they will be exempted from import duties. Although the CECA will create great economic opportunities on both sides, the working group that will assess the agreement, must certainly look at the industries on both sides that might suffer on account of this. For instance Indiaís and the Customs unionís exports overlap in the case of metals. The Russian metal industry could suffer on account of the competition from Indian peers and thus there will be a need to formalise the CECA carefully and in such a way that it promotes development on both sides while ensuring protection for industries that might suffer on account of this agreement.
While there exists great enthusiasm in Russia and India on the prospect of a CECA, there isnít much talk at present on the prospect of India joining the Russian led customs union. There is neither any significant interest on the Indian side on joining the CU in the near future nor is there any invitation from the customs union to India to seriously consider integrating its economy with that of Russia, Belarus and Kazakhstan. Hence any decision to consider joining the customs union must be based on an extensive cost and benefit analysis.
Thus while the former judgment gave primacy to the opinion of the Chief Justice of India, the latter gave the concept of the collegium system which is being followed till the present times. The present system, thus, in the real sense ,gave all the powers of appointment to the collegium with the Chief Justice of India as the initiator and the President only becoming a formal approver.
The author is a final year student of BA(honours) Economics at Sri Venketeswara College, Delhi university. He has also completed a short term course in International Political Economy from the London School of Economics in 2012.