EurAsEC, created on October 10, 2000, in Kazakhstan's capital Astana by
presidents Alexander Lukashenko of Belarus, Nursultan Nazarbayev of Kazakhstan,
Askas Akayev of Kyrgyzstan, Vladimir Putin of Russia, and Emomalia Rakhmonov of
Tajikistan, originated from the Commonwealth of Independent States custom union
between Belarus, Russia and Kazakhstan created on March 29, 1996. The treaty on
the establishment of the EurAsEC was subsequently signed on October 7, 2005,
with
Uzbekistan joining. Common Economic Space is expected to be launched on January
1, 2010.
The Organization of Central Asian Cooperation (OCAC) was an international
organization composed of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and
Russia. Georgia, Turkey and Ukraine had observer status. Kazakhstan,
Kyrgyzstan, Tajikistan, Turkmanistan and Uzbekistan formed the OCAC in 1991 as
Central Asian Commonwealth (CAC). The organization continued after 1994 as
Central Asian Economic Union (CAEU), in which Tajikistan and Turkmenistan did
not participate. In 1998 it became Central Asian Economic Cooperation (CAEC),
which marked the return of Tajikistan. On February 28, 2002 it was renamed to
its current name OCAC.
Russia joined OCAC on May 28, 2004, on the initiative of Uzbekistan. In
October, 2005 Uzbekistan applied for membership in EurAsEC. OCAC de facto
dissolved on January 25, 2006, when Uzbekistan joined EurAsEC. On November 12,
2008, Uzbekistan temporarily suspended its membership in EurAsEC.
The creation of a common economic space between the CIS countries of Russia,
Ukraine, Belarus, and Kazakhstan, was agreed in principle after a meeting in
Moscow on February 23, 2003. The Common Economic Space would involve a
supranational commission on trade and tariffs that would be based in Kiev,
would initially be headed by a representative of Kazakhstan, and would not be
subordinate to the governments of the four nations. The ultimate goal would be
a regional organization that would be open for other countries to join as well,
and could eventually lead even to a single currency.
On May 22, 2003, the Ukrainian parliament voted 266 to 51 in favor of the joint
economic space. However, the Orange revolution of 2004 that brought to power
Viktor Yushchenko dealt a significant blow against the project. Yushchenko has
shown renewed interest in Ukrainian membership in the European Union, and such
membership would be incompatible with the envisioned common economic space.
The Paris summit of September 2008, hosted by French President Nicolas Sarkozy
and president-in-office of the European Council, attended by Javier Solana,
High Representative of the EU for common foreign and security policy and other
high ranking officials from Brussels, was a major event in the EU-Ukraine
bilateral relations.
Russian President Dmotry Medvedev has indicated that the creation of a common
economic space for Russia, Kazakhstan, and Belarus may be launched on January
1, 2010. Russian Foreign Minister Sergei Lavrov said on December 10, 2008 that
Moscow is ready to build a common economic space with both Europe and the
United States on a basis of equality.
Kazakh President Nursultan Nazarbayev has proposed the creation of a common
noncash currency called yevrav for the community. This would help insulate the
countries from the dollar global economic crisis.
In May 2007, the CSTO secretary-general Nikolai Bordyyuzha suggested Iran could
join the CSTO saying, "The CSTO is an open organization. If Iran applies in
accordance with our charter, we will consider the application." If Iran joined
it would be the first state outside the former Soviet Union to become a member
of the organization.
On October 6, 2007, CSTO members agreed to a major expansion of the
organization that would create a CSTO peacekeeping force that could deploy
under a UN mandate or without one in its member states. The expansion would
also allow all members to purchase Russian weapons at the same price as Russia.
CSTO signed an agreement with the SCO, in the Tajik capital Dushanbe, to
broaden cooperation on issues such as security, crime, and drug trafficking.
On August 29, 2008, Russia announced it would seek CSTO recognition of the
independence of Abkhazia and South Ossetia, which touched off a war between
Russia and Georgia. Three days before, on August 26, Russia recognized the
independence of Georgia's breakaway regions of Abkhazia and South Ossetia.
The CST was set to last for a five-year period unless extended. On April 2,
1999, only six members of the CST signed a protocol renewing the treaty for
another five year period - Azerbaijan, Georgia and Uzbekstan refused to sign
and withdrew from the treaty. At the same time Uzbekistan joined the GUAM
group, established in 1997 by Georgia, Ukraine, Azerbijian and Moldova,
changing the name to GUUAM group and largely seen as intending to counter
Russian influence in the region.
In the years following the signing of its charter, the GUAM grouping was
generally considered to have stagnated. During 2005, the CSTO partners
conducted some common military exercises. In 2005, Uzbekistan withdrew from
GUAM and joined the CSTO in 2006 in order to seek closer ties with Russia.
In June 2007, Kyrgyzstan assumed the rotating CSTO presidency, and in October
2007 the CSTO signed an agreement with the SCO, in the Tajik capital Dushanbe,
to broaden cooperation on issues such as security, crime, and drug trafficking.
On October 6, 2007, CSTO members agreed to a major expansion of the
organization that would create a CSTO peacekeeping force that could deploy
under a UN mandate or without one in its member states. The expansion would
also allow all members to purchase Russian weapons at the same price as Russia.
On August 29, 2008, Russia announced it would seek CSTO recognition of the
independence of Abkhazia and South Ossetia. Three days before, on August 26,
Russia recognized the independence of Georgia's breakaway regions of Abkhazia
and South Ossetia.
On February 4, 2009, Medvedev announced that the rapid military reaction-force
that would be deployed during a military aggression against a CSTO member would
be "just as good as comparable NATO forces". He added that Russia would be
ready to contribute a division and a brigade.
SCO economic cooperation
All SCO members except China are also members of the EurAsEC. A Framework
Agreement to enhance economic cooperation was signed by the SCO member states
on 23 September 2003. At the same meeting Chinese Premier Wen Jaibao proposed a
long-term objective to establish a free-trade area in the SCO, while other more
immediate measures would be taken to improve the flow of goods in the region. A
follow up plan with 100 specific actions was signed one year later, on
September 23, 2004.
On October 26, 2005, at the Moscow Summit of the SCO, the secretary general of
the organization said the SCO will prioritise joint energy projects; including
the oil and gas sector, the exploration of new hydrocarbon reserves, and joint
use of water resources. The creation of an Inter-bank SCO Council was also
agreed upon at that summit in order to fund future joint projects. The first
meeting of the SCO Interbank Association was held in Beijing on February 21-22,
2006.
On 30 November 2006, at an international conference: The SCO: Results and
Perspectives, held in Almaty, the representative of the Russian Foreign
Ministry announced that Russia is developing plans for an SCO "Energy Club".
The need for this "club" was reiterated by Moscow at an SCO summit in November
2007. Other SCO members, however, have not committed themselves to the idea.
The August 28, 2008 summit issued a statement that read: "Against the backdrop
of a slowdown in the growth of world economy pursuing a responsible currency
and financial policy, control over the capital flowing, ensuring food and
energy security have been gaining special significance."
In the St Petersburg International Economic Forum held on June 5-6, 2009, the
joint response of SCO members to the ongoing financial crisis, and the
potential restructuring of the global financial and economic system, were the
key topics of discussion. Panel members also noted the importance of
development cooperation within the SCO, and interbank links between SCO member
countries to finance key joint projects.
Specifically:
SCO countries have not escaped the consequences of the
global financial crisis. Member countries need to consider the development and
implementation of new economic and financial market regulations that differ
from the principals established at Bretton Woods. It was noted that SCO members
should implement joint efforts to handle the global financial crisis, and
coordinate efforts to maintain trade relations at pre-crisis levels.
Representatives of SCO member countries confirmed that they plan to transform
the SCO into a new economic structure with management bodies on top of regional
governments. The SCO, it was acknowledged, remains a forum for discussion and
the development of joint projects in various areas including medicine,
education, logistics and insurance. SCO members plan to accelerate cooperation
with observer countries in the organization, including India and Iran.
SCO members are considering establishing an energy club to intensify dialogue
in the spheres of energy and water reserves. Several SCO members have
significant energy reserves, while a growing number of member countries -
particularly in Central Asia - face potential water and energy deficits.
The development of a modern logistics network is vitally important for SCO
member countries. The members are currently focused on creating a multinational
logistics system (project E40), which envisages the establishment of several
logistics centres on the territory of SCO members. Notably, several SCO
countries have no access to seaport infrastructure.
The key task is to maintain stability in the SCO region, but this cannot be
achieved without an adequate financial and economic base. The SCO interbank
association plans to become more closely involved in financing projects
oriented towards all six SCO members. It was confirmed that the SCO's upcoming
summit in Yekaterinburg will include a detailed presentation on progress in
this regard.
Participants noted significant progress on various projects in the financial
sphere among SCO members. EuroAsia Development Bank, created by Russia and
Kazakhstan to invest in infrastructure projects, with $1billion under
management, is being funded by Russian (Renaissance Capital), Kazakh
(Samruk-Kazyna) and international (Macquarie Capital) financial institutions.
Representatives of SCO member countries highlighted the important role of
public-private partnerships several times during the discussion.
China is a key SCO member. It was acknowledged that the Chinese economy has
demonstrated its ability to absorb crisis threats, and the role of the Chinese
economy is strengthening within the global framework. SCO member countries, it
was acknowledged, may benefit from the Chinese experience, and Chinese
officials confirmed their willingness to share this experience and support SCO
member countries.
SCO and BRIC
Medvedev invited Chinese President Hu Jintao to pay a state visit to Russia in
Moscow followed by state visits to Slovakia and Croatia from June 18 to June
20, after attending the ninth annual summit of the SCO June 14-18 in
Yekaterinburg. SCO leaders were expected to discuss counter-measures for
tackling the financial crisis as well as expanding inter-member economic
cooperation.
During the visit to Yekaterinburg, Hu attended the first meeting of BRIC
(Brazil, Russia, India and China) leaders.The term, BRIC, was coined by Goldman
Sachs economist Jim O'Neill in 2003. BRICs account for 42% of the world's
population, 14.6% of global Gross domestic product (GDP) and 12.8% of the
global trade volume in 2008. The first meeting of BRIC leaders covered a range
of issues including a new global financial system, the current financial
crisis, energy cooperation and environmental protection.
Next: Commonwealth of Independent States and SCO
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