The Commonwealth of Independent States Economies

Marcus Goncalves, Erika Cornelius Smith

• Publisher: Business Expert Press
• Year: 2017
• ISBN:
  9781947098237
• Topic: Economics
• Subtopic: Comparative Economics
• Index: Economics

The year 2016 marks the 25th anniversary of the official inauguration of the Commonwealth of Independent States (CIS), a free association of sovereign states comprised by Russia and 11 other republics that were formerly part of the Soviet Union. Although this loose association of states may not exist as a fixed-entity on the globe, it is believed that this bloc of countries will continue to build upon the various separate regions in the former Soviet space in the coming decade. This book provides a regional analysis and a country scan of the CIS regional block economies. It examines its history since the breakup of the formal Soviet Union and the formation of the CIS bloc, including creation of regional agreements such as the CIS Free Trade Area and the Eurasian Economic Union, which now represents more than 180 million people. As a whole, our text attempts to better understand current, and future, prospects for economic growth in the region, as well as their individual national challenges.

CHAPTER 1

An Overview of the Commonwealth of Independent States

Demokratizatsiya

The Commonwealth of Independent States (CIS), also known as the Russian Commonwealth, is a regional bloc of countries formed during the breakup of the Soviet Union, whose participating countries are some former Soviet Republics. The CIS is a loose association of countries. Although the CIS has few supranational powers, it is aimed at being more than a purely symbolic organization, nominally possessing coordinating powers in the realm of trade, finance, lawmaking, and security. It has also promoted cooperation on cross-border crime prevention.

The CIS was established on December 8, 1991, through the Belavezha Accords,¹ which also brought a legal end to the Soviet Union. A New York Times article published the next day observed:

Ever since the August coup d’etat, the Soviet Union has been dying a lingering death, its final agony stretched over months of crisis and negotiations while it was kept alive by the frantic faith of one man, Mikhail S. Gorbachev, the Soviet president…Today, the union died—if future historians will accept a death warrant signed by the patient itself as proof.²

The preamble of the Belavezha Accords stated that “the USSR as a subject of international law and a geopolitical reality no longer exists.” Article 1 of the Accords read: “The High Contracting Parties shall constitute the Commonwealth of Independent States (CIS).” The agreement stated a desire to develop cooperation in political, economic, humanitarian, cultural, and other fields. Parties guaranteed their citizens equal rights and freedoms, irrespective of their nationality or other differences; accepted and respected the territorial integrity of each other and the inviolability of existing borders within the Commonwealth, as well as the openness of borders, free movement of citizens and transfer of information within the Commonwealth. Article 14 determined the city of Minsk the official seat of the coordinating bodies of the Commonwealth.

Leaders from Russia, Ukraine, and Belarus signed these accords, dissolving the 1922 Union Treaty.³ Within 2 weeks, on December 21st, in the city of Alma-Ata (Kazakhstan), the heads of Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan, signed the Declaration on the establishment of the CIS, commonly referred to as the Alma-Ata Protocols.⁴ These 11 countries were joined by Georgia in December 1993, bringing the total membership to 12 states (the Baltic Republics of Estonia, Lithuania, and Latvia never joined). Figure 1.1 illustrates the geographic location of the CIS bloc.

Figure 1.1 The 12 CIS bloc countries

Source: interopp.org.

Institutional Integration

The CIS Agreements articulate several goals for the organization, including coordination of members’ foreign and security policies, development of a common economic space (CES), fostering human rights and inter-ethnic concord, maintenance of the military assets of the former USSR, creation of shared transportation and communications networks, environmental security, regulation of migration policy, and efforts to combat organized crime. The CIS is composed of three categories of institutions through which it attempts to integrate states within the framework of the organization and accomplish these goals: Charter Bodies, Executive Bodies, and Bodies of Branch Cooperation.

The Charter Bodies of the CIS are: The Council of the Heads of States, the Council of the Heads of Governments, the Council of Foreign Ministers, the Council of Defense Ministers, the Council of Commanders-in-Chief of Frontier Troops, the Inter-Parliamentary Assembly, and the Economic Court.

The Executive Bodies of the CIS are: The Economic Council, the Council of Permanent Plenipotentiary Representatives of the States-Participants of the Commonwealth under Charter and Other Bodies of the Commonwealth, and the Executive Committee.

The Branches of Cooperation of the CIS are: Anti-Terrorist Center, Interstate Bank, Interstate Statistical Committee, Interstate Council on Standardization Metrology and Certification, Interstate Council on Emergency Situation of natural and Anthropogenic Character, Interstate Council on Antimonopoly Policy, Coordinating Council on the States-Participants on the CIS on Informatization under the regional Commonwealth in the Field of Communications, Electric Energy Council, Interstate Council on Aviation and Air Space Use, Council of the Heads of Statistical Services of the States-Participants of the Commonwealth, Council of the Heads of Customs Services of the States-Participants of the Commonwealth, and more.

Council of the Heads of States

This is a supreme body of the CIS which discusses and solves any principle questions of the Commonwealth connected with the common interests of the States-Participants.

Council of the Heads of Governments

This Council coordinates cooperation of the executive authorities of the States-Participants in economic, social, and other spheres of their common interests. Decisions of the Council of the Heads of States and the Council of the Heads of Governments are adopted by consensus. Any state may declare about its lack of interest in one or another question, the fact being not considered as an obstacle for adopting a decision.

Council of Foreign Ministers

The main executive body ensuring cooperation in the field of foreign policy activities of the States-Participants of the CIS on the matters of mutual interest, adopting decisions during the period between the meetings of the Council of the Heads of States, the Council of the Heads of Governments and by their orders.

Council of Defense Ministers

This is a body of the Council of the Heads of States responsible for military policy of the States-Participants of the CIS. Its working office is a staff which coordinates military cooperation of the CIS member states, prepares and holds meetings of the Council of Defense Ministers, organizes the activities of groups of military observers and collective forces for peace keeping in the CIS.

Council of Commanders-in-Chief of Frontier Troops

This is a body of the Council of the Heads of States responsible for guarding outer frontiers of the States-Participants and securing stable situation there. Its working office is a Coordinating Service of the Council which organizes preparation and holding of the meetings of this Council, implementation of the decisions adopted by it.

Inter-Parliamentary Assembly

The Assembly was established in March 1995 by the leaders of Supreme Soviets (parliaments) of the Commonwealth countries as a consultative institution to discuss problems of parliamentary cooperation and develop proposals by the parliaments of the CIS states. It consists of parliamentary delegations of the States-Participants of the CIS. The activities of the Assembly are carried out by the Assembly Council which comprises the leaders of the parliamentary delegations. The Assembly Secretariat, headed by Secretary-General, was created to ensure the work of the Inter-Parliamentary Assembly, its Council and commissions.

Economic Court

The Economic Court functions with the aim of ensuring the meeting of economic commitments in the framework of the CIS. Its terms of reference include settlement of interstate economic controversy arising in meeting economic commitments envisaged by Agreements and decisions of the Council of the Heads of States and the Council of the Heads of Governments of the CIS.

Economic Council

The main executive body which ensures implementation of the decisions of the Council of the Heads of States and the Council of the Heads of Governments of the CIS on realization of the Agreement for creation of free trade zone, Protocol to it, as well as for other matters of socio-economic cooperation. The Council adopts the decisions on the matters related to its competence and by the orders of the Council of the Heads of States and the Council of the Heads of Governments of the CIS. Economic Council consists of the Deputy Heads of Governments of States-Participants of the CIS.

Executive Committee

It is the unite permanently functioning executive, administrative, and coordinating body of the CIS, which organizes the activities of the Council of the Heads of States, Council of the Heads of Governments, Council of Foreign Ministers of States-Participants of the CIS, Economic Council, and other bodies of the Commonwealth, prepares proposals on extending economic cooperation in the framework of the CIS, creating and functioning free trade zone, ensuring favorable conditions for transition to higher stage of economic cooperation, developing CES in future, jointly with the States-Participants and the bodies of the Commonwealth develops proposals and draft documents aimed at the development of States-Participants of the CIS in political, economic, social, and other spheres.

Integration Without Unification

Although the CIS was designed in some ways to replicate the economic, political, and historical relationships of the Soviet Union, it was not and is not a separate state or country. Rather, the CIS is an international organization designed to promote cooperation among its members in a variety of fields. Its headquarter is in Minsk, Belarus. Over the years, its members have signed dozens of treaties and agreements, and some hoped that it would ultimately promote the dynamic development of ties among the newly independent post-Soviet states. By the late 1990s, however, the CIS lost most of its momentum and was victimized by internal rifts, becoming, per some observers, largely irrelevant and powerless.⁵

From its beginning, the CIS had two main purposes. The first was to promote what was called a “civilized divorce” among the former Soviet states. Many feared the breakup of the Soviet Union would lead to political and economic chaos, if not outright conflict over borders. The earliest agreements of the CIS, which provided for recognition of borders, protection of ethnic minorities, maintenance of a unified military command, economic cooperation, and periodic meetings of state leaders, arguably helped to maintain some semblance of order in the region, although one should note that the region did suffer some serious conflicts, of note, the war between Armenia and Azerbaijan, and the civil conflicts in Tajikistan, Moldova, and Georgia.

The second purpose of the CIS was to promote integration among the newly independent states. On this score, the CIS had not succeeded. The main reason is that while all parties had a common interest in peacefully dismantling the old order, there has been no consensus among these states as to what, if anything, should replace the Soviet state. Moreover, the need to develop national political and economic systems took precedence in many states, dampening enthusiasm for any project of reintegration. CIS members have also been free to sign or not sign agreements as they see fit, creating a hodgepodge of treaties and obligations among CIS states.

Cooperation in military matters fared little better. The 1992 Tashkent Treaty on Collective Security⁶ was ratified by a mere six states. While CIS peacekeeping troops were deployed to Tajikistan and Abkhazia, a region of Georgia, critics viewed these efforts as Russian attempts to maintain a sphere of influence in these states. As a “Monroeski Doctrine⁷” took hold in Moscow, which asserted special rights for Russia on post-Soviet territory, and Russia used its control over energy pipelines to put pressure on other states, there was a backlash by several states against Russia, which weakened the CIS.

Since that time, it has undergone many changes in response to global shifts in economy, politics, security, and conflict. To promote further economic opportunity and integration, in October 2000 the heads of five countries (Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan) signed an Agreement on the creation of Eurasian Economic Community (EAEC or EurAsEC).⁸ In September 2003 Belarus, Kazakhstan, Russia, and Ukraine signed an Agreement on Formation of CES.⁹ As a result of political upheavals between the years of 2003 and 2005, three CIS member states experienced a change of government in a series of color revolutions: Eduard Shevardnadze was overthrown in Georgia, Viktor Yushchenko was elected in Ukraine, and, lastly, Askar Akayev was toppled in Kyrgyzstan.¹⁰

While these political and economic shifts have impacted integration efforts, the movement of states in and out of various CIS Agreements and institutions has also created discontinuity and disruption. In October 2005 Uzbekistan stated its intention to join the CIS organization, while in February 2006, Georgia officially withdrew from the Council of Defense Ministers: it so happened that Georgia was working to join NATO and could not be part of two military structures simultaneously. However, Georgia remained a full member of the CIS but following the South Ossetian war in 2008, President Saakashvili announced during a public speech in the capital city Tbilisi that Georgia would leave the CIS and the Georgian Parliament voted unanimously (on August 14, 2008) to withdraw from the regional organization. On August 18, 2008 the Ministry of Foreign Affairs of Georgia sent a note to the CIS Executive Committee notifying it of the aforesaid resolutions of the Parliament of Georgia and Georgia’s withdrawal from CIS. In accordance with the CIS Charter, Georgia’s withdrawal came into effect 12 months later, on August 18, 2009. Yet earlier that year, in May 2009 six countries Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine joined the Eastern Partnership, a project which was initiated by the European Union.

After September 11, 2001, the CIS created bodies to help combat terrorism, and some hoped that this might bring new life to the organization. But within a short time of those efforts, in March 2007, Igor Ivanov, the secretary of the Russian Security Council, expressed his doubts concerni...

Table of contents

• Cover
• Half-title Page
• Title Page
• Copyright
• Dedication
• Abstract
• Contents
• Preface
• Acknowledgments
• Chapter 1 An Overview of the Commonwealth of Independent States
• Chapter 2 Economic Activity in the CIS Region
• Chapter 3 Challenges for Entering CIS Markets
• Chapter 4 The Impact of the Global Economic Crisis on CIS Economies
• Chapter 5 Political Risk in CIS Region
• Chapter 6 Future Considerations and Challenges to Growth
• Appendix A: Country Scanning of the CIS States
• About the Authors
• Bibliography
• Index
• Other Titles from the Economics Collection