On February 26, 2018 at the Faculty of international affairs of the Belarusian State University (BSU) an open lecture on the topic “The Republic of Belarus in Eurasian Economic Union” was held. The co-organizer of this event was the Belarussian “Eurasian Partnership” NGO with the assistance of the Eurasian sector of the Centre for Comprehensive European and International Studies (CCEIS) of the Higher School of Economics. The lector was Mikhail Demidenko, deputy director, Centre for integration Studies, Eurasian Development Bank, Ph.D in economics, graduate of the Faculty of Applied Mathematics and Informatics of the BSU.
The lecture was opened by the deputy Dean for Research Olga Malashenkova, who introduced the speaker from the Eurasian Development Bank. The moderator of the lecture was Alexei Toma, deputy director of the Eurasian Partnership.
Mikhail Demidenko covered the key directions of the Eurasian Economic Union’s long term development, the problems and issues on which the Eurasian Development Bank (EDB) and the Eurasian Economic Commission (EEC) work.
Based on research, conducted by the EDB and the EEC, Mikhail Demidenko outlined the following problems encountered by the EAEU member states when attempting to promote the integration process.
Firstly, digital integration. According to the EEC, the implentation of a national digital economy in Belarus will lead to an increase in GDP by 3% (the data are calculated for a long-term period, particularly until 2025 with taking into account the current economic situation in the region at the end of 2017). In addition, Belarus ranks first among the CIS countries in the development of info-communication technologies (data of Belstat, 2017).
Secondly, tthe problem of financial integration within the EAEU. Today, due to objective political reasons, the transition to a single currency is currently not on the agenda. Obviously, for the member states of the EAEU, the preservation of national currencies is identified with the notion of national sovereignty. However, it doesn’t mean that we shouldn’t think about financial integration and ways of its implementation, which involves the use of the latest digital technologies in the financial sphere. He quoted the President of Kazakhstan, Nursultan Nazarbayev, who recently suggested the following: «There is a need to transform the world’s financial architecture. It’s time to seriously consider introducing an international settlement and payment unit. It will save the world from currency wars, speculation, avoid distortions in trade, reduce volatility in markets. The currency should have a simple, transparent emission mechanism, controlled by its consumers. Taking into account digitalization, the development of such technologies as blockchain, such a unit of account can be created in the form of a crypto currency.” According to Mikhail Demidenko, when implementing the task of creating a Eurasian settlement and payment unit based on the most modern technologies, the Republic of Belarus would receive significant benefits from using such a payment unit, its application would greatly facilitate the trade with Russia, especially if we take into account the fact that 44% of the Belarusian exports go to the Russian Federation. Thus, the use of modern financial technologies within the Eurasian Economic Union will accelerate mutual settlements among the participating counties and will increase trade flows. The EDB economist also pointed out the need of a more precise monetary policy coordination, because, as history has shown, imbalances in exchange rate policies significantly reduce the potential of intra-Union trade.
Thirdly, another problem faced by the EAEU business community is the lack of a proper level of infrastructure development, which would stimulate trade between the EU and the EAEU. According to EEC experts, this problem lies in the slow process of modernization of container logistics. The economist noted that the China-led Belt and Road Initiative (BRI), as well as the issues of conjugation of the EAEU and the BRI, play an important role in the modernization of container transportations. Building a constructive dialogue with the Chinese authorities will allow the business community of the EAEU countries expand their sales markets, which will also entail a corresponding increase in the GDP of all countries by 2025. EDB research has shown that the demand for container shipments of goods from China to the EU is 2 times higher than the demand for container transportation from the EU to China. This is a “trigger” for the development of the EAEU economies that are the link between the Chinese market and the EU market, since this will allow loading trains with goods produced in the Eurasian Union that will be in demand in China.
Talking about pothential EAEU enlargment, Mikhail Demidenko noted that Tajikistan is a potential candidate for joining the Union. The results of a sociological survey carried out by the EDB revealed that 69% of the population of Tajikistan would support joining the EAEU.
Mikhail Demidenko also highlighted that, while talking about the problem of Belarus’ trade with other EAEU member state besides the Russian Federation, it is necessary to take into account gravitational trade models and the effect of distance on transportation costs.
Author: Tatyana Kalitskaya
Translation: Osman Akhonov