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    EURASEC: ECONOMICS REQUIRES INTEGRATION

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    By Viktor Litovkin, RIA Novosti commentator

    On Wednesday, February 25, the Eurasian Economic Community (EurAsEc), which includes five CIS states (Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan), will open a session of its inter-state council in Alma-Ata. The session will last three days and at its final stage the heads of governments will attend it. The agenda of the inter-state council, which will be chaired by Kazakhstan, includes about thirty issues. However, energy problems, the development of transport infrastructure, customs tariffs and legislation harmonisation, in the first place, tax legislation, will be at the focus of attention. Although there are certain disagreements between some EurAsEc member states, in particular, the disagreements on gas prices between Russia and Belarus, EurAsEc Secretary-General Grigory Rapota told RIA Novosti that this conflict would not affect the work of the five countries.

    The heads of governments will, indeed, have to take very important decisions. First of all, they will have to decide on water and electric power regulation in the states of Central Asia. In the Soviet period, the construction of cascades for the Rogunskaya and Sangtudinskaya hydroelectric power stations in Tajikistan, as well as their Kyrgyz counterparts Kambaratinskaya-1 and Kambaratinskaya-2, was launched in the Pamir Mountains, on the banks of the Vakhsh and Naryn rivers. These facilities were intended both to generate electricity for the cities and villages of the four neighbouring republics and create fresh water reserves. Fresh water is abundant in winter in these areas, but is extremely scarce in summer, when local fine-fibre cotton and famous Central Asian fruits and vegetables begin to ripen.

    However, some hydroelectric facilities in the Soviet period were left almost constructed while others remained at the initial construction stage. Today, Kyrgyzstan has to discharge extra water from its reservoirs in winter to prevent the dam's destruction. As a result, water floods fertile lands in Kazakhstan and Uzbekistan, which, naturally, leads to sharp protests from their unhappy neighbours. The only way this situation can be solved is to conclude the construction of the entire cascade. This will cost almost $300 million. So, the issues of the potential sources of financing and potential investors will top the February agenda of the EurAsEC's inter-state council.

    RAO UES Rossii has already prepared a feasibility study of investment for the Sangtudinskaya hydroelectric power station. It is clear about $220 million will be needed to complete its construction. But there are also other investors ready to invest the same amount in the project, as they anticipate substantial dividends.

    The implementation of the project to build a single hydroelectric power system in Central Asia will, in the future, bring down electricity bills, including in Russia. In the past four months, over a billion kilowatt-hours of electricity have been transmitted to Russia from Kyrgyzstan and Tajikistan. Grigory Rapota believes that this system should also include Uzbekistan, as although it is not a member of the Eurasian Economic Community, the country is vitally interested in the stable deliveries of cheap electricity and, for course, the settlement of the water balance issue. There is a chance that all these problems will be resolved in Alma-Ata.

    The creation of a ramified transport infrastructure is no less important for the integration of the EurAsEc member states. For this purpose, it is necessary to build roads and railways, bridges and passes, and approve uniform transportation rates. The point is that the goods produced in Kyrgyzstan, for example, suddenly lose their competitiveness on the Belarus market after passing through Kazakhstan and Russia because extra expenses on the payment of transportation and transhipment charges are added to their price. This is not the first time this issue has appeared on the council's agenda, but so far a solution has proved to be elusive. Indeed, nor has the council the issue of customs tariffs been resolved.

    Experts who have worked in between the sessions of the heads of governments have made specific proposals, but their harmonisation is problematic. This can be explained, in the first place, by differences in national legislation, which cannot be removed within a year or two. "Perhaps, there is sense in making the move to the creation of supra-national legislation as the next stage of integration," the EurAsEc secretary-general suggests. "This is an interesting idea, which is being implemented in the member states of the European community. However, it is not clear yet how to approach this issue in our conditions."

    In short, the regular Alma-Ata session of the EurAsEC's inter-state council does not promise any high-profile sensations. It will be calm, business-like and, perhaps, rather routine. But maybe leading government experts and the heads of governments from Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan should be credited for conducting their day-to-day work, without any haste or political advertising, to bring their economies closer to each other and solve the most complex problems of the economies' interrelation and inter-dependence. The final goal of this work is to achieve the true integration of the five countries.

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