Russia Expanding Customs Union

By: Liz Zuliani   Date: 6 June 2011

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Liz Zuliani

Diverse background in digital media, with experience working across large networks, to boutique

Liz Zuliani, EconomyWatch Contributor

 

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06 June 2011

Ukraine and Kyrgyzstan are the countries to watch as Russia builds its influence in its periphery through the customs union. Analyst Eugene Chausovsky examines Russian designs for integrating Ukraine and Kyrgyzstan into its customs union and how that challenges the European Union and China.

Russia has recently made moves to expand the customs union; an economic grouping consisting of Russia, Belarus and Kazakhstan, to two other former Soviet states, Kyrgyzstan and Ukraine.

 

russia customs union

Infographic Source: rian.ru

In seeking to expand these countries into the customs union, Russia is using the union as a platform to increase its influence at the expense of other outside powers.Speaking at the International Railway Forum in the Russian resort city of Sochi, Russia’s Prime Minister Vladimir Putin said that Russia must modernize its railways to keep Europe a single whole from the economic point of view according to the Voice of Russia.

For Russia, the customs union is more than just an organization to integrate customs and tariffs. By the time the customs union is set to become the common economic space by 2012, this union will spend everything from common border control to possibly establishing a single currency between its members. In fact, the customs union represents the closest form of integration between Russia and its member states since the fall of the Soviet Union.

 

Related:Russia Trade, Exports and Imports
Related: Ukraine Trade, Exports and Imports
Related: Kyrgyztan Trade Statistics

Ukraine has been a battleground for influence between Russia and the West, particularly the European Union, for years. Russia has been actively working against this, as this would represent a closer Ukrainian integration into the EU and would challenge Russia’s interests in the country.

Russia has said that if Ukraine were to join into this free trade agreement, then Russia would have to reciprocate by raising export duties on key goods, and Russia has tried to entice Ukraine to join a customs union by saying it would result in roughly $8 billion of annual benefits for Ukraine. Ultimately, Russia’s goal is not necessarily to get Ukraine to join the customs union but to make sure that it stays out of further integration with the European Union.

 


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