The inauguration of the Russia-Kazakhstan-Belarus customs union at the beginning of this year gave a very visible push to the Kremlin's long-term goal of economic reintegration of the former Soviet republics.
There has never been any doubt that the Russian government would play the leading role in decision making, whether in a customs union or the in the next step foreseen, a single market that could soon become a reality. Many analysts interpret the Kremlin's intent as to re-create a kind of modernized Soviet Union, at least at the economic level.
COMMON RULES, HIGHER PRICES
The Kremlin's initial moves in support of Prime Minister Vladimir Putin's goal of a Russian-dominated zone embracing much of the former Soviet Union have been in the economic sphere. A half-dozen states have been drawn into the Russian economic embrace, and now Belarus and Kazakhstan have accepted Moscow's invitation to begin applying common customs tariffs on the majority of imported goods
It's early days yet for the customs union. The three countries began applying common tariffs on 1 January, and a few types of products are temporarily exempt. But the impact of the new measures is provoking indignation among consumers in Kazakhstan, who are upset over higher prices for a wide range of goods.
"Why does a new Toyota Camry made in Russia [now] cost 40,000 American dollars when all over the world the price is just 22,000?" one blogger complained on a Kazakh Internet site.
The prices of imported clothing, leather goods, shoes, and perfumes have risen on the back of higher duties.
Many medicines imported from outside the former Soviet countries are also more expensive now. Customs duties rose by 5 percent on imported insulin, hemoglobin, and some kinds of antibiotics, as well as vitamins. The duty on leather goods went from 5 percent of the cost of the goods to 20 percent, a rise of about $7 per kilogram.
In Kazakhstan you can hear the view that the system of common tariffs is working to strengthen Russia's positions. Some Russian officials are openly saying that the new tariff setup is based largely on the Russian system. And Moscow's ambitions go well beyond the customs union now in place. The Russian, Kazakh, and Belarusian leaders have approved documents to establish a "common economic space" on 1 January 2012 – a single market for goods, investment, and labor.
When the three countries' presidents signed the documents establishing the customs union in November they promised that it would boost trade, make their countries more competitive, and promote investment opportunities. Kazakhstan's president, Nursultan Nazarbaev, put the combined trade turnover of the three members at $900 billion. Although that is probably an embellishment, as leaders of post-Soviet states often tend to overstate figures relating to intrastate economic schemes, the customs union does have enormous potential, and, as Nazarbaev also declared, it could become a major exporter of oil and grain in the future.
But these benefits may seem rather abstract to many consumers in Kazakhstan who so far are seeing mostly higher prices. Where products from developed countries used to be comparatively inexpensive, many Kazakhs have noted considerable rises in the retail cost of goods imported from outside the union. Some of the loudest complaints concern the price of cars.
On 1 January the customs duty on imported cars rose from 10 percent of the price – the old Kazakh rate – to match the Russian rate of 30 to 35 percent. Behind these measures, some see Russia attempting to give an unfair advantage to its own auto industry products – cars that are uncompetitive on world markets.
The new tariff system could unleash a flood of imports of all sorts, they warn, undermining domestic producers' market positions and perhaps causing an upturn in inflation. In 2007, Kazakhstan exported about $46 billion worth of goods and services, dominated by hydrocarbons, and imported about $30 billion worth, according to the World Bank.
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