Media Learn Details Of Belarus-Russia Economic Association

(updated) The unification is supposed to start since January 2021, according to the plans of the authorities.

Kommersant has studied the program of the economic integration of Belarus and Russia. The publication’s sources in the Kremlin have confirmed the authenticity of the document. The program is counted on a year and a half and provides for the partial unification of the two economic systems since January 2021. This refers to at least a unified Taxation Code, foreign trade regime, and Civil Code, unified register of property and similar social guarantees, nearly united bank supervision, but with two central banks, a single regulator of oil, gas and electricity markets and harmonized state regulation of industries. This degree of integration is higher than in the EU, in fact, at the level of economies, we are talking about the creation of a confederate state since 2022. At the same time, it is unlikely to be completely equal for the parties: the Russian economy is 29 times larger than the Belarusian one, the newspaper writes.

The biggest part of the parties' plans is to submit proposals to each other by November 1, 2019 related to the roadmaps for combining economies, prepare legislative steps for integration by the end of 2020, in most cases, start work in a consolidated mode since January 1, 2021.

As the publication notes, this is a rather radical project: it is partial economic integration at a level no less than in the European Union, and in a number of issues it is similar to confederate or even federal states.

“When implementing the plan by 2021, we are talking about the absorption by the highly nationalized economy of Russia of almost completely the state economy of Belarus at the management level,” Kommersant writes.

The authenticity of the project considered by Kommersant was confirmed by the source of the publication in the Russian government, reports tut.by.

What is there in the plan?

The following points are specified in the “Program of Action”:

Mutual cancellation of roaming from June 1, 2020.

Combining tax systems: it is assumed that a unified Tax Code will be adopted in the “union state” of Russia and Belarus by April 1, 2021.

A single customs policy - up to joint customs raids, common information system, and almost a common customs service.

Energy Policy. The document directly implies the creation of a “single regulator” of gas, oil, oil products and electricity markets - also without details, with a descriptive term.

Unified principles of “special economic measures”. Apparently, we are talking about counter-sanctions.

Social policies. Since January 2022, two states within the framework of the “union state” also intend to pursue a “coordinated policy” in the labor market and in the field of social protection, but in the latter case, only a “rapprochement of the level” of social guarantees and in the future “equal rights” of citizens of the two countries is promised.

Miscellaneous. Two ministries of economy - of Russia and Belarus - should also create a “road map” that combines industry regulation, by November 1, 2019. In addition to the fuel and energy complex, they intend to harmonize (in this case, this refers to a uniform set of regulation standards, and not a single “union” state body), an “industrial policy”, whatever that means, the state regulation regime for agricultural markets, trade, transport and communications, antitrust policy, and the protection consumers regime. By 2021, they also promised mutual unified access to public procurement, a unified system of property accounting and unification of economic legislation, that is, apparently, Civil Codes: the work will be carried out on the Foundations of civil legislation of the “union state”.

What is not there in the plan?

The document emphasizes that this is only about economic integration.

There are no references to the merger of issuing banks and a single currency in the document, but the central banks and the finance ministries of the two countries intend to agree on harmonization of macroeconomic policies, unification of currency controls, unification of payment systems and, at least partially, a unified investment protection regime. Since 2021, the Central Bank of Russia and the National Bank of Belarus should also work within the framework of an interstate agreement on common principles for banking and financial supervision.

The document does not contain specific agreements on the fate of the “unified” budget of the “union state”.

Miscellaneous. There are no references in the draft about defense, state security, courts, law enforcement, and issues of the Ministry of Internal Affairs, education, healthcare, science, or directly the state administration, that is, the internal structure of the executive branch in Russia and Belarus.

It is almost impossible to speak on equal terms about the feasibility of the proposed program. Moreover, the outstripping of the development of at least most of the regulatory infrastructure of the Russian Federation of Belarusian analogues is obvious - for example, harmonization of state regulation of the transport markets of the Russian Federation and Belarus in a form different from Belarus’s adoption of the Russian standards is hardly possible, and the same applies to most of the subjects of future negotiations. As always in such cases, the main risk for a larger (in this case, Russian) economy from non-equilibrium integration is the opportunity to revise the internal rules of the game that opens “for integration needs,” which many will obviously want to take advantage of. Only the specific course of the negotiations, which, based on the experience of September 2019, is unlikely to be public, will show how much this risk for Russia is compatible with the tasks of integration with the economy which is 29 times less.

Revision of the “Union State Treaty”

In December last year, Prime Minister Dmitry Medvedev said that Russia was ready to continue to move forward on the path of building a “union state” in the manner provided for in the agreement on the creation of a “union state” of December 8, 1999. According to him, the countries should have a single currency, a single court, a single customs. The agreement also provided for further steps in integration - at least the path to a single “parliament” and a single “president”.

On December 25, during a meeting of the rulers of Belarus and Russia, an agreement was reached on the creation of a Russian-Belarusian working group to discuss various aspects of integration and controversial issues. From the Russian side, the group was led by Minister for Economic Development Maksim Oreshkin. In Belarus, the group included 30 officials, headed by its Minister of Economy Dzmitry Kruty.

In July, at the Forum of the Regions of Belarus and Russia in St. Petersburg, Lukashenka invited Putin to resolve all controversial issues and prepare a program of action strategies for integration by December 8, the 20th anniversary of the “union treaty”.

According to the Prime Minister of Belarus Siarhei Rumas, the principle “two countries - one market” is laid down in the developed program. There are no political issues in it. He also promised that the program would be published in order to remove concerns about sovereignty.

Later, the Minister of Economic Development of Russia Maksim Oreshkin said that integration is not a question of unification of states, it is “about the unification of economies as equal partners”.

In late August, the project was presented to Aliaksandr Lukashenka. On September 6, the draft was initialed, that is, agreed upon with the possibility of minor changes, by Prime Ministers of Belarus and Russia Siarhei Rumas and Dmitry Medvedev.

The document has not been officially published yet.