T he main issues discussed during the narrow-format session of the Eurasian Intergovernmental Council on August 25-26 related to the strengthening of the domestic market, the development of transport infrastructures, the regulation of customs tariff, the digital agenda, common gas market formation within the framework of the Union, financing of industrial cooperation, regulations of the alcohol market.  

Besides the agenda, the prospects for the implementation of priority programs in the RA-RF transport, industry and energy sectors and the possibilities of using national currencies in bilateral trade within the EAEU framework were also discussed.

The regular meeting of the Eurasian Intergovernmental Council was held in Cholpon-Ata city, Kyrgyzstan on August 25-26, which was attended by the top leadership of the Eurasian Economic Union (EAEU). The 9 main issues discussed during the session are presented below.

The establishment of the Eurasian Reinsurance Company

T he heads of the EAEU countries stated that the works on the agreement on establishing the Eurasian Reinsurance Company were completed. Actually, it is the first in the Eurasian area and is positioned as an international financial organization. The Eurasian Reinsurance Company is designed to stimulate mutual and foreign trade, as well as the implementation of joint cooperation projects by increasing the insurance capacity and professional risk management throughout the EAEU.  

The authorized capital of the company will be formed at the expense of investments from member states and will amount to 15 billion Russian rubles. The potential insurance capacity (excluding possible expansion) is up to 2 billion US dollars. Most of the investments will be attracted by Russia (45%) and Belarus (30%), Kazakhstan’s share is 20%, Armenian’s is 3% and Kyrgyzstan’s is 2%.

According to expert estimates, in case of creating additional insurance capacities of the Eurasian Reinsurance Company, the volume of mutual trade within the EAEU will increase by more than 6 billion US dollars.

It is expected that the Eurasian Reinsurance Company will fully operate since 2023.

Expand the use of national currencies when making payments in mutual trade

T he heads of the governments of the EAEU countries also discussed the issue of expanding the use of the EAEU countries’ national currencies when making payments in mutual trade. Along with the increase in the rates of mutual trade between EAEU member states, there is also an increase in the use of national currencies, especially in the Russian ruble. Over the past 7 years since the creation of the Union, the shares of the latter have exceeded 70%, reaching 74% in 2022. The greatest share of transactions is made in rubles: in particular 71.5% of transactions were made in Russian currency and 26.2% in the US dollars and euros in 2021. The increase in the share of national currencies in mutual settlements is mainly due to the increase in the share of the ruble. It is clear from the chart that in the last 9 years, the share of national currencies in the mutual settlements of the EAEU countries reached its maximum in 2017, making 76% of the total volume of transactions. 

At the same time, it should be noted that currently the use of the dollar in mutual settlements of the EAUE countries decreased to 21% of the total volume of transactions. The tendency of decreasing share of the dollar in EAEU mutual settlements has been noticeable since last year: in 2021 it was 19.5% compared to 20% of the previous year. 

It is important to mention that even in the face of global economic changes and significant upheavals in financial systems, there is a certain positive tendency in trade and economic relations between EAEU countries. In the first half of 2022, Armenia’s mutual trade turnover with EAEU countries increased by 52.5% compared to the same period of last year, making 1.7 billion US dollars, moreover Armenia’s exports to EAEU countries increased by 49% and imports by 54.2%.

It is noteworthy, that the volume of mutual trade turnover reached its maximum in 2021, during the activity of EAEU, amounting to 72.6 billion US dollars, which is about 32% more compared to 2020 and 17.8% more compared to 2019. The largest increase in the observed period was in Kyrgyzstan, about 45% and in Kazakhstan, about 35%. 

Despite the positive tendencies in the mutual trade development in EAEU countries, the Eurasian Development Bank (EDB) has predicted, that in 2022, the volume of mutual trade turnover between the EAEU countries will decrease by 7-15%, which is significantly less compared to the dynamics of trade between the EAEU countries and third countries. The main reasons for the decline in mutual trade in the current year were the decline in domestic demand in Belarus and Russia, as well as the reduction in the supplies of cooperative products to foreign markets.

A global transformation of logistics and supply chains is taking place in the region under modern conditions, thus the effective interaction of the ministers of transport in EAEU countries acquires more special importance. 

During the session, the Intergovernmental Council’s members also approved the list of priority infrastructure transport projects in the EAEU countries. In general, the list includes 7 projects of the EAEU countries, which will be implemented at different stages. At the same time, all of them are aimed at developing the Eurasian transport corridors and routes, transit potential and transport infrastructure, which is included in the international transport corridors in the East-West and Nort-South directions.

“The adopted document will serve as a basis for ensuring the coordination of the Union countries in the implementation of infrastructure projects with great integration potential”, said Arzybek Kozhoshev, Minister for Energy and Infrastructure of the Eurasian Economic Commission.

Referring to the volume of passenger traffic in the EAEU countries, it should be noted, that in January-May 2022 it amounted to 200.7 billion passenger-kilometers, increasing by 9.6% compared to the same period last year. During this period, the volume of passenger traffic amounted to 7.4 billion people, which is 6.1% more than in January-May of last year.

Approval of a plan for the full digitalization of public procurement

B y order of the Board of the Eurasian Economic Commission, a list of measures for the full digitalization of public procurement in the EAEU countries was approved. The latter is considered as part of the strategic directions for the development of Eurasian Economic Integration within the framework of the Strategy 2025.

The document approved by the EEC provides for the study of issues related to the formation of a legal basis for conducting all competitive procurement procedures in electronic format using an electronic digital signature, as well as reducing the time for such procedures. 

According to EEC Minister for Competition and Antimonopoly Regulation Arman Shakkaliyev, the document will ensure fair competition between public procurement participants: “Digitalization of public procurement procedures in the EAEU is an important element in ensuring full access for suppliers of all EAEU countries to participate in each other’s procurement”, emphasized Arman Shakkaliyev.

The heads of the governments of the EAEU countries also approved the amendments to the Union Treaty on the collection of indirect taxes on the electronic sale of goods by individuals.  

To sum up, all the issues discussed and the decisions taken are aimed at strengthening economic ties and integration processes in the EAEU countries, mitigating the economic losses as much as possible from the current geopolitical developments in the case of some countries, and in some cases even receiving positive economic impulses, as well as ensuring the economic development of the EAEU countries, including from the point of view of strengthening possible cooperation ties. Moreover, as a result of the implementation of the above-mentioned changes, according to the EEC expert estimates, a significant increase in the volume of mutual trade of the EAEU, an increase in investment attractiveness, an increase in competitiveness in the domestic and international markets, as well as the effective implementation of monetary and foreign exchange policies in the EAEU countries are expected.  

It should be noted that the next session of the Eurasian Intergovernmental Council will be held in October, in Yerevan.

The share of national currencies in mutual settlements of the EAEU countries in 2013-2021 (%)

The share of the ruble and the dollar in the mutual settlements of the EAEU countries in 2013-2021 (%)

The volume of mutual trade turnover between the EAEU countries (billion US dollars)

Change in the volume of passenger traffic in the EAEU countries in 2021-2022, compared to the same period last year (%)