Global Insider: The Post-Soviet Customs Union

Kyrgyzstan recently moved to open membership negotiations with the customs union formed by Russia, Kazakhstan and Belarus in mid-2010. In an email interview, Alexander Libman, a professor of international political economy at the Frankfurt School of Management and Finance, discussed the prospect of the customs union's expansion.

WPR: What are benefits of the customs union for Russia and the other countries that have joined?

Alexander Libman: The three countries in the customs union (CU) -- Russia, Belarus and Kazakhstan -- exhibit a relatively high level of economic interconnection, partly inherited from their Soviet past and partly created anew through the expansion of Russian and Kazakh businesses. These linkages survived or developed in spite of, rather than thanks to, the actions of those countries' governments: There have been many instances of open or hidden protectionism in the past, combined with additional pressure on crossborder transactions from rent-seeking, inefficient bureaucracies. The main benefit of the CU would be the removal of these barriers for the companies, at least in the area of trade. Whether it will achieve this goal is unclear, given the many difficulties and inefficiencies. But the impression seems to be that unlike its multiple predecessors -- created by the countries of the former Soviet Union in various forms and combinations in the past 20 years -- the new CU is a functioning institution rather than a purely rhetorical construction.

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