Economic Relations between Kazakhstan and Russia

At the same time progress in the development of bilateral economic relations is checked by a number of problems, notably by chronic nonpayment of mutual debts. Kazakhstan's debt for electric power received from Russia grew almost threefold in 1995. In turn, Russia owed a large sum to
Kazakhstan for the coal from Ekibastuz.

Serious possibilities are sometimes missed for successful cooperation between enterprises in the fuel and energy complex, in metallurgy, and other branches of the economy of Kazakhstan and Russia. Close production links became established between the Orskneftegazsintez JSC and the
Aktyubinskneft JSC, which form the Orenburg JSC. Early in 1995, the management of these associations conducted mutual consultations and decided that a joint oil company must be set up.

In Russia, the formation of financial-industrial groups went on at an increasing pace. The results of their work in 1995 show that integration of industrial and banking capital had a positive impact on economic development.

Further effective economic cooperation between Kazaklistan and Russia calls for systematic analysis and work on a mechanism of control over the implementation of bilateral Kazaklistani-Russian treaties and agreements.

The following tasks should in our view be singled out in the field of economic cooperation between Kazaklistan and Russia that are of mutual interest and call for coordinated decisions of the governments: a) Stabilization of export of raw materials and subsequent increase in it as a basis for the growth of currency earnings for the modernization of production; b) Diversification of exports; c) Additional currency and investment resources for restructuring the economy; d) Support for active trading policy on CIS countries' potential markets; e) Moderate protectionism in relation to newly created import-replacing production lines.

Under these conditions the two countries will have to solve new problems in economic integration in the framework of the Customs Union and in the system of world economic links, in searching for additional financial resources necessary for the implementation of economic restructuring and their balanced growth, in defending the interests of the domestic market from unfavorable conditions in the world economy and from, foreign competition at the stage of stabilization of their economies.

In choosing a promising export and import specialization, Kazakhstan and Russia should give preference to commodities that are least susceptible to market fluctuations. To achieve this, it is necessary to conduct regular analysis and forecasting of the situation on the markets for the principal import and export commodities, favoring long-term agreements on their purchase/selling over one-off deals.

In the medium-term perspective, transition should be effected from restrictive policies to encouragement, consistently facilitating the formation of a progressive, structure of exports and creating a corresponding system of its state support.

Analysis of export/import operations of foreign trade companies and enterprises shows that, in the absence of combined controls over exports and currency and of an obligatory norm of currency sales, 1 all export earnings reach the republic. According to Kazakhstan specialists calculations, some $0.6-0.8 billion end up on the accounts of Kazakhstan enterprises in the countries of near and far abroad. According to Russian experts, corresponding figures for Russia range from $5 to $17 billion. In this connection, one of the main tasks of management of foreign trade activities of the two states is the setting up of systems of customs control over export and import contracts and banking control over currency earnings, investments, and other commodities.

In future, it is advisable to step up coordination of information systems of control over repatriation of currency earnings by the customs bodies and the banking system, which will permit a concentration of efforts on securing maximum currency earnings from exports.

It is advisable to restrict the decisive role of the state in foreign economic activity to internationally recognized standards, to be implemented in accordance with the rules and norms of the World Trade
Organization.

It is also advisable, in a situation of considerable reduction of the share of state property, to export and import commodities in state interests only within the framework of intergovernmental agreements, which must not include any privileges or tax or duty exemptions. For this purpose, the possibility is created for domestic purchases on a competitive basis.

The state policy of selective protection in relation to promising exporting industries and conquering foreign markets gradually becomes one of the main priorities of economic policy as a whole; it is called, upon to prepare the implementation of a really proactive export policy, without which it is impossible to ensure either the payment of foreign debts, or internal financial stabilization, or investment activity and employment.

Another important task is the achievement of favorable trading procedures-in relations with foreign countries and their trade and economic groups, organizations, and unions, as well as the lifting of existing discriminatory restrictions, and prevention of new ones, with regard to the member states of the customs union.

To solve this task, plans are made to work consistently and purposefully toward the entry of Kazakhstan and Russia in the World Trade
Organization, to harmonize our countries' legislative systems with international norms and principles, and to implement the agreement on partnership and cooperation with the European Union and agreements with other countries.

Formation of new economic relations with states of the near abroad will require a longer that previously believed period of time and a gradual and coordinated advance toward generally accepted international norms of organization.

The future economic policy of Kazakhstan in relation to Russia and the countries of the near abroad must have the following goals development and rationalization of cooperative economic links in terms of minimizing expenditure and increasing competitiveness;

— The utilization of transit communications serving the export/import commodity flows from Customs Union members to third countries;

— Cooperation and coordination of CIS countries' efforts in the restructuring of production and in optimizing the distribution of production forces. An active economic policy in relation to countries of the near abroad is seen as one of the levers for the rehabilitation of the economy and creating conditions for its upward swing.

Particularly important in the economic relations of Kazakhstan and
Russia is the creation of conditions for establishing horizontal links between agents operating on the market, the use of new forms of economic cooperation, such as joint ventures, transnational production, commercial, and financial structures, and of financial-industrial groups.

Thus the entire course of economic cooperation between Kazakhstan and
Russia and its present state show that there is no alternative to close, mutually advantageous, and constructive relations between the two countries. As the two largest countries of post-Soviet space possessing great natural resources, production potential, and a desire for cooperation, Kazakhstan and Russia are quite capable of solving the tasks they face in reforming the economy and achieving the level of economically developed countries.

Present-day economic science and practice show that economic integration is the absolute imperative of the future.

CONCLUSION

The analysis, in terms of history and political science, of the birth and development of new, sovereign states at the end of the 20th century, considered here in dynamic interaction with the development of other states, leads us to a number of significant conclusions.

The formation of interstate relations between the Republic of
Kazakhstan and the Russian Federation is an example of synthesis of mutual relations between two equal agents of international law. Considering the unique situation and the entire context of ongoing processes, these relations may be seen as a considerable contribution to the world political and juridical experience.

An in-depth analysis of the causes of the disintegration of the USSR was not the goal of the present study; besides, as President Nazarbayev pointed out, it is difficult and even practically impossible to understand everything that is connected with this event, which had such stupendous consequences. However, it is possible to outline the objective and subjective characteristics of this historical event.
Among the objective factors, economic causes must above all be pointed out.
The rigidly conservative plan-and-command system of the country's economy, carrying the unbearable burden of the military-industrial complex and serious structural unbalance, could not meet the real challenges of the present level of development of the world economy - the postindustrial resource- and energy-saving revamping of the economy and a breakthrough in information technology. The inevitable nationality problems that accumulated in the ethnically diverse Soviet Union called for considerable attention and timely response to the challenges in this area. Perestroika suddenly made these challenges topical almost overnight, but it couldn't provide an adequate solution of the problems within the framework of a unified state structure. The Novo-Ogarevo project proved Utopian in view of its goal of achieving a consensus among nearly forty of its participants.

It is no secret that Russia played an integrative role, being a kind of backbone in the genesis and architecture of the unitary state.
Considering its actual political and economic weight as the most powerful republic of the Union, it is easy to understand the centrifugal effect of the separation of the Russian Communist Party from the Communist Party of the Soviet Union and the subsequent declaration of the sovereignty and independence of the Russian Federation.

Among other factors, the subjective element also played a role in the disintegration of the USSR. This element could be analyzed in terms of persons and situations, but this is not of the greatest importance for the purposes of the present study.

The dialectical development of Kazakhstani-Russian relations in the process of the sovereignty of Kazakhstan showed the correctness of the view of this process as a consequence of the disintegration of the USSR and subsequent objective course of events in the post-Soviet space. It is important to stress, in the context of our study, the consistent efforts of
President Nazarbayev of Kazakhstan aimed at developing integrative processes in the relations between Kazakhstan and Russia and in the
Commonwealth of Independent States.

In turn, the declaration of sovereignty was only the beginning of a complex process of real sovereignty for the post-Soviet countries. Using
Kazakhstan as a model, we tried to analyze the serious and comprehensive work that had to be done, and will still have to be done, to achieve a normal, civilized entry of the Republic in the international community. The formation of the new Kazakhstan statehood occurred against the background of an all-round political and economic reform of society. Despite many complicated and contradictory processes, the country's leadership endeavored therefore to act on the basis of scientifically well-founded programs and concepts capable of providing the Kazakhstan is with real reference points, the nearest tactical goals, and general strategic objectives in this far from simple transition period.
The instituting of the post of president of the republic, the elections of the first head of the Kazakhstan state, the constitutional reform, the formation of a full-fledged parliamentarian system in the country were the landmarks of the development of Kazakhstan as a sovereign independent state.

The parliamentary system developed in Kazakhstan as a significant part of a general political reform; it went through many political conflicts and problem situations.

The Supreme Soviet of Kazakhstan, consisting of 360 deputies elected in
1990, was far from perfect. It should be remembered, however, that it was this parliament that adopted the most important state acts on sovereignty, independence, and the presidency; under this parliament, political reform began, and new market laws were discussed and adopted. The deputies of this parliament nurtured the idea of a professional, compact, and effective highest legislative organ of the country working on a permanent basis.

The first professional parliament of Kazakhstan, numbering 177 deputies, was elected in March 1994. Its fate was contradictory and dramatic. Though elected for a term of four years, this Supreme Soviet was not quite ready for routine legislative work; besides, there were significant violations of procedure during its election, and it was therefore dissolved on a decision of the Constitutional Court in March
1995.

The country's political parties and movements took an active part in the elections in December 1995 of a new parliament consisting of two chambers, the Senate and the Mazhilis. Compact and professional, the new parliament is, in the view of many jurists and politicians, quite capable of fruitful legislative work and is absolutely in keeping with the democratic principle of the division of powers.

The constitutional process in the republic also developed in a dynamic way. This process consistently, step by step opened up new areas of the rule of law, which corresponded to the vital periods in the development of the republic. The path traversed from the first Constitution of sovereign
Kazakhstan, adapted in January 1993, to the Fundamental Law of the country, adopted at a referendum in August 1995, is the path of progressive dynamic legislative movement, of which many parameters corresponded to the standards of developed democratic states.

Decisions on a wide range of problems in interethnic relations, the dynamics of their development from the Forum of the Peoples of Kazakhstan and the rise of national-cultural centers to the convocation of the
Assembly of the Peoples of Kazakhstan made it possible to conduct, in this most difficult period in the building of the Kazakhstan state, all-round socioeconomic and political reforms largely due to the preservation of interethnic accord, civic peace, and goodwill of the peoples of Kazakhstan.

There is no need to emphasize the importance of Russia as a magnitude of world order and Kazakhstan's closest neighbor. It is known all too well what complex, and at times painful, political, economic, and social processes took place, and are still taking place, in both states. During the hundreds of years of cohabitation on vast adjacent territories,
Russians and Kazakhs have accumulated, despite certain differences in their culture, traditions, and religion, a wealth of experiences in good- neighborly relations.
The historical community, interdependence, and inter-connectedness of the two countries' economies form the basis of Kazakhstani-Russian relations.
Of great significance is the geopolitical aspect of the relationship between Kazakhstan and Russia as the two biggest states of the region, which largely affects the general climate of the Eurasian subcontinent.

President Nazarbayev repeatedly stressed that Russia is our main strategic partner, and the special relationship with Russia helps in the solution of the most important current and long-term tasks in the development of Kazakhstan. It may be stated today that a qualitatively new level of relations is now taking shape in the relations between Kazakhstan and Russia, characterized above all by the beginning of a practical realization of the high integration potential accumulated in the public consciousness of the two countries. It is tills area in Kazakhstan's foreign policy, one that provides the key to the formation of a new shape of the Kazakhstan state and is closely connected with the policy of integration, that is an absolute priority for Kazakhstan.

Under the new historical conditions, the stable and dynamic development of Kazakhstani-Russian relations rests on a serious legal basis. That basis is the treaty of friendship, cooperation, and mutual assistance between the
Republic of Kazakhstan and the Russian Federation dated May 25, 1992, as well as treaties and agreements signed in the course of the first official visit of President Nazarbayev to Russia in March 1994 and his working meeting with President Yeltsin in January 1995. As a follow-up to these fundamentally important agreements, a whole series of intergovernmental documents, agreements, and memorandums were signed which regulate the relations between concrete ministries and departments.

However, the everyday practical experiences of bilateral cooperation show that the joint efforts of the two countries must be constantly kept up. Closer integration, especially in the economy and in the humanitarian sphere, is necessary in the interests of democratic reform both in
Kazakhstan and in Russia. The process of further elaboration and coordination of new agreements does not therefore cease. Recent years have seen continuous meetings of heads of ministries and departments, government delegations, and groups of experts to consider bilateral issues.

A considerable share of the economic potential of Kazakhstan and Russia is employed in supporting production in the two countries. In recent years, integration links have dynamically developed not only on the interstate level but also between individual regions and enterprises. Besides, our peoples are linked by centuries-old spiritual and cultural ties, as well as by kinship and purely human relations, which must be constantly reinforced.
That is why the policy of integration is a principled line of conduct for
Kazakhstan leadership. "On the question of priorities," President
Nazarbayev commented, we must stress the vast importance of relations with the Russian Federation. The effective factors here are the interdependence of the economies, historical affinity, and demography. The two countries are simply doomed to good-neighborly relations and collaboration. This collaboration must be based on equal rights and mutual advantage, if we have in mind the strategic goal of consolidating our common economic, defense, humanitarian, information, and educational space.

Various aspects of economic and financial relations, problems in state security and military-strategic cooperation, and humanitarian problems may, as practical experience has shown, be positively resolved only if mutual interests are taken into account, and if there is a conscious desire for fruitful and mutually advantageous cooperation.

On March 28, 1994 a package of 23 treaties and agreements were signed, five of them by the heads of state. These are, above all, the treaties on further deepening of economic cooperation and integration, on military cooperation, an agreement on the main principles of using the Baikonur launching site, and a memorandum on the issues of citizenship and legal status of citizens of the two countries.

These steps are in keeping with the integration efforts of our states in the CIS framework, too. The ground has been laid for the economic and settlement unions, and the Interstate Economic Committee - the Economic
Union's coordinating and executive committee - has begun to operate in
Moscow.

Other agreements, which significantly increase the horizons of multilateral and bilateral cooperation, also promote the progress of the
Commonwealth toward new integration successes. Apart from the trade and economic ones, agreements on cooperation in the sphere of defense also belong here.
While noting the high level and rate of development of Kazakhstani-Russian relations, it must be said that, both in previous times and nowadays, unresolved problems naturally remain. There is a certain stage-by-stage approach in foreign policy due to objective differences between the two countries in their view of priorities in the phases of declaration, establishment, and consolidation of sovereignty and independence.

The historical experiences of good-neighborly relations between
Kazakhstan and Russia and the solid relations of strategic partnership in the present inspire confidence that the peoples of Kazakhstan and Russia will enter the 21st century in a dignified manner.

LIST OF USED SOURSES

1.Mansurov. T. “Relationship between Kazakhstan and Russia”, 1998, /p.p178-
250/

2. Esengalin. N. “ External Economy” 1999, /p.p 12-45/

3. Peter Bophinger. “Kazakhstan 1993-2000” 2001, /p.p171-184/

4. Luts Hoffmann. “ Kazakhstan During the Transition”1998, /p.p202-235/

5. World Bank “Annual Report” 1998, /p.p 252-259/

6. World Bank “Annual Report” 2000, /p.p153-159/

7. National Agency of Statistics “Semiannually Report”2001 /p.p 159-175/

8. Hella Engerrer “Research of relationship between Kazakhstan and Russia during the Transition” 1999 /p.p 25-50/

9. Katerina Dittmann “Tendency of Economic Development of Kazakhstan”, 1998
/p.p 89-123/

10. Todaro “Transition in CIS countries 2001 /p.p 25-31/

11. Mishkin “Relation Between Russia and CIS Countries 2001 /p.p 23-30/

12. Krugman “International Economies” 2001/2 /p.p 31-35/

13. EBRD “Annual Economic Report ” 2001, /p.p 123-159/

14. Daniel Gross “Economic Transition in Former Soviet Union” 1995 /p.p 145-
160/

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