Union industrial production – Newspaper Kommersant No. 197 (7398) dated 10/24/2022

The Eurasian Economic Union (EAEU) is launching a “pilot” for financial support of industrial cooperation projects. At the start, we are talking about subsidizing interest rates for five years in the amount of about $20-30 million per year for industrial projects in value chains in at least three EAEU countries. The idea, approved in Yerevan by the prime ministers of the EAEU countries, requires expanding the powers of the Eurasian Economic Commission (EEC) and, if successful, can be scaled up fairly quickly.

The issue of a pilot project on industrial cooperation was the main one on the agenda of the meeting of the Eurasian Intergovernmental Council – a regular meeting of the governments of the EAEU, the trade and economic integration association of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan (Moldova, Uzbekistan and Cuba have the status of observers in the EAEU) – at the end last week in Yerevan. According to EEC Minister for Industry and Agro-Industrial Complex Artak Kamalyan, “the heads of government of the EAEU countries supported the need to give the commission new powers to organize activities at the supranational level to work with projects and provide financial support.” The issue of financing the EAEC project to subsidize industrial cooperation will be submitted for consideration by the Supreme Eurasian Economic Council – the heads of state of the EAEU.

Joint financing of industrial cooperation from the general budget for such associations (the union was originally created as a customs union) is an infrequently achieved stage of integration. According to Russian Deputy Prime Minister Alexei Overchuk, it is supposed to be financed through the EEC from the funds of anti-dumping and special duties within the union – this is about 19% of the annual fees, which, according to EEC Chairman Mikhail Myasnikovich, amount to $190-230 million per year, that is we are talking about $ 20-30 million in subsidies for industrial cooperation, which it was decided to implement in the form of subsidizing interest rates on loans. The general criterion for the project is the participation of at least three parties in the EAEU, the creation of added value in the entire supply chain and the financial efficiency of the project – its profitability and sustainability with support and the growth of mutual trade and investment. So far, there is no information about applicants for subsidies (they are unlikely to be available before 2023, based on the parameters, we can talk about supporting loans for $ 300–350 million per year), but these schemes, with the accumulation of experience in a five-year “pilot”, are easy and inexpensive are scaled. According to Mr. Overchuk, one of the goals of the project is to raise the general level of industry in the EAEU, transfer technologies and their joint development.

In the context of strong sanctions pressure from the world’s largest economies on the Russian Federation and Belarus (caused by the Russian military operation in Ukraine), the EAEU turned out to be a fairly effective tool to support the economies of the five countries and a stabilizing factor for their work. Thus, Russian Prime Minister Mikhail Mishustin announced the agreement of the EAEU countries to jointly limit the emergence of new obstacles in mutual trade at the national levels, which would be impossible if the benefits from the work of the union were less political risks for the EAEU countries. At the same time, Mikhail Mishustin called for maintaining the external openness of the EAEU – for example, the Russian Prime Minister invited colleagues to work in the Russian industrial zone in Egypt.

Support for industrial cooperation is just one of the signs that the stake on the EAEU (at least for Russia) is rational, since the union is seen as a tool to support, among other things, its own technological development. The Prime Minister of the Russian Federation also said that the union is preparing “for a full-scale launch of the union’s integrated information system” – it will help, among other things, “simplify and speed up all procedures” within the framework of the work of the EAEU structures already in digital format.

Dmitry Butrin