Integration Potential in Energy Sector: Eurasian Economic Union Case

International Journal of Energy Economics and Policy ISSN: 2146-4553 available at http: www.econjournals.com International Journal of Energy Economics and Policy, 2019, 9(2), 174-181. Integration Potential in Energy Sector: Eurasian Economic Union Case Angelina A. Kolomeytseva*, Maria A. Maksakova Moscow State Institute of International Relations, MGIMO-University, Moscow, Russia. *Email: Received: 04 December 2018 Accepted: 06 February 2019 DOI: https://doi.org/10.32479/ijeep.7426 ABSTRACT Using the potential of regional integration in different spheres may enhance the overall integration effect for the member states and contribute to more intensive modernization of the union economy. Due to historical conditions and a certain number of economic factors energy sector is one of the priority areas of cooperation for the Eurasian Economic Union countries. This study aims to assess the interconnection of the integration and energy Eurasian Economic Union (EAEU) agendas, based on the theory and practice of regional economic and energy integration. The findings from the research illustrate how formation of a common energy space due to integration of resource, economic, scientific and technological potential, will contribute to the deepening of integration processes and improving the competitiveness of the EAEU countries in the foreign markets. Keywords: Energy Sources, Eurasian Economic Union, Integration JEL Classifications: F02, Q40 1. INTRODUCTION Growing interdependence of the countries, gradual erasure of borders between states and formation of the global market have led to the need of creating unions where the member states can interact with each other and with third countries on favorable terms, without compromising the rights and interests of each other. The conditions of growing contradictions with worsening external economic and political conjuncture determine the need for more active use of the integration potential within the Eurasian Economic Union (EAEU) that is becoming increasingly important and more obvious every year. The year 2015 saw the creation of the EAEU, the organization that united the former Soviet republics of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. At the same time, the Union focuses not only on the development of intraregional relations, but also having an international status, may conclude international treaties with third countries, including farabroad countries and strategically important partners in the Asian and Balkan directions. So far, the EAEU and Vietnam have signed an agreement on free trade and economic integration, besides, negotiations with Serbia, India and other countries are in progress (Eurasian Economic Commission [EEC], 2016). This integration union came into existence with the signing of the Customs Union Agreement in 1995 by Belarus, Kazakhstan and Russia. In 2000, a new international organization, the Eurasian Economic Community (EurAsEC), was established with the aim of unifying the regulatory framework and harmonizing the economic restructuring processes of the member countries. The next stage of integration dates back to 2007, when the Treaty on the Establishment of the Common Customs Territory and Formation of the Customs Union was signed. By 2010, with the Common customs tariff introduced and the Unified Customs Code adopted under the Treaty, the Customs Union came into operation, which ensured free circulation of goods within the single customs territory. In 2012, the member states formed a single economic space (SES). 2014 witnessed the signing of the Eurasian Economic Union Treaty, with its regulatory basis drawing on the legislation of the This Journal is licensed under a Creative Commons Attribution 4.0 International License 174 International Journal of Energy Economics and Policy | Vol 9 • Issue 2 • 2019 Kolomeytseva and Maksakova: Integration Potential in Energy Sector: Eurasian Economic Union Case Customs Union and the SES modified to conform to the rules of the World Trade Organization (WTO). The Treaty stipulates the powers of the key integration institutions: the Supreme Eurasian Economic Council (heads of states), the Intergovernmental Council (heads of governments), the EEC (Eurasian standing regulator), Court of the Eurasian Economic Union (adjudication of economic disputes). SES implies not only free movement of goods, services, capital and labor force but also coordinated actions in the key areas of economy regulation including significant energy sector. The idea of creating common markets for electricity, oil, gas and coal first appeared within the EurAsEC, but at that time no specific deadlines have been defined. In 2003, the Interstate Council approved the Basics of the Energy Policy of the EurAsEC member states, the main goal of which was to ensure the energy independence and energy security of the countries due to the creation of a common market for energy resources. It was also envisaged to deepen cooperation in the development of new energy deposits, their processing, transportation, as well as expanding the transit potential of the member states. The EurAsEC Treaty was terminated on January 1, 2015 in connection with signing of the Treaty establishing the EAEU, which, among other things, provides for the formation of common energy markets, and fixed deadlines for the implementation of energy projects. 2. THEORY AND LITERATURE REVIEW At the contemporary stage of the world economic development, the tendency towards regionalization is greatly intensifying and acquiring new outlines, many countries consider this process as one of the ways to uphold national interests in the world market. Regional economic integration involves joint activities of several states at the regional level, leading to the unification of their economies into the single regional economic complex of one type or another, allowing countries to realize common economic and political interests, strengthen their regional competitive advantages in the global economy. Profound forms of economic integration, such as a customs union, a common market, an economic union, and various forms of preferential relations without creating supranational institutions (FTA, EIA) reflect two currently dominant concepts of integration the so-called “closed” (“old”) and “open” (“new”) regionalism. Together, they form situation of integration processes in the modern world. The term “old regionalism” was used by Ethier in 1998 and was a synonymous with the term “First Regionalism”, introduced by Bhagwati in 1991 to refer to the first wave of active development of regional integration (late 1950s - 1960s) (Ethier, 1998; Bhagwati, 1991). The concept of traditional (closed, old) regionalism is based on European experience and implies a consistent deepening of the integration level and expansion of number of areas in which interaction takes place in a preferential mode with the formation of supranational regulatory bodies. In co (...truncated)