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The Leaders of the Eurasian Space

The reorientation of cargo flows in Russia has set a new historic record.
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The volume of mutual trade in goods between the countries of the Eurasian Economic Union (EAEU) has set a historic record, reaching $80.6 billion (a 10.3% increase year-on-year), according to analysts of the Eurasian Development Bank (EDB). As Russia is chairing the union in 2023, economic experts attribute the crucial role in increasing the cargo turnover to Russia’s contribution.
According to EDB, Armenia, Belarus, Kazakhstan and Kyrgyzstan increased exports to the EAEU by $9.8 billion (1.4 times vs 2022), including by $9.5 billion - to Russia alone.

Reasons behind the growth 

Setting this historic record is accounted for by serious structural changes in the geography of Russia's foreign trade flows last year. As Olga Belenkoy, head of the macroeconomic analysis department of Finam Financial Group, told 1520 International, this year the growth of mutual trade between the EAEU countries is expected to continue but, most likely, at a more moderate pace.

The main volumes of rail transport in the EAEU space fall on cargo shipments between Russia and Kazakhstan. Thus, the countries carry coal, metal ores, ferrous non-ferrous metals, grain, fertilizers and other products to each other, said Leonid Vardomsky, head of the Center for Post-Soviet Studies at the Institute of Economics of the Russian Academy of Sciences.
“Some of the cargoes are transit ones, going through Russia to third countries or through Kazakhstan from Russia to Central Asia, China and Vietnam. Fairly large volumes are also transported between Belarus and Russia,” the expert said.

According to him, the nomenclature of goods transported between the EAEU member states is very diverse. The Union space also sees the active development of container services - freight trains running between cities according to schedule. 

State control

In 2023, Russia is chairing the Eurasian Economic Union. During its tenure, Russia’s agenda will include the development of planning documents for the long-term periods up to 2030 and 2045, the development of transport and logistics potential and cooperation chains, ensuring technological sovereignty, the creation of a common financial space and the realization of the EAEU's potential as a largely self-sufficient macro-region.

At the February meeting of the Eurasian Intergovernmental Council in Almaty, Russian Prime Minister Mikhail Mishustin spoke of Russia’s goal to further deepen the cooperation between the EAEU and CIS countries. According to him, a special role here is played by interaction in the financial and fiscal spheres between the countries of the union, including in terms of increasing the share of mutual settlements in national currencies and expanding the use of their own payment systems.

According to Yuri Shurygin, Director General of the International Export Promotion Agency, today many Russian companies and professional participants of the Russian State Corporation VEB have switched to settlements in national currencies.

"Overall, many Russian companies have also turned to intermediaries from CIS countries, with which we mainly settle in rubles directly converting them into euros and dollars. The intermediaries we are talking about operate in Armenia and Kyrgyzstan. These are payments for exports and imports, and they work both ways,” the expert noted.

Eurasian Express

One of the projects set to eliminate barriers between the Union member states is the Agroexpress. The service is a joint product by Russian Railways, Russian Railways Logistics and Russian Export Center intended to deliver agro-industrial cargoes. The Agroexpress is being implemented in the EAEU space and is already ‘rolling its way through’ to the Middle East via the International North-South Transport Corridor (INSTC). 
According Alexander Karavaev, a researcher at the Center for Post-Soviet Studies of the Institute of Economics of the Russian Academy of Sciences, Uzbekistan and Azerbaijan began to use the service three years ago but so far in a test mode.

“This project’s shipping volumes are not as large-scale compared to the overall volumes of rail transit as a whole, let’s say, between Kazakhstan and Russia. In particular, about 550 thousand tons were transported in 2022, including 266.2 thousand tons of refrigerated cargoes. One of the project’s goals is transportation beyond the EAEU borders,” he said.

The expert emphasized the service’s good prospects in terms of shipments to China. In 2022, the project transported more than half a million tons of cargo, with more than a half accounted for by reefer cargo. According to him, the system’s logistics capacities may allow the supply of agricultural products of the CIS and EAEC to China to reach 600 thousand tons, cumulatively from all senders participating in this project.

The Agroexpress project creates a more flexible and faster delivery system for the space shared by the Russian Federation with the EAEU and CIS, strengthening the presence of Russian Railways in this market, which has been previously dominated by the road transport. Besides, this type of transportation stimulates development of ties between agricultural warehouses and regional railway hubs in unloading areas”, summarized Alexander Karavaev.

Olga Shelkova

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