Getting Along: The Case for Regional Economic Integration in the Commonwealth of Independent States

Sammanfattning: From the ruins of the collapsed Soviet empire emerged 15 new independent countries. The communist command economy had integrated the Soviet territory closely in terms of production and transportation networks, which were effectively dissolved in the early 1990s. The newly independent states were left with a set of problems, with which they continue to struggle today. Several attempts have been made at recreating lost linkages by establishing regional trade blocs, but these efforts have in most cases resulted in failure. Political trust, trade, and development remain far below their potential in the CIS. Economists and other social scientists have opposed the formation of regional trade blocs and instead suggested the introduction of multilateralism coupled with market liberalisation – often referred to as the Washington Consensus – as the “first-best” development strategy for the CIS countries. In this thesis, I present an alternative normative view. I argue that multilateralism by itself will fail to neutralise the problems which currently impede the integration of the CIS into the global economy. In particular, the overwhelming transportation costs from Central Asia and Transcaucasia cannot be mitigated without close regional cooperation. Thus, I propose that the CIS countries continue to seek regional integration while at the same time striving for WTO membership. The latter will serve to anchor liberal trade norms in a region currently characterised by authoritarianism and protectionism. The international community, particularly the EU, the USA, and the Bretton Woods institutions, should support the formation of a strong regional trade bloc, which could also serve as a useful forum to settle mutual non-trade issues, including water and energy supply management. As a result, I believe that the geographically and economically isolated southern-tier countries in the CIS will be able to grow increasingly competitive, transparent, and rich.