Eurasian Integration Yearbook 2012

Natalia Maqsimchook. “Chronicle of EurasianRegional Integration 2011”2011: Data and ReviewsThere was also some integration in the oil and gas sector in 2011. Kazakhstan’sKazMunayGas National Oil Company (KMG) expressed an interest in jointprojects in Russia with OJSC Gazprom Neft. Ukraine’s Naftogaz discussedpossible joint ventures with TNK-BP and LUKOIL on the Black and Azov Seashelves.Nevertheless, 2011 did not see an end to conflict over the terms of Russianenergy supplies. The latest in a series of interruptions in Russian oil supplies toBelarus took place in early 2011 and was only resolved by the signing of newcontracts with Russian oil companies.Despite the early success of integration in the context of the CU, bilateralrelations between some of the former Soviet countries deterioratedconsiderably during the year, most notably affecting relations between Russiaand Ukraine. Last year saw the signing of a landmark agreement betweenMoscow and Kyiv, but in the middle of 2011 the President of Ukraine, ViktorYanukovych, asked for Russian gas prices to be revised, effectively bringing Kyivinto open conflict with Moscow. The dispute is yet to be resolved: Gazpromsays it has no intention of lowering its prices, while Kyiv is refusing to negotiateon Ukraine entering the CU and placing its gas transportation system underRussian control. Because of the price advantage of imported oil products overthe output from Ukraine’s own refineries, Russia’s LUKOIL and TNK-BP haveidled their refining capacity in Ukraine. Russia has also faced problems in tryingto develop cooperation in nuclear energy with Belarus and Ukraine.Integration initiatives in other sectors included the establishment of a jointventure between Russia and Kazakhstan in grain transportation and Russia’sentry into Kazakhstan’s terminal operations and freight-handling market, whichmay eventually lead to a unified freight railway infrastructure. Kazakhstan andRussia’s RUSAL agreed to create a joint venture to manufacture railcars, whileanother joint venture plans to produce UAZ automobiles in the Kazakh city ofKostanay. Kazakhstan and Russia ratified an agreement to build a third powerunit at the Ekibastuz GRES-2, the other two units of which currently account for12% of all electricity generated in Kazakhstan. As for the financial and bankingsector, VTB Kazakhstan, a subsidiary of Russia’s state-owned VTB Bank, becamea member of Kazakhstan Stock Exchange (KASE) currency market, paving wayfor further financial integration.The year ended with the adoption of measures to facilitate the Collective SecurityTreaty Organisation’s (CSTO) transition to a fully-fledged military and politicalbloc, whose members must take each other’s, as well as their own, interestsinto account. From now on, no foreign military facilities can be deployed in anyof the CSTO countries without the sanction of all CSTO member states. Thesechanges have also affected the function of the Collective Rapid Reaction Force(CRRF), which may now be deployed to protect the constitution in any of theCSTO member states.Eurasian Development Bank231