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Russia creates economic union with 2 neighbors

MOSCOW -- The leaders of Russia, Belarus and Kazakhstan on Thursday created an economic union that intends to boost cooperation between the ex-Soviet neighbors, a pact which was at the source of the crisis in Ukraine.

Russian President Vladimir Putin said the Eurasian Economic Union — which Moscow had pushed Ukraine to join, helping spark the worst crisis in relations between Russia and the West since the Cold War — takes the countries' cooperation to a “new level” while respecting their sovereignty.

“We are creating a powerful and attractive center of economic development, a major regional market bringing together over 170 million people,” Putin said during talks in Kazakhstan's capital, Astana. He added that the pact would allow the countries to exploit their economic potential and strengthen their positions in global markets.

With a combined annual economic output of US$2.2 trillion a year, the alliance's economic size would be close to that of Britain and well below that of the U.S.'s US$17 trillion.

Financial Systems Coordination, Industrial Regulation

The union is the development of the existing Customs Union including the same nations. In addition to free trade, it coordinates the members' financial systems and regulates industrial and agricultural policies along with their labor markets and transport systems. The deal stops short of introducing a single currency and delays the creation of a common energy market.

The signing followed years of tense negotiations, and many differences have remained.

Moscow will host the top executive body of the new alliance. Its high court will be based in Belarus, and the top financial regulator will be located in Kazakhstan.

Belarus' authoritarian President Alexander Lukashenko, who has depended on cheap Russian energy and other subsidies to keep his nation's Soviet-style economy afloat, said before the signing he wasn't fully happy with the deal, but hailed it reflected a mutually acceptable compromise.

1 Comment
June 1, 2014    bwmmiller@
World awaits the closing of the energy taps in Putin's hands to Europe. Will Putin demand payment for Europe's energy in Yuan, Rubles or Euros and does he stand in a position to actually control the value of the currency he selects for petrol payment form Europe? Will he demand same monetary value for Petrol sold to Europe as to China?
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From right, Russian President Vladimir Putin, Kazakh President Nursultan Nazarbayev and Belarusian President, Alexander Lukashenko shake hands after signing an agreement to create the Eurasian Economic Union in Astana, Kazakhstan on Thursday, May 29. (AP)

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