Реферат: Economic Relations between Kazakhstan and Russia

From the beginning of 1995, steadily increasing numbers of enterprises were turned over for administration. Toward the end of December 1995, external administration was introduced at some 20 major industrial enterprises in various sectors. The necessary legislative basis was created for the involvement of foreign capital in Kazakhstan.

Thus the implementation of economic policies in 1992-1995 in Kazakhstan resulted in the liberalization and openness of the economy and the expansion of private enterprise.

There were significant shifts in the market infrastructure. Trade and the banking sector developed rapidly, and other financial institutions were born - in other words, there was, progress in those spheres of the economy that had previously; been underdeveloped but that were vital for the functioning of the market economy.

The liberalization of foreign and domestic trade resulted in a slight reduction of export in 1994 and early 1995 compared to the decline in the volume of GDP. The export of commodi­ties, mostly to CIS countries, amounted to $13 billion in 1994 and $4.97 billion in 1995. The greatest share of exports went to the Russian Federation — 47 percent, or $1.4 billion's worth in 1994; in 1995, the exports amounted to $2.8 billion, includ­ing $2.1 billion to Russia.

Russia's share in Kazakhstan's imports from CIS coun­tries at the beginning of 1995 was the largest - 70 percent; Turkmenistan's, 10 percent; and Uzbekistan's, 9 percent. Of considerable significance is the fact that more than 50 enter­prises securing Russia's defense interests work on Kazakhstani territory. All principal roads of Russia leading east and south­east, Yuzhsib and Transsib railways included, pass through Kazakhstan. Major Russian high voltage power lines, com­munications lines, and pipelines are also connected with Kazakhstan.

As before, Kazakhstan's exports to Russia are raw materi­als, oil and petrochemical products, as well as products of ferrous and non-ferrous metallurgy.

Deliveries of ferrous metals (35.2 percent), copper and items made of copper (15.1 percent) make up a considerable share of exports. Russian enterprises are also the main consum­ers of Kazakhstan oil and petroleum products, which amount to 40 percent of the exports of mineral products.

In 1994, Kazakhstan's imports of industrial and techni­cal goods and of consumer goods from the far and near abroad amounted to $3.4 billion; in 1995, the figure was $3.7 billion. The largest share of imports fell on Russia - $1.3 billion and $1.8 billion respectively. Imports from Russia covered 30 per­cent of the demand of households and the republic's enter­prises for raw materials, 70 percent of the demand for indus­trial manufactured products (including 90 percent of the de­mand, for complex household appliances), and more than 70 percent of the * demand for products of the chemical and tim­ber industries. Kazakhstan's imports from Russia are domi­nated by electric; machines, equipment, mechanisms, and, transport vehicles. Their share in over imports amounts to 70-percent. There are also imports of considerable amounts of raw materials for the foodstuffs industry and the foodstuffs themselves (10.2 percent), mineral products and metals (10.1 percent), and other consumer goods (7.8 percent). More than half of imported mineral products and non-ferrous metals come from Russia.

The share of deliveries against convertible currency in the export-import operations between Kazakhstan and Russia amounted to 6.5 percent of the total volume of exports; the share of baiter operations was 32.6 percent; and the share of clearing and similar operations, 60.9 percent. In this process, baiter deals did not as a rule result in a balanced and equivalent exchange. Analyses of export-import barter deals in 1993-1995 shows that total exports were twice as large as imports of com­modities. As a result of these operations, considerable funds of Kazakhstan Commodity producers annually stay in Russia.

On the whole, the results of economic development show that the republic was close to achieving macroeconomic stabilization, that the impact of market incentives increased, and that a new system of reference points and motivations devel­oped. The main problems of the critical period of development were partially solved, but new ones emerged.

Harsh monetary and credit policies, liberalization of the domestic and foreign markets promoted the formation in the republic of market mechanisms for the regulations of the economy and for ensuring equal possibilities and guarantees for all the agents of economic activity. In this situation the possibility appeared of creating a common economic space cov­ering Kazakhstan and Russia, in which free circulation of com­modities, capital, and labor would be made possible.

The development of Kazakhstani-Russian relations be­tween 1991 and 1995 showed that the two states adopted a great many documents covering a wide range of economic issues.

The implementation of these agreements created favor­able conditions for establishing economic links between eco­nomic agents and for the development of a common market that would be advantageous for the economic interests of both Kazakhstan and Russia.

The relations between the two countries in the economic sphere developed, against the background of improving multi­lateral cooperation: within the CIS framework. The legal basis for this, process was the treaty on the jetting-up of the CIS Economic Union signed on September 24, 1993.' This docu­ment proclaimed as the main goal a voluntary, stage-by-stage re-creation, on new, market principles of unified economic space, or common market, with free circulation of commodi­ties, services, capital, and labor. On the basis of the treaty, a solid legal groundwork was created. On October 21, 1994, an interstate economic committee was set up at a-session of the council of CIS heads of state, and a memorandum on the main directions of integration development of the Commonwealth of Independent States was signed. These documents envisaged a stage-by-stage formation of a customs union and the possibil­ity of movement of different countries at different speeds to­ward a unified economic space within the Economic Union.

A characteristic feature of the situation in the CIS is uni­versal recognition of the need for stepping up integration pro­cesses in the economic interaction of CIS countries. It should be noted that, among CIS countries, economic relations were most intense between Russia, Kazakhstan, Ukraine, and Byelorussia, with 80 percent of commodity circulation within the CIS taking place within these countries.

One of the basic documents on economic integration was an agreement on a customs union between the Russian Federa­tion, the Republic of Kazakhstan, and the Republic of Belarus.1 Let us recall that on January 20, 1995 the presidents of Kazakhstan and Russia, in their joint declaration on the ex­pansion and deepening of Kazakhstani-Russian cooperation, instructed their governments to sign an agreement on the cus­toms union. The heads of govern­ments of Kazakhstan, Russia, and Belarus signed this document.

The formation of the customs union was preceded by extensive preparatory work aimed at harmonizing the legislative systems of the two countries. A number of governmental and interdepartmental agreements, protocols, and joint normative acts were signed, including those on free trade, on a unified procedure for regulating foreign trade, on the re-export of commodities, on the introduction of a unified procedure for non-tariff regulation of trade with a coordinated nomenclature and volumes of licensed and quoted commodities, on the establishment of a free trade zone, on the unification and sim­plification of customs procedures, on collaboration between customs services, on combating illegal drugs trafficking, on the terms of maintenance of military facilities on the territories of the two sides, and on joint security measures for the protec­tion of the external borders of the Customs Union. These agree­ments covered a sufficiently wide range of issues, and they formed the basis for further action.

The agreement on the setting up of the Customs Union was based on the principles of unified customs territory of the member states of the Customs Union and the existence of a uniform mechanism of economic regulation. It is proposed to form the Customs Union in two stages. At the first stage, tariffs and quantitative restrictions on mutual trade are lifted that are envisaged in the agreement on a unified procedure for regulat­ing foreign trade activity of April 12, 1994; fully identical sys­tems for regulating foreign economic links, identical trade regu­lations, common customs tariffs and non-tariff measures for regulating relations with third countries are introduced. At this stage, work is envisaged on the unification of legislation on foreign trade, customs, currency, finances, tax, and of other laws bearing on foreign trade activities.

Agreements on the Customs Union envisage the possibil­ity of introduction of coordinated time restrictions on mutual trade in case of shortages of commodities on the domestic market, acute payment deficit, and other circumstances.

The countries assumed the obligation to establish unified control over their customs organs and organize joint supervi­sion of the movement of commodities and transport vehicles on the borders. The procedures for such supervision are regu­lated by agreements between the customs organs of the states involved.

The agreement on the Customs Union is open to all other CIS member states that will recognize the provisions of the agreement and express a readiness to fulfill them in their entirety.

The joint statement was in effect an agreement on coor­dinated moves for further realization of economic reform and creation of a uniform mechanism for regulating the economies based on market principles. It set the task of unification of legislation on foreign trade, customs, currency, finances, prices, taxes, and other economic laws ensuring free development of production links and of enterprise, as well as equal possibilities and guarantees for economic agents of the three states.

In that document, the heads of the governments of the three states noted the considerable progress in the creation of possibilities for a real formation of a customs union on the basis of agreements and protocols signed. The sides agreed that tariff and quantitative restrictions on mutual trade will be lifted through the setting up of fully identical systems of regulation of external economic links, unconditional guarantees for effective joint pro­tection of the external borders of the member states of the Cus­toms Union, and establishment of identical trade procedures, common customs tariffs, and measures for non-tariff regulation with respect to third countries. It was stressed that the develop­ment of foreign economic links will be promoted by the stage-by-stage formation of a clearing union to ensure continuous clear­ing on the basis of mutual convertibility of national currencies and formation of an effective payment system.

An agreement was reached to render state support to the development of direct links and cooperation between enter­prises, to the establishment of financial-industrial groups, for­mation of favorable conditions for mutual access and protec­tion of investment, and acquiring real estate,

Measures were outlined for the formation of a common scientific/technological space for a more rational utilization of the available intellectual, scientific, and technical potential.

State delegations headed by deputy heads of governments take part in regular monthly sittings of the commission. These sessions consider the implementation of agreements, analyze the state of affairs in the practical formation of the customs union, and coordinate joint measures.

At the same time each side set up its own national sec­tions of the intergovernmental commission on the customs union. Five groups were set up in the framework of each national commission to cover the following areas:

1. Creation of the Customs Union. Solving tasks in the realization of a mechanism for the establishment, of a. free trade zone; working out normative acts for the unification of cur­rency, financial, and general legislation; preparing proposals for the introduction of unified procedures for foreign trade regulation and an identical customs tariff, for coordinating a unified procedure of customs control, for working out an agree­ment on unified management of customs services, and so on.

2. Harmonization of legislative systems to coordinate the legal basis of agreements with agreements already achieved and to eliminate discrepancies in the economic legislative systems of the states, and to solve other issues.

3. Realization of the provisions of treaties; of friendship, cooperation, and mutual assistance; preparation of draft agreements and documents on freedom of movement, citizens' legal status, conversion, mutual debts of enterprises, and on mili­tary cooperation.

4. The development of production and enterprise. Taking coordinated measures for economic reforms, preparing agree­ments on scientific and technological cooperation, investment activity, state support of enterprises participating in joint financial-industrial groups.

5. In the area of finances and payment relations: the orga­nization of work on providing regular quotations for the na­tional currencies, on the setting up of a network of currency exchange points, on concluding an inter bank agreement on mutual access to domestic markets of authorized banks, on working out a common mechanism for currency regulation and control, on unification of taxes and their size, on the method­ology of price formation, and so on.

Practically all issues have been resolved in. the framework of the three countries on non-tariff regulation of foreign trade activity; work on the unification of normative legal acts in this area has been completed. The partners came to an agreement on the procedure for registering contracts on exports of strate­gically important commodities.

Work is being completed on the establishment of unified operation modes in trading with countries and on re export of commodities.

Apart from bilateral agreements, the Customs: Union also relies on a number of multilateral agreements and conventions adopted by the CIS Countries, including The Foundations of Customs Legislation, A Unified Methodology for the Customs Statistics on Foreign Trade, On the Movement of CIS Coun­tries' Citizens Through Their Territories Without Visas, On Guarantees for the Rights of Individuals Belonging to Na­tional Minorities, On the Establishment of a Unified System of Air Defense of CIS Member States, and On Legal Aid and Legal Relations in Civil, Family, and Criminal Cases.

Thus the main principle on which the Customs Union is founded is the existence of a unified customs territory and a uniform mechanism for regulating the economy, based on unified legislation.

Toward the end of 1995, significant changes occurred in the trade and economic relations of Kazakhstan and Russia. The agreement was revised on trade and economic relations; the emphasis was made on the development of direct links between producers, which resulted in a considerable increase in the exchange of products. In 1995, trade between Kazakhstan and Russia amounted to $319 billion, or 54 percent of the total volume of the republic’s trades, an increase of 55.4 percent on the same period in the previous year. Exports amounted to $2.1 billion, which made up 42 percent of the total volume of Kazakhstan export; exceeding the 1994 figures by a factor of 1.5. Imports reached the $1.8 billion mark, or 49 percent of all imports, exceeding the 1994 imports by 66 percent.

Work on the formation of the Customs Union can thus be seen as one of the main achievements in the field of eco­nomic integration of Kazakhstan and Russia. A breakthrough was achieved in the establishment of a common market. The three countries established a unified customs zone and elimi­nated controls at their internal borders. Close businesslike links were established between the customs services.

The Customs Union brings tangible results to each of its members. The overall volume of trade between the CIS coun­tries outside the Customs Union continued to fall, while the lifting of custom barriers enabled Kazakhstan, Russia, and Byelorussia to considerably increase commodity circulation.

In October 1995, the heads of the governments of Rus­sia, Kazakhstan, and Byelorussia issued a joint appeal to the governments of CIS member states to join the triple union. Running somewhat ahead of the story, let us note that in March 1996 Kyrgyzstan joined the customs union.

At the same time progress in the development of bilateral economic relations is checked by a number of problems, nota­bly by chronic nonpayment of mutual debts. Kazakhstan's debt for electric power received from Russia grew almost threefold in 1995. In turn, Russia owed a large sum to Kazakhstan for the coal from Ekibastuz.

Serious possibilities are sometimes missed for successful cooperation between enterprises in the fuel and energy complex, in metallurgy, and other branches of the economy of Kazakhstan and Russia. Close production links became established between the Orskneftegazsintez JSC and the Aktyubinskneft JSC, which form the Orenburg JSC. Early in 1995, the management of these associations conducted mutual consultations and decided that a joint oil company must be set up.

In Russia, the formation of financial-industrial groups went on at an increasing pace. The results of their work in 1995 show that integration of industrial and banking capital had a positive impact on economic development.

Further effective economic cooperation between Kazaklistan and Russia calls for systematic analysis and work on a mechanism of control over the implementation of bilat­eral Kazaklistani-Russian treaties and agreements.

The following tasks should in our view be singled out in the field of economic cooperation between Kazaklistan and Russia that are of mutual interest and call for coordinated de­cisions of the governments:

a)    Stabilization of export of raw materials and subsequent increase in it as a basis for the growth of currency earnings for the modernization of production;

b) Diversification of exports;

c) Additional currency and investment resources for re­structuring the economy;

d) Support for active trading policy on CIS countries' potential markets;

e) Moderate protectionism in relation to newly created import-replacing production lines.

Under these conditions the two countries will have to solve new problems in economic integration in the framework of the Customs Union and in the system of world economic links, in searching for additional financial resources necessary for the implementation of economic restructuring and their balanced growth, in defending the interests of the domestic market from unfavorable conditions in the world economy and from, foreign competition at the stage of stabilization of their economies.

In choosing a promising export and import specializa­tion, Kazakhstan and Russia should give preference to com­modities that are least susceptible to market fluctuations. To achieve this, it is necessary to conduct regular analysis and forecasting of the situation on the markets for the principal import and export commodities, favoring long-term agreements on their purchase/selling over one-off deals.

In the medium-term perspective, transition should be effected from restrictive policies to encouragement, consistently facilitating the formation of a progressive, structure of exports and creating a corresponding system of its state sup­port.

Analysis of export/import operations of foreign trade com­panies and enterprises shows that, in the absence of combined controls over exports and currency and of an obligatory norm of currency sales, 1 all export earnings reach the republic. According to Kazakhstan specialists calculations, some $0.6-0.8 billion end up on the accounts of Kazakhstan enterprises in the countries of near and far abroad. According to Russian experts, corresponding figures for Russia range from $5 to $17 billion. In this connection, one of the main tasks of manage­ment of foreign trade activities of the two states is the setting up of systems of customs control over export and import con­tracts and banking control over currency earnings, investments, and other commodities.

In future, it is advisable to step up coordination of in­formation systems of control over repatriation of currency earn­ings by the customs bodies and the banking system, which will permit a concentration of efforts on securing maximum cur­rency earnings from exports.

It is advisable to restrict the decisive role of the state in foreign economic activity to internationally recognized stan­dards, to be implemented in accordance with the rules and norms of the World Trade Organization.

It is also advisable, in a situation of considerable reduc­tion of the share of state property, to export and import com­modities in state interests only within the framework of inter­governmental agreements, which must not include any privi­leges or tax or duty exemptions. For this purpose, the possibil­ity is created for domestic purchases on a competitive basis.

The state policy of selective protection in relation to promising exporting industries and conquering foreign mar­kets gradually becomes one of the main priorities of economic policy as a whole; it is called, upon to prepare the implementation of a really proactive export policy, without which it is impossible to ensure either the payment of foreign debts, or internal financial stabilization, or investment ac­tivity and employment.

Another important task is the achievement of favorable trading procedures-in relations with foreign countries and their trade and economic groups, organizations, and unions, as well as the lifting of existing discriminatory restrictions, and pre­vention of new ones, with regard to the member states of the customs union.

To solve this task, plans are made to work consistently and purposefully toward the entry of Kazakhstan and Russia in the World Trade Organization, to harmonize our countries' legisla­tive systems with international norms and principles, and to implement the agreement on partnership and cooperation with the European Union and agreements with other countries.

Formation of new economic relations with states of the near abroad will require a longer that previously believed pe­riod of time and a gradual and coordinated advance toward generally accepted international norms of organization.

The future economic policy of Kazakhstan in relation to Russia and the countries of the near abroad must have the following goals development and rationalization of cooperative economic links in terms of minimizing expenditure and increasing competitiveness;

— The utilization of transit communications serving the export/import commodity flows from Customs Union mem­bers to third countries;

— Cooperation and coordination of CIS countries' ef­forts in the restructuring of production and in optimizing the distribution of production forces. An active economic policy in relation to countries of the near abroad is seen as one of the levers for the rehabilitation of the economy and creating conditions for its upward swing.

Particularly important in the economic relations of Kazakhstan and Russia is the creation of conditions for estab­lishing horizontal links between agents operating on the mar­ket, the use of new forms of economic cooperation, such as joint ventures, transnational production, commercial, and fi­nancial structures, and of financial-industrial groups.

Thus the entire course of economic cooperation between Kazakhstan and Russia and its present state show that there is no alternative to close, mutually advantageous, and construc­tive relations between the two countries. As the two largest countries of post-Soviet space possessing great natural resources, production potential, and a desire for cooperation, Kazakhstan and Russia are quite capable of solving the tasks they face in reforming the economy and achieving the level of economi­cally developed countries.

Present-day economic science and practice show that economic integration is the absolute imperative of the future.

CONCLUSION

The analysis, in terms of history and political science, of the birth and development of new, sovereign states at the end of the 20th century, considered here in dynamic interaction with the development of other states, leads us to a number of significant conclusions.

The formation of interstate relations between the Repub­lic of Kazakhstan and the Russian Federation is an example of synthesis of mutual relations between two equal agents of in­ternational law. Considering the unique situation and the en­tire context of ongoing processes, these relations may be seen as a considerable contribution to the world political and jurid­ical experience.

An in-depth analysis of the causes of the disintegration of the USSR was not the goal of the present study; besides, as President Nazarbayev pointed out, it is difficult and even prac­tically impossible to understand everything that is connected with this event, which had such stupendous consequences. However, it is possible to outline the objective and subjective characteristics of this historical event.

Among the objective factors, economic causes must above all be pointed out. The rigidly conservative plan-and-command system of the country's economy, carrying the unbearable bur­den of the military-industrial complex and serious structural unbalance, could not meet the real challenges of the present level of development of the world economy - the postindustrial resource- and energy-saving revamping of the economy and a breakthrough in information technology. The inevitable nationality problems that accumulated in the ethnically diverse Soviet Union called for considerable atten­tion and timely response to the challenges in this area. Perestroika suddenly made these challenges topical almost overnight, but it couldn't provide an adequate solution of the problems within the framework of a unified state structure. The Novo-Ogarevo project proved Utopian in view of its goal of achieving a consensus among nearly forty of its participants.

It is no secret that Russia played an integrative role, being a kind of backbone in the genesis and architecture of the uni­tary state. Considering its actual political and economic weight as the most powerful republic of the Union, it is easy to under­stand the centrifugal effect of the separation of the Russian Communist Party from the Communist Party of the Soviet Union and the subsequent declaration of the sovereignty and independence of the Russian Federation.

Among other factors, the subjective element also played a role in the disintegration of the USSR. This element could be analyzed in terms of persons and situations, but this is not of the greatest importance for the purposes of the present study.

The dialectical development of Kazakhstani-Russian re­lations in the process of the sovereignty of Kazakhstan showed the correctness of the view of this process as a conse­quence of the disintegration of the USSR and subsequent ob­jective course of events in the post-Soviet space. It is important to stress, in the context of our study, the consistent efforts of President Nazarbayev of Kazakhstan aimed at developing in­tegrative processes in the relations between Kazakhstan and Russia and in the Commonwealth of Independent States.

In turn, the declaration of sovereignty was only the be­ginning of a complex process of real sovereignty for the post-Soviet countries. Using Kazakhstan as a model, we tried to analyze the serious and comprehensive work that had to be done, and will still have to be done, to achieve a normal, civilized entry of the Republic in the international community. The formation of the new Kazakhstan statehood occurred against the background of an all-round political and economic reform of society. Despite many complicated and contradictory processes, the country's leadership endeavored therefore to act on the basis of scientifically well-founded programs and concepts capable of providing the Kazakhstan is with real refer­ence points, the nearest tactical goals, and general strategic objectives in this far from simple transition period.

The instituting of the post of president of the republic, the elections of the first head of the Kazakhstan state, the constitutional reform, the formation of a full-fledged parlia­mentarian system in the country were the landmarks of the development of Kazakhstan as a sovereign independent state.

The parliamentary system developed in Kazakhstan as a significant part of a general political reform; it went through many political conflicts and problem situations.

The Supreme Soviet of Kazakhstan, consisting of 360 deputies elected in 1990, was far from perfect. It should be remembered, however, that it was this parliament that adopted the most important state acts on sovereignty, independence, and the presidency; under this parliament, political reform began, and new market laws were discussed and adopted. The deputies of this parliament nurtured the idea of a professional, compact, and effective highest legislative organ of the country working on a permanent basis.

The first professional parliament of Kazakhstan, num­bering 177 deputies, was elected in March 1994. Its fate was contradictory and dramatic. Though elected for a term of four years, this Supreme Soviet was not quite ready for routine legislative work; besides, there were significant violations of procedure during its election, and it was therefore dissolved on a decision of the Constitutional Court in March 1995.

The country's political parties and movements took an active part in the elections in December 1995 of a new parlia­ment consisting of two chambers, the Senate and the Mazhilis. Compact and professional, the new parliament is, in the view of many jurists and politicians, quite capable of fruitful legisla­tive work and is absolutely in keeping with the democratic prin­ciple of the division of powers.

The constitutional process in the republic also developed in a dynamic way. This process consistently, step by step opened up new areas of the rule of law, which corresponded to the vital periods in the development of the republic. The path traversed from the first Constitution of sovereign Kazakhstan, adapted in January 1993, to the Fundamental Law of the coun­try, adopted at a referendum in August 1995, is the path of progressive dynamic legislative movement, of which many pa­rameters corresponded to the standards of developed demo­cratic states.

Decisions on a wide range of problems in interethnic re­lations, the dynamics of their development from the Forum of the Peoples of Kazakhstan and the rise of national-cultural centers to the convocation of the Assembly of the Peoples of Kazakhstan made it possible to conduct, in this most difficult period in the building of the Kazakhstan state, all-round socioeconomic and political reforms largely due to the preserva­tion of interethnic accord, civic peace, and goodwill of the peoples of Kazakhstan.

There is no need to emphasize the importance of Russia as a magnitude of world order and Kazakhstan's closest neigh­bor. It is known all too well what complex, and at times pain­ful, political, economic, and social processes took place, and are still taking place, in both states. During the hundreds of years of cohabitation on vast adjacent territories, Russians and Kazakhs have accumulated, despite certain differences in their culture, traditions, and religion, a wealth of experiences in good-neighborly relations.

The historical community, interdependence, and inter-connectedness of the two countries' economies form the basis of Kazakhstani-Russian relations. Of great significance is the geopolitical aspect of the relationship between Kazakhstan and Russia as the two biggest states of the region, which largely affects the general climate of the Eurasian subcontinent.

President Nazarbayev repeatedly stressed that Russia is our main strategic partner, and the special relationship with Russia helps in the solution of the most important current and long-term tasks in the development of Kazakhstan. It may be stated today that a qualitatively new level of relations is now taking shape in the relations between Kazakhstan and Russia, characterized above all by the beginning of a practical realiza­tion of the high integration potential accumulated in the pub­lic consciousness of the two countries. It is tills area in Kazakh­stan's foreign policy, one that provides the key to the forma­tion of a new shape of the Kazakhstan state and is closely connected with the policy of integration, that is an absolute priority for Kazakhstan.

Under the new historical conditions, the stable and dy­namic development of Kazakhstani-Russian relations rests on a serious legal basis. That basis is the treaty of friendship, coop­eration, and mutual assistance between the Republic of Kaza­khstan and the Russian Federation dated May 25, 1992, as well as treaties and agreements signed in the course of the first official visit of President Nazarbayev to Russia in March 1994 and his working meeting with President Yeltsin in January 1995. As a follow-up to these fundamentally important agree­ments, a whole series of intergovernmental documents, agree­ments, and memorandums were signed which regulate the re­lations between concrete ministries and departments.

However, the everyday practical experiences of bilateral cooperation show that the joint efforts of the two countries must be constantly kept up. Closer integration, especially in the economy and in the humanitarian sphere, is necessary in the interests of democratic reform both in Kazakhstan and in Russia. The process of further elaboration and coordination of new agreements does not therefore cease. Recent years have seen continuous meetings of heads of ministries and depart­ments, government delegations, and groups of experts to con­sider bilateral issues.

A considerable share of the economic potential of Kaza­khstan and Russia is employed in supporting production in the two countries. In recent years, integration links have dynami­cally developed not only on the interstate level but also be­tween individual regions and enterprises. Besides, our peoples are linked by centuries-old spiritual and cultural ties, as well as by kinship and purely human relations, which must be con­stantly reinforced. That is why the policy of integration is a principled line of conduct for Kazakhstan leadership. "On the question of priorities," President Nazarbayev commented, we must stress the vast importance of relations with the Rus­sian Federation. The effective factors here are the interdepen­dence of the economies, historical affinity, and demography. The two countries are simply doomed to good-neighborly rela­tions and collaboration. This collaboration must be based on equal rights and mutual advantage, if we have in mind the strategic goal of consolidating our common economic, de­fense, humanitarian, information, and educational space.

Various aspects of economic and financial relations, prob­lems in state security and military-strategic cooperation, and humanitarian problems may, as practical experience has shown, be positively resolved only if mutual interests are taken into account, and if there is a conscious desire for fruitful and mu­tually advantageous cooperation.

On March 28, 1994 a package of 23 treaties and agree­ments were signed, five of them by the heads of state. These are, above all, the treaties on further deepening of economic cooperation and integration, on military cooperation, an agree­ment on the main principles of using the Baikonur launching site, and a memorandum on the issues of citizenship and legal status of citizens of the two countries.

These steps are in keeping with the integration efforts of our states in the CIS framework, too. The ground has been laid for the economic and settlement unions, and the Inter­state Economic Committee - the Economic Union's coordi­nating and executive committee - has begun to operate in Moscow.

Other agreements, which significantly increase the hori­zons of multilateral and bilateral cooperation, also promote the progress of the Commonwealth toward new integration successes. Apart from the trade and economic ones, agree­ments on cooperation in the sphere of defense also belong here.

While noting the high level and rate of development of Kazakhstani-Russian relations, it must be said that, both in previous times and nowadays, unresolved problems naturally remain. There is a certain stage-by-stage approach in foreign policy due to objective differences between the two countries in their view of priorities in the phases of declaration, estab­lishment, and consolidation of sovereignty and independence.

The historical experiences of good-neighborly relations between Kazakhstan and Russia and the solid relations of stra­tegic partnership in the present inspire confidence that the peoples of Kazakhstan and Russia will enter the 21st century in a dignified manner.

LIST OF USED SOURSES

1.Mansurov. T. “Relationship between Kazakhstan and Russia”, 1998, /p.p178- 250/

2. Esengalin. N. “ External Economy” 1999, /p.p 12-45/

3. Peter Bophinger. “Kazakhstan 1993-2000” 2001, /p.p171-184/

4. Luts Hoffmann. “ Kazakhstan During the Transition”1998, /p.p202-235/

5. World Bank “Annual Report” 1998, /p.p 252-259/

6. World Bank “Annual Report” 2000, /p.p153-159/

7. National Agency of Statistics “Semiannually Report”2001 /p.p 159-175/

8. Hella Engerrer “Research of relationship between Kazakhstan and Russia during the Transition” 1999 /p.p 25-50/

9. Katerina Dittmann “Tendency of Economic Development of Kazakhstan”, 1998 /p.p 89-123/

10. Todaro “Transition in CIS countries 2001 /p.p 25-31/

11. Mishkin “Relation Between Russia and CIS Countries 2001 /p.p 23-30/

12. Krugman “International Economies” 2001/2  /p.p 31-35/

13. EBRD “Annual Economic Report ” 2001, /p.p 123-159/

14. Daniel Gross “Economic Transition in Former Soviet Union” 1995 /p.p 145-160/