The media largely ignored the start of the Eurasian Economic Union (EEU) on January 1, 2015, and the EEU is widely considered to be off to a pretty bad start, insofar as Russia, its main driver, is entering an economic crisis. Still, what is the future of the new construct? Will it survive the Russian crisis? Will it lead to genuine economic integration? Will it go beyond economics to become a political confederation? How will the EEU relate to its neighbors in the east and west, China, and the EU?

Andrei KolesnikovMember of the Board, Yegor Gaidar Foundation

There is nothing counterintuitive about the pursuit of integration in the post-Soviet space, or about the Eurasian Economic Union in particular. However, one caveat is in order: Russia’s dominance is built into the very fabric of the EEU. While this was not quite so evident before 2014, the annexation of Crimea, the hybrid war in the southeast of Ukraine and the imposition of sanctions and counter-sanctions have made it abundantly clear that the Russian leadership makes decisions without regard for its EEU partners.

The annexation of Crimea led to the expansion of the Customs Union and EEU proper, but the Russian authorities consulted none of their partners. No input was sought on the issue of counter-sanctions, either. And Russia treated the re-export of merchandise by Kazakhstan and Belarus, which is not prohibited by EEU joint standards, as hostile conduct.

The jury is still out on the economic effectiveness of the EEU. In any event, trade volume has decreased across the board, affecting all of the CIS states. Even imports from Belarus were down 12.5 percent for the first ten months of 2014, according to a report by Russia’s Federal Customs Service. Imports from future EEU members Kyrgyzstan and Uzbekistan fell 38.9 percent and 25.7 percent respectively.

EEU members are pursuing multi-vector interests, including in the political sphere. Belarus is maneuvering between Russia, its CIS partners, Ukraine, and the West. Kazakhstan is extremely concerned about the Russian leadership’s geopolitical escapades.

The EEU is fragile and has a mainly symbolic significance at this point.

Alexander GabuevDeputy editor in chief of Kommersant Vlast

On January 1 about 170 million Russians, Kazakhs, Belarusians, Kyrgyz, and Armenians woke up in a new reality. When the clock struck twelve, a new political entity came to life—the Eurasian Economic Union (EEU). This body unites Russia, Kazakhstan, Belarus, and Armenia, with Kyrgyzstan set to become a full member later in the year. The Union is the result of Moscow’s effort to push its neighbors into a new economic integration project based on WTO rules and modeled (in theory, at least) after the EU—with oversight over a variety of economic issues being passed from the national to the supranational level, under the auspices of the Eurasian Economic Commission. Inaugurating the new format at a Kremlin summit on December 23, Russian President Vladimir Putin promised to build a comprehensive economic space with unified regulation of energy and financial markets by 2025.

Despite the “historic achievement,” as the summit was characterized in its member states’ official medias, few understand how the new entity will function in reality. Or, to put it differently, just how long it will function before becoming another hollow organization like the Commonwealth of Independent States. The first leader to mention this possibility was the President of Belarus, Alexander Lukashenko, who warned at the December 23 celebration that trade between Russia, Kazakhstan, and Belarus was actually falling and there was still no real free trade area inside the borders of the Customs Union.

This explains the very calm (nearly nonexistent) reaction of neighboring Asian countries to the EEU’s formation. The Chinese example is very telling. When the Customs Union was created in 2010, Beijing was concerned that customs barriers for Chinese goods would increase. But it turned out that growing tariffs didn’t affect Russian and Kazakh customers’ desire to import more Chinese goods. Kyrgyzstan also remained the largest “back door” for cheap Chinese imports into Central Asia. It will play the same role even after Bishkek’s accession to the EEU, which will probably make such illegal trade even simpler—the border control between Kazakhstan and Kyrgyzstan will be removed once both countries are in the EEU, and nobody is under the illusion that the Kyrgyz authorities will manage the border with China properly. Flow of goods is the only real concern of China regarding the EEU’s formation for now—the future of the union is so murky that even the Communist Party, with its long-term mindset, cannot pretend to foresee what lies ahead.

By:
  • Andrei Kolesnikov
  • Alexander Gabuev