It has been a transformative year for Eurasian integration and its flagship project, the Eurasian Economic Union (EEU). What started off as a relatively simple customs union in early 2014 has been transformed by treaty into a single economic space that includes Belarus, Kazakhstan, and Russia and will soon include Armenia and Kyrgyzstan. In some ways, the last year was a triumph. But expansion has come at the cost of the union’s coherence, and as Russia’s economy spirals into crisis, the prognosis for 2015 is dire. More and more, the peripheral economies realize that they are bound to a drowning Russia.
BEND THE RULES
The EEU’s predecessor, the Eurasian Customs Union, had been distinctive in the former Soviet Union because, unlike so many other multilateral bodies there, it was following its written rules and developing as an institution. New customs controls and tariff limits shared among Belarus, Kazakhstan, and Russia were being enforced. Hundreds of young civil servants had been hired. And progress had been made toward creating a shared regulatory framework for everything from financial services to telecommunications to agriculture. Capital, labor, and goods would soon flow freely, and even more ambitious goals seemed achievable, thanks to the political commitment of the powerful leaders of Belarus, Kazakhstan, and Russia.
That political commitment vanished in the aftermath of the Ukraine crisis. The proximate cause of the Ukrainian revolution was then President Viktor Yanukovych’s rejection of a trade deal with the EU and announcement that Ukraine would join the Customs Union instead. The ensuing protests and ouster of Yanukovych crushed any hope that Ukraine would offer its substantial economic potential to the Customs Union. Russia’s subsequent annexation of Crimea and invasion of eastern Ukraine terrified Belarus and Kazakhstan, each with its own large Russian minority.
Instead of trying to resolve the contradictions created by the Ukrainian crisis, Russia lashed out without consideration for its union partners. It responded to Western sanctions with its own countersanctions on food imports—sanctions retaliated by slowing Russian imports to a halt. In addition, Russia dramatically sped up the accession process for Armenia and Kyrgyzstan, two marginal economies with little to offer the union besides a photo opportunity. Armenia does not even share a land border with the union.
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