The Eurasian Economic Union: State of Affairs
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The Eurasian Economic Union and Integration Theory
Even though the EAEU is helping cooperation among three fairly important ex-USSR countries Russia, Kazakhstan and Belarus, its significance is minimal. There were hopes that Eurasian integration would restore production structures of the former USSR. However, by the time the CU was launched in 2010, all of those had already been destroyed to such extent that there was nothing to restore. The second Ukrainian colour revolution of 2014 wiped off residuals of the Ukrainian economy leaving no hopes of ever uniting the significant industrial and intellectual potential Ukraine used to have with the potential of Russia and the rest of the EAEU. The global crisis has detrimental influence on exchange among developing countries, and EAEU intra-regional trade is declining both in absolute and relative terms, despite the continuing intra-regional liberalization. EAEU’s intra-regional exports excluding oil and gas are low at the level of 2% of GRP. As such, EAEU’s distribution effects are small, and they deprive the union of macroeconomic significance. The regional organization is just one of the minor features of the contemporary economic conjuncture that contributes to the decline of the post-Soviet societies. However, as time goes by, EAEU’s accumulative effects may become drastic.
This is so because the EAEU smaller countries have signed up for potentially dangerous commitments capable of deindustrializing them further, in favour of Russian businesses, as small countries are invariably disadvantaged in regional arrangements built on principles of liberal economics. They will experience more production cutbacks and bigger costs of adjustment because of their undersized firms. Growing inequalities within the bloc will be fraught with negative consequences for all members, including Russia. These consequences are a more unbalanced migration, bigger unemployment and falling incomes of both Russia’s and smaller countries’ populations and, therefore, decreasing consumption and deteriorating social environment. The EAEU will only favour the financial and industrial oligarchy, who are doing well anyway. Contribution to inequalities is the problem of all contemporary regions. Given weaknesses of the post-Soviet countries and extremely unhealthy geopolitical environment around Russia, serious investments in the EAEU are risky because of the likelihood of Brexit situations in the future.
Geopolitical objectives in regard to the EAEU have failed. Adaptation through the union towards hegemonic orders of a Greater Europe and a World Government is fortunately no longer on the agenda. Attempts to consolidate Russian power through association with small, weak and corrupt countries are hopeless. To maintain the EAEU friends who are not really friends but parasites, Russia is compelled to offer a whole range of incentives: subsidized gas prices, loans, payment of compensation claims linked to WTO, and access to its labour market in conditions of high domestic unemployment and underemployment. As all post-Soviet countries are weak, they will continue demanding financial support from Russia. As the Russian economy is sliding down, and Russia lacks adequate resources even for its own development, it will be increasingly difficult to meet expectations of the EAEU partners. The perception of Russia’s population is that integration projects with the former Soviet Republics compel Russia to ‘feed’ post-Soviet populations both on Russia’s own soil and in their homelands at the expense of the Russia’s hungry and poor. Most citizens of the smaller countries are convinced that Russia must help them, but is not doing anything. EAEU intergovernmental forums are places where the smaller countries collaborate to constrain Russia.
From a security point of view, it is very important for Russia to preserve control over Belarus because of its physical proximity to Moscow. However, it is possible to do so without the EAEU through bilateral relations and a security organization. Belarus has been the major beneficiary of wealth transfers from Russia since the early 1990s, long before the EAEC and EAEU came to existence. Trade, investment and humanitarian relations between Belarus and Kazakhstan are close to zero. Kazakhstan is the only resource-endowed country in the union besides Russia, and is the only country that has not been subsidized by Russia. Kazakhstani bureaucracy and population firmly believe that Kazakhstan has only been losing as a result of the EAEU. Even the smallest countries Armenia and Kyrgyzstan may not need the EAEU as such, because they are capable of managing their relations with Russia on a bilateral basis.
Russia’s EAEU efforts produce no results. No matter what Russia does for these countries, they do not even pretend to align behind Russia’s political agendas. In the context of the ongoing mobbing of Russia by the West, the post-Soviet states have signalled distances from Russia, and extracted as many concessions from Moscow as possible, raising Russian costs of integration to the limit. Fruitless support of the EAEU will sooner or later bring limitations to the Russian commitment to this organization as Russia’s own regional development is seriously compromised. On the public relations front, Russia with its corruption scandals does not appeal as an inspiring leader in the fight against a corrupt West for a fairer world. The smaller countries are eager to sell themselves cheaply to the West, and many of the Russian elites have been doing the same.
Except for mere symbolism, the EAEU is not bringing any dividends to Russia. Neither is it contributing to the formation of a regional society, as the post-Soviet space continues to be torn apart by nationalisms. They mock Russia’s difficulties with the West and discriminate against their own Russian-speaking citizens. Eurasian integration is in clash with sovereignty and nationalism more so than European integration, because the mere survival of the smaller states in Eurasia is seen to depend on eradication of any memories of the Soviet past and of any ties with Russia after 1991 when the process of construction of the new states began.
Many contemporary trends come to Russia with a delay. In the 1990s when regionalism was booming in most parts of the world, disintegration prevailed in the post-Soviet space. When there emerged universal disappointment about the increasingly unequal social and economic consequences of regionalism managed on neoliberal principles, Russia began to pursue its regional project with triple efforts, if we believe the Eurasian voices asserting that their countries were forced into the EAEU by Russia. All Russia has achieved out of the EAEU so far is a shop for cheap gas and an import base for unskilled labour. One does not need high levels of intelligence to sell gas below market price and to keep borders open for unskilled labourers. For the smaller countries, the EAEU is primarily a means to access subsidized Russian gas and cheaper loans. Most often the smaller countries are unable to take advantage of access to the Russian market, as such access is only free in public discourse, but in practice is controlled by mafias.
Who then needs the EAEU? Travelers, migrant workers, trans-border businesses, and members of the public with nostalgia for the USSR do not count as they all somehow operated within the CIS. The EAEU has come to offer additional travel and party opportunities for politicians. Nepotic regional bureaucracy, the growing Eurasian Economic Commission, staffed with over two thousand employees, enjoy generous salary packages while doing the same amount of work as about fifty personnel of the MERCOSUR Administrative Secretariat in Montevideo. The Eurasian Commission and the MERCOSUR Secretariat serve nearly identical arrangements among comparable countries in comparable regions. The Commission is closely linked to the respective national governments and provides excellent opportunities for national bureaucrats to come work to Moscow for a change. The EAEU offers occasions for academics and journalists to write something about, like this book. This concludes the short list of beneficiaries.
It is unlikely that the Russian government and the regional bureaucracy see no dismal results of the EAEU. However, they will not admit this to the population that feels nostalgic about the Soviet Union and sees the EAEU as a tool of resistance to escalating aggression of the Western countries. Russia may still be affected by regionalism as a fashionable idea coming from Western Europe, despite the EU falling apart. Pro-integration thinking may also be affected by the remembrance of the days of the USSR when Russia was strong, and there is probably a mistaken perception that the return of satellites can bring power back to the country. However, times have changed for such a hypothesis to work. Many Russian resources are now sustaining oligarchy and high-level corruption practices. Russia would need to decide if it wants to maintain the EAEU in elegance and style as it did the USSR in the past, or to preserve super-incomes of the oligarchy and top bureaucrats. It cannot do both, and it appears a lot more likely that it will prioritize the needs of the oligarchs and bureaucracy over those of general population. Few Russians would be glad to see more Russian money sent to maintain the EAEU countries in conditions of increasing poverty in their own country.
In addition to this evaluation of the EAEU, the book has various implications for the theory. The complex explanation of differences between the EAEU and EU processes and the elaboration of a framework and criteria for comparisons of contemporary regions constitutes the main contribution of this book to the field of integration studies. The monograph calls attention to the necessity to incorporate economic geography and the evaluation of states’ asymmetries of size, interest, and economic performance into the study of regions. The book redefines integration as intentional policy harmonization and indicates that the implementation of integration should be limited to the solution of similar problems confronted by the countries involved. Therefore, social constructivism and intergovernmentalism—as approaches emphasizing differences and similarities among the integrating states—should prevail in the study, advocacy, and criticism of regionalism. There are ten implications of the comparison of the EAEU with the EU. Below they are discussed at a greater length.
- Integration outcomes are highly contingent on specific endogenous regional features.
- Integration in the EAEU and the EU develops unevenly across various policy dimensions. The EU is more strongly consolidated politically and economically while the EAEU is culturally, or at least linguistically.
- However, the EAEU fails to make use of its advantage of cultural cohesion through the Russian language and experiences of the common Soviet past.
- Regional integration clearly has limits, and no excessive expectations should be placed on it.
- The EAEU lags behind the EU in economic consolidation due to region-specific conditions of economic and political geography resulting in low levels of economic interdependence and sharp interest divergences due to size and power asymmetries among the EAEU members. If an integrated theory of regionalism is ever developed, it should incorporate the discussion of issues of regional economic geography and member states’ size and power asymmetries. Smaller states have a higher propensity for regionalism than bigger states.
- Given the huge asymmetry of size among the five members of the EAEU, absorption into the Russian Federation would be a much more logical method of integration than the currently practiced incremental integration without clear goals.
- The EAEU and the EU are different as regions and institutions. If judged by history and outcomes of integration, the two are clearly distinct processes as well. Therefore, the EU cannot serve as a model of integration for the EAEU, and the EAEU should not replicate EU institutions and procedures without adjusting them to its own needs.
- There is a huge gap between the EAEU’s intentions of a functional common market and the EAEU’s working provisions. A possible explanation of this gap is the excessive exogenous influence of the EU model on the EAEU and the EAEU’s inability to assimilate this external model, which has served an entirely different region and is currently in need of a profound re-evaluation.
- The studies of regional blocs like the EAEU and the EU provide a fuller picture of integration if they incorporate perspectives of multiple integration and cooperation theories. An analytical framework for the comparison of various regional blocs should be based on the criteria for comparison derived from several theories. The theories that have been used to explain European integration are useful in explaining the differences in integration results between the EAEU and the EU.
- Social constructivism and intergovernmentalism should prevail in the synthesis of integration theories, if integration is understood as intentional policy harmonization among the countries.
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3. Traditional explanations of regionalism that focus exclusively on commercial transactions overlook the role of cultural affinities and impoverish our understanding of integration. Apart from trade, there are other ways to integrate peoples, for example, through linguistic, cultural and educational policies. This monograph concludes that ongoing cultural fragmentation of the EAEU is in evidence, and this trend is at odds with the intention to integrate the union economically through a common regional market. Neither the EU nor the EAEU would seriously confirm two somewhat popular claims that (1) cultural affinity is favourable for economic integration, and that (2) regional institutions forge regional identities. However, similar studies of MERCOSUR illustrate that cultural affinities can be conducive to cultural integration (namely, linguistic and educational policies), even though this type of integration was not anticipated or desired at the moment of creation of the regional organization. Nevertheless, at least for the time being, the EAEU institutions are not administering any integration in the cultural domain. Despite their facilitation of labour migration into Russia, many migrants’ exposure to Russia does not reverse the trend of decline of Russian outside Russia and Belarus.
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6. Clearly, restoration of the USSR on neofunctionalist principles is unlikely, as these are failing even in Europe. Among the respective five member states, Russia in the EAEU is relatively bigger than Brazil is in MERCOSUR-5. The extreme asymmetry of size provides a much more efficient and logical method for Eurasian integration than the neofuctionalist vehicle currently in use. This more appropriate method is absorption of the smaller states into the legal order of the Russian Federation. Such mode, however, does not respond to the goals of the union and intentions of any of its member states. The reality of contemporary life is such that most governments do not mind extending their control over new territories and resources but are less interested in the care of additional populations, as their own populations are a bother. This is the major reason why Hillary Clinton’s worry about the recreation of the Soviet federation is not fully justified, and why the US government would very much like to get rid of the bankrupt Puerto Rico. Besides, the desire of Eurasian populations and governments to join Russia is not a clear-cut matter.
Thus between the two former Georgian autonomous territories, South Ossetia and Abkhazia, the former wishes to join Russia but the latter does not. In case of South Ossetia even its government is willing to surrender formal sovereignty. The only other government aspiring for incorporation into Russia is that of Transnistria. Both Transnistria and South Ossetia are very small states, and they are still a long distance away from hypothetical incorporation into Russia due to various circumstances of political, historical and physical nature. Such hypothetical prospect does not even seem to exist for a place like Kazakhstan where nationalism is very strong. As far as Ukraine is concerned, in 1991 its three provinces Crimea, Donetsk and Lugansk overwhelmingly voted for the preservation of the USSR in March, but for Ukrainian independence from the USSR in December. In 2014 they voted for cession from Ukraine with a view of joining Russia, the reason why their compatriots from Kiev and Western Ukraine started a war against them. Any substantial territorial incorporation into Russia would be fraught with destructive counter-intervention from the West, as demonstrated by the Crimean precedent, and is only realistic as a consequence of a major international shock comparable to the two world wars of the 20th century.
Such shock may be coming, and Russia, despite its corruption and unattractivenss, may be expanded further (after incorporation of Crimea), given even worse inefficiencies and failures of the smaller states of the post-Soviet area. The next accession candidate into Russia after Crimea is Belarus. If Lukashenko first deeply scared about Russia’s intention to drop Belarusian economy and then offered a deal like the job of prime-minister under Putin (rumoured Putin’s conflict with Medvedev may exist, and Putin may succeed in getting rid of Medvedev),the Belarusian propaganda machine will solemnly announce that the utmost goal of historical destiny of Belarusians is the union with the Russian brothers, and those in disagreement will be dealt with silencing and repression.
Despite Lukashenko’s unfriendly passages on Russia, he is viewed as a very efficient ruler in Russia, much more so than in Belarus itself where many people are exhausted by his omnipresence. Lukashenko’s popularity may be a good asset for Putin whose standing among Russians is in sharp decline. By the time Belarus joins Russia, the Ukrainian state will dissolve and huge chunks of this country will meet Russian administrators with flowers. Following the incorporation of parts of Ukraine, Russia may be joined by small states Transnistria, South Ossetia, and also by Kazakhstan, if the latter falls into instability due to internal circumstances on the background of China-fears. At the very maximum, the process may end up encompassing Kyrgyzstan, Tajikistan and Abkhazia. Such project is most likely to succeed if implemented within 10 to 20 years, as it will be more difficult to realize it after the generation change. Resource-endowned Azerbaijan and Turkmenistan are unlikely to become part of it to avoid sharing their wealth, the Baltic states due to their deep incorporation into the political and economic system of the West, and Georgia and parts of Ukraine due to severe animosities towards Russia generated in post-Soviet years.
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10. Another conclusion in relation to the whole book is about the importance of social constructivism for integration studies and the necessity to extend the use of constructivist explanations beyond cultural integration to discussions of regionalism in all integration dimensions. In constructivism integration appears naturally due to convergence of norms, values, and interests. If the essence of integration is in intentional standardization and unification of social practices, then this phenomenon should be expected only in the matters of perceived common interest and in situations where there is agreement on the effects of the proposed measures. Therefore, the similarities of interests, problems, and situations are essential for integration; and social constructivism emphasizing these similarities should be placed to the fore of integration studies. Intergovernmentalism is the reverse side of this approach because it discusses differences between the countries and how these differences are overcome in the adoption of integration policies.
In this book constructivism is explicit in the analysis of cultural heterogeneity and its possible effects on cultural integration (in Chapter 4). However, it is implicitly present elsewhere, because it is not just homogeneity of culture that is important for integration, but homogeneity of interest. A common policy is most successful when it responds to the common interest of all the parties and addresses similar and not dissimilar problems. Therefore, integration of economically and socially co-oriented states that are similar in terms of economic development is preferable to integration schemes involving industrialized and third-world countries with sharp divergences in economic indicators.
Ideally, interdependence, which is key to the analysis of Chapter 2, should also be balanced, and it should not be of a colonial pattern when poor countries sell commodities and buy finished products. Trade deals with external partners are also easier to negotiate within the region whose members have similar production structures and are affected by the consequences of external liberalization in a similar way. It has been discussed that economic, and specifically monetary integration, needs convergence in macroeconomic performance (Sections 2.3 and 2.4). Thus constructivism comes into conflict with liberal economics, which prescribes identical rules of behaviour for everybody regardless of the varying competition abilities.
Constructivism is implicitly present in the chapter on intra-bloc size asymmetries. It is not just similar market and production structures but also similar size and power potential among the countries that are warranted for the development of integration. Thus divergences in foreign policy approaches and expectations from the EAEU between Russia and the small countries are directly linked to the different sizes of the countries, and also to their different geographic locations (Chapter 3). Constructivists would agree that the similarity of government regimes, ideologies, perceptions of national interests, and external threats; the similar ability of the states to respond and adapt to integration; and the equity of distribution of integration benefits are all requirements of a deep and sustainable process. Overall, constructivism with its emphasis on similarities indicates that the EAEU’s economic, political, and institutional integration is more difficult to achieve than that in the EU precisely because these are the domains where the differences among the EAEU countries are bigger. As social reality does not allow occurrence of identical states whose integration would be unproblematic, flexibility and equity will remain important principles of integration policies in any regional bloc.
Social constructivism can serve as a baseline theory in the synthesis of other integration approaches. A broader application of constructivism and its application to Eurasian integration is not yet a common approach, because it alludes to the common historic experience and affinities of language and culture that hegemonic power structures of the West teach us to forget. In narrow terms, constructivism is confined to the domain of culture and identity politics. While every scholar is aware of the common historical and linguistic foundations of the former USSR, it is problematic to relate advances and failures of economic and political integration to these cultural phenomena. Thus scholars of Eurasia usually look into issues of power and trade, and, as consequence, neorealistish and intergovernmentalistish analyses dominate the study of Eurasian integration.
Enlargements of regional blocs alienate them from the expectations of a successful constructivist model by increasing differences in culture, political interests, economic ideologies, and distribution of wealth among member states. Weakening cultural bases and continued pursuit of the liberal model, which increases distributional costs of integration, present an aggravating problem for both the EAEU and the EU. In order to remain sustainable, the unions should cultivate stronger solidarity feelings among their citizens. This is only possible if fairer models of redistribution of integration gains are implemented. Transfer mechanisms should direct funds not only from rich to poor countries, but also within the countries. At the moment the poor are becoming poorer and the rich are becoming richer and more unwilling to share. This represents a difficult political problem. Growing polarization in integrating societies reduces the support for integration and may signify that the best days of regionalism are not in an observable future.
Adjunct Professor for Spanish and Portuguese at the Samara College for the Humanities
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