EEU - economic union of currently struggling states

, by Juuso Järviniemi

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EEU - economic union of currently struggling states

The Eurasian Economic Union (EEU) officially came into existence on the 1st of January. It currently consists of Russia, Belarus, Kazakhstan, and Armenia which joined on January the 2nd. Kyrgyzstan, which already belonged to the Eurasian Customs Union (ECU) now merged to the newly established community, is set to join the EEU this year as well, although its entry has already been delayed a couple of times.

The main idea of the EEU is similar to that of the economic aspect of the EU. Enhanced movement of labour force, goods and services and unified trade regulation compose the backbone of the EEU. Political integration in fields other than trade hasn’t been projected within the framework of the EEU.

Western media has pointed out several times that Russia has the lion’s share of both the population and the GDP of the EEU. Vladimir Putin’s desire to extend his realm has caused some to suspect that the Eurasian Economic Union, often just called the Eurasian Union, would eventually become the successor of the Soviet Union. Political integration would lead towards that scenario and according to Eurasia Review, the idea of a Eurasian Parliament was first suggested by the President of the Russian Duma but Belarus and Kazakhstan, whose leader Nursultan Nazarbayev – the father of the Eurasian Union idea – initially wished for an explicitly economic union, have been reluctant.

It’s clear that Russia’s current recession is bound to have and has already had an impact on the EEU. Even without economic unification, the member states of the Union are more or less dependent on Russia. Belarus may be the one that has suffered the most from the plummeting price of the ruble and the country has seen swaying interest rates and people rushing to exchange their money for foreign currencies, but Kazakhstan, Armenia and Kyrgyzstan haven’t been spared either. As Business Insider states, the area as a whole is in a trouble, which isn’t a promising start for the union.

The Eurasian Union has been said to exercise protectionism with its customs fees on its external borders. These tariffs make trade within the Union more lucrative but in the meantime, trade with third parties is made more difficult, as the Foreign Policy magazine says. This has been criticised as making the smaller member states to move closer to Russia, an argument which is truthful but on the other hand, hardly surprising as we’re talking about an international agreement. Astana Times says that in a poll made by the Eurasian Development Bank to 14,000 people in 11 CIS countries in the year 2013, public support to the union ranged between 65 and 73 percent in the three founding members so the general public didn’t seem to object to integration at least before the recent changes in circumstances.

Several Western sources are very doubtful of the Eurasian Union while Russian media are unsurprisingly optimistic about its economic benefits. For countries whose important trade partner Russia is, eased trade with that partner doesn’t seem to be a bad idea. It seems that the main concern is whether strengthening one’s relationship to Russia which is facing an economic crisis and whose president thirsts for more power is wise. Anyway, the union that was officially created as 2015 began isn’t about legislation or a common currency. Although there is concern regarding sovereignty in Kazakhstan and Belarus at the moment, the current stage of the Eurasian Union isn’t that dramatic. When it comes to economic defects, what has hindered economic prosperity within the union according to Foreign Policy has been the external customs policy, which was already present in the ECU.

Ukraine’s entry to the EEU, an endeavour of Russia’s apparently proved unsuccessful after Ukraine’s association agreement with the European Union, would’ve brought balance to Russia’s dominant role in the union. Ukraine isn’t the only former Soviet republic that has refused to join the EEU but the country with a large population of 45 million would’ve been particularly important in increasing the international significance of the Eurasian project. To Vladimir Putin’s disappointment, the EEU will lack its “crown jewel”. It looks like the project endorsed especially by Russia will lack the finishing touches, the accession of even more nations. Moreover, political commitment - which is at the moment rather weak due to disagreement about trade restrictions against the West - and member states’, especially Kyrgyzstan’s, ability to live by agreements have been questioned, which sheds a grim light on the newly established union.

The countries in the Eurasian Union aren’t going to have an easy start for the year 2015 in terms of economy but it’s not because of the Union itself. Considering Russia’s recent actions and economic setbacks, it’s understandable that the comparatively small member states of the EEU have reason for concern but each step towards further integration has to be taken separately. That, in fact, seems to be the key thing, as the current atmosphere looks like the project won’t get much further than the first base.

Article originally published in Undivided Europe:

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