Vladimir Putin’s Impotent Eurasian Union

Why the Russian president’s dream of 'near abroad' linked to Moscow might be less than the sum of its parts.


It was never meant as a return to the Soviet Union. When Kazakhstan’s president, Nursultan Nazarbayev, first called for a Eurasian Union just over 20 years ago, he envisaged a grouping of individual states with individual interests coming together for the economic benefit of one another. Nazarbayev, an iron-fisted autocrat and the only president an independent Kazakhstan has ever known, cited, seemingly without irony, "the will of the people to integration" as he tried to justify the reintegration of independent states the Soviet Union’s demise had left behind.

On May 29, Nazarbayev witnessed this goal finally come to fruition. Sort of. Alongside Russian President Vladimir Putin and Belarusian President Aleksandr Lukashenko, Nazarbayev signed the founding treaty of the Eurasian Union (EEU) in Astana, paving the way for the transition from their current customs union to the full-fledged EEU on Jan. 1, 2015. Putin called the signing an event of "epoch-making significance."

But Putin has a way of mangling rhetoric and reality. While the EEU seeks to rejoin the post-Soviet space in economic agglomeration — and has even received interested partners from Vietnam to Syria — it stands far from the goal Nazarbayev once held, and even further from what irredentist Putin would hope.

Rather than launching a wholesale effort at post-Soviet reintegration, the EEU has rapidly morphed into something far more degraded — and has faced substantive pushback from states watching Putin attempt to shift the EEU into another vehicle for Russia’s revanchism, displayed so obviously in Crimea. Where the concerns on the EEU were originally economic — the benefits are discernibly slanted toward Moscow — events in Ukraine have displayed that the Kremlin’s neo-imperialism is back. "The original purpose of the Eurasian Union was to become a dominant regional economic organization, with a legal architecture controlled by Moscow," said Alexander Cooley, a political science professor at Barnard College. But Crimea ended up illustrating that Putin would much rather have something to "effectively lock countries into Moscow’s political and economic orbit."

Modeled on the European Union’s economic constructs, the new union will represent a market of 170 million, and will boast a total GDP of nearly $3 trillion. The EEU will serve as the maturation of the current customs union shared by the three nations, and will allow further economic integration — increased free movement of goods, streamlined trade regulation, unified macroeconomic policy — between member states. And the EEU has potential to keep growing. If Putin somehow manages to woo the remaining post-Soviet (non-Baltic) nations, the EEU’s market could jump to some 300 million members and just under $4 trillion in combined GDP.

But that swell is far from plausible. Even before the EEU became official, members had many doubts about its benefits. Kazakhstan, Central Asia’s most dynamic economy, has failed to procure the expected benefit from membership in the customs union, and the EEU looks to continue the trend. Involvement with the current customs union has continued to delay Kazakhstan’s accession to the World Trade Organization, with the WTO citing "discrepancies" surrounding the external tariffs that will continue under the EEU. Meanwhile, Russia joined the WTO on its own, rather than as the bloc originally proposed. More worrying for members is what the World Bank found in a 2012 study: Membership in the customs union has, as a result of the external tariff, "depressed real wages by 0.5 percent and depressed the real return on capital in Kazakhstan by 0.6 percent." This will "[lead] to a loss of productivity gains in the long run" — a finding shared by the European Union’s Institute for Security Studies. By being forced to trade more with union member states, and less with nonmembers — increasing "costs to businesses and consumers of imports," as the World Bank noted — Kazakhstan is forced to forego technologically advanced goods and services, and is required to rely that much more heavily on Russian supply. As one Kazakh analyst puts it, the union has been "like letting a [Kazakh] schoolboy and a [Russian] professional boxer into the ring."

The economic problems with the union go deeper. Kazakhstan has already seen substantial devaluation and record-setting oil setbacks in 2014 — unrelated to the union — and as Russia’s economy slows due to Western sanctions, it will likely drag Kazakhstan with it. And Astana’s not the only one taking a hit. According to Russian Deputy Finance Minister Sergei Shatalov, Russian fiscal support for the other two EEU member states could soon jump more than $30 billion, or five times its current rate, should all trade restrictions be lifted. For an economy sliding into recession and facing sanctions and capital flight, watching allies suck up much-needed funds is likely a difficult sight in Moscow. Moreover, says economist Aitolkyn Kourmanova, "Without direct subsidies, the Central Asian countries will not perceive any significant advantage to integrating with the [EEU]."

The events in Ukraine have cast an even darker pall over the Eurasian Union’s formation. Where Nazarbayev once envisioned the EEU to be a coalition of equals, Moscow’s neo-imperialism now appears the driving force for its enactment. "Suddenly, the concerns are no longer purely economic — now, they’re political," says Luca Anceschi, a Central Asian Studies lecturer at the University of Glasgow. These concerns haven’t only come forth in EEU negotiations — since Crimea, Astana has proposed increased penalties for those calling for separatism, and cut timetables for ethnic Kazakhs seeking citizenship. Meanwhile, nationalistic, anti-Russian protests — the kinds seen rarely (if ever) in Kazakhstan — have been growing in numbers.

This response is, on the whole, not that surprising. Northern parts of Kazakhstan have historically been part of Russia — and more than 60 percent of Russians believe parts of neighboring countries "really belong to Russia." As one Kazakhstani, an ethnic Russian, recently asked me, "Do you really co
nsider [Kazakhstan] a country?" In response to Putin’s imperialistic push, Astana has increasingly cited the preeminence of its territorial sovereignty in EEU-related matters, and Nazarbayev has repeatedly called on slowing the integration process. "I am … not a supporter of quick decision-making," Nazarbayev recently observed. "We all have to understand that we are not making a sparkling snowman here that would melt in the face of economic and geopolitical changes."

Putin’s Crimean adventurism has effectively dampened any momentum the EEU once maintained. Russian calls for potential common passports and currency have fallen flat. The possibility of a Eurasian Parliament, first proposed by the Russian Duma in 2012, failed to find any traction in Belarus and Kazakhstan. Lukashenko recently noted that he would "fight" anyone attempting to challenge Belarus’s sovereignty. "Even if it is Putin," he added.

It’s not only Kazakhstan and Belarus taking issue with the EEU and with Moscow’s neo-imperial push. Kyrgyzstan, which seems a natural fit to join the EEU — remittances from Russia account for over 30 percent of the country’s GDP, and over 35 percent of its imports come from EEU member states — has delayed decisions on its pathway to membership multiple times. Armenia has seen protests against the union and, despite being one of the few countries to publicly support Russia’s Crimean annexation, just witnessed Moscow double its offer of tank supplies to Yerevan’s decades-long enemy, Azerbaijan. It’s little wonder that Armenia has opted to continue talks with the EU about a postponed Association Agreement, which the country had appeared to swap for EEU membership only a few months ago.

But even if Armenia or Kyrgyzstan suddenly reversed course and rushed to join the EEU, their stunted economies would add little muster. For the EEU to really stand as any kind of consequential geopolitical pole, it would, in end, require the membership of Ukraine, whose industrial heft and 46-million-strong population represent the greatest economic force in the former Soviet Union after Russia. But events in Ukraine over the past six months all but preclude the country’s potential recruitment. Kiev isn’t exactly enthusiastic about joining a union with a government propping and propagating the civil war rumbling through Ukraine’s east.

Ukraine’s (non-)role in the EEU shares strong parallels with that other grand attempt at post-Soviet reunification: the Commonwealth of Independent States (CIS). Rising from the refuse of the collapsed USSR, the CIS was meant to stand as a regional successor. But without Ukraine’s wholesale participation — Ukraine was only an associate member, and officially exited the group this month — the CIS offered little more than photo ops and empty handshakes.

And that, it seems, is what the EEU now stands to offer: plenty of spectacle and ceremony, but with little to actually show. The association will be far from the goals either Nazarbayev or Putin once carried. The ghosts of the Soviet Union and an imperialist Russia surround the EEU — but the organization will carry an impotence of the Kremlin’s own doing.