The Diplomat
Jan 5 2015

Eurasian Economic Union: Dead on Arrival?

The new bloc officially formed on January 1, to remarkably little fanfare.

By Casey Michel for The Diplomat
January 05, 2015

If you missed the official unveiling of the Eurasian Economic Union
(EEU) on January 1, you weren’t alone. Instead of the pomp and
circumstance requisite for the new “epoch” that Russian President
Vladimir Putin claims we’ve just entered, the EEU came into being with
thundering silence. And instead of heralding the dawn of a new
“giant,” as Kremlin state media claimed, the EEU entered into force in
a near-stillborn state.

The reasons for the resounding disappointment surrounding the Eurasian
Union’s unveiling are myriad, and have already been covered in stark
detail within the Crossroads Asia vertical. The Eurasian Union was
largely a non-starter as soon as Ukraine pulled out from the project,
but its struggles have continued unabated. Belarus and Russia have yet
to resolve their customs disputes – effectively nullifying the primary
purpose of the customs union as a whole – and, in the days leading up
to the EEU’s formalization, called Russia’s barring of certain
Belarusian products “stupid and brainless.” Meanwhile, while customs
struggles continue to separate Minsk and Moscow, it seems there will
be no customs checkpoints between Armenia and Nagorno-Karabakh –
despite the wishes of Kazakhstan, which had previously called out
Yerevan for not securing its customs borders. That is to say, within
the Eurasian Union, customs debacles continue between two of the
founding members, but have been removed between one of the member
states and an unrecognized statelet within a nation outside the EEU’s
auspices. Not exactly the best way to build confidence in the
organization’s efficacy.

This comes on top of the continuing contagion Russia’s blinkered
economic policies have set upon the post-Soviet space. Trade between
Kazakhstan and the Russia-Belarus tandem already dropped by nearly
one-fifth during 2014. For Astana, there seems little likelihood 2015
will bring any reprieve. According to Eduard Edokov, the head of
Kazakhstan’s Independent Automobile Union, Kazakhstan’s auto market –
already battered by depressed demand and a collapsed ruble – shows no
signs of optimism for the coming year. “In terms of sales, I think,
next year will be worse than this one,” Edokov said. “The market will
either be in stagnation or see a decrease in sales.”

Astana, meanwhile, seems to be counting the weeks until it experiences
its second devaluation in as many years. After 2014’s shock 19-percent
devaluation of the Kazakhstani tenge, the country looks set for
another imminent drop. The scale, according to analysts, could run
from either 10 percent to 35 percent within the first quarter –
retaining a bit of business that’s slipped toward Russia, but eating
that much further into citizens’ savings.

This, then, is the state of the Eurasian Union as it comes to be –
nations beset by pointed rhetoric, frightened of Moscow’s irredentism,
surrounding a sinking Russia whose fortunes stand between a vice of
continued sanctions and declining oil prices. As Nate Schenkkan wrote
in Foreign Affairs, “The Eurasian Economic Union is dead in all but
name. It will survive as another hollow post-Soviet multilateral
institution celebrated with presidential summits but producing no
progress toward its stated goals. The EEU’s crumbling is proof that
Russia’s capacity for influence is weakening.”

If you need any further proof, look again to the celebratory vacuum
that greeted the Eurasian Union – not among observers, but among the
member-states participating. Armenia’s president didn’t share a single
mention of the Eurasian Union in his New Year address. And for the
first time, Belarus opted not to carry Putin’s New Year greeting on
its airwaves. So much for the welcoming of a new geopolitical pole. A
new epoch may be among us, but no one seemed to notice.