On 1 January 2010 the Customs Union between Russia, Belarus and Kazakhstan came into being. The purpose is to protect national production, that is not internationally competitive and strengthen trade. The next step is to establish a Eurasian Union by 2015 and include other countries. This is intended to deepen economic and political ties with a Russian zone of influence, blocking the EU and China. The re-establishment of influence may remind of the Russian empire and Soviet Union. They fell through partly because the Russians were unable to both support and control their neighbours. The Russian elite seem to have learned some lessons, and will not recreate the Soviet Union, but go for economic integration with a strong dose of political influence. At the same time the ethnic Russian population is decreasing, and Muslims are increasing in numbers both within Russia and in Central Asia. Millions of immigrants are working in Russia, and Russian nationalists feel threatened and friction is growing. But the perception is that Russian power is increasing, they have a window of opportunity now, and Putin makes full use of it.
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| Member countries in light green (Stratfor). |
The European Union (EU) continues to function in spite of serious problems. It is relatively stable, democratic and predictable needs reform. The people of Eastern Europe and Central Asia need stability and safety, but are under pressure to take sides. In the long run I think closer economic and political cooperation between the EU and Russia would benefit all European and Central Asian countries. It is not likely to happen in the short term, but I think it is possible in the long term. It will take quite a few more visionary politicians, business people and civil society to make it happen. Let’s encourage them.
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| Presidents Lukashenko (Belarus), Medvedev (Russia) and Nazarbayev (Kazakhstan) on 9 December 2009. |
Background
The Soviet Union was breaking up during 1990-91, and finally dissolved on 26 December 1991. The 15 former Soviet republics became independent states. During the breakup the presidents of Russia, Belarus and Kazakhstan met and formed The Commonwealth of Independent States (CIS) on 8 December 1991. The CIS is an association of states with the purpose of coordinating trade, finance, law-making and security. Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan and Ukraine joined the CIS on 21 December 1991. Georgia ratified the CIS two years later, but left after the war with Russia in 2008. The three Baltic republics chose to stay out and oriented themselves clearly to the EU and NATO, of which they later became members.
Several other initiatives, including the Collective Security Treaty Organization (CSTO) have been established. CSTO is a military alliance with Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan as members.
Resurgence of Russia
During the 1990s Russia experienced a severe decline in the economy, health and living standards although political freedom grew substantially. Vladimir Putin became president in 2000 and started to strengthen the Russian state. By regaining ownership to key oil and gas companies, increasing production volumes and experiencing high prices on gas and oil exports, the economic situation of the state and country improved considerably.
Ukraine is a key country for Russia both because it is the cradle of Russian civilization one 1000 years ago, and is a huge populous territory on the south-western vulnerable flank. A 2003 agreement to create a Common Economic Space failed in 2004 when the Ukrainian opposition leader Yushchenko came to power, but the efforts continued. In 2005 Putin described that the collapse of the Soviet Union as “the greatest geopolitical catastrophe” of the 20th century. Political freedoms were restricted and more power concentrated in the Kremlin over the next years until today. Most Russians were and are pleased with the improved economic situation and stability, but an increasing number of people have started to demonstrate openly.
Re-establishing sphere of influence
China has had a tremendous economic growth, strongly increasing trade and investment in Central Asia and undermining Russian influence there. Putin wanted to integrate the former Soviet Union states economically and politically. With stronger Russian muscles it was time to do this. The first and easiest step would be Belarus and Kazakhstan. In 2009 the Gross Domestic Product (GDP) in billion US$ was: Belarus 49, Kazakhstan 115 and Russia 1222. Russia was 7,5 times bigger than the other two countries combined. At a meeting in Belarus in November 2009 the presidents Lukashenko of Belarus, Medvedev of Russia and Nazarbayev of Kazakhstan declared the Customs Union would start in January 2010. Import tariffs from outside were harmonized and internal customs controls removed. That basically happened by Belarus and especially Kazakhstan raising their tariffs to the Russian level. They did that to improve their economic stability although their economies became less competitive. Trade increased by over 60% over the next two years, though some of this was attributed to recovery after the 2009 financial crisis. The plans were to achieve free movement of goods, capital and labour within the framework of the Common Economic Space, but a number of non-trade barriers were still in place in 2012.
The future Eurasian Union
In November 2011 the Eurasian Union was announced to come into existence by 2015. Putin said it will build on the best values of the Soviet Union. But it is not quite clear what Eurasian Union will be like, it is still in the making. On 3 September 2013 Armenia’s president reversed the approximation to the EU, and declared that Armenia will join the Eurasian Union. But Armenia is a small country, Ukraine on the other hand is considered by many analysts as key to the project. In November 2013 the Ukrainian president Yanukovych, apparently under Russian pressure, decided not to sign an Association agreement with the EU. Russia agreed to lower gas-prices from 1 January 2014. Huge protests against these decisions are ongoing in Kiev. The EU has made it clear that Ukraine and other countries cannot be part of both the EU and the Eurasian union. The Ukrainians are split and try to find a balance. And the EU itself is not ready to integrate Ukraine fully yet because of its own economic difficulties. Ukraine may not become a part of the Eurasian Union, but Russia’s goal is still to block it from becoming part of the EU. Other countries like Kyrgyzstan, Tajikistan and Vietnam have expressed interest to join. In 2012 the GDP in billion US$ was: 2.030 in Russia, 202 in Kazakhstan and 63 in Belarus. This totals 2.295 billion US$ but was only 3,1% of the world GDP of 72.216 billion US$. And the size of the economies are low compared to the EU 16.673, and US 16.244 billion US$. But perception is important in international relations, and at the moment Russian power seems to be rising. During 2014 and 2015 we will probably see increased building of institutions and framework and initiatives to include other countries in The Eurasian Union. Whether they will succeed remains to be seen. In the long run I think closer economic and political cooperation between the EU and Russia would benefit all European and Central Asian countries. But in the short term that seems unlikely.
Sources and more information
I am open to your comments and proposals.
Warmly
Bjarte Bjørsvik
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