What a Eurasian Union Means for Washington

What a Eurasian Union Means for Washington

Putin's attempts to bolster regional ties have many in the West concerned.

Two key events, the planned withdrawal of U.S. troops from Afghanistan and Vladimir Putin’s impending return to the Kremlin, have reopened a long-standing debate in Russian foreign-policy circles about Moscow’s relations with its post-Soviet neighbors. While outgoing president Dmitri Medvedev downplayed Moscow’s ambitions to dominate the post-Soviet space and encouraged greater cooperation with the United States in the context of the war in Afghanistan, Russia’s regional strategy increasingly focuses on promoting integration through a variety of economic and security institutions. Putin has long been a proponent of this approach, which he discussed in detail in the Russian daily Izvestiya last October, calling for the formation of a “Eurasian Union”—an EU-like association of post-Soviet states that would deepen economic ties among members, ultimately paving the way for further political integration.

Some foreign observers view the Eurasian Union idea as a veiled attempt to restore the Soviet Union, whose collapse Putin famously termed the “greatest geopolitical catastrophe of the [twentieth] century.” Whatever else it portends, the Eurasian Union is clearly not that. Moscow has long since jettisoned its missionary ideology and no longer has any interest in subsidizing its neighbors. Moreover, Putin and other Russian leaders have accepted that Moscow cannot keep all fourteen other post-Soviet countries in its orbit. The Eurasian Union and other recent regional initiatives such as the Collective Security Treaty Organization (CSTO), Eurasian Economic Community (EurAsEC) and the Single Economic Space (SES) encompass a core group of states with extensive economic ties to Russia whose leadership supports—willingly or unwillingly—deeper integration.

Though worries about a new USSR (or “USSR lite”) are overblown, the United States has reason to be wary. While the economic and political logic for deeper integration across parts of the post-Soviet region is strong, and although regional integration could strengthen weak economies, especially in Central Asia, Russian-sponsored integration also brings another threat: deepening dependence of neighboring countries on Russia that could compromise not only development but also foreign-policy autonomy.

For now, the United States should withhold judgment until Putin’s intentions for the Eurasian Union are clearer, particularly with regard to the balance between economic and political aims and the extent to which Moscow allows its neighbors to freely choose whether or not to become members.

Ever Closer Union?

Putin advocates using existing multilateral institutions: the nascent SES, the Russia-Belarus-Kazakhstan customs union and EurAsEC (which also includes Kyrgyzstan and Tajikistan, with Belarus, Moldova and Armenia as observers) as the building blocks for constructing a closer political union between Russia and its neighbors.

This planned Eurasian Union would lower trade barriers, harmonize regulations and currency policies, and eventually lead to deeper political association. If this sounds like the growth of the European Union, that is deliberate. Putin’s Izvestiya article portrays the Eurasian Union as modeled directly on the EU and even suggests that a strong Eurasian Union would be a natural partner for the EU, capable of negotiating with Brussels over the eventual creation of a joint economic space stretching from the Atlantic to the Pacific.

While that vision may be far off, economic integration within Eurasia has potential benefits for many regional states. As regional integration proceeds in much of the world (not just through the EU but also via NAFTA, ASEAN and Washington’s proposed Trans-Pacific Partnership, among others), the post-Soviet space remains largely on the sidelines. A lack of horizontal trading links and isolation from global markets contribute to the region’s persistent underdevelopment.

The most significant benefits of a new Eurasian Union would be the creation of a huge single market and the lowering of barriers to the movement of goods and people. That would make it easier for migrant workers from Central Asia to move back and forth to Russia for work and to legally repatriate their earnings. And since the USSR fostered regional specializations (little industry was placed in Central Asia, for example) and supply chains that crossed republic—now international—borders, integration could also lower production costs by letting each member focus on areas in which it has a comparative advantage.

Yet economic integration across the post-Soviet world also holds potential perils. By reorienting members’ economies to focus on the post-Soviet space, a Eurasian Union would create new barriers between member states and the outside world. Indeed, limiting the reach of foreign powers—whether of China in Central Asia or the EU in Ukraine—appears to be a major goal of Russia. China already accounts for a greater percentage of foreign trade in Kazakhstan, Kyrgyzstan and Tajikistan than does Russia, gradually eroding Moscow’s economic and political influence. A country like Kyrgyzstan, whose economy depends heavily on Chinese investment and the re-export of Chinese goods, could suffer badly if the Eurasian Union limits Chinese access to its internal markets. Meanwhile, the EU is pressing for a Deep and Comprehensive Free Trade Agreement (DCFTA) with Ukraine that would facilitate that country’s access to the European market and make Ukrainian regulations increasingly compatible with those of the EU. Moscow has repeatedly sought to prevent this development, seeking instead to cement the economic and political bonds holding together the Russia-centric “post-Soviet space” that is being increasingly fractured by globalization and Russia’s failure to develop into a pole of attraction for its neighbors.

Of course, Russia’s neighbors like the idea of forging direct connections with the outside world and are consequently skeptical of regional integration that would tie them more tightly to Russia. Tellingly, apart from Kazakhstan, Russia’s closest strategic partner in the former Soviet Union (Kazakh president Nursultan Nazarbayev first floated the idea of a Eurasian Union in 1994), and Belarus, which may not have much choice given the collapse of its relations with Europe following the suppression of antigovernment demonstrations last year, few post-Soviet states have evinced much enthusiasm for the Eurasian Union project. Central Asia’s weakest states, Kyrgyzstan and Tajikistan, are likely to join, given the importance of Russia as a market for their exports (including of migrant labor) and source of investment. Uzbekistan and Turkmenistan, which have been eager to limit their dependence on Russia by pursuing a “multivector” foreign policy and which have the economic and political heft to go their own way, will opt out. Even Armenia, Russia’s only ally in the South Caucasus, is ambivalent, given its lack of a border with other potential member states and concerns about excessive dependence on Moscow.

The biggest question mark is Ukraine. Kyiv has announced it will not join the Eurasian Union, arguing it would block deeper integration with Europe—a process practically the entire Ukrainian political class believes should take priority over Russian-led integration projects. Yet Russia has been reluctant to take “no” for an answer. In addition to trying to preempt the EU-Ukraine DCFTA, Moscow has repeatedly pressured Ukraine into joining the customs union and sought to take over Ukraine’s pipeline network as compensation for Kyiv’s debts to Gazprom. Russian commentators recognize the importance of Ukrainian participation to the overall success of the Eurasian Union idea, and it is likely Moscow will exert significant pressure on Kyiv to join up.

Who’s Afraid of the Eurasian Union?

Unlike the EU, a Eurasian Union would hardly be a partnership of equals. Russia’s population of 140 million dwarfs that of the next-largest post-Soviet state (Ukraine, with 46 million); its GDP is roughly $1.4 trillion, or more than twelve times that of Ukraine or Kazakhstan. Moreover, the EU emerged gradually over the course of half a century on the basis of choices made by democratically elected governments, while Putin seeks to have the Eurasian Union in place by 2015 without a popular mandate—either in Russia or any of the other potential member states.

How concerned should the West be? Much depends on how the nascent idea ultimately develops. Facing a growing series of domestic challenges, above all increasing dissatisfaction with Russia’s corrupt authoritarian politics, Putin is likely to relegate developing the Eurasian Union to the back burner for the time being. And with Russia finally set to join the World Trade Organization this year, promoting regional economic integration (which many Russian officials saw as an alternative to WTO membership) is likely to become a lower priority.

Washington should not condemn the Eurasian Union proposal outright—at least not yet. There would be something hypocritical in opposing regional integration in Eurasia while supporting it elsewhere. The United States also has a direct interest in seeing the Central Asian republics develop into functioning, prosperous states. Following the U.S. withdrawal from Afghanistan, Washington will be in a much weaker position to promote development in a region where poor governance, corruption, drug trafficking and Islamism are all growing problems. A stronger Russian presence underpinning regional trade and development would be vastly preferable to the collapse of a state like Tajikistan into drug-fueled anarchy.

On the other hand, recent experience shows that Moscow is generally keen to extract a political price in exchange for providing such economic benefits. One obvious possibility would be demanding an end to the U.S. presence at the Manas Transit Center in Kyrgyzstan. Though Moscow has agreed to support the U.S. presence for the duration of the fighting in Afghanistan, it remains opposed to a long-term U.S. presence. It may use membership in the Eurasian Union as a lever for pressuring the Kyrgyz to evict U.S. forces from the base—a step Washington should resist.